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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
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COMMISSION FILE NUMBER 1-13452
PAXSON COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 59-3212788
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 CLEARWATER PARK ROAD, WEST PALM BEACH, FLORIDA 33401
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (561) 659-4122
Securities Registered Pursuant to Section 12(b) of the Act:
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NAME OF EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Class A Common Stock, $0.001 par value American Stock Exchange
11 5/8% Senior Subordinated Notes American Stock Exchange
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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 Exchange Act of
1934 during the preceding twelve months (or such 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. []
The aggregate market value of voting stock held by non-affiliates as of
March 27, 1997 is $149,560,000, computed by reference to the closing price for
such shares on the American Stock Exchange.
The number of shares outstanding of each of the registrant's classes of
common stock, as of March 27, 1997 are: 40,480,482 shares of Class A Common
Stock $.001 par value, and 8,311,639 shares of Class B Common Stock, $.001 par
value.
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DOCUMENTS INCORPORATED BY REFERENCE
Parts of the definitive Proxy Statement for the Registrant's Annual Meeting
of Stockholders to be held on May 2, 1997.
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TABLE OF CONTENTS
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PAGE
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Business.................................................... 2
Properties.................................................. 25
Legal Proceedings........................................... 27
Submission of Matters to Vote of Security Holders........... 27
Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 27
Selected Financial Data..................................... 28
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 29
Financial Statements........................................ 34
Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................. 34
Directors and Executive Officers of the Registrant.......... 34
Executive Compensation...................................... 34
Security Ownership of Certain Beneficial Owners and
Management................................................ 34
Certain Relationships and Related Transactions.............. 34
Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 34
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PART I
ITEM 1. BUSINESS
GENERAL
Paxson Communications Corporation (the "Company") is a broadcasting company
whose principal businesses consist of a group of television stations carrying
its proprietary network, which broadcasts long form paid programming consisting
primarily of infomercials ("inTV"), and a major radio station group operating
primarily in Florida. In addition to the television station group, the Company
owns an ABC network affiliated television station and operates a UPN/WB network
affiliated television station pursuant to a time brokerage agreement, each in
the West Palm Beach, Florida television market. The Company has entered into
definitive agreements to sell its interests in these network affiliated
television stations as well as its interests in television stations in
Cleveland, Ohio, and Atlanta, Georgia, currently operated pursuant to time
brokerage agreements. See "Recent Developments" below.
The Company introduced the inTV network in January 1995 with four of the
Company's television stations. The network has expanded rapidly and currently
consists of 41 owned, operated pursuant to a time brokerage agreement or
affiliated television stations. Upon completion of announced acquisitions and
station sales the Company will have 46 owned, operated pursuant to a time
brokerage agreement or affiliated television stations operating in 41 television
markets, 24 of which are among the 30 largest in the United States. The Company
expects to complete the announced acquisitions within the next year, subject to
receipt of regulatory approvals.
The Company owns 39 radio stations, 35 of which are located in Florida,
including 23 stations which serve Florida's four largest radio markets. Upon
completion of announced acquisitions, the Company will own a total of 43 radio
stations, 24 of which will serve Florida's four largest radio markets. The
Company expects to complete the announced radio station acquisitions by the end
of 1997, subject to receipt of regulatory approvals.
The Company was founded in 1991 by Lowell W. "Bud" Paxson. Mr. Paxson has
been at the forefront of several innovative broadcasting concepts over the last
decade, including his leadership role in the creation and early growth of
electronic retailing as the creator and co-founder of Home Shopping Network,
Inc. and Silver King Communications, Inc.
RECENT DEVELOPMENTS
The Company has entered into definitive agreements to sell its interests in
two network affiliated television stations serving the West Palm Beach, Florida
market which currently comprise the Company's network affiliated television
operations. The Company has agreed to sell WPBF-TV, an ABC network affiliated
station, and to sell its interest in WTVX-TV, a UPN/WB network affiliated
station operated pursuant to a time brokerage agreement, for aggregate
consideration of $119 million. The Company's decision to sell its network
affiliated television stations has resulted in the discontinuance of the network
affiliated television segment for financial reporting purposes. The Company
expects to complete these sales during the third quarter of 1997, subject to the
receipt of all necessary regulatory and other approvals.
The Company has contracted to sell its interests in WOAC-TV and WNGM-TV,
which it currently operates pursuant to time brokerage agreements, for aggregate
consideration of $73.5 million. 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.
The Company estimates that the completion of the sales of WPBF-TV, WTVX-TV,
WOAC-TV and WNGM-TV, (the "TV Sales") will result in a total pre-tax gain of
approximately $130 million.
The Company has agreements to purchase the assets of, or finance the
acquisition of assets of and enter into time brokerage agreements with respect
to, a number of radio and television stations, information with
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respect to which is included in the notes to the financial statements of the
Company appearing elsewhere in this report.
INTV
The Company introduced inTV in January 1995 in order to capitalize on what
the Company believes to be a rapidly growing industry. The Company has assembled
41 owned, operated or affiliated stations dedicated to inTV programming and has
agreements to own, operate or affiliate with seven additional television
stations in six additional markets. The Company believes that inTV is the only
group of broadcast television stations in the United States offering long form
paid programmers and infomercial advertisers significant national, regional and
local distribution capability and airtime during each of the popular morning,
daytime and prime time viewing hours.
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.
The television stations converted by the Company to its inTV network
stations are typically non-network affiliated stations with marginal operating
results that can be acquired at a relatively low cost compared to network
affiliated stations. Certain of these stations are licensed to communities
outside the center of major television markets, but within such markets'
designated market area ("DMA"), and by virtue of the "must carry" rules of the
Federal Communications Commission ("FCC"), are thus generally entitled to
carriage on cable systems throughout such DMA. Through the exercise of "must
carry" rights and the improvement of its stations' over-the-air signals, the
Company attempts to maximize its cable household coverage within its markets.
While the Company's cable household coverage for its owned or operated
television stations was in the aggregate 61.5% of the total cable households in
its markets as of February 1997, the Company's goal is to reach approximately
85% of the cable homes in its markets (although there can be no assurance that
the Company will reach such goal). The Company believes that it also reaches a
significant number of over-the-air television households that do not receive
cable television. The Company continues to evaluate the acquisition of or
affiliation with additional television stations to further extend the national
reach of its network with a goal of reaching 70% of U.S. households, the maximum
allowed by law.
Industry Background
During recent years, advertisers have come to recognize the effectiveness
and reasonable cost of long-form programming, or infomercials. An infomercial is
an advertisement, usually approximately one half-hour in length and often
produced in an entertainment format, that is paid for by the advertiser on the
basis of airtime, market size and in certain cases past results from airing on a
particular television station. Regardless of the presentation format, the
viewers are provided information that can be used to make informed and immediate
purchasing decisions from the comfort of their home without the pressure of a
salesperson or the inconvenience of visiting a local retailer. Unlike most
traditional television advertising, the direct response nature of many
infomercials affords advertisers the ability to evaluate the effectiveness of
their advertising expenditures on an immediate basis.
The Company believes that the infomercial industry has grown rapidly during
the past several years. Long form informational programming has typically
occupied time slots that were less profitable for broadcasters. Increasingly,
infomercials are being placed in more expensive and attractive time periods such
as daytime, early fringe and prime time, and the infomercial is becoming a more
widely accepted form of advertising. Infomercials have been used to promote
major consumer brandnames, such as America Online, AT&T, and
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Microsoft, and to promote the products and services of local businesses such as
automotive and marine dealers and other retailers.
Infomercials are one type of long form paid programming. In addition to
infomercials, there are other types of both local and national long form paid
programming which, unlike infomercials, do not rely on immediate viewer response
and sales. The Company believes that non-infomercial paid programming is growing
in popularity and may, in certain of the Company's markets, ultimately surpass
infomercials as the predominant type of long form paid programming. Other types
of non-infomercial long form paid programming include sports programs, such as
Florida Marlins Baseball, New York Yankees Baseball and Southeastern Conference
Football, and non sports programs, such as the Connecticut State Lottery,
religious, ethnic, political and corporate image building programs of major
corporations (often referred to as "advertorials"). Currently, the funds spent
on advertorials by major corporations are a relatively small part of their
overall advertising budget. The Company believes that such advertorial
expenditures will continue to increase. In certain of the Company's markets,
such as Los Angeles and Miami, the demand for airtime by foreign language ethnic
programmers has steadily increased. Political long form paid programming has
been used as a method of reaching voters. In general, religious, ethnic and
political paid programs have produced revenues for particular time periods
(e.g., Sundays for religious programming and weekday mornings for certain ethnic
programming) which are higher than otherwise available from infomercial
advertisers during such time periods. The Company believes that its television
stations airing significant amounts of non-infomercial long form paid
programming would not suffer as significant an adverse effect as its other
stations should the Supreme Court find the "must carry" rules unconstitutional.
Operating Strategy
The Company assembled inTV through the conversion of independent television
stations to inTV stations. In most cases, those stations were non-network
affiliated stations with marginal operating results. Certain stations are
licensed to communities outside the center of major television markets, but
within such markets' DMA, and by virtue of the FCC's "must carry" rules, are
therefore generally entitled to carriage on all cable systems within such DMA,
provided the broadcaster's television signal can be delivered to the cable
system operator's head end at a specified signal strength by a variety of means.
The Company's inTV stations subsequently extend their reach to a substantial
percentage of such DMA's cable households through the exercise of federal "must
carry" rights. See "Federal Regulation of Broadcasting -- 'Must
Carry'/Retransmission Consent" and "Forward Looking Statements and Associated
Considerations -- 'Must Carry' Regulations."
The Company's inTV operating strategy is to maximize revenues and operating
cash flow through improved performance of its inTV stations. Shortly after the
Company acquires a television station or commences operating a television
station pursuant to a time brokerage agreement, the Company adds such station to
its proprietary network, and replaces substantially all of the existing
programming with inTV programming, which, unlike traditional television
programming, is paid for by the advertiser as opposed to the broadcaster. The
introduction of inTV programming allows the Company to eliminate substantially
all programming expenses and achieve significant reductions in other operating
expenses. The Company's inTV stations are operated by an average of 15 people,
compared to network and independent television stations, which average over 100
and 60 people, respectively, in markets of similar size to the Company's.
inTV programming time is sold on a local, national and network basis. Local
programming time is sold by each station's local sales force and is offered to
merchants and businesses operating within a station's local market, including
retailers, insurance companies, medical clinics, automobile and marine dealers,
financial services providers and general merchandisers. National and network
programming time is sold by national advertising placement agencies and the
Company's own in-house national and network sales force. National and network
programming times appeal to advertisers who desire to reach viewers in targeted
inTV markets and all inTV markets. The Company maintains national sales offices
in New York, Los Angeles, Chicago and at the Company's headquarters in West Palm
Beach. Support and administration of inTV is also centralized at the Company's
West Palm Beach headquarters, including most accounting and personnel functions
as well as administration of the inTV programming traffic scheduling systems.
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inTV makes accessible to infomercial and other paid programmers relatively
more desirable broadcast time periods (e.g. "prime-time") which are generally
unavailable at reasonable rates on traditional television stations. The Company
also seeks to increase the percentage of time sold to local infomercial and
other long form paid programmers. Because such programming can be complementary
to local retailing outlets and professional businesses, and may result in
increased store traffic as well as immediate sales via telephone, the Company
believes that local advertisers have the potential to become consistent
customers of inTV.
When the Company commences operation of an inTV station, revenues are
derived primarily from national infomercial advertisers. Such revenues enable
new inTV stations to quickly cover operating costs. As the Company's inTV
stations mature, however, a local sales staff is developed, generally consisting
of two sales people and a manager. The Company's experience with its more mature
inTV stations is that local sales can be increased to generate increased overall
demand for airtime and thereby enable the Company to achieve higher average
advertising rates and to increase its revenues.
Expansion Strategy
By purchasing independent television stations, entering into time brokerage
agreements, affiliating with stations, and extending its stations' broadcast
reach on cable via "must carry" requirements, the Company has created a valuable
national television broadcasting distribution infrastructure providing long
form, paid entertainment and information programming. The Company continues to
seek to expand inTV through the purchase or operation of, or affiliation with
independent television stations in major United States television markets. As of
March 1997, the DMAs to be served by the Company's inTV stations upon completion
of pending acquisitions and prior to station sales, contained approximately 53.3
million television households, of which 36 million were served by cable
television.
The Company currently employs various distribution-enhancing technologies,
such as signal transmission through fiber optic lines either alone or along with
microwave transmission, as well as low power television ("LPTV") broadcast
signal transmission and television signal compression and satellite technology
as a means of increasing the households reached in several of its largest inTV
markets.
The Company may also selectively consider joint venture or other
relationships with established members of the infomercial industry with whom the
Company can further exploit both its broadcast television programming
distribution system and its knowledge of the infomercial and telemarketing
industries generally.
inTV Properties
The stations included in inTV are either (i) owned by the Company, (ii)
operated by the Company pursuant to time brokerage agreements entered into with
the FCC licensee, or (iii) owned by independent television station operators
that enter into affiliation agreements with the Company. After giving effect to
announced acquisitions and station sales, the Company will own or operate 39
inTV stations and have affiliation agreements with seven independently owned and
operated stations that are currently dedicated to inTV.
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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.)
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TOTAL
NATIONAL INTV CABLE CURRENT MARKET CURRENT
TV MARKET COMMENCEMENT CARRIAGE AT INTV CABLE CABLE INTV CABLE
MARKET(1) RANK STATION OF OPERATION COMMENCEMENT(2) CARRIAGE(3) HOUSEHOLDS CARRIAGE%(3)
- --------- --------- ------------- ------------ --------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Owned or Operated
New York, NY......... 1 WHAI TV 3/96 626 783 4,663 16.8%
Los Angeles, CA...... 2 KZKI TV 5/95 1,453 2,434 3,049 79.8%
Philadelphia, PA..... 4 WTGI TV 2/95 1,225 1,635 2,015 81.1%
San Francisco, CA.... 5 KLXV TV 6/95 650 1,096 1,620 67.7%
Boston, MA........... 6 WGOT TV 5/95 604 949 1,665 57.0%
Boston, MA*.......... 6 WHRC TV(5) 6/97 0 0 1,665 0.0%
Washington, D.C...... 7 WSHE TV(6) 10/96 0 47 1,301 3.6%
Dallas, TX........... 8 KINZ TV(8) 12/96 0 587 954 61.5%
Atlanta, GA.......... 10 WTLK TV 4/94 300 960 1,089 88.2%
Atlanta, GA*......... 10 WNGM TV(10) 4/96 182 243 1,089 22.3%
Houston, TX.......... 11 KTFH TV 3/95 647 826 894 92.4%
Cleveland, OH*....... 13 WOAC TV(10) 10/95 332 365 1,001 36.5%
Cleveland, OH........ 13 WAKC TV 3/96 560 715 1,001 71.4%
Minneapolis, MN...... 14 KXLI TV 10/96 605 655 722 90.7%
Tampa, FL*........... 15 WFCT TV 8/94 0 973 1,014 96.0%
Miami, FL*........... 16 WCTD TV 4/94 396 1,005 1,005 100.0%
Phoenix, AZ.......... 17 KWBF TV 3/96 23 27 694 3.8%
Phoenix, AZ.......... 17 KAJW TV(4)(8) 6/97 N/A N/A 694 N/A
Denver, CO........... 18 KUBD TV 8/95 430 478 725 65.9%
Sacramento, CA*...... 20 KCMY TV 10/96 624 640 711 90.0%
St. Louis, MO........ 21 WCEE TV 1/96 23 137 583 23.6%
Orlando, FL*......... 22 WIRB TV(5) 12/94 468 756 779 97.1%
Hartford, CT*........ 27 WTWS TV(5) 3/95 661 775 790 98.1%
Raleigh, NC*......... 29 WRMY TV(5)(6) 6/96 0 297 505 58.8%
Milwaukee, WI........ 31 WHKE TV 7/96 257 320 468 68.5%
Grand Rapids, MI*.... 37 WJUE TV(8) 9/96 0 292 404 72.2%
Oklahoma City, OK.... 43 KMNZ TV 10/96 0 0 367 0.0%
Greensboro, NC....... 46 WAAP TV 7/96 323 340 357 95.3%
Providence, RI....... 47 WOST TV(4)(7) 3/97 0 0 423 0.0%
Birmingham, AL*...... 51 WNAL TV 10/96 31 79 347 22.8%
Albany, NY........... 52 WOCD TV 5/96 251 272 368 74.0%
Dayton, OH........... 53 WTJC TV 10/95 298 311 349 89.1%
Little Rock, AR*..... 57 KVUT TV(4)(8) 6/97 N/A N/A 298 N/A
Tulsa, OK*........... 58 KGLB TV(4)(8) 6/97 0 0 288 0.0%
Puerto Rico.......... NR WSJN TV 2/96 285 285 298 95.6%
Puerto Rico.......... NR WKPV TV 2/96
Puerto Rico.......... NR WJWN TV 2/96
Total Owned or Operated(9) 11,254 18,284 29,747 61.5%
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Affiliates
Philadelphia, PA..... 4 WTVE TV 10/96 414 481 2,015 23.8%
Indianapolis, IN..... 25 WIIB TV 1/96 401 424 606 69.9%
Norfolk, VA.......... 40 WJCB TV 8/95 343 385 467 82.4%
Fresno, CA........... 55 KGMC TV 1/96 179 164 265 61.9%
Total Affiliates 1,336 1,453 1,338 43.3%
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Total Owned, Operated and Affiliates(9) 12,590 19,737 31,085 63.5%
====== ====== ====== ======
Announced inTV Stations
Washington, D.C...... 7 WVVI TV 1,301
Detroit, MI.......... 9 WBSX TV 1,174
Seattle, WA.......... 12 KBCB TV(4) 1,071
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TOTAL
MARKET TV
MARKET(1) HOUSEHOLDS
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Owned or Operated
New York, NY......... 6,712
Los Angeles, CA...... 4,942
Philadelphia, PA..... 2,654
San Francisco, CA.... 2,279
Boston, MA........... 2,150
Boston, MA*.......... 2,150
Washington, D.C...... 1,909
Dallas, TX........... 1,849
Atlanta, GA.......... 1,625
Atlanta, GA*......... 1,625
Houston, TX.......... 1,595
Cleveland, OH*....... 1,461
Cleveland, OH........ 1,461
Minneapolis, MN...... 1,428
Tampa, FL*........... 1,411
Miami, FL*........... 1,363
Phoenix, AZ.......... 1,213
Phoenix, AZ.......... 1,213
Denver, CO........... 1,185
Sacramento, CA*...... 1,116
St. Louis, MO........ 1,110
Orlando, FL*......... 1,022
Hartford, CT*........ 916
Raleigh, NC*......... 815
Milwaukee, WI........ 787
Grand Rapids, MI*.... 648
Oklahoma City, OK.... 588
Greensboro, NC....... 568
Providence, RI....... 558
Birmingham, AL*...... 526
Albany, NY........... 507
Dayton, OH........... 503
Little Rock, AR*..... 480
Tulsa, OK*........... 461
Puerto Rico.......... 1,064
Puerto Rico..........
Puerto Rico..........
Total Owned o 45,445
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Affiliates
Philadelphia, PA..... 2,654
Indianapolis, IN..... 939
Norfolk, VA.......... 632
Fresno, CA........... 491
Total Affilia 2,062
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Total Owned, 47,507
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Announced inTV Statio
Washington, D.C...... 1,909
Detroit, MI.......... 1,772
Seattle, WA.......... 1,492
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TOTAL
NATIONAL INTV CABLE CURRENT MARKET CURRENT
TV MARKET COMMENCEMENT CARRIAGE AT INTV CABLE CABLE INTV CABLE
MARKET(1) RANK STATION OF OPERATION COMMENCEMENT(2) CARRIAGE(3) HOUSEHOLDS CARRIAGE%(3)
- --------- --------- ------------- ------------ --------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kansas City, MO...... 32 KYFC TV 515
Salt Lake City, UT... 36 KOOG TV 372
West Palm Beach,
FL................. 44 WHBI TV(4)(6) 486
Wilkes Barre, PA..... 49 WSWB TV(4) 444
Total Announced inTV Stations(9) 4,959
------
Total inTV Network(9) 35,147
======
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TOTAL
MARKET TV
MARKET(1) HOUSEHOLDS
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Kansas City, MO......................... 787
Salt Lake City, UT...................... 671
West Palm Beach, FL..................... 587
Wilkes Barre, PA........................ 553
Total Announced inTV Stations(9) 7,011
------
Total inTV Network(9) 53,368
======
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* 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 3/97, and as a percentage of the total market
cable households. Source: A.C. Nielsen.
(4) Station is under construction or not operating commercially.
(5) The Company has no option to acquire this station.
(6) Pending inTV affiliate.
(7) 50% ownership interest.
(8) 49% ownership interest with an option for the remaining 51%.
(9) Figures represent total cable and television households in each market only
and are not necessarily indicative of the number of households reached by
each station in its market; totals do not double count markets where the
Company has more than one station.
(10) The Company has contracted to sell its interest in this station.
N/R Not ranked
PAXSON RADIO
The Company has assembled a substantial statewide radio broadcasting group
with operations in Florida's largest markets. Upon completion of pending
acquisitions, the Company will own and operate 43 radio stations (29 FM and 14
AM stations), 39 of which serve eight Florida markets (including 23 in the
state's four largest markets) and four of which are located in Cookeville,
Tennessee. The Company has assembled radio duopolies (two FM or two AM stations
in a market) or "super duopolies" (more than two FM or two AM stations in a
market) in each of its Florida radio markets and in Cookeville.
The Company's radio expansion strategy is to acquire additional stations to
enhance its position in its current markets and to selectively enter new
markets, primarily in Florida, building upon its multiple radio station
ownership strategy in each of its markets and taking advantage of relaxed
multiple radio station ownership limitations implemented by recent changes in
federal telecommunications law.
The Florida radio markets in which the Company operates continue to
experience substantial concentration of station ownership among large radio
group owners. Total market radio advertising revenues in the Company's five
largest Florida markets grew from $339.3 million in 1995 to $380.6 million in
1996, an increase of 12.2%. The Company believes that its established position
among the leading radio broadcast groups in each of its Florida markets
differentiates it from its competitors and makes the Company attractive to
regional and national advertisers.
The Company's radio stations employ broadly diversified programming
formats, including News, Talk, Sports, Country, Adult Contemporary ("AC"),
Smooth Jazz, Album Oriented Rock ("AOR"), Mainstream AOR, and Alternative Rock.
The Company operates six radio networks, primarily in the southeastern United
States, that provide daily statewide news segments, sports programming and
satellite distribution of play-by-play broadcasts of professional and collegiate
sports events for 338 affiliated stations throughout the eastern and
southeastern United States and controls 469 billboard faces in the Tampa and
Orlando markets that support the Company's radio station operations and provide
advertising revenue.
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Operating Strategy
The Company seeks to continue to improve cash flow growth from its radio
properties through the integration of acquisitions and enhanced station
performance. The Company believes that the geographic proximity of its FM and AM
duopolies throughout Florida give it the ability to realize certain revenue and
promotional opportunities as well as cost efficiencies. Through advertising on
the Company's group of Florida stations, an advertiser is able to cover an
entire geographic region, while effectively reaching targeted demographic
groups. Various cross-market promotional opportunities exist, such as the
ability to provide listeners with tickets to another market's sporting events or
local entertainment attractions. Personnel and technical costs can be minimized
by virtue of the ability to service markets in close proximity to one another.
The stations' geographic concentration allows management to more easily and
rapidly respond to market developments.
The Company seeks to attract and retain skilled and experienced managers
capable of implementing the Company's aggressive marketing and promotion
strategy. Local managers are responsible for the day to day operations of their
respective stations and have incentive compensation programs linked to the
station's operating cash flow performance.
Corporate management is responsible for long-range planning, establishment
of primary policies and procedures, resource allocation, accounting and
auditing, regulatory and legal compliance, license renewals and the evaluation
of potential acquisitions. Corporate management reviews sales pacing reports
from each station on a daily basis. In addition, members of senior management
visit the Company's stations on a regular basis to review performance and to
assist local management with its programming, sales and recruiting efforts, as
well as to develop overall station operating and marketing strategies.
The Company's stations provide programming designed to appeal to targeted
demographic groups. The Company uses extensive ongoing research to refine each
station's programming and employs local television, print media, outbound
telemarketing and billboards to promote its stations. The Company has
implemented strict financial reporting standards and cost control measures to
ensure a focus on improvements in operating results throughout Paxson Radio and
has instituted local management incentive programs tied to increasing operating
cash flow.
Radio Properties
The following table sets forth certain information about the radio stations
the Company owns or proposes to acquire:
<TABLE>
<CAPTION>
NATIONAL
RADIO AUDIENCE SHARE REVENUE(2)
MARKET (PERSONS 25-54)(3) ------------
MARKETS/STATION(1) RANK(2) FORMAT 1996 SHARE RANK
- ------------------------------- -------- ----------------------- ------------------ ----- ----
<S> <C> <C> <C> <C> <C>
MIAMI/FT. LAUDERDALE........... 11
WZTA-FM........................ Active Rock 3.9%
WIOD-AM........................ Hot Talk 3.9%
WLVE-FM........................ Smooth Jazz 3.4%
WPLL-FM........................ Modern AC 2.4%
WINZ-AM........................ News/Talk 1.3%
WFTL-AM........................ Hot Talk 0.2%
WSRF-AM........................ Block/Long Form n/a
-----
Total Market......... 15.1% 20.6% 1
</TABLE>
8
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C> <C>
TAMPA/ST. PETERSBURG................... 21
WSJT-FM................................ Smooth Jazz 5.7%
WHPT-FM................................ Rock Alternative 4.6%
WZTM-AM................................ Sports 2.0%
WHNZ-AM................................ News/Talk 0.5%
WKES-FM(4)............................. To Be Determined --
-----
Total Market................. 12.8% 13.1% 4
ORLANDO................................ 39
WMGF-FM................................ Soft AC 7.2%
WTKS-FM................................ Hot Talk 7.1%
WJRR-FM................................ Active Rock 3.9%
WSHE-FM................................ Modern AC 3.4%
WQTM-AM................................ Sports 1.6%
WWNZ-AM................................ News/Talk 0.6%
-----
Total Market................. 23.8% 27.6% 3
JACKSONVILLE, FL....................... 53
WROO-FM................................ Country 5.5%
WFSJ-FM................................ Smooth Jazz 3.4%
WPLA-FM................................ Alternative 2.9%
WNZS-AM................................ Sports 2.1%
WTLK-FM (5)............................ Hot Talk 0.2%
WZNZ-AM................................ News 0.2%
-----
Total Market................. 14.3% 16.4% 3
PENSACOLA, FL.......................... 125
WYCL-FM................................ Gold 6.0%
WTKX-FM................................ Album Oriented Rock 4.6%
-----
Total Market................. 10.6% 18.1% 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........................ 224
WPAP-FM................................ Country 10.5%
WFSY-FM................................ Adult Contemporary 8.8%
WSHF-FM................................ Modern AC 4.4%
WPBH-FM................................ Gold 3.5%
WDIZ-AM................................ Adult Standards n/a
-----
Total Market(6).............. 27.2% n/r 1
</TABLE>
9
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C> <C>
COOKEVILLE, TN......................... n/c
WGSQ-FM................................ Country 27.0%
WGIC-FM................................ Soft AC 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(4)............................. Hot AC n/c
WAVK-FM(4)............................. Adult Contemporary n/c
WKRY-FM(4)............................. Soft AC n/c
-----
Total Market(6).............. 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 Fall 1996
Arbitron Radio Market Reports; except Cookeville which is based on Company
estimates.
(4) Pending acquisition.
(5) Station commenced broadcasting during October 1996.
(6) Revenue shares not reported; rank based upon Company estimates.
n/a Insignificant share.
n/c Market not covered by Arbitron.
n/r Revenue shares not reported.
Radio Networks
The Company operates six radio networks that serve approximately 338
affiliates. The programs produced and distributed by the Company's radio
networks include news broadcasts, sports play-by-play and sports talk shows, and
business and agricultural news and information. In addition to providing radio
programming, the Company also offers its affiliates printed script for news,
sports and weather information, which the Company either generates internally or
consolidates from wire services and other sources. The Company believes its
radio networks are attractive to advertisers because they provide an opportunity
to advertise simultaneously on multiple stations. In addition, the Company's
networks provide certain programming to the Company's radio broadcast stations.
Billboard Properties
The Company currently owns or operates 469 billboard faces in the Orlando
and Tampa markets. The Company sells the use of the billboards to a broad group
of potential advertisers and takes advantage of the relationships it has with
its radio advertisers to broaden its billboard customer base and expand its
share of the advertiser's media purchases within a market. In addition, as
broadcasters are major users of billboard advertising campaigns, the Company can
control its own billboard promotional expenditures through the use of its unsold
billboards, as well as assure full use of all its owned billboards.
The Company has engaged the services of an investment banking firm to
advise it with respect to a sale or exchange of its billboard operations. While
the Company has received several offers to acquire its billboard operations, it
has not accepted any such offers and there can be no assurance that any offer
will be received which will be acceptable to the Company.
10
<PAGE> 12
PAXSON NETWORK AFFILIATED TELEVISION
The Company owns and operates an ABC-TV affiliate, WPBF-TV, and, pursuant
to a time brokerage agreement, provides programming for a second television
station, WTVX-TV (a combined United Paramount Network and Warner Brothers
Network affiliate), both of which television stations serve the West Palm Beach,
Florida market.
The Company concluded that the consolidation being experienced by the
network affiliated television broadcasting industry in the wake of the relaxed
multiple station ownership rules implemented by the Telecommunications Act of
1996 would place small station group operators at a significant disadvantage
versus larger group operators. In light of the Company's inability to locate
traditional television stations at attractive prices to expand its network
affiliated television station group, the Company has sought to redeploy its
investment in its network affiliated television operations to its core inTV and
radio group businesses, and has entered into definitive agreements to sell its
interests in its two network affiliated television stations for aggregate
consideration of approximately $119 million. The Company's decision to sell its
network affiliated television stations has resulted in the discontinuance of the
network affiliated television segment for financial reporting purposes. The
Company expects to complete the TV Sales during the third quarter of 1997,
subject to the receipt of all necessary regulatory and other approvals.
ADVERTISING
Virtually all the Company's broadcasting revenue is derived from local,
regional and national advertising. Advertising rates charged by radio stations
are based on a station's ability to attract audiences in the demographic groups
that advertisers wish to reach and the number of stations competing in the
market area. A station's audience is reflected in rating surveys of the number
of listeners tuned to the station and the time spent listening. The Company
offers a regional presence in Florida's most populous markets and attractive
targeted demographic groups in those markets to national, regional and local
radio advertisers. The Company strives to maximize radio revenue by constantly
managing the number of commercials available and by adjusting prices based upon
demand by advertisers to reach the Company's stations' target demographic
groups. In addition to the sales of advertising time for cash, stations
typically exchange advertising time for goods or services that can be used by
the station in its business operations, including radio, television and
billboard advertising and such items as travel and entertainment services.
inTV advertising rates are primarily based on the number of cable
households reached, the effectiveness of infomercials, the nature of the
advertiser, the nature of the advertisement (local, national or network), and
ultimately the demand for available infomercial time. The Company attempts to
maximize revenue by increasing the number of cable homes reached, thereby
providing advertisers with increased viewership for which advertisers will pay
higher rates.
COMPETITION
The Company's radio and television stations compete with the other radio
and television broadcasting stations in their respective market areas, as well
as with other advertising media, including newspapers, television, magazines,
outdoor advertising, transit advertising and direct mail marketing. Competition
within the radio and television broadcasting industries occurs primarily in
individual market areas, so a station in one market does not generally compete
with stations in other market areas. In each of its markets, the Company's radio
and television stations face competition from other stations with substantial
financial resources, including, in certain instances, stations whose programming
is directed to the same demographic groups. In addition to management
experience, factors that are material to competitive positions include a
station's rank in its market, authorized power, assigned frequency or station
(as applicable), audience characteristics, local program acceptance and the
programming characteristics of other stations in the market area. The Company
attempts to improve its radio stations' competitive position with extensive
research and promotional campaigns aimed at those demographic groups targeted by
its stations, and through sales efforts designed to attract advertisers by
emphasizing the effectiveness of radio advertising in increasing advertisers'
revenue. Recent changes in the FCC's policies and rules permit increased joint
ownership and joint operation of local
11
<PAGE> 13
radio stations. Stations, such as those owned by the Company, taking advantage
of these joint arrangements may in certain instances have lower operating costs
and may be able to offer advertisers more attractive rates and services.
Although the Company believes that each of the Company's radio and television
stations can compete effectively in its market, there can be no assurance that
any of the Company's radio or television stations will be able to maintain or
increase its current audience rating or advertising revenue market share.
Although the radio and television broadcasting industries are highly
competitive, some barriers to entry exist. The operation of a radio or
television broadcasting station requires a license from the FCC, and the number
of radio and television stations that can operate in a given market is limited
by the availability of the FM and AM radio frequencies or stations (as
applicable) that the FCC will license in that market. The radio and television
broadcasting industries historically have grown in terms of total revenue,
despite the introduction of new technologies for the delivery of entertainment
and information, such as cable, audio tapes and compact discs. The Company
believes that radio's portability makes it less vulnerable than other media to
competition from new methods of distribution or other technological advances.
There can be no assurance, however, that the application of new media
technologies will not have an adverse effect on the radio or television
broadcasting industries.
The Company's development of inTV and creation of a national long form paid
programming distribution system is a relatively new concept, and there can be no
assurance of its success. The concept is subject to competition from several
sources. The Company's inTV stations face significant competition from
established broadcasting stations and cable television. Various television
networks carry blocks of infomercials and local cable operators also sell blocks
of time to long form advertisers. To the extent that inTV is successful, it is
likely that the Company will face competition from new market entrants, some of
which could have significantly greater financial resources than the Company. In
addition, the Company could encounter competition as a result of technological
developments.
TIME BROKERAGE AGREEMENTS AND OTHER INTERESTS IN BROADCAST STATIONS
The Company has made certain investments in broadcast properties with third
parties consisting of time brokerage agreements and the co-ownership of certain
television stations. These investments in broadcast properties permit the
Company to have a presence in additional markets and to enjoy many, but not all,
of the benefits of ownership while at the same time remaining in compliance with
FCC regulations.
Time Brokerage Agreements. The Company has entered into time brokerage
agreements with third parties pursuant to which the Company enjoys many, but not
all, of the benefits of operating a television station while not owning such
station. The Company may in the future enter into other time brokerage
agreements to operate stations prior to their acquisition or to enable the
Company to operate additional television stations that it might not be able to
own itself under current FCC multiple station ownership restrictions. The
Company is currently operating inTV stations WNAL-TV, WJUE-TV, KGLB-TV and
KCMY-TV pursuant to time brokerage agreements pending consummation of the
Company's acquisition of such stations.
The Company also operates or intends to operate pursuant to time brokerage
agreements certain stations which the Company is not in the process of
acquiring. The Company currently operates each of WTVX-TV, WOAC-TV, WNGM-TV,
WCTD-TV, WFCT-TV, WIRB-TV, WTWS-TV, WRMY-TV and WHRC-TV under time brokerage
agreements. Three of such stations (WTVX-TV, WOAC-TV and WNGM-TV) are operated
pursuant to time brokerage agreements with entities owned or controlled by Eddie
Whitehead (collectively, "Whitehead Media") and the Company's interests in these
three stations are presently under contract to be sold. In addition, three
stations (WCTD-TV, WFCT-TV and WIRB-TV) are operated pursuant to time brokerage
agreements with subsidiaries of The Christian Network, Inc. ("CNI"), two
(WRMY-TV and WTWS-TV) are operated pursuant to time brokerage agreements with
entities owned or controlled by Steven Roberts and Michael Roberts jointly
("Roberts Broadcasting"), and one (WHRC-TV) is operated pursuant to a time
brokerage agreement with Massachusetts Redevelopment LLC. WHRC-TV is under
contract to be sold to CNI and the Company will continue to operate the station
pursuant to a time brokerage agreement after it is purchased by CNI.
12
<PAGE> 14
With certain limited exceptions, the time brokerage agreements of the
Company entered into other than in anticipation of an acquisition involve a
basic transaction structure. The Company (i) finances the acquisition by a third
party of some or all of the assets of the brokered stations and secures such
financing by encumbering such assets including, to the extent permitted under
FCC rules and regulations, the FCC license and all of the capital stock of the
acquiring company; and (ii) enters into a time brokerage agreement with such
third party which allows the Company to operate the brokered station in
accordance with FCC guidelines. In the case of Whitehead Media, the Company
initially financed the acquisition by Whitehead Media of each of WTVX-TV and
WOAC-TV. Whitehead Media subsequently obtained third party financing, a portion
of the proceeds of which was used to repay the Company. In general, payments
made to the FCC licensee under the time brokerage agreement are established, and
renegotiated from time to time, based upon increases in expenses for which the
FCC licensee must, in accordance with FCC regulations, remain primarily liable,
including servicing the indebtedness owed by such FCC licensee to the Company
or, in the case of Whitehead Media, to third parties. In certain circumstances,
the Company may acquire certain tangible assets useful in the construction or
operation of the brokered station and lease such assets to the brokered station.
In addition, unless prohibited by FCC rules and regulations, the FCC licensee
also grants to the Company an option to purchase the station for an amount
payable in cash together with the forgiveness of all outstanding indebtedness.
The Company has options to purchase all of the stations listed in the preceding
paragraph other than WHRC-TV, WIRB-TV, WTWS-TV and WRMY-TV. The Company has no
ownership interest in the parties with which it has entered into time brokerage
agreements.
Other Investments in Television Properties. The Company, DP Media, Inc.
(an entity owned and controlled by members of Mr. Paxson's family) and Roberts
Broadcasting have entered into agreements whereby the Company will lend DP Media
approximately $10 million (of which approximately $5.5 million, to be assumed by
DP Media, has been advanced to Roberts Broadcasting as of December 31, 1996, and
has been recorded as investments in broadcast properties) allowing DP Media to
purchase a 100% ownership interest in WRMY-TV. The Company is currently
operating the station pursuant to a time brokerage agreement and expects the
station to enter into an affiliation agreement with the Company following the
sale of the station to DP Media.
The Company has amended its agreements with Roberts Broadcasting relating
to KZAR-TV, Salt Lake City, Utah, to lend an additional $2 million to Roberts
Broadcasting and to terminate the Company's 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.
The Company has also extended financing to Cocola Media Corporation of
Florida ("Cocola"), which has in turn financed the construction by WPB
Communications, Inc. of television station WHBI-TV, which is licensed to
Hispanic Broadcasting, Inc. WPB Communications, Inc. is the holder of an option
to acquire WHBI-TV from Hispanic Broadcasting, Inc. after the station commences
broadcast operations. After the consummation of the acquisition by WPB
Communications, Inc., Cocola has an option to acquire the station and, pending
the consummation of such acquisition, the right to operate WHBI-TV pursuant to a
time brokerage agreement. The Company expects to enter into an affiliation
agreement with Cocola after Cocola acquires WHBI-TV, pursuant to which WHBI-TV
would air inTV programming. The Company has no ownership interest in Cocola, WPB
Communications, Inc. or Hispanic Broadcasting, Inc.
FEDERAL REGULATION OF BROADCASTING
The FCC regulates radio and television broadcast stations pursuant to the
Communications Act of 1934, as amended (the "Communications Act"). The
Communications Act permits the operation of radio and television broadcast
stations only in accordance with a license issued by the FCC upon a finding that
the grant of such license would serve the public interest, convenience and
necessity. The Communications Act provides for the FCC to exercise its licensing
authority to provide a fair, efficient and equitable distribution of broadcast
service throughout the United States.
The Communications Act empowers the FCC, among other things, to determine
the frequencies, location and power of broadcast stations; to issue, modify,
renew and revoke station licenses; to approve the
13
<PAGE> 15
assignment or transfer of control of broadcast licenses; to regulate the
equipment used by stations; to impose fees for processing applications; and to
impose penalties for violations of the Communications Act or FCC regulations.
The FCC may revoke licenses for, among other things, false statements made to
the FCC or willful or repeated violations of the Communications Act or of FCC
rules. Legislation has been introduced from time to time to amend the
Communications Act in various respects and the FCC from time to time considers
new regulations or amendments to its existing regulations. On February 8, 1996,
the President signed into law the Telecommunications Act of 1996 (the "1996
Act"). The 1996 Act changed many provisions of the Communications Act and
requires the FCC to change its existing rules and adopt new rules in several
areas affecting broadcasting.
The following is a brief summary of certain provisions of the
Communications Act and the rules of the FCC. Reference should be made to the
Communications Act and the rules, orders, decisions and published policies of
the FCC for further information on FCC regulation of television and radio
broadcast stations.
License Renewal. The Communications Act provides that a broadcast station
license may be granted to an applicant if the public interest, convenience and
necessity will be served thereby, subject to certain limitations. In making
licensing determinations, the FCC considers an applicant's legal, technical,
financial and other qualifications. Broadcast station licenses are granted for
specific, limited periods, and, upon application, are renewable for additional
terms. The 1996 Act extended the license term for both television and radio
broadcast stations to eight years. The FCC has recently adopted regulations to
implement the new license terms. The Company's current licenses, and the
licenses of stations with which the Company has time brokerage agreements expire
on the following dates:
<TABLE>
<CAPTION>
RADIO STATIONS(1) MARKET(2) LICENSE EXPIRATION
----------------- --------- ------------------
<S> <C> <C>
WZTA-FM Miami/Ft. Lauderdale February 1, 2004
WIOD-AM Miami/Ft. Lauderdale February 1, 2004
WLVE-FM Miami/Ft. Lauderdale February 1, 2004
WPLL-FM Miami/Ft. Lauderdale February 1, 2004
WINZ-AM Miami/Ft. Lauderdale February 1, 2004
WFTL-AM Miami/Ft. Lauderdale February 1, 2004
WSRF-AM Miami/Ft. Lauderdale February 1, 2004
WSJT-FM Tampa/St. Petersburg February 1, 2004
WHPT-FM Tampa/St. Petersburg February 1, 2004
WZTM-AM Tampa/St. Petersburg February 1, 2004
WHNZ-AM Tampa/St. Petersburg February 1, 2004
WMGF-FM Orlando February 1, 2004
WTKS-FM Orlando February 1, 2004
WJRR-FM Orlando February 1, 2004
WSHE-FM Orlando February 1, 2004
WQTM-AM Orlando February 1, 2004
WWNZ-AM Orlando February 1, 2004
WROO-FM Jacksonville February 1, 2004
WFSJ-FM Jacksonville February 1, 2004
WPLA-FM Jacksonville February 1, 2004
WNZS-AM Jacksonville February 1, 2004
WTLK-FM Jacksonville February 1, 2004
WZNZ-AM Jacksonville February 1, 2004
WYCL-FM Pensacola February 1, 2004
WTKX-FM Pensacola February 1, 2004
WTNT-FM Tallahassee February 1, 2004
WSNI-FM Tallahassee April 1, 2004
WXSR-FM Tallahassee February 1, 2004
WJZT-FM Tallahassee February 1, 2004
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
RADIO STATIONS(1) MARKET(2) LICENSE EXPIRATION
----------------- --------- ------------------
<S> <C> <C>
WNLS-AM Tallahassee February 1, 2004
WFSY-FM Panama City February 1, 2004
WSHF-FM Panama City February 1, 2004
WPAP-FM Panama City February 1, 2004
WPBH-FM Panama City February 1, 2004
WDIZ-AM Panama City February 1, 2004
WGSQ-FM Cookeville August 3, 2004
WGIC-FM Cookeville August 3, 2004
WPTN-AM Cookeville August 3, 2004
WHUB-AM Cookeville August 3, 2004
</TABLE>
<TABLE>
<CAPTION>
OWNED TELEVISION STATIONS MARKET LICENSE EXPIRATION
------------------------- ------ ------------------
<S> <C> <C>
WHAI New York April 1, 1999
KZKI Los Angeles December 1, 1998
WTGI Philadelphia August 1, 1999
KLXV San Francisco December 1, 1998
WGOT Boston April 1, 1999
WSHE Washington October 1, 2004
KINZ Dallas Application Pending
WTLK* Atlanta April 1, 1997
KTFH Houston August 1, 1998
WAKC Cleveland October 1, 1997
KXLI Minneapolis April 1, 1998
KAJW Phoenix October 1, 1998
KWBF Phoenix October 1, 1998
KUBD Denver April 1, 1998
WCEE St. Louis December 1, 1997
WHKE Milwaukee December 1, 1997
KMNZ Oklahoma City Application Pending
WPBF West Palm Beach February 1, 2005
WAAP Greensboro December 1, 2004
WOST Providence April 1, 1999
WOCD Albany June 1, 1999
WTJC Dayton October 1, 1997
KVUT Little Rock Under Construction
KGLB Tulsa Application Pending
WSJN* San Juan, Puerto Rico February 1, 1997
WKPV* Ponce, Puerto Rico February 1, 1997
WJWN* San Sebastian, Puerto Rico February 1, 1997
</TABLE>
<TABLE>
<CAPTION>
TIME BROKERAGE
TELEVISION STATIONS MARKET(2) LICENSE EXPIRATION
------------------- --------- ------------------
<S> <C> <C>
WHRC Boston April 1, 1999
WNGM* Atlanta April 1, 1997
WOAC Cleveland October 1, 1997
WFCT Tampa/St. Petersburg February 1, 2005
WCTD Miami/Ft. Lauderdale February 1, 2005
KCMY Sacramento December 1, 1998
WIRB* Orlando February 1, 1997
WTWS Hartford/New Haven April 1, 1999
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
TIME BROKERAGE
TELEVISION STATIONS MARKET(2) LICENSE EXPIRATION
------------------- --------- ------------------
<S> <C> <C>
WRMY Raleigh December 1, 2004
WJUE Grand Rapids October 1, 1997
WTVX West Palm Beach February 1, 2005
WNAL Birmingham April 1, 2005
</TABLE>
- ---------------
* License renewal pending.
(1) The formal call sign assigned by the FCC does not include the "-AM" suffix
and does not necessarily include the "-FM" suffixes.
(2) Each station is licensed by the FCC to serve a specific community which is
included in the listed market.
Generally, the FCC renews licenses without a hearing. The Communications
Act authorizes the filing of petitions to deny during specified periods after
the renewal applications have been filed. Interested parties, including members
of the public, may file petitions to deny as a means to raise issues concerning
the renewal applicant's qualifications. The 1996 Act removed the opportunity for
the filing of competing applications against an incumbent licensee at renewal
time. Instead, the FCC will renew broadcast licenses if the incumbent meets
three requirements: (1) the station has served the public interest, convenience
and necessity; (2) the licensee has not seriously violated the Communications
Act or the FCC's rules; and (3) there have been no other violations, which,
taken together, would constitute a pattern of abuse. If an applicant for renewal
fails to satisfy this tripartite standard, the FCC nevertheless may renew the
license on appropriate terms and conditions, including renewal for less than a
full license term. The FCC may not consider applications for the channel by
other parties until it first has decided to deny renewal to the incumbent.
Before denying renewal to an incumbent, the FCC must first allow the licensee a
hearing on the licensee's alleged failure to satisfy the statutory standard. The
Communications Act, as amended, now prohibits the FCC from considering whether
another licensee would be preferable until it first has determined that the
incumbent does not qualify for renewal.
Ownership Matters. The Communications Act requires the prior approval of
the FCC for the assignment of a broadcast license or the transfer of control of
a corporation or other entity holding a license. In determining whether to
approve an assignment of a broadcast license or a transfer of control of a
broadcast licensee, the FCC considers, among other things, the financial and
legal qualifications of the prospective assignee or transferee, including
compliance with FCC restrictions on alien ownership and control, compliance with
rules limiting the common ownership of certain attributable interests in
broadcast, cable and newspaper properties, and the character qualifications of
the transferee or assignee and the individuals or entities holding attributable
interests in them.
The FCC generally applies its ownership limits to attributable interests
held by an individual, corporation, partnership, or other association or entity.
In the case of corporations holding broadcast licenses, the interests of
officers, directors, and those who, directly or indirectly, have the right to
vote five percent or more of the corporation's stock are generally attributable,
as are positions of an officer or director of a corporate parent of a broadcast
licensee. The FCC treats all partnership interests as attributable, except for
those limited partnership interests that are insulated under FCC policies. For
insurance companies, certain regulated investment companies and bank trust
departments, that hold stock for investment purposes only, such interests become
attributable with the ownership of ten percent or more of the stock of the
corporation holding broadcast licenses.
The 1996 Act substantially relaxed and restructured ownership rules
applicable to broadcast entities by removing restrictions on the number of
television stations a single entity may own nationwide and increasing the
nationwide audience reach ceiling for television ownership. Under the new rules,
an entity will be able to hold an attributable interest in television stations
reaching up to 35% of the United States television households. The 1996 Act also
removed entirely the nationwide limits on the number of radio broadcast stations
in which a single entity may hold an attributable interest. In addition, the
1996 Act changed the local
16
<PAGE> 18
radio station ownership rules to increase the number of radio stations a single
entity may own in a single market:
If there are fourteen or fewer stations in a market, a single entity
may own as many as five stations and three same-service stations (that is,
AM or FM), except that a single entity may not own more than 50% of the
stations in a market with fourteen or fewer commercial radio broadcast
stations;
In a market with between fifteen and twenty-nine stations, a single
entity may own six stations and four stations in the same service;
In a market with thirty to forty-four stations, a single entity may
own a total of seven stations and four same-service stations; and
In a market of forty-five or more stations, a single entity may own a
total of eight stations with up to five same-service stations.
The FCC also has rules that limit the number of co-located radio or
television broadcast stations in which a single entity may own an attributable
interest. For television, no single entity may hold an attributable interest in
television stations with overlapping Grade B service contours. The 1996 Act
directs the FCC to conduct a rule making proceeding to determine whether these
rules should be retained. Under local radio ownership rules, an entity with an
attributable interest in one radio station is considered also to have an
attributable interest in any other radio station in the same market for which
the first radio station provides the programming for more than 15% of the
broadcast time, on a weekly basis. The FCC has established a liberal waiver
policy to permit common ownership of a radio station and a television station in
any of the nation's 25 largest markets, and in some circumstances involving
failed stations and in other situations where more stringent waiver standards
can be met. The 1996 Act extends this waiver policy to the top 50 markets.
The FCC's cross-ownership rules prohibit the common ownership of
attributable interests in certain combinations of media outlets serving the same
geographic area. Under these rules, a single entity may not have an attributable
interest in: (i) both a radio station and a television station that serve
specified overlapping areas; (ii) a daily newspaper and either a radio station
or a television station that serve specified overlapping areas; or (iii) a
television station and a cable television system that serve specified
overlapping areas. (The 1996 Act deleted the statutory prohibition on a single
entity owning both a television station and a cable television system in the
same market, but did not require the FCC to change its rule that imposes this
restriction.) The FCC has initiated proceedings to inquire whether it should
change or eliminate this policy, covering joint ventures and common key
employees. The policy does not necessarily prohibit these interests, but may
require that the FCC consider whether they could have a significant adverse
affect on programming diversity and competition in the market.
In cases where one person or entity (such as Mr. Paxson in the case of the
Company) holds more than 50% of the combined voting power of the common stock of
a broadcasting corporation, a minority shareholder of the corporation generally
would not acquire an attributable interest in the corporation. If a majority
shareholder of a company (such as Mr. Paxson in the case of the Company) were no
longer to hold more than 50% of the combined voting power of the common stock of
the Company, the interests of minority shareholders that had theretofore been
considered non-attributable could become attributable, with the result that any
other media interests held by such shareholders would be combined with the media
interests of such company for purposes of determining the shareholders'
compliance with FCC ownership rules. In the event of any noncompliance, steps
required to achieve compliance could include divestitures by either the
shareholder or the affected company.
Under the Communications Act, no FCC broadcast license may be held by a
corporation of which any officer or director is an alien or of which more than
one-fifth of its capital stock is owned or voted by aliens or their
representatives or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country (collectively
"Aliens"). Furthermore, the Communications Act provides that no FCC broadcast
license may be granted to any corporation controlled by any other corporation of
which more than one-fourth of its capital stock is owned of record or voted by
Aliens if the FCC should find that the
17
<PAGE> 19
public interest would be served by the refusal of such license. Restrictions on
alien ownership also apply, in modified form, to other types of business
organizations, including partnerships.
Programming and Operation. The Communications Act requires broadcasters to
present programming that responds to community problems, needs and interests and
to maintain certain records demonstrating such responsiveness.
Broadcast of obscene or indecent material is regulated by the FCC as well
as by state and federal law. Stations also must follow various rules promulgated
under the Communications Act that regulate, among other things, political
advertising, sponsorship identifications, the advertising of contests and
lotteries, and technical operations, including limits on radio frequency
radiation. Pursuant to the Children's Television Act of 1990, the FCC has
adopted rules limiting advertising in children's television programming and
required that television broadcast stations serve the educational and
informational needs of children.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
short term renewals or, for particularly egregious violations, the denial of a
license renewal application or the revocation of a license.
Time Brokerage Agreements. Over the past several years a significant
number of broadcast licensees, including certain of the Company's subsidiaries,
have entered into time brokerage agreements. These arrangements are subject
under FCC rules and regulations to maintenance by the licensee of each station
of independent control over the programming and station operations of its own
station.
Typically, a time brokerage agreement is a programming agreement between
two separately owned radio stations serving a common service area, whereby the
licensee of one station programs substantial parts of the broadcast day on the
other licensee's station, subject to ultimate editorial and other controls being
exercised by the licensee of the brokered station. The broker then sells
advertising time during such program segments for its own account.
The FCC has determined that issues of joint advertising sales should be
left to antitrust enforcement. In addition, it has specifically exempted time
brokerage agreements from its cross-interest policy. Furthermore, the FCC and
the staff of the FCC's Mass Media Bureau have held that time brokerage
agreements do not per se constitute a transfer of control and are not contrary
to the Communications Act provided that the licensee of the station maintains
ultimate responsibility for and control over operations of its broadcast station
(including, specifically, control over station finances, licensee personnel and
programming) and complies with applicable FCC rules and with antitrust laws.
The FCC will consider a radio station brokering more than 15% of the
broadcast time, on a weekly basis, of another radio station to be an
attributable owner of that station. The FCC has no present rules on the
attribution of television time brokerage agreements as it does with radio time
brokerage agreements. The FCC has adopted an interim policy on the grant of
transfer and assignment applications that include television time brokerage
agreements and the FCC is now considering whether to adopt rules governing
television time brokerage agreements. The 1996 Act grandfathered time brokerage
agreements existing at the time of its passage and included a provision that the
broadcast ownership section of the Act is not to be construed to prohibit the
origination, continuation or renewal of any television time brokerage agreement
that complies with FCC regulations.
The FCC rules also prohibit a radio broadcast licensee from simulcasting
more than 25% of its programming on another station in the same radio broadcast
service (that is, AM-AM or FM-FM) whether it owns both stations or operates both
through a time brokerage agreement if the brokered and brokering stations serve
substantially the same geographic area.
"Must Carry"/Retransmission Consent. The Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") contains broadcast
signal carriage requirements that allow local commercial television broadcast
stations to elect once every three years to require a cable system to carry the
station subject to certain exceptions, or to negotiate for retransmission
consent to carry the station. A cable system generally is required to devote up
to one-third of its activated channel capacity for the mandatory carriage of
local commercial television stations. Additionally, cable systems are required
to obtain retransmission consent for all distant commercial television stations
(except for commercial satellite-delivered indepen-
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<PAGE> 20
dent super stations such as WTBS), commercial radio stations and certain low
power television stations carried by such systems after October 6, 1993.
The 1996 Act allows for telephone companies to provide video programming as
an Open Video System. The FCC has adopted regulations mandating "must carry" for
commercial and noncommercial stations and retransmission consent for these
operators.
The 1996 Act modified the way in which markets for carriage will be
determined for purposes of the "must carry" rules. The 1996 Act provides that
the FCC will determine a broadcast station's market by using commercial
publications that delineate television markets based on viewing patterns. This
modification has resulted in the FCC ruling that for the election period
commencing January 1, 2000 a station's market will be defined by the DMA to
which it has been designated. The FCC is authorized to entertain requests for
expansion or other modification of television station markets, and is now
required to resolve any market modification request within 120 days after the
request is filed or within 120 days of enactment of the 1996 Act, whichever is
later.
Equal Employment Opportunity Requirements. The 1992 Cable Act also
codified the FCC's existing equal employment opportunity ("EEO") regulations and
reporting forms used by television broadcast stations. In addition, as required
by the 1992 Cable Act, the FCC has adopted rules providing for a review of the
EEO performance of each television station at the mid-point in its license term
(in addition to an examination at renewal time) and for the FCC to inform the
licensee of any improvements in recruiting practices that may be needed as a
result of the review. The FCC recently proposed rules that would reduce the EEO
record keeping and filing requirements of certain categories of stations.
Syndicated Exclusivity/Territorial Exclusivity. The FCC has imposed on
cable operators syndicated exclusivity rules and expanded existing network
non-duplication rules. These syndicated exclusivity rules allow local broadcast
stations to require that cable operators black out certain syndicated
non-network programming carried on distant signals (that is, signals of
broadcast stations, including so-called super stations, which serve areas
substantially removed from the cable system's local community). The network
non-duplication rules allow local broadcast network affiliates to require that
cable operators black out duplicating network broadcast programming carried on
more distant signals that are not significantly viewed over the air.
Television and radio broadcast stations also may be subject to a number of
other federal, state and local regulation, including regulations of the Federal
Aviation Administration affecting tower height and marking, and federal, state
and local environmental and land use restrictions and general business
regulation, and a variety of local regulatory concerns.
Proposed Changes. The Congress and the FCC have under consideration, and
in the future may consider and adopt, new laws, regulations and policies
involving a wide variety of matters that could affect, directly or indirectly,
the operation, ownership and profitability of the Company's broadcast stations,
result in the loss of audience and advertising revenue for the Company's
broadcast stations and affect the ability of the Company to acquire additional
broadcast stations or finance such acquisitions.
FCC Proceedings to Revise Broadcast Ownership Rules. The FCC has issued a
further notice of proposed rule making which proposed the following changes in
regulations governing television broadcasting: (i) modifying the reach discount
as it applies to UHF stations; (ii) narrowing the geographic area where common
ownership restrictions would be triggered by limiting it to overlapping Grade A
contours and by permitting certain UHF/UHF or UHF/VHF overlaps; (iii) relaxing
the rules prohibiting cross-ownership of radio and television stations in the
same market; and (iv) treating television time brokerage agreements the same as
radio time brokerage agreements which would presently preclude certain
television time brokerage agreements where the programmer owns or has an
attributable interest in another television station in the same market. In June
1995, the FCC announced an interim policy for processing television transfer and
assignment applications that include time brokerage agreements. Pending the
adoption of new rules, the FCC has stated that it will not grant applications
that propose a time brokerage arrangement if the arrangement also includes both
debt financing by the time broker and an option for the time broker to purchase
the brokered station. The FCC has stated that it will continue to grant
applications with time brokerage arrangements if
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<PAGE> 21
they include only one of those elements (that is, either debt financing by the
broker or an option of the time broker to purchase).
In January 1995, the FCC issued a further notice of proposed rule making
that combined several long-pending proceedings to consider changes in its
ownership rules and policies. In the new proceeding, the FCC is considering,
among other things, (i) whether to make non-voting stock interests attributable;
(ii) whether to change attribution thresholds; (iii) how to treat limited
liability companies for purposes of attribution; (iv) whether to extend the
cross-interest policy to require review of multi-layered business relationships,
including debt relationships, that now are not subject to scrutiny; and (v)
whether to change the insulation standards for non-attribution of limited
partnership interests.
FCC Inquiry on Broadcast of Commercial Matter. The FCC also has initiated
a notice of inquiry proceeding seeking comment on whether the public interest
would be served by establishing limits on the amount of commercial matter
broadcast by television stations. No prediction can be made at this time as to
whether the FCC will propose any limits on commercial advertising at the
conclusion of its deliberation or the effect the imposition of limits on the
commercial matter broadcast by television stations would have upon the Company's
operations.
Digital Audio Broadcasting. The FCC recently has allocated spectrum to a
new technology, digital audio broadcasting ("DAB"), to deliver satellite-based
audio programming to a national or regional audience and is considering rules
for a DAB service. DAB may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats with compact disc
quality sound to local and national audiences. It is not known at this time
whether this technology also may be used in the future by existing radio
broadcast stations either on existing or alternate broadcasting frequencies. In
addition, applications by several entities currently are pending at the FCC for
authority to offer multiple channels of digital, satellite-delivered S-Band
aural services that could compete with conventional terrestrial radio
broadcasting. These satellite radio services use technology that may permit
higher sound quality than is possible with conventional AM and FM terrestrial
radio broadcasting.
Advanced High Definition Television System. The FCC has also begun to
adopt rules for implementing advanced (high definition) television ("ATV") in
the United States. Implementation of ATV service should improve the technical
quality of television broadcasts. In anticipation of the implementation of ATV
operations, the 1996 Act directs the FCC to adopt ATV technical standards and
other rules necessary to protect the public interest. The FCC is authorized (but
not required) to establish minimum hours of ATV operation. The 1996 Act also
provides for the FCC to limit the eligibility for ATV licenses to existing
television licensees and permittees. The FCC is directed to condition ATV
licenses on recapture of either the new ATV spectrum or television licensees'
initial spectrum, but neither the timetable nor the subsequent use of recaptured
spectrum is specified. Ten years after it first issues ATV licenses, however,
the FCC must evaluate its regulation and public acceptance of ATV, including
possible alternative uses of and reduction in ATV spectrum.
The FCC is required to adopt rules permitting ATV licensees to offer
"ancillary or supplementary services" on newly-available ATV spectrum, so long
as such services are consistent with the FCC's ATV standards; do not derogate
required ATV services, including high definition television; and are regulated
in the same manner as similar non-ATV services. The FCC has decided that it will
set aside specific new channel allotments for ATV service. Initial eligibility
for these channels will be limited to existing television licensees. The FCC has
not yet adopted a new technical standard for ATV, nor has it adopted a final
Table of Allotments for ATV channels.
EMPLOYEES
As of December 31, 1996, the Company had approximately 1100 full-time
employees and 300 part-time employees, for a total of 1400 employees. None of
its employees is represented by a labor union. The Company considers its
relations with its employees to be good.
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<PAGE> 22
SEASONALITY
Seasonal revenue fluctuations are common within the radio and television
broadcasting industry and result primarily from fluctuations in advertising
expenditures by local retailers. Paxson Radio generally experiences its lowest
revenue for the year in the first quarter, whereas the highest revenue for the
year generally occurs in the fourth fiscal quarter. Because of the short
operating history of inTV, the Company's ability to assess the effects of
seasonality on inTV is limited. It appears, however, that inTV may experience
its highest revenues during the first and fourth fiscal quarters.
PATENTS AND TRADEMARKS
The Company has 17 federally registered service marks and 13 service mark
registrations pending relating to its business. It does not own any patents or
patent applications. The Company does not believe that any of its marks are
material to its business or operations.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED CONSIDERATIONS
This Report contains forward-looking statements which reflect the Company's
current views with respect to future events and financial performance. These
forward-looking statements are made pursuant to the "safe harbor" provisions of
the Securities Litigation Reform Act of 1995 and involve risks and
uncertainties, including those identified below, which could cause actual
results to differ materially from historical results or those anticipated. The
words "believe," "expect," "intend," "anticipate" and similar expressions
identify certain of such forward-looking statements, which speak only as of the
dates on which they were made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements. Factors to consider in
evaluating any forward-looking statements and the other information contained
herein and which could cause actual results to differ from those anticipated in
the forward-looking statements include those set forth below:
High Level of Indebtedness; Restrictions Imposed by Terms of Indebtedness and
Preferred Stock
The Company is highly leveraged. At December 31, 1996, on a pro forma
basis, after giving effect to announced acquisitions and related capital
expenditures, the TV Sales, estimated capital expenditures on existing
properties and acquisitions which have closed subsequent to December 31, 1996,
the Company would have had $303 million of total debt. In addition, subject to
restrictions in the indenture (the "Indenture") governing the Company's 11 5/8%
Senior Subordinated Notes (the "Notes"), the Company's $200 million Senior
Secured Revolving Credit Facility (the "Credit Facility"), the terms of the
Company's Junior Cumulative Compounding Redeemable Preferred Stock (the "Junior
Redeemable Preferred Stock") and the terms of the Company's redeemable 12 1/2%
Cumulative Exchangeable Preferred Stock (the "Exchangeable Preferred Stock," and
with the Junior Redeemable Preferred Stock, collectively, the "Preferred
Stock"), the Company may incur additional indebtedness and issue additional
shares of preferred stock from time to time to finance acquisitions or capital
expenditures or for other corporate purposes.
The level of the Company's indebtedness could have important consequences
to the Company, including: (i) a significant portion of the Company's cash flow
from operations must be dedicated to debt service and will not be available for
other purposes; (ii) the Company's ability to obtain additional financing in the
future, if needed, may be limited; (iii) the Company's leveraged position and
covenants contained in the Indenture and the Credit Facility (or any replacement
thereof) could limit its ability to expand and make capital improvements and
acquisitions; and (iv) the Company's level of indebtedness could make it more
vulnerable to economic downturns, limit its ability to withstand competitive
pressures and limit its flexibility in reacting to changes in its industry and
economic conditions generally. Certain of the Company's competitors currently
operate on a less leveraged basis and may have significantly greater operating
and financing flexibility than the Company.
The Credit Facility, the Indenture and the Exchangeable Preferred Stock
each contain certain covenants that restrict, among other things, the Company's
ability to incur additional indebtedness, incur liens, make
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<PAGE> 23
investments, pay dividends or make certain other restricted payments, consummate
certain asset sales, consolidate with any other person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
assets of the Company. In addition, the Credit Facility requires the Company to
comply with certain financial ratios and tests, under which the Company is
required to achieve certain financial and operating results. In the event of a
default under the Credit Facility, the lenders may terminate their lending
commitments and declare the indebtedness under the Credit Facility immediately
due and payable. There can be no assurance that the Company would have
sufficient assets to pay indebtedness then outstanding under the Credit Facility
and the Notes. If the Company is unable to service its indebtedness or satisfy
its dividend or redemption obligations with respect to its Preferred Stock, it
will be forced to adopt an alternative strategy that may include actions such as
reducing or delaying capital expenditures, selling assets, restructuring or
refinancing its indebtedness or seeking additional equity capital. There can be
no assurance that any of these strategies could be effected on satisfactory
terms, if at all.
"Must Carry" Regulations
The Company believes that the growth and success of inTV depends in part
upon access to households served by cable television systems. Pursuant to the
1992 Cable Act, each broadcaster is required to elect, every three years, to
exercise either certain "must carry" or retransmission consent rights in
connection with carriage of their signals by cable systems in their local
market. By electing the "must carry" rights, a broadcaster can demand carriage
on a specified channel on cable systems within its DMA, provided the
broadcaster's television signal can be delivered to the cable system operator's
cable head end at a specified strength. These "must carry" rights are not
absolute, and their exercise depends on variables such as the number of
activated channels on a cable system, the location and size of a cable system,
and the amount of duplicative programming on a broadcast station. Therefore,
under certain circumstances, a cable system can decline to carry a given
station. Alternatively, if a broadcaster chooses to exercise retransmission
consent rights, it can prohibit cable systems from carrying its signal or grant
the appropriate cable system the authority to retransmit the broadcast signal
for a fee or other consideration. The Company's television stations have elected
the "must carry" alternative. The Company's elections of retransmission or "must
carry" status will continue until the next required election date of October 1,
1999. If the law were changed to eliminate or materially alter "must carry"
rights, the Company could suffer adverse effects.
Government Regulation
Each of the Company's radio and television stations operates pursuant to
one or more licenses issued by the FCC that expire at different times, some of
which are currently up for renewal. The Company may apply to renew those
licenses, and third parties may challenge those applications. The 1996 Act
extended the license term for both television and radio broadcast stations to
eight years. Although the Company has no reason to believe that its licenses
will not be renewed in the ordinary course, there can be no assurance that the
licenses will be renewed. The radio and television broadcasting industries are
subject to extensive and changing regulation. See "Federal Regulation of
Broadcasting."
Multiple Ownership Rules; Time Brokerage Agreements
Current FCC rules prohibit ownership interests in two or more television
stations with overlapping service areas. The FCC generally applies its ownership
limits to attributable interests held by an individual, corporation, partnership
or other entity. In the case of corporations holding broadcast licenses, the
interests of officers, directors and those who directly or indirectly have the
right to vote 5% or more of the corporation's voting stock are generally deemed
to be attributable, as are the interests of officers and directors of a
corporate parent of a broadcast licensee. Changes in the rule for attributing
the ownership of media interests for purposes of the FCC's multiple ownership
and cross-ownership rules could require that the Company restructure or divest
itself of some existing broadcast interests.
The television duopoly and one-to-a-market rules currently prevent the
Company from acquiring the FCC licenses of television stations with which it has
time brokerage agreements in those markets where the Company owns a television
or radio station. In addition, if the FCC were to decide that the provider of
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<PAGE> 24
programming services under time brokerage agreements should be treated as having
an attributable interest in the television station it programs, and if it did
not relax the corresponding duopoly rules, or if the FCC were to adopt
restrictions on time brokerage agreements without grandfathering existing time
brokerage agreements, the Company could be required to renegotiate or terminate
certain of its time brokerage agreements. The 1996 Act specifies, however, that
none of the provisions relating to broadcast ownership shall be construed to
prohibit the origination, continuation or renewal of any television time
brokerage agreement that is in compliance with the regulations of the FCC.
Nevertheless, if in individual cases the FCC were to find that the licensee of a
station with which the Company has a time brokerage agreement failed to maintain
control over its operations as required by FCC rules and policies, the licensee
of the time brokerage agreement and/or the Company could be fined or could be
set for hearing, the outcome of which could be a fine or, under certain
circumstances, loss of the applicable FCC license. The Company is unable to
predict the ultimate outcome of possible changes to these FCC rules and the
impact such FCC rules may have on its broadcasting operations. See "Federal
Regulation of Broadcasting."
New Industry
inTV operates in a relatively new industry with a limited operating
history. Difficulties and uncertainty are normally associated with new
industries, including a lack of consumer and advertiser acceptance, difficulty
in obtaining financing, increasing competition, advances in technology, and
changes in law and regulations. There can be no assurance that this new industry
will develop and continue as a viable industry. The failure of this industry to
develop could require the Company to sell its owned inTV stations or convert
them to other uses that are less profitable than expected. Growth in revenue
from the Company's inTV business depends on increasing consumer awareness and
acceptance of infomercial programming and growing demand by infomercial
advertisers. Should these circumstances not occur, the Company's revenue from
inTV could be adversely affected.
Dependence on Key Personnel
The Company's business depends upon the efforts, abilities and expertise of
its executive officers and other key employees, including Lowell W. Paxson. If
certain of these executive officers were to leave the Company, the Company's
operating results could be adversely affected. In addition, in the event of Mr.
Paxson's death, the Company may be required, in certain circumstances, to make
an offer to repurchase the Notes and to redeem its Preferred Stock. There can be
no assurance that if such an event were to occur, the Company would have, or
would have access to, sufficient funds to satisfy such repurchase or redemption
obligations.
Consummation of TV Sales
The Company has entered into definitive agreements for the TV Sales for
aggregate consideration to the Company of $192.5 million. Consummation of the TV
Sales is subject to the prior satisfaction of a number of conditions, including
receipt of all necessary regulatory and other approvals, and there can be no
assurance that such conditions will be satisfied or that the Company will
consummate any of the TV Sales on the terms set forth in such agreements.
Failure of the Company to consummate the TV Sales could require the Company to
seek alternative financing in order to provide sufficient funds to consummate
pending acquisitions or fund related capital expenditures and other planned uses
of funds, or to delay or abandon one or more pending acquisitions if alternative
funding were not obtained on terms acceptable to the Company.
Ability to Manage Growth
Since inception, the Company has experienced rapid growth, primarily
through acquisitions. Rapidly growing businesses frequently encounter unforeseen
expenses and delays in completing acquisitions, as well as difficulties and
complications in integrating acquired operations without disruption to overall
operations. In addition, such rapid growth may adversely affect the Company's
operating results because of many factors, including capital requirements,
transitional management and operating adjustments, and interest costs
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<PAGE> 25
associated with acquisition debt. There can be no assurance that the Company
will successfully integrate acquired operations or successfully manage the costs
often associated with rapid growth.
Industry and Economic Conditions
The profitability of the Company's radio and television stations is subject
to various factors that influence the radio and television broadcasting
industries as a whole, including changes in audience tastes, priorities of
advertisers, new laws and governmental regulations and policies, changes in
broadcast technical requirements, technological changes, proposals to eliminate
the tax deductibility of expenses incurred by advertisers and changes in the
willingness of financial institutions and other lenders to finance radio and
television station acquisitions and operations. The Company's broadcasting
revenue is likely to be adversely affected by a recession or downturn in the
United States economy or other events or circumstances that adversely affect
advertising activity. In addition, the Company's operating results in individual
geographic markets could be adversely affected by local regional economic
downturns, particularly in Florida.
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ITEM 2. PROPERTIES
The following table sets forth information with respect to the Company's
offices and its studios and broadcast tower locations. Management believes that
the Company's properties are in good condition and are suitable for its
operations.
<TABLE>
<CAPTION>
MARKET(A) PROPERTY OWNED/LEASED LEASE EXPIRATION
- --------- -------- ------------ ----------------
<S> <C> <C> <C>
Miami, FL..................... Studio/Offices Owned
WZTA-FM Tower Leased April 2007
WIOD-AM Tower/Studios Owned
WLVE-FM Tower Leased January 2000
WPLL-FM Tower Leased December 2000
WINZ-AM Tower Owned
WFTL-AM Tower Owned
WSRF-AM Tower/Studios Leased December 2001
WSRF-AM Land Leased December 2001
Tampa, FL..................... Studio/Offices Leased May 1998
WSJT-FM Tower Leased March 2015
WHPT-FM Tower Owned
WZTM-AM Tower Owned
WHNZ-AM Tower Owned
Orlando, FL................... Studio/Offices Leased March 2002
WMGF-FM Tower Leased February 2001
WTKS-FM Tower Owned
WJRR-FM Tower Leased April 2000
WSHE-FM Tower Leased November 2012
WSHE-FM Studio Leased October 1998
WQTM-AM Tower Owned
WWNZ-AM Tower Owned
Jacksonville, FL.............. Studio/Offices Leased February 1999
WROO-FM Tower Leased March 1999
WFSJ-FM Tower Owned
WPLA-FM Tower Owned
WNZS-AM Tower Leased Perpetual
WTLK-FM Tower Owned
WZNZ-AM Tower Owned
Pensacola, FL................. WYCL-FM Studio/Offices Leased Month to month
WYCL-FM Tower Owned
WTKX-FM Studio/Offices Owned
WTKX Tower Leased March 2018
Tallahassee, FL............... WTNT-FM Studio/Offices Leased December 1999
WTNT-FM Tower Owned
WSNI-FM Studio/Offices Leased December 1998
WSNI-FM Tower Leased March 2005
WXSR-FM Studio/Offices Leased December 1998
WXSR-FM Tower Leased April 1998
WJZT-FM Studio/Offices Leased December 1998
WJZT-FM Tower Leased August 2000
WNLS-AM Studio/Offices Leased December 1999
WNLS-AM Tower Owned
</TABLE>
25
<PAGE> 27
<TABLE>
<S> <C> <C> <C>
Panama City, FL...................... WFSY-FM, WEBZ-FM and
WDIZ-AM Studio/Offices Owned
WFSY Tower Leased July 2015
WSHF-FM Tower Leased July 2013
WPAP-FM Studio/Offices Leased Annual
WPAP-FM Tower Leased March 2011
WPBH-FM Studio/Offices Leased March 1999
WPBH-FM Tower Leased March 1999
WDIZ-AM Tower Owned
Cookeville, TN....................... Studio/Offices Leased December 1998
WGSQ-FM Tower Leased July 2007
WGIC-FM/WHUB-AM
Studio/Offices Leased October 1998
WGIC-FM/WHUB-AM Towers Owned
WPTN-AM Tower Owned
TELEVISION MARKET(A)
- ------------------
New York, NY......................... Studio Leased March 2001
Los Angeles, CA...................... Tower Leased March 2006
Studio/Offices Leased October 1998
Tower Leased June 2005
Philadelphia, PA..................... Sales Office Leased July 1998
Studio Leased September 2000
San Francisco, CA.................... Tower Leased June 2020
Studio/Offices Leased June 2005
Boston, MA........................... Studio/Offices Leased February 2006
Tower Leased February 2012
Washington, DC....................... Tower Owned
Studio Owned
Dallas, TX........................... Studio Leased October 2001
Tower Leased March 2016
Atlanta, GA.......................... Tower Leased October 2015
Studio/Offices Leased October 1998
Houston, TX.......................... KTFH Tower Owned
Studio Owned
Cleveland, OH........................ Tower Leased May 2006
Studio Leased October 1999
Minneapolis, MN...................... Studio Owned
Tower Owned
Phoenix, AZ.......................... KWBF Studio Leased September 1999
KWBF Tower Leased October 2001
KAJW Tower Leased June 2012
Denver, CO........................... Studio Leased August 2001
Tower Leased August 2003
Hartford, CT......................... Tower Leased October 2035
Studio/Offices Leased October 1999
St. Louis, MO........................ Studio Owned
Tower Owned
Milwaukee, WI........................ Studio Owned
Tower Leased Month to month
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
MARKET(A) PROPERTY OWNED/LEASED LEASE EXPIRATION
- --------- -------- ------------ ----------------
<S> <C> <C> <C>
Grand Rapids, MI..................... Studio Leased March 2001
Tower Leased July 2005
Oklahoma City, OK.................... Studio Leased October 2003
Tower Leased September 2003
West Palm Beach, FL.................. Tower Owned
Headquarters Owned
Studio Leased October 1998
Greensboro, NC....................... Tower Owned
Studio Leased May 1998
Providence, RI....................... Tower Leased August 2006
Albany, NY........................... Tower Owned
Studio Leased May 1998
Dayton, OH........................... Tower Owned
Studio Owned
Little Rock, AR...................... Tower Leased January 2012
Tulsa, OK............................ Tower Leased December 2006
Puerto Rico.......................... Towers -- three Leased April 1997
Studio Leased April 1997
</TABLE>
- ---------------
(a) Market listed may differ from actual location.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company or any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the period covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
In November 1994, the Company's Class A Common Stock became publicly-held
through its merger with The American Network Group, Inc. and beginning November
7, 1994, the Class A Common Stock was listed on the NASDAQ Small-Cap Market.
Since July 10, 1995, the Class A Common Stock has been listed on the American
Stock Exchange under the symbol PXN. The following table sets forth, for the
periods indicated, the high and low last sales price per share for the Class A
Common Stock, as reported on the NASDAQ Small-Cap Market (until July 7, 1995)
and the closing sale price per share for the Class A Common Stock on the
American Stock Exchange thereafter.
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
<S> <C> <C> <C> <C>
First Quarter........................................... 211/4 137/8 125/8 9
Second Quarter.......................................... 153/8 105/8 14 8
Third Quarter........................................... 13 911/16 153/4 12
Fourth Quarter.......................................... 111/8 65/8 163/8 115/8
</TABLE>
On March 27, 1997, the closing sale price of the Class A Common Stock on
the American Stock Exchange was $9 per share. As of that date, there were
approximately 276 holders of record of the Class A Common Stock. Because of the
limited trading activity in the Class A Common Stock, the preceding prices
27
<PAGE> 29
may not be indicative of the actual value of the Class A Common Stock or of the
trading prices that would result from a more seasoned market.
On June 28, 1996, in connection with the Company's acquisition of Todd
Communications, Inc., the Company issued 139,555 shares of Class A Common Stock
valued at $1,535,000 to the shareholders of Todd Communications in payment of a
portion of the $5 million purchase price. The shares issued were not registered
under the Securities Act of 1933 and were issued in reliance upon the exemption
from registration provided in Section 4(2) of such Act for transactions not
involving a public offering.
The Company has not paid cash dividends and does not intend for the
foreseeable future to declare or pay any cash dividends on its Common Stock and
intends to retain earnings, if any, for the future operation and expansion of
the Company's business. Any determination to declare or pay dividends will be at
the discretion of the Company's board of directors and will depend upon the
Company's future earnings, results of operations, financial condition, capital
requirements, contractual restrictions under the Company's debt instruments,
considerations imposed by applicable law and other factors deemed relevant by
the board of directors. In addition, the terms of the Credit Facility, the
Indenture and the Preferred Stock contain restrictions on the declaration of
dividends with respect to the Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data as of
and for each of the years in the five year period ended December 31, 1996. This
information is qualified in its entirety by, and should be read in conjunction
with, the consolidated financial statements and the notes thereto which are
included elsewhere in this report. The following data insofar as it relates to
each of the years presented has been derived from annual financial statements,
including the consolidated balance sheets at December 31, 1996 and 1995 and the
related consolidated statements of operations and of cash flows for the three
years ended December 31, 1996 and notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues....................... $144,497,611 $ 86,536,506 $ 54,589,935 $ 32,062,031 $ 17,061,837
Operating loss....................... (123,231) (9,244,320) (1,487,987) (6,161,230) (6,837,152)
Loss from continuing operations
before extraordinary item.......... (26,572,465) (24,156,156) (5,694,029) (10,951,853) (7,855,039)
Income from discontinued operations
(a)................................ 353,564 1,308,593 931,955 -- --
Extraordinary item................... -- 10,625,727 -- (457,157) --
Net loss............................. (26,218,901) (33,473,290) (4,762,074) (11,409,000) (7,855,039)
Net loss attributable to common stock
(b)................................ ($48,127,485) ($46,770,496) ($ 8,147,530) ($11,560,367) --
PER SHARE DATA: (C)
Loss from continuing operations
before extraordinary item.......... (0.61) (0.70) (0.17) (0.35) --
Income from discontinued operations
(a)................................ 0.01 0.04 0.03 -- --
Extraordinary item................... -- (0.31) -- (0.01) --
Net loss (d)......................... (0.60) (0.97) (0.14) (0.36) --
Net loss attributable to common stock
(d)................................ (1.10) (1.36) (0.24) (0.37) --
Cash dividends declared.............. -- -- -- -- --
Weighted average shares
outstanding -- primary and fully
diluted (d)........................ 43,836,526 34,429,517 33,430,116 31,581,948 --
BALANCE SHEET DATA:
Working capital...................... 76,200,837 74,388,086 26,392,082 12,894,569 9,031,611
Total assets......................... 543,182,460 293,832,077 152,670,381 66,574,608 37,067,084
Current portion of long-term debt.... 644,509 430,590 6,393,415 410,632 1,363
Long-term debt and notes............. 231,062,784 239,858,935 76,013,542 32,206,770 21,508,402
</TABLE>
28
<PAGE> 30
<TABLE>
<S> <C> <C> <C> <C> <C>
Total redeemable securities.............. 184,709,646 57,175,963 43,878,757 13,798,540 --
Total common stockholders' equity........ 106,775,237 (17,478,797) 17,019,390 16,119,257 14,327,956
</TABLE>
- ---------------
(a) See Recent Developments for additional discussion on the disposition of the
Network-Affiliated Television segment.
(b) Includes dividends and accretion on redeemable preferred stock and
redeemable common stock warrants, as applicable.
(c) In February 1997, the Financial Accounting Standards Board adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share". The
Statement establishes standards for computing and presenting earnings per
share and applies to entities with publicly held common stock or potential
common stock. The Statement is effective for financial statements issued for
periods ending after December 15, 1997 and earlier application is not
permitted. The Company is currently assessing the impact this Statement will
have on its earnings per share.
(d) Loss per share data and weighted average shares outstanding for the years
ended December 31, 1993 and 1994 give a pro forma effect to (i) the
Company's amended capital structure related to the merger with ANG; and (ii)
a stock dividend on common shares outstanding on January 1, 1995. For
periods prior to January 1, 1993, loss per share data was not computed as
such amounts were not relevant.
ITEM 7. 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 subsequent improvement in the operation of these
properties. Certain of the Company's radio and television stations were and
continue to be operated under time brokerage agreements for various periods.
Under time brokerage agreements, the stations' operating revenues and expenses
are controlled by the Company and are included in its 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.
Subsequent to December 31, 1996, the Company entered into definitive
agreements to sell its interests in its two network affiliated television
stations serving the West Palm Beach, Florida market for aggregate consideration
of approximately $119 million. The Company's decision to sell these stations has
resulted in the discontinuance of the network affiliated television segment for
financial reporting purposes.
Subsequent to December 31, 1996, the Company contracted to sell its
interests in WOAC-TV, Cleveland, Ohio and WNGM-TV, Atlanta, Georgia, each of
which is currently operated pursuant to time brokerage agreements, for aggregate
consideration of $73.5 million.
The Company's operating data throughout the periods discussed have been
impacted significantly by the timing and mix of radio, television and inTV
acquisitions throughout such periods. Operating revenues are derived from the
sale of advertising to local and national advertisers. The Company's primary
operating expenses involved in owning and operating Paxson Radio are syndicated
program rights fees, commissions on revenues, employee salaries, news gathering,
promotion and administrative expenses. Comparatively, operation of an inTV
station involves lower operating expenses relative to traditional network or
independent television station operation. As a result, the Company's inTV
stations usually contribute to operating profit within a short time frame. The
costs of operating an inTV station do not vary significantly with revenue, with
the exception of costs associated with sales commissions and agency fees. As
such, upon obtaining a certain level of revenue sufficient to cover fixed costs,
additional revenue levels have a significant impact on the operating results of
an individual inTV station.
The Company'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
29
<PAGE> 31
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 values 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 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
December 31, 1996. As a result of the foregoing, the estimates presented in the
Company's financial statements are not necessarily indicative of the amounts
that the Company could realize in a current market exchange and have not been
comprehensively revalued for purposes of the Company's financial statements.
See "Business -- Forward-Looking Statements and Associated Considerations"
for a discussion of certain factors which could influence the Company's future
performance and prospects.
RESULTS OF OPERATIONS
Years Ended December 31, 1996 and 1995
Consolidated revenues for 1996 increased 67% (or $58.0 million) to $144.5
million from $86.5 million for 1995. This increase was primarily due to new
television station acquisitions and time brokerage operations ($27.7 million),
new radio stations and billboard faces ($18.6 million) and increased revenues
from existing television stations ($3.6 million) and radio stations ($10.3
million).
Operating expenses for 1996 increased 51% (or $48.8 million) to $144.6
million from $95.8 million for 1995. The increase was due to higher direct
expenses such as commissions which rise in proportion to revenues ($11.8
million), other non-direct costs of operating new television stations ($8.7
million) and radio stations ($10.8 million), higher depreciation and
amortization primarily related to assets acquired ($8.5 million), and increased
time brokerage agreement fees ($6.4 million), all of which were partially offset
by lower option plan compensation costs ($2.9 million).
Operating cash flow for 1996 increased 118% (or $20.7 million) to $38.2
million, from $17.5 million for 1995. The increase in operating cash flow was
primarily a result of television station acquisitions and time brokerage
operations ($9.6 million), new radio stations ($5.2 million) and improved
performance of existing television ($2.8 million) and radio stations ($5.2
million).
For purposes of this Report, "operating cash flow" is defined as net income
excluding non-cash items, non-recurring items including terminated operations
and relocation costs, 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 of 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.
Interest expense for 1996 increased to $31.6 million from $17.3 million for
1995, an increase of 83% primarily due to a greater level of debt throughout the
period and higher borrowing rates. As a result of
30
<PAGE> 32
acquisitions, at December 31, 1996, total long-term debt and senior subordinated
notes were $231.7 million, compared with the balance of $240.3 million
outstanding a year prior. The balance sheets reflect the private sale of $230
million of Notes at a discount netting $227.3 million before transaction costs
on September 28, 1995.
Interest income for 1996 increased to $6.9 million from $1.7 million,
primarily due to greater levels of cash and cash equivalents invested throughout
the period primarily as a result of the receipt of the proceeds of the April
1996 common stock sale and the October 1996 exchangeable preferred stock sale.
At December 31, 1996 the Company had accumulated approximately $64 million
of taxable losses. Usage of these losses is subject to certain limitations.
Years Ended December 31, 1995 and 1994
Consolidated revenues for 1995 increased 58% (or $31.9 million) to $86.5
million from $54.6 million for 1994. This increase was primarily due to the new
television station acquisitions and time brokerage operations ($19.2 million),
and increased revenues from existing television stations ($9.1 million).
Operating expenses for 1995 increased 71% (or $39.7 million) to $95.8
million from $56.1 million in 1994. The increase was primarily due to higher
direct expenses such as commissions which rise in proportion to revenues ($6.2
million), other non-direct costs of operating newly acquired and operated
television stations ($5.5 million), higher corporate overhead ($6.3 million),
option plan compensation ($10.8 million), higher depreciation and amortization
related to assets acquired ($4.8 million), and increased expenses from a full
year of operating existing television stations ($1.6 million).
Interest expense for 1995 increased to $17.3 million from $6.2 million for
1994, an increase of 179%, primarily due to a greater level of long-term debt
throughout the period and higher borrowing rates. As a result of acquisitions,
at December 31, 1995, total long-term debt and senior subordinated notes was
$240.3 million, or 192% higher than the $82.4 million outstanding a year prior.
Interest income for 1995 increased to $1.7 million from $.3 million,
primarily due to greater levels of cash and cash equivalents invested throughout
the period primarily as a result of the receipt of the proceeds of the September
1995 senior subordinated notes sale.
The Company recognized $1.3 and $1.7 million of income tax benefit during
1995 and 1994, respectively, which resulted primarily from the 1995 net losses
and the reversal of deferred taxes associated with the 1993 tax provision
resulting from a change in tax status.
Operating cash flow for 1995 increased 101% (or $8.8 million) to $17.5
million, from $8.7 million for 1994. The increase in operating cash flow was a
direct result of new television station acquisitions and time brokerage
operations ($13.1 million), and improved performance of existing television
properties ($3.4 million) partially offset by increased corporate overhead ($4.6
million).
31
<PAGE> 33
The following table sets forth, for the periods indicated, selected
financial information as a percentage of revenues.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Total revenue............................................... 100.0% 100.0% 100.0%
----- ----- -----
Operating Expenses:
Direct.................................................... 22.9 24.6 27.6
Programming............................................... 10.6 11.9 14.2
Sales & promotion......................................... 7.9 9.1 9.6
Technical................................................. 5.6 5.2 3.5
General & administrative.................................. 21.7 23.5 20.1
Trade and barter.......................................... 2.2 2.7 4.3
Time brokerage agreement fees............................. 5.0 1.1 0.9
Sports rights fees........................................ 2.5 3.2 4.4
Option plan compensation.................................. 5.4 12.5 --
Depreciation and amortization............................. 16.0 17.0 18.1
----- ----- -----
Total operating expenses.................................... 100.1 110.7 102.7
----- ----- -----
Operating loss.............................................. (0.1) (10.7) (2.7)
Other Income (expense):
Interest expense.......................................... (21.9) (19.9) (11.4)
Interest income........................................... 4.8 2.0 0.6
Other expense, net........................................ (1.2) (0.8) --
----- ----- -----
Loss from continuing operations before benefit for income
taxes
and extraordinary item.................................... (18.4) (29.4) (13.5)
Benefit for income taxes.................................... -- 1.5 3.1
----- ----- -----
Loss from continuing operations before extraordinary item... (18.4) (27.9) (10.4)
Income from discontinued operations......................... 0.2 1.5 1.7
Extraordinary item.......................................... -- (12.3) --
----- ----- -----
Net loss.................................................... (18.2) (38.7) (8.7)
===== ===== =====
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
On April 3, 1996, the Company completed an offering of 10,300,000 shares of
its Class A Common Stock (the "Equity Offering") resulting in gross proceeds of
$164.8 million before transaction costs. Total transaction costs of
approximately $10 million resulted in net proceeds of approximately $154.8
million. The Equity Offering proceeds were used by the Company to repay the
outstanding balances under the Credit Facility aggregating approximately $27.7
million, to complete acquisitions and fund capital expenditures and for general
corporate purposes.
On October 4, 1996, the Company completed an offering of 150,000 shares of
12 1/2% Cumulative Exchangeable Preferred Stock (the "Preferred Offering"),
resulting in gross proceeds of $150 million before transaction costs. Total
transaction costs of approximately $6.8 million resulted in net proceeds of
approximately $143.2 million. A portion of the Preferred Offering proceeds was
used by the Company to redeem the outstanding senior preferred stock aggregating
approximately $28.5 million. The remaining proceeds of the Preferred Offering
were utilized to fund acquisitions and related capital requirements.
The Company's working capital at December 31, 1996 and December 31, 1995
was $76.2 million and $74.3 million, respectively, and the ratio of current
assets to current liabilities was 4.88:1 and 6.37:1 on such dates, respectively.
Working capital decreased primarily due to the completion of acquisitions of
broadcast properties.
32
<PAGE> 34
Cash provided by (used in) operating activities of $(1.1), $11.0 and $5.1
million for 1996, 1995 and 1994, respectively, primarily reflects the
improvement in operating results of existing properties, acquisitions and time
brokerage properties net of increased interest expense and receivables in 1996.
Cash used for investing activities of $258.5, $105.6 and $66.8 million for 1996,
1995 and 1994, respectively, primarily reflects acquisitions of and investments
in broadcast properties and purchases of equipment for acquired and existing
properties (net of the proceeds from station or asset sales). Cash provided by
financing activities of $253.3, $141.1 and $76.3 million in 1996, 1995 and 1994,
respectively, primarily reflects the proceeds of the Equity Offering, the
Preferred Offering, the issuance of the Notes and the incurrence of long term
debt, net of repayments and loan origination costs incurred. Non-cash activity
relates to option plan compensation, stock issued for the WFSJ-FM acquisition, a
note payable incurred with the WOCD-TV acquisition, reciprocal trade and barter
advertising revenue and expense and accretion of discount on the Notes, as well
as dividends and accretion on the redeemable preferred stock and common stock
warrants.
The Company has issued options to purchase shares of Class A Common Stock
to certain members of management during 1996 and 1995 under its stock
compensation plans. There are currently 3,590,693 options outstanding under
these plans. Further, the Company recognized option plan compensation expense of
approximately $7.9 million and $10.8 million in 1996 and 1995, respectively, and
expects that approximately $6.4 million of compensation expense will be
recognized over the remaining vesting period of the outstanding options.
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 Notes require semi-annual interest
payments at a fixed rate. The Company presently has $80 million in outstanding
borrowings under the Credit Facility all of which has been drawn subsequent to
December 31, 1996. Borrowings under the Credit 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 may require additional financing to complete
acquisitions which are currently pending. The timing and amount of the Company's
additional financing needs will depend, among other things, upon the timing of
the completion of the TV Sales, the amount of net proceeds to the Company from
the TV Sales (estimated to be $150 million after repayment of associated
indebtedness and transaction expenses, prior to making any payments under the
Credit Facility required by virtue of the TV Sales or 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 Credit Facility. While the Company currently has $80
million in outstanding borrowings under the Credit Facility and a maximum
additional borrowing capacity thereunder of $120 million, the amount actually
available to the Company for borrowing under the Credit Facility is subject to
covenant compliance, including limitations on indebtedness and other financial
ratios, and the Company presently has no additional borrowing capacity
thereunder. The amount available for borrowing under the Credit 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.
There can be no assurance that the Company will be able to borrow additional
funds under the Credit Facility. As there is no assurance that the timing of
asset sales will be adequate to meet the closing dates for acquisitions, the
Company is considering additional sources of financing, including public and
private sales of equity and debt securities.
The Company will require additional financing to enable it to continue its
acquisition strategy and to fund capital expenditures on existing and acquired
properties and the Company's working capital requirements. 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 Credit
Facility or the Notes when due or to make required payments on the Preferred
Stock.
33
<PAGE> 35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
The response to this item is submitted in a separate section of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None required to be reported.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item regarding directors and officers is
incorporated by reference from the definitive Proxy Statement being filed by the
Company for the Annual Meeting of Stockholders to be held May 2, 1997.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item regarding compensation of officers and
directors is incorporated by reference from the definitive Proxy Statement being
filed by the Company for the Annual Meeting of Stockholders to be held May 2,
1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is incorporated by reference from the
definitive Proxy Statement being filed by the Company for the Annual Meeting of
Stockholders to be held May 2, 1997.
ITEMS 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is incorporated by reference from the
definitive Proxy Statement being filed by the Company for the Annual Meeting of
Stockholders to be held May 2, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of the report:
1. The financial statements filed as part of this report are listed
separately in the index to Financial Statements beginning on page F-1 of
this report.
2. Financial Statement Schedule -- Schedule II -- Valuation and
Qualifying Accounts on page F-37.
3. For Exhibits see Item 14(c), below. Each management contract or
compensatory plan or arrangement required to be filed as an exhibit hereto
is listed in Exhibits Nos. 10.26, 10.27, 10.28 and 10.157 of Item 14(c)
below.
(b) No reports on Form 8-K have been filed by the Company during the final
quarter of the period covered by this report.
34
<PAGE> 36
(c) List of Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C> <C>
3.1.1 -- Certificate of Incorporation of the Company(2)
3.1.2 -- The Company's Certificate of Designations of the Company's
Junior Cumulative Compounding Redeemable Preferred Stock(2)
3.2 -- Bylaws of the Company(8)
4.1 -- Indenture dated as of September 28, 1995 by and between the
Company, the guarantors named therein and The Bank of New
York, as Trustee, with respect to the Senior Subordinated
Notes(7)
4.2 -- Indenture dated as of October 4, 1996 by and between the
Company, the Guarantors named therein and the Bank of New
York, as Trustee, with respect to the Exchange
Debentures(11)
4.3 -- Credit Agreement, dated as of December 19, 1995, among PCC,
the Lenders named therein, and Union Bank, as Agent(7)
4.3.1 -- Amended and Restated Credit Agreement, dated November 19,
1996, among Paxson Communications Corporation, the Lenders
named therein and Union Bank of California, N.A., as the
Agent.
9.1 -- Amended and Restated Stockholders Agreement, dated as of
December 22, 1994, by and among the Company and certain
stockholders thereof(2)
9.2 -- Agreement, dated March 26, 1996, amending the Amended and
Restated Stockholders Agreement, dated as of December 22,
1994, by and among the Company and certain stockholders
thereof and certain related agreements(8)
10.1 -- Securities Purchase Agreement, dated as of September 22,
1995, by and among the Company, the Guarantors named therein
and the Initial Purchasers named therein(7)
10.2 -- Stock Purchase Agreement, dated as of December 15, 1993, by
and among the Company and certain purchasers of the Company
securities(2)
10.3 -- Stock Purchase Agreement, dated as of December 22, 1994, by
and among the Company and certain purchasers of the Company
securities(2)
10.4 -- Amended and Restated Stockholders Agreement, dated as of
December 22, 1994, by and among the Company and certain
stockholders thereof (incorporated by reference to Exhibit
9.1)(2)
10.4.1 -- Agreement, dated March 26, 1996 amending the Amended and
Restated Stockholders Agreement, by and among the Company
and certain stockholders thereof and certain related
agreements (incorporated by reference to Exhibit 9.2)
10.5 -- Exchange and Consent Agreement, dated as of December 22,
1994 by and among the Company and certain stockholders
thereof(2)
10.20 -- Warrant Agreement, dated as of December 15, 1993, by and
among the Company and William Watson as Warrant Agent(1)
10.25 -- Warrant Agreement, dated as of December 22, 1994, by and
among the Company and William Watson as Warrant Agent(2)
10.26 -- Employment Agreement, dated as of June 30, 1994, by and
between the Company and Lowell W. Paxson(1)
10.27 -- Paxson Communications Corp. Profit Sharing Plan(1)
10.28 -- Paxson Communications Corp. Stock Incentive Plan(1)
10.29 -- Asset Purchase Agreement, dated as of March 31, 1995, by and
among The Christian Network, Inc. and LeSea Broadcasting
Corporation and the Company(3)
</TABLE>
35
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C> <C>
10.30 -- Stock Purchase Agreement, dated as of April 30, 1995, by and
among Channel 59 of Denver, Inc. and David M. Drucker and
Charles Ergen and the Company(3)
10.31 -- Asset Purchase Agreement, dated as of April 30, 1995, by and
among Channel 59 of Denver, Inc. and Echonet Corporation and
the Company(3)
10.32 -- First Letter Agreement, dated as of December 2, 1994, to
Asset Purchase Agreement by and between the Company and
Sandino Telecasters, Inc., dated as of December 5, 1994(4)
10.33 -- Second Letter Agreement, dated as of December 5, 1994, to
Asset Purchase Agreement by and between the Company and
Sandino Telecasters, Inc., dated as of December 5, 1994(4)
10.34 -- Third Amendment, dated as of May 17, 1995, to Asset Purchase
Agreement by and between the Company and Sandino
Telecasters, Inc., dated as of December 5, 1994(4)
10.35 -- Asset Purchase Agreement, dated January 31, 1995, between
Gary A. Rosen in his capacity as Bankruptcy Trustee for
Flying A Communications, Inc. and the Company(5)
10.36 -- Real Estate Sale and Purchase Agreement, dated as of May 18,
1995, by and between F&M Bank -- Martinsburg and Paxson
Communications of Washington-60, Inc.(5)
10.37 -- Asset Purchase Agreement, dated as of June 1, 1995, by and
between Channel 26 of Dayton, Inc. and Video Mall
Communications, Inc. for Television Station WTJC-TV,
Springfield, Ohio(5)
10.38 -- Asset Purchase Agreement, dated as of May 23, 1995, by and
among Whitehead Media, Inc., Morton J. Kent and Canton, Inc.
for Television Station WOAC(TV) Canton, Ohio(5)
10.39 -- Option Agreement, dated December 29, 1995 by and among
Whitehead Media, Inc., Whitehead Media of Ohio, Inc. and
Paxson Communications of Cleveland-67, Inc. for WOAC (TV),
Channel 67, Canton, Ohio(7)
10.40 -- Time Brokerage Agreement, dated October 30, 1995, between
Whitehead Media, Inc. and Paxson Communications of
Cleveland-67, Inc. for WOAC (TV), Channel 67, Canton,
Ohio(7)
10.41 -- Amendment to Time Brokerage Agreement, dated December 29,
1995, between Whitehead Media, Inc. and Paxson
Communications of Cleveland-67, Inc. for WOAC (TV), Channel
67, Canton, Ohio(6)
10.42 -- Time Brokerage Agreement, dated September 22, 1994,
effective as of August 4, 1995, between Whitehead Media,
Inc. and the Company for Television Station WTVX-TV Fort
Pierce, Florida(6)
10.43 -- Amendment to Time Brokerage Agreement, dated as of April 19,
1995, between Whitehead Media, Inc. and the Company for
Television Station WTVX-TV Fort Pierce, Florida(6)
10.44 -- Amendment to Time Brokerage Agreement, dated December 29,
1995, by and between Whitehead Media, Inc. and Paxson
Communications of Ft. Pierce-34, Inc. for Television Station
WTVX-TV, Ft. Pierce, Florida(7)
10.45 -- Option Agreement, dated December 29, 1995, by and among
Whitehead Media, Inc., Whitehead Media of Florida, Inc., and
Paxson Communications of Ft. Pierce-34, Inc. for Television
Station WTVX-TV Ft. Pierce, Florida(8)
10.46 -- Non-compete Agreement, dated August 18, 1995, between the
Company and Lowell W. Paxson(7)
10.47 -- Asset Purchase Agreement, dated as of August 23, 1995, by
and among Valuevision International, Inc., VVI Bridgeport,
Inc., VVI Akron, Inc., and the Company(7)
10.48 -- Time Brokerage Agreement, dated August 31, 1995, by and
between Channel 56 of Orlando, Inc. and Paxson
Communications of Orlando-56 Inc. for Television Station
WIRB(TV), Melbourne, Florida(7)
</TABLE>
36
<PAGE> 38
<TABLE>
<S> <C> <C>
10.49 -- Loan Agreement, dated August 31, 1995, among Paxson Communications of Orlando-56, Inc. and Channel 56
of Orlando, Inc.(7)
10.50 -- Time Brokerage Agreement, dated August 31, 1995, by and between UHF Channel 59 Corp. and Paxson
Communications of Denver-59, Inc. for Television Station KUBD(TV), Denver, Colorado(7)
10.51 -- Loan Agreement, dated August 31, 1995, by and between Paxson Communications of Denver-59, Inc. and
Channel 59 of Denver, Inc.(7)
10.52 -- Option Agreement, dated August 31, 1995, by and among Paxson Communications of Denver-59, Inc., Channel
59 of Denver, Inc., and UHF Channel 59 Corp.(7)
10.53 -- Asset Purchase Agreement, dated August 31, 1995, by and between Channel 13 of Flagstaff, Inc., Michael
C. Gelfand, and Del Ray Television Company, Inc.(7)
10.53.1 -- Option Agreement, dated January 24, 1996, by and between Channel 13 of Flagstaff, Inc. and Paxson
Communications of Flagstaff-13, Inc. for television station KWBF-TV(8)
10.54 -- Indenture, dated as of September 28, 1995, among the Company, the Guarantors named therein and The Bank
of New York, as Trustee with respect to the Senior Subordinated Notes(7)
10.55 -- Original Note No. 1 for $115,000,000 CUSIP No. 704231-AA-7, with Guarantee of Guarantors listed
therein(7)
10.56 -- Original Note No. 2 for $115,000,000, CUSIP No. 704231-AA-7, with Guarantee of Guarantors listed
therein(7)
10.57 -- Form of New Note with Form of New Guarantee(7)
10.58 -- Registration Rights Agreement, dated as of September 28, 1995, by and among the Company, the Guarantors
named therein and each of the Purchasers referred to therein(7)
10.59 -- Asset Purchase Agreement, dated October 2, 1995 by and between Whitehead Media, Inc. and NGM Television
Partners, Limited for Television Station WNGM-TV, Athens, Georgia(7)
10.60 -- Option Agreement dated December 29, 1995, by and between Whitehead Media, Inc., Whitehead Media of
Georgia, Inc. and Paxson Communications of Atlanta-14, Inc. for WNGM (TV), Channel 34, Athens,
Georgia(7)
10.61 -- Time Brokerage Agreement, dated December 29, 1995, by and between Whitehead Media of Georgia, Inc. and
Paxson Communications of Atlanta-14, Inc. for WNGM (TV), Athens, Georgia(7)
10.62 -- Time Brokerage Agreement, dated October 16, 1995, by and between Channel 26 of Dayton, Inc. and Paxson
Communications of Dayton-26, Inc. for Television Station WTJC(TV), Springfield, Ohio(7)
10.63 -- Loan Agreement, dated October 6, 1995, by and among Paxson Communications of Dayton-26, Inc. and
Channel 26 of Dayton, Inc.(7)
10.64 -- Option Agreement, dated October 6, 1995, by and between Paxson Communications of Dayton-26, Inc. and
Channel 26 of Dayton, Inc.(7)
10.65 -- Asset Purchase Agreement, dated August 25, 1995, by and between Channel 13 of St. Louis, Inc. and
McEntee Broadcasting, Inc., for Television Station WCEE-TV, Mt. Vernon, Illinois(7)
10.65.1 -- Time Brokerage Agreement, dated January 26, 1996, between Channel 13 of St. Louis, Inc. and Paxson
Communications of St. Louis-13, Inc. for television station WCEE-TV, Mt. Vernon, Illinois(7)
10.65.2 -- Option Agreement, dated January 26, 1996, by and between Channel 13 of St. Louis, Inc. and Paxson
Communications of St. Louis-13, Inc.(7)
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C> <C>
10.65.3 -- Letter Exercising Option, dated February 21, 1996, by and
between Channel 13 of St. Louis, Inc. and Paxson
Communications of St. Louis-13, Inc. for television station
WCEE-TV(8)
10.67 -- Letter of Intent, dated February 24, 1996, among the
Company, New Age Broadcasting, Inc. and The Seventies
Broadcasting Corporation(8)
10.68 -- Time Brokerage Agreement, dated December 17, 1993, by and
between Bradenton Broadcast Television Co., Ltd., and The
Christian Network, Inc. regarding television station
WFCT-TV(8)
10.69 -- Loan and Option Agreement, dated December 17, 1993, between
Bradenton Broadcasting Television Company, Ltd. and The
Christian Network, Inc. for Channel 66(8)
10.69.1 -- Partial Assignment of Loan and Option Agreement, dated May
15, 1994, between Bradenton Broadcast Television Company,
Ltd., The Christian Network, Inc. and Paxson Communications
of Tampa-66, Inc. for Channel 66(8)
10.70 -- Partial Assignment of Time Brokerage Agreement, dated May
15, 1994, between Bradenton Broadcast Television Company,
Ltd., The Christian Network, Inc. and Paxson Communications
of Tampa-66, Inc.(8)
10.71 -- Letter Exercising Option, dated February 22, 1996, by Paxson
Broadcasting of Tampa-66, Inc. to exercise option on
WFCT-TV(8)
10.72 -- Time Brokerage Agreement, dated April 1, 1994, by and
between Channel 35 of Miami, Inc. and Paxson Communications
of Miami-35, Inc. regarding television station WCTD-TV(8)
10.73 -- Option Agreement, dated April 1, 1994, by and between
Channel 35 of Miami, Inc. and Paxson Communications of
Miami-35, Inc. regarding television station WCTD-TV(8)
10.74 -- Time Brokerage Agreement, dated January 31, 1996, by and
between S&E Network, Inc. and Paxson Communications of San
Juan, Inc. for television station WSJN-TV(8)
10.74.1 -- Stock Purchase Agreement, by and between S&E Network, Inc.
and Paxson Com Communications of San Juan, Inc. for
television station WSJN-TV(8)
10.75 -- Time Brokerage Agreement, dated October 31, 1995, by and
between Roberts Broadcasting Company of Raleigh-Durham, L.P.
and Paxson Communications of Raleigh Durham-47, Inc. for
television station WRMY-TV(8)
10.76 -- Option Agreement dated October 31, 1995, between Roberts
Broadcasting Company of Raleigh-Durham, L.P. and Paxson
Communications of Raleigh-Durham-47, Inc. for interest in
WRMY-TV(8)
10.77 -- Loan Agreement, dated October 31, 1995, between Roberts
Broadcasting Company of Raleigh-Durham, L.P. and the Company
for $4,000,000(8)
10.78 -- Letter of Intent, dated November 14, 1995, with Offshore
Broadcasting Company regarding television station WOST-TV(8)
10.79 -- Letter of Intent, dated February 22, 1996, with Roberts
Broadcasting Company of Salt Lake City LLC regarding
television station KZAR-TV(8)
10.80 -- Loan Agreement, dated March 23, 1995, with Cocola Media
Corporation of Florida for construction of facilities for
WHBI-TV(8)
10.81 -- Asset Purchase Agreement, dated January 31, 1996 between
TeleSouth Communications, Inc., Paxson Networks, Inc. and
Lowell W. Paxson in connection with the sale of South
Carolina Radio Network(8)
10.82 -- Asset Purchase Agreement, dated January 1, 1996, between the
Company and Lowell W. Paxson in connection with the sale of
World Travelers Network(8)
</TABLE>
38
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C> <C>
10.83 -- Lease Agreement, dated June 14, 1994, between Paxson
Communications of Tampa-66, Inc. and The Christian Network,
Inc. for lease of production and distribution facilities at
WFCT-TV(8)
10.84 -- Replacement Promissory Note, dated October 20, 1995, from
Channel 55 of Dallas, Inc., assigned to the Company for
$1,000,000 regarding KLDT-TV(8)
10.85 -- Letter of Intent, dated September 22, 1995, from The
Christian Network, Inc. to Western Michigan Family
Broadcasting, Inc. for television station WJUE-TV, Battle
Creek, Michigan(8)
10.86 -- Letter of Intent, dated October 4, 1995, from The Christian
Network, Inc. to Cornerstone Television, Inc. for television
station WOCD-TV, Amsterdam, New York(8)
10.87 -- First Amendment dated February 29, 1996 between Channel 55
of Albany, Inc. and Cornerstone Television, Inc.(9)
10.88 -- Asset Purchase Agreement dated as of March 29, 1996 by and
between Paxson Communications of Cookeville, Inc. and WHUB,
Inc.(10)
10.89 -- Amended and Restated Promissory Note dated August 5, 1996
between Roberts Broadcasting of Salt Lake City, L.L.C. and
Paxson Communications of Salt Lake City-16, Inc.(10)
10.90 -- First Amendment to Loan Agreement dated August 5, 1996
between Roberts Broadcasting of Salt Lake City, L.L.C. and
Paxson Communications of Salt Lake City-16, Inc.(10)
10.91 -- Asset Purchase Agreement, dated March 15, 1996, between
Ralph E. Kaschai, d/b/a Cashi Signs, Cashi Corp., Cashi
Outdoor Advertising, Inc., and Cashi Services, Inc., and
Paxson Outdoor, Inc.(10)
10.92 -- Asset Purchase Agreement, dated May 31, 1996 by and between
Paxson Broadcasting of Orland, Limited Partnership and Press
Broadcasting Company for Radio Station WTKS(FM) Cocoa Beach,
Florida(10)
10.93 -- Time Brokerage Agreement, dated May 31, 1996, by and between
Press Broadcasting Company, Inc. and Paxson Broadcasting of
Orlando, Limited Partnership for Radio Station WTKS(FM)
Cocoa Beach, Florida(10)
10.94 -- Asset Purchase Agreement, dated December 11, 1995, by and
between Channel 55 of Albany, Inc. and Cornerstone
Television, Inc. for Television Station WOCD(TV) Amsterdam,
New York (10)
10.95 -- First Amendment to Asset Purchase Agreement, dated February
29, 1996, by and between Channel 55 of Albany, Inc. and
Cornerstone Television, Inc.(10)
10.96 -- Promissory Note, dated May 31, 1996, between Channel 55 of
Albany, Inc. and Cornerstone Television, Inc. principal sum
of $1,650,000(10)
10.97 -- Stock Purchase Agreement, dated May 23, 1996 by and among
Channel 44 of Tulsa, Inc., Paxson Communications of
Tulsa-44, Inc. and Broadcasting Systems Inc.(10)
10.98 -- Asset Purchase Agreement, dated April 18, 1996, by and
between Paxson Communications of Phoenix-13, Inc. and
Channel 13 of Flagstaff, Inc.(10)
10.99 -- Asset Purchase Agreement, dated April 18, 1996 by and among
Paxson Communications of Denver-59, Inc., UHF Channel 59
Corp. and Channel 59 of Denver, Inc.(10)
10.100 -- Asset Purchase Agreement, dated April 18, 1996, by and
between Paxson Communications of Dayton-26, Inc. and Channel
26 of Dayton, Inc.(10)
10.101 -- Asset Purchase Agreement, dated April 18, 1996 by and
between Paxson Communications of St. Louis-13, Inc. and
Channel 13 of St. Louis, Inc.(10)
10.102 -- Asset Purchase Agreement, dated April 12, 1996, by and
between Paxson Broadcasting of Miami, Limited Partnership
and TK Communications, L.C.(10)
</TABLE>
39
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C> <C>
10.103 -- Construction Agreement, dated April 16, 1996, by and among
Offshore Broadcasting Corporation, Ocean State Television,
L.L.C. and Paxson Communications of Providence-69, Inc.(10)
10.104 -- Loan Agreement, dated April 16, 1996, by and among Paxson
Communications of Providence-69, Inc., Offshore Broadcasting
Corporation and Ocean State Television, L.L.C.(10)
10.105 -- Asset Purchase Agreement, dated April 19, 1996 by and
between Paxson Communications of Greensboro-16, Inc. and
Television Communications, Inc. for Television Station
WAAP(TV), Burlington, North Carolina(10)
10.106 -- Asset Purchase Agreement, dated April 26, 1996, by and
between Paxson Broadcasting of Miami, Limited Partnership
and WIOD, Inc.(10)
10.107 -- Agreement and Plan of Merger, dated April 12, 1996 by and
among Devon W. Paxson, Todd L. Paxson, Pax Jax, Inc., the
Company and Todd Communications, Inc.(10)
10.107.1 -- First Amendment to Agreement and Plan of Merger, dated June
27, 1996 by and among Devon W. Paxson, Todd L. Paxson, Pax
Jax, Inc., the Company and Todd Communications, Inc.(10)
10.108 -- Asset Purchase Agreement, dated May 13, 1996, by and among
Paxson Communications of Tallahassee, Inc., B. Radio, Inc.,
and Boss Radio Group, Inc., for WGNE, WFSY, WEBZ(10)
10.109 -- Option Agreement by and between Paxson Communications of
Minneapolis 41, Inc. and KX Acquisition, L.P. for Television
Station KXLI(TV), St. Cloud Minnesota dated May 30,
1996.(10)
10.110 -- Subordinated Note between MacDonald Communications
Corporation and the Company for $3,000,000 dated June 7,
1996.(10)
10.111 -- Asset Purchase Agreement, dated April 29, 1996, by and among
Paxson Communications of Tallahassee, Inc., Southern
Broadcasting Companies,Inc., Great South Broadcasting, Inc.,
Charles E. Giddens, Inc., and Southern Broadcasting of
Pensacola, Inc.(10)
10.112 -- Asset Purchase Agreement, dated April 26, 1996, by and
between Paxson Broadcasting of Orlando, Limited Partnership
and Shamrock Communications, Inc.(10)
10.113 -- Time Brokerage Agreement, dated April 26, 1996, by and
between Shamrock Communications, Inc. and Paxson
Broadcasting of Orlando, Limited Partnership for Radio
Station WDIZ(FM) Orlando, Florida(10)
10.114 -- Purchase Agreement, dated July 17, 1996, by and between
Impact Communications of Central Florida, Inc. and Paxson
Outdoor, Inc.(10)
10.115 -- Asset Purchase Agreement, dated February 23, 1996, by and
among Paxson Communications LPTV, Inc., and Michael A.
Bogner d/b/a Amity Broadcasting Company(10)
10.116 -- Asset Purchase Agreement, dated July 1, 1996, by and among
Paxson Communications of New London-26, Inc., Paxson New
London License, Inc., and Roberts Broadcasting of Hartford,
L.L.C.(10)
10.117 -- Asset Purchase Agreement, dated March 5, 1996, by and
between Paxson Communications LPTV, Inc., and Craig L.
Fox(10)
10.118 -- Asset Purchase Agreement, dated June 18, 1996, by and
between Paxson Communications LPTV, Inc. and Communications
Corporation(10)
10.119 -- Time Brokerage Agreement, dated July 9, 1996, by and between
Channel 55 of Milwaukee, Inc. and Paxson Communications of
Milwaukee-55, Inc. for Television Station WHKE-TV Milwaukee,
Wisconsin(10)
10.120 -- Loan Agreement, dated July 9, 1996, by and between Paxson
Communications of Milwaukee-55 of Milwaukee, Inc. for
Television Station WHKE-TV Kenosha, Wisconsin(10)
</TABLE>
40
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C> <C>
10.121 -- Second Amendment to Asset Purchase Agreement, dated July 9,
1996, by and between LeSea Broadcasting Corporation and
Channel 55 of Milwaukee, Inc.(10)
10.122 -- Asset Purchase Agreement, dated July 1, 1996, by and between
Paxson Communications LPTV, Inc. and Electron Communications
Corporation(10)
10.123 -- Asset Exchange Agreement, dated August 7, 1996, by and
between Paxson Broadcasting of Birmingham-44, Inc. and
WNAL-TV Inc.(10)
10.124 -- Loan Agreement, dated August 7, 1996, by and between Paxson
Broadcasting of Birmingham-44 Inc. and WNAL-TV Inc.(10)
10.125 -- Time Brokerage Agreement, dated August 7, 1996, by and
between Paxson Broadcasting of Birmingham-44 Inc. and
WNAL-TV Inc.(10)
10.126 -- Option Agreement by and among Paxson Communications of Salt
Lake City-16, Inc. and Roberts Broadcasting of Salt Lake
City L.L.C., dated August 5, 1996(10)
10.127 -- Asset Purchase Agreement, dated July 31, 1996, by and
between Paxson Communications of Oklahoma City-62, Inc. and
Aracelis Ortiz for Television Station KMNZ-TV, Oklahoma
City, Oklahoma(12)
10.128 -- Purchase Agreement, dated July 31, 1996, by and among
America 51, L.P., Paxson Communications of Phoenix-51.,
Inc., and Hector Garcia Salvatierra for Television Station
Channel 51, Tolleson, Arizona(12)
10.129 -- Loan, Option and Related Transactions, dated August 19,
1996, between Paxson Communications of Seattle-24, Inc. and
World Television of Washington, L.L.C. for Television
Station KBCB(TV), Bellingham, Washington(12)
10.130 -- Stock Purchase and Related Transactions, dated August 21,
1996, between Paxson Communications of Little Rock-42, Inc.,
Leininger-Geddes Partnership and Channel 42 of Little Rock,
Inc. for Television Station KVUT(TV), Little Rock,
Arkansas(12)
10.131 -- Asset Purchase and Sale Agreement, dated August 27, 1996,
between Intermart Broadcasting First Coast, Inc., and Paxson
Broadcasting of Jacksonville, Limited Partnership for Radio
Station WPVJ-FM of Ponte Verda Beach, Florida(12)
10.132 -- Purchase Agreement, dated August 29, 1996, by and between
Boardworks Outdoor Advertising Company, Inc., and Paxson
Outdoor, Inc.(12)
10.133 -- Asset Purchase Agreement, dated August 30, 1996, by and
between Paxson Communications Television, Inc. and Alpha &
Omega Communications, L.L.C. for Television Station KOOG-TV,
Ogden, Utah(12)
10.134 -- Loan Agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento-29, Inc. for Television Station
KCMY-TV, Sacramento, California(12)
10.135 -- Option Agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento for Television Station KCMY-TV,
Sacramento, California(12)
10.136 -- Asset Purchase Agreement, dated September 12, 1996, by and
between The Moody Bible Institute of Chicago and Paxson
Broadcasting of Tampa, Limited Partnership for Radio Station
WKES-FM, St., Petersburg, Florida(12)
10.137 -- Asset Purchase Agreement, dated September 27, 1996, by and
between Channel 46 of Boston, Inc. and Massachusetts
Redevelopment Limited Liability Company for Television
Station WHRC(TV), Norwell, Massachusetts(12)
10.138 -- Easement Agreement, dated October 9, 1996, by and between
Kartworlds of Central Florida L.C. and Paxson Outdoor,
Inc.(12)
</TABLE>
41
<PAGE> 43
<TABLE>
<S> <C> <C>
10.139 -- Contract for Sale and Purchase, dated October 22, 1996, between Southern Land Investors, LTD., and
Paxson Outdoor, Inc.(12)
10.139.1 -- Promissory Note, dated October 22, 1996, between Southern Land Investors, LTD. and Paxson Outdoor,
Inc.(12)
10.139.2 -- Real Estate Mortgage, dated October 22, 1996, Southern Land Investors, Ltd. and Paxson Outdoor,
Inc.(12)
10.139.3 -- Assignment of Rights Under Pre-annexation Agreement, dated October 22, 1996, by and between Michael J.
Grinstaff and Southern Land Investors, Ltd.(12)
10.140 -- Stock Purchase Agreement, dated November 12, 1996, by and between Housing Development Associates S.E.
and Paxson Communications of San Juan, Inc.
10.141 -- Asset Purchase Agreement, dated November 21, 1996, by and among Value Vision International, Inc., VVI
Manassas, Inc., WVVI(TV), Inc., Paxson Communications of Washington-66, Inc., and the Company
10.142 -- Asset Purchase Agreement, dated November 21, 1996, by and between Paxson Communications of
Milwaukee-55, Inc. and Channel 55 of Milwaukee, Inc.
10.143 -- Asset Purchase Agreement, dated December 13, 1996, by and between Paxson Communications of the Keys,
Inc., and Key Chain, Inc. for Radio Stations WFKZ-FM, Plantation Key, Florida, WAVK-FM, Marathon,
Florida, and WKRY-FM, Key West, Florida
10.144 -- Asset Purchase Agreement, dated December 10, 1966, by and between Paxson Communications of Kansas
City-50, Inc. and Kansas City Youth for Christ, Inc. for Television Station KYFC-TV, Kansas City,
Missouri
10.145 -- Stock Purchase Agreement, dated December 11, 1996, by and among Channel 64 of Scranton, Inc., Paxson
Communication of Scranton-64, Inc. and Ted Ehrhardt D/B/A Ehrhardt Broadcasting
10.146 -- Asset Purchase Agreement, dated February 19, 1997, by and between Paxson Communications of Ft.
Pierce-34, Inc., and Paramount Stations Group, Inc. for Television Station WTVX(TV), Ft. Pierce,
Florida
10.147 -- Promissory Note, dated February 12, 1997, by and between Roberts Broadcasting of Hartford, L.L.C. and
Paxson Communications of New London-26, Inc. for Television Station WTWS (TV), New London, Connecticut
10.147.1 -- Time Brokerage Agreement, dated February 12, 1997, by and between Roberts Broadcasting of Hartford, L.
L. C. and Paxson Communications of New London-26, Inc. for Television Station WTWS(TV), New London,
Connecticut
10.147.2 -- Amendment to Asset Purchase Agreement, dated December 16, 1996, by and among Roberts Broadcasting of
Hartford, L.L.P., Paxson Communications of New London-26, Inc., and Paxson New London License, Inc.
10.148 -- Amended and Restated Promissory Note, dated April 16, 1996, by and between Ocean State Television, L.
L. C. and Paxson Communications of Providence-69, Inc.
10.149 -- Second Amendment to Stock Purchase and Option Agreement, dated September 27, 1996, by and among Paxson
Communications of Battle Creek-43, Inc., Western Michigan Christian Broadcasting, Inc., Western
Michigan Family Broadcasting, Inc., Horizon Broadcasting Corporation, and William B. Popjes.
10.150 -- Partnership Interest Purchase Agreement, dated February 14, 1997, by and among DP Media, Inc., Roberts
Broadcasting, L.L.C., and Roberts Broadcasting company of Raleigh-Durham, L.P.
</TABLE>
42
<PAGE> 44
<TABLE>
<S> <C> <C>
10.151 -- Option Purchase Agreement, dated February 14, 1997, by and between Paxson Communications of
Raleigh-Durham-47, Inc., and D P. Media, Inc.
10.152 -- Amendment Agreement, dated February 13, 1996, by and among Channel 43 of Battle Creek, Inc., Western
Michigan Christian Broadcasting, Inc., Western Michigan Family Broadcasting, Inc., Horizon Broadcasting
Corporation, William B. Popjes and Paxson Communications of Battle Creek-43, Inc.
10.153 -- Asset Purchase Agreement, dated March 13, 1997 by and among Paxson Communications of Detroit-31, Inc.
and Blackstar Communications, Inc. for Television Stations WBSX(TV) and W48AV
10.154 -- Asset Purchase Agreement, dated March 25, 1997, by and between Paxson Communications of West Palm
Beach-25, Inc. and The Hearst Corporation, for Television Station WPBF(TV), West Palm Beach, Florida
10.155 -- Purchase and Sale of Option, dated March 26, 1997, by and between Paxson Communications of
Cleveland -- 67, Inc., and Global Broadcasting Systems, Inc. for Television Station WOAC(TV),
Cleveland, Ohio
10.155.1 -- Purchase and Sale of Option, dated March 26, 1997, by and between Paxson Communications of
Atlanta -- 14, Inc., and Global Broadcasting Systems, Inc. for Television Station WNGM(TV), Atlanta,
Georgia
10.156 -- Asset purchase agreement, dated March 21, 1997, by and between Whitehead Media of Florida, Inc.,
Whitehead Broadcasting of Florida, Inc. and Paxson Communications of Ft. Pierce-34, Inc. for Television
Station WTVX(TV), Ft. Pierce, Florida
10.157 -- Paxson Communications Corporation 1996 Stock Incentive Plan(13)
21 -- Subsidiaries of the Company
23 -- Consent of Price Waterhouse LLP
27 -- Financial Data Schedule (for SEC use only)
99.1 -- Tax Exemption Savings Agreement between the Company and The Christian Network, Inc., dated May 15,
1994(8)
</TABLE>
- ---------------
(1) Filed with the Company's Registration Statement on Form S-4, filed
September 26, 1994, Registration No. 33-84416 and incorporated herein by
reference.
(2) Filed with the Company's Annual Report on Form 10-K, dated March 31, 1995
and incorporated herein by reference.
(3) Filed with the Company's Quarterly Report on Form 10-Q, dated May 12, 1995
and incorporated herein by reference.
(4) Filed with the Company's Report on Form 8-K dated June 1, 1995 and
incorporated herein by reference.
(5) Filed with the Company's Quarterly Report on Form 10-Q, dated August 14,
1995 and incorporated herein by reference.
(6) Filed with the Company's Report on Form 8-K, dated August 21, 1995 and
incorporated herein by reference.
(7) Filed with the Company's Registration Statement on Form S-4, as amended,
filed January 23, 1996, Registration No. 33-63765 and incorporated herein
by reference.
(8) 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.
(9) Filed with the Company's Quarterly Report on Form 10-Q, dated March 31,
1996 and incorporated herein by reference.
(10) Filed with the Company's Quarterly Report on Form 10-Q, dated June 30, 1996
and incorporated herein by reference.
43
<PAGE> 45
(11) 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.
(12) Filed with the Company's Quarterly Report on Form 10-Q, dated September 30,
1996 and incorporated herein by reference.
(13) Filed with the Company's Registration Statement on Form S-8, filed January
22, 1997, Registration No. 333-20163 and incorporated herein by reference.
(d) The financial statement schedule filed as part of this report is listed
separately in the Index to Financial Statements beginning on page F-1 of this
report.
44
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of West Palm
Beach, State of Florida, on March 31, 1997.
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ LOWELL W. PAXSON
--------------------------------------
Lowell W. Paxson
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
/s/ LOWELL W. PAXSON Chairman of the Board, Chief March 31, 1997
- ----------------------------------------------------- Executive Officer, and
Lowell W. Paxson Director (Principal
Executive Officer)
/s/ ARTHUR D. TEK Vice President, Chief March 31, 1997
- ----------------------------------------------------- Financial Officer, and
Arthur D. Tek Director (Principal
Financial Officer)
/s/ KENNETH M. GAMACHE Vice President and Controller March 31, 1997
- ----------------------------------------------------- (Principal Accounting
Kenneth M. Gamache Officer)
/s/ JAMES B. BOCOCK President and Chief Operating March 31, 1997
- ----------------------------------------------------- Officer, Director
James B. Bocock
/s/ J. PATRICK MICHAELS, JR. Director March 31, 1997
- -----------------------------------------------------
J. Patrick Michaels, Jr.
/s/ S. WILLIAM SCOTT Director March 31, 1997
- -----------------------------------------------------
S. William Scott
/s/ BRUCE L. BURNHAM Director March 31, 1997
- -----------------------------------------------------
Bruce L. Burnham
/s/ JAMES L. GREENWALD Director March 31, 1997
- -----------------------------------------------------
James L. Greenwald
</TABLE>
45
<PAGE> 47
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Paxson Communications Corporation
will be held at 10:00 a.m., May 2, 1997 at Hyatt Regency Grand Cypress, Orlando,
Florida. All stockholders are cordially invited to attend and are urged to
consider the voting information provided in the Notice of Meeting, Proxy
Statement and form of Proxy accompanying the mailing of this report.
Proxy accompanying the mailing of this report.
SHAREHOLDER INFORMATION
<TABLE>
<S> <C> <C>
CORPORATE HEADQUARTERS COMMON STOCK INDEPENDENT ACCOUNTANTS
601 Clearwater Park Road American Stock Exchange Price Waterhouse LLP
West Palm Beach, FL 33401 Symbol: PXN One East Broward Boulevard
(561) 659-4122 Suite 1700
Fort Lauderdale, Florida 33301
</TABLE>
TRANSFER AGENT
First Union National Bank of North Carolina
2300 South Tryon St.
10th Floor
Charlotte, NC 28288-1104
46
<PAGE> 48
PAXSON COMMUNICATIONS CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(1) Consolidated Financial Statements:
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Changes in Common Stockholders'
Equity.................................................... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
(2) Financial Statement Schedule:
Report of Independent Certified Public Accountants on
Financial Statement Schedule.............................. F-36
For the three years ended December 31, 1996 --
II -- Valuation and Qualifying Accounts..................... F-37
</TABLE>
F-1
<PAGE> 49
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
of Paxson Communications Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in common
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Paxson Communications Corporation and its subsidiaries
at December 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
February 12, 1997, except as to Notes 2, 18 and 19 which are
as of March 26, 1997
F-2
<PAGE> 50
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 61,748,788 $ 68,070,990
Accounts receivable, less allowance for doubtful accounts
of $1,576,593 and $909,713.............................. 29,860,998 17,726,415
Prepaid expenses and other current assets................. 2,713,565 971,363
Current program rights.................................... 1,512,019 1,412,544
------------- ------------
Total current assets............................... 95,835,370 88,181,312
Property and equipment, net................................. 144,415,412 79,859,080
Intangible assets, net...................................... 220,409,421 84,318,147
Investments in broadcast properties......................... 53,297,022 21,192,030
Program rights, net......................................... 1,075,536 384,814
Other assets, net........................................... 28,149,699 19,896,694
------------- ------------
Total assets....................................... $ 543,182,460 $293,832,077
============= ============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 10,676,692 $ 5,030,692
Accrued interest.......................................... 6,684,373 6,932,342
Current portion of program rights payable................. 1,628,959 1,449,602
Current portion of long-term debt......................... 644,509 430,590
------------- ------------
Total current liabilities.......................... 19,634,533 13,843,226
Program rights payable...................................... 1,000,260 432,750
Long-term debt.............................................. 3,407,688 12,484,024
Senior subordinated notes, net.............................. 227,655,096 227,374,911
Redeemable Cumulative Compounding Junior preferred stock,
$0.001 par value; 12% dividend rate per annum, 33,000
shares authorized, issued and outstanding................. 36,780,496 31,533,910
Redeemable Exchangeable preferred stock, $0.001 par value;
12.5% dividend rate per annum, 440,000 shares authorized,
150,000 shares issued and outstanding..................... 147,929,150 --
Redeemable Cumulative Compounding Senior preferred stock,
$0.001 par value; 15% dividend rate per annum, 2,000
shares authorized......................................... -- 16,824,082
Redeemable Cumulative Compounding Series B preferred stock,
$0.001 par value; 15% dividend rate per annum, 714,286
shares authorized......................................... -- 2,352,654
Redeemable Class A and B common stock warrants.............. -- 6,465,317
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 40,442,482 and 26,226,826
shares issued and outstanding............................. 40,442 26,227
Class B common stock, $0.001 par value; ten votes per share;
35,000,000 shares authorized and 8,311,639 shares issued
and outstanding........................................... 8,312 8,312
Class A and B common stock warrants......................... 6,862,647 --
Class C common stock warrants............................... 2,335,528 5,338,952
Stock subscription notes receivable......................... (1,873,139) (115,714)
Additional paid-in capital.................................. 209,621,241 34,342,086
Deferred option plan compensation........................... (6,397,916) (1,384,267)
Accumulated deficit......................................... (103,821,878) (55,694,393)
Commitments and contingencies (Note 18)..................... -- --
------------- ------------
Total liabilities, redeemable securities and common
stockholders' equity............................. $ 543,182,460 $293,832,077
============= ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-3
<PAGE> 51
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Revenues:
Local and national advertising............................ $137,035,237 $ 79,279,331 $49,381,842
Retail and other.......................................... 4,251,884 4,616,010 2,646,273
Trade and barter.......................................... 3,210,490 2,641,165 2,561,820
------------ ------------ -----------
Total revenues..................................... 144,497,611 86,536,506 54,589,935
------------ ------------ -----------
Operating expenses:
Direct.................................................... 33,118,118 21,292,722 15,085,153
Programming............................................... 15,384,844 10,325,066 7,775,675
Sales and promotion....................................... 11,459,371 7,888,543 5,220,127
Technical................................................. 8,153,622 4,497,771 1,930,239
General and administrative................................ 31,293,872 20,293,162 10,972,160
Trade and barter.......................................... 3,247,965 2,295,198 2,356,112
Time brokerage agreement fees............................. 7,263,729 910,558 503,698
Sports rights fees........................................ 3,676,410 2,806,121 2,379,516
Option plan compensation.................................. 7,856,534 10,803,241 --
Depreciation and amortization............................. 23,166,377 14,668,444 9,855,242
------------ ------------ -----------
Total operating expenses........................... 144,620,842 95,780,826 56,077,922
------------ ------------ -----------
Operating loss.............................................. (123,231) (9,244,320) (1,487,987)
Other income (expense):
Interest expense.......................................... (31,608,725) (17,250,641) (6,216,148)
Interest income........................................... 6,875,050 1,708,942 335,438
Other expense, net........................................ (1,715,559) (650,137) (5,332)
------------ ------------ -----------
Loss from continuing operations before benefit for income
taxes and extraordinary item.............................. (26,572,465) (25,436,156) (7,374,029)
Benefit for income taxes.................................... -- 1,280,000 1,680,000
------------ ------------ -----------
Loss from continuing operations before extraordinary item... (26,572,465) (24,156,156) (5,694,029)
Income from discontinued operations......................... 353,564 1,308,593 931,955
------------ ------------ -----------
Loss before extraordinary item.............................. (26,218,901) (22,847,563) (4,762,074)
Extraordinary item.......................................... -- (10,625,727) --
------------ ------------ -----------
Net loss.................................................... (26,218,901) (33,473,290) (4,762,074)
Dividends and accretion on preferred stock and common stock
warrants.................................................. (21,908,584) (13,297,206) (3,385,456)
------------ ------------ -----------
Net loss attributable to common stock....................... $(48,127,485) $(46,770,496) $(8,147,530)
============ ============ ===========
Per share data:
Loss from continuing operations before extraordinary
item.................................................... $ (0.61) $ (0.70) $ (0.17)
Income from discontinued operations....................... 0.01 0.04 0.03
Extraordinary item........................................ -- (0.31) --
------------ ------------ -----------
Net loss.................................................. (0.60) (0.97) (0.14)
Dividends and accretion on preferred stock and common
stock warrants.......................................... (0.50) (0.39) (0.10)
------------ ------------ -----------
Net loss attributable to common stock....................... $ (1.10) $ (1.36) $ (0.24)
============ ============ ===========
Weighted average shares outstanding......................... 43,836,526 34,429,517 33,430,116
============ ============ ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-4
<PAGE> 52
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS
A AND B CLASS C STOCK
COMMON STOCK COMMON COMMON SUBSCRIPTION
--------------------------- COMMON STOCK STOCK NOTES
CLASS A CLASS B CLASS C STOCK WARRANTS WARRANTS RECEIVABLE
------- ------- ------- ------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994............... $ 1
Recapitalization of common stock......... $15,791 $5,264 (1)
Stock issued for ANG acquisition......... 1,570 277 $ (77,666)
Net proceeds from issuance of common
stock warrants.......................... $ 5,338,952
Dividends on redeemable preferred
stock...................................
Accretion on Senior redeemable preferred
stock...................................
Accretion on Series B preferred stock....
Accretion on Junior preferred stock......
Accretion on Class A and B common stock
warrants................................
Net loss.................................
Stock dividend........................... 8,681 2,771
------- ------ ------ --- ----------- ----------- -----------
Balance at December 31, 1994............. 26,042 8,312 -- -- -- 5,338,952 (77,666)
Stock issued for Cookeville
acquisition............................. 95
Deferred option plan compensation........
Option plan compensation.................
Stock options exercised.................. 90
Increase in stock subscription notes
receivable.............................. (48,029)
Repayments of stock subscription notes
receivable.............................. 9,981
Dividends on redeemable preferred
stock...................................
Accretion on Senior redeemable preferred
stock...................................
Accretion on Series B preferred stock....
Accretion on Junior preferred stock......
Accretion on Class A and B common stock
warrants................................
Net loss.................................
------- ------ ------ --- ----------- ----------- -----------
Balance at December 31, 1995............. 26,227 8,312 -- -- -- 5,338,952 (115,714)
Release of put option on Class A and B
common stock warrants................... $ 9,116,399
Issuance of common stock, net of issuance
costs of $10,000,000.................... 10,300
Exercise of Class A, B and C common stock
warrants................................ 3,623 (2,253,752) (3,003,424)
Stock issued for Todd Communications
acquisition............................. 139
Deferred option plan compensation........
Option plan compensation.................
Stock options exercised.................. 153
Increase in stock subscription notes
receivable.............................. (1,873,139)
Repayment of stock subscription notes
receivable.............................. 115,714
Dividends on redeemable preferred
stock...................................
Accretion on Senior redeemable preferred
stock...................................
Accretion on Series B preferred stock....
Accretion on Junior preferred stock......
Accretion on Redeemable Exchangeable
preferred stock.........................
Accretion on Class A and B common stock
warrants................................
Net loss.................................
------- ------ ------ --- ----------- ----------- -----------
Balance at December 31, 1996............. $40,442 $8,312 $ -- $-- $ 6,862,647 $ 2,335,528 $(1,873,139)
======= ====== ====== === =========== =========== ===========
<CAPTION>
DEFERRED
ADDITIONAL OPTION
PAID-IN PLAN ACCUMULATED
CAPITAL COMPENSATION DEFICIT
------------ ------------ -------------
<S> <C> <C> <C>
Balance at January 1, 1994............... $ 16,895,623 $ (776,367)
Recapitalization of common stock......... (21,054)
Stock issued for ANG acquisition......... 3,784,530
Net proceeds from issuance of common
stock warrants..........................
Dividends on redeemable preferred
stock................................... (2,216,137)
Accretion on Senior redeemable preferred
stock................................... (325,147)
Accretion on Series B preferred stock.... (7,968)
Accretion on Junior preferred stock...... (15,648)
Accretion on Class A and B common stock
warrants................................ (820,556)
Net loss................................. (4,762,074)
Stock dividend........................... (11,452)
------------ ------------ -------------
Balance at December 31, 1994............. 20,647,647 -- (8,923,897)
Stock issued for Cookeville
acquisition............................. 1,199,905
Deferred option plan compensation........ 12,187,508 $(12,187,508)
Option plan compensation................. 10,803,241
Stock options exercised.................. 307,026
Increase in stock subscription notes
receivable..............................
Repayments of stock subscription notes
receivable..............................
Dividends on redeemable preferred
stock................................... (7,275,516)
Accretion on Senior redeemable preferred
stock................................... (332,156)
Accretion on Series B preferred stock.... (325,208)
Accretion on Junior preferred stock...... (634,988)
Accretion on Class A and B common stock
warrants................................ (4,729,338)
Net loss................................. (33,473,290)
------------ ------------ -------------
Balance at December 31, 1995............. 34,342,086 (1,384,267) (55,694,393)
Release of put option on Class A and B
common stock warrants...................
Issuance of common stock, net of issuance
costs of $10,000,000.................... 154,789,700
Exercise of Class A, B and C common stock
warrants................................ 5,253,548
Stock issued for Todd Communications
acquisition............................. 1,534,967
Deferred option plan compensation........ 12,932,506 (12,932,506)
Option plan compensation................. 7,918,857
Stock options exercised.................. 768,434
Increase in stock subscription notes
receivable..............................
Repayment of stock subscription notes
receivable..............................
Dividends on redeemable preferred
stock................................... (13,223,227)
Accretion on Senior redeemable preferred
stock................................... (1,805,599)
Accretion on Series B preferred stock.... (3,418,615)
Accretion on Junior preferred stock...... (650,084)
Accretion on Redeemable Exchangeable
preferred stock......................... (159,977)
Accretion on Class A and B common stock
warrants................................ (2,651,082)
Net loss................................. (26,218,901)
------------ ------------ -------------
Balance at December 31, 1996............. $209,621,241 $(6,397,916) $(103,821,878)
============ ============ =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-5
<PAGE> 53
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (26,218,901) $ (33,473,290) $ (4,762,074)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization........................... 25,974,909 17,771,109 11,397,528
Option plan compensation................................ 7,918,857 10,803,241 --
Program rights amortization............................. 1,381,582 1,765,942 820,754
Provision for doubtful accounts......................... 1,287,819 1,098,181 344,706
Deferred income taxes................................... -- (1,280,000) (1,680,000)
Loss (gain) on sale or disposal of assets............... 181,586 145,857 (28,105)
Loss on extinguishment of long-term debt................ -- 10,625,727 --
Changes in assets and liabilities:
Increase in accounts receivable....................... (13,422,402) (5,255,398) (1,683,664)
(Increase) decrease in prepaid expenses and other
current assets...................................... (1,742,202) 608,591 234,301
Increase in intangible assets......................... -- (1,200,000) --
(Increase) decrease in other assets................... (1,886,853) 2,578,733 613,496
Increase (decrease) in accounts payable and accrued
liabilities......................................... 5,646,000 131,529 (313,225)
(Decrease) increase in accrued interest............... (247,969) 6,707,814 135,683
------------- ------------- -------------
Net cash (used in) provided by operating
activities........................................ (1,127,574) 11,028,036 5,079,400
------------- ------------- -------------
Cash flows from investing activities:
Acquisitions of broadcasting and billboard properties..... (186,662,299) (58,510,509) (56,143,061)
Increase in investments in broadcast properties........... (32,104,992) (19,442,030) --
Deposits on broadcasting properties....................... (3,837,000) (2,381,619) (4,291,241)
Purchases of property and equipment....................... (36,709,477) (25,016,816) (5,916,512)
Deposits refunded (made) on buildings and equipment....... 555,341 (735,074) (642,890)
Proceeds from sale of assets.............................. 228,279 466,820 200,000
------------- ------------- -------------
Net cash used in investing activities............... (258,530,148) (105,619,228) (66,793,704)
------------- ------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net............... 154,800,000 -- --
Proceeds from issuance of long-term debt.................. 17,700,000 327,539,000 50,000,000
Repayments of long-term debt.............................. (28,230,464) (169,722,340) (401,500)
Payment of loan origination costs......................... (2,985,742) (15,896,473) (5,030,352)
Payments for program rights............................... (1,424,912) (1,098,731) (335,646)
Proceeds from issuance of redeemable preferred stock,
net..................................................... 143,197,254 -- 26,694,761
Redemption of Senior and Series B preferred stock......... (28,455,758) -- --
Proceeds from issuance of common stock warrants, net...... -- -- 5,338,952
Proceeds from exercise of common stock options, net....... 492,567 307,116 --
Increase in stock subscription notes receivable........... (1,873,139) (48,029) --
Repayment of stock subscription notes receivable.......... 115,714 9,981 --
------------- ------------- -------------
Net cash provided by financing activities........... 253,335,520 141,090,524 76,266,215
------------- ------------- -------------
(Decrease) increase in cash and cash equivalents............ (6,322,202) 46,499,332 14,551,911
Cash and cash equivalents, beginning of year................ $ 68,070,990 $ 21,571,658 $ 7,019,747
------------- ------------- -------------
Cash and cash equivalents, end of year...................... $ 61,748,788 $ 68,070,990 $ 21,571,658
============= ============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest.................................... $ 28,342,148 $ 8,292,274 $ 4,765,800
============= ============= =============
Non-cash operating and financing activities:
Accretion of discount on Senior Subordinated Notes........ $ 280,185 $ 65,911 $ --
============= ============= =============
Issuance of common stock in connection with the merger and
acquisitions............................................ $ 1,535,106 $ 1,200,000 $ 3,786,377
============= ============= =============
Note payable incurred for WOCD-TV acquisition............. $ 1,650,000 $ -- $ --
============= ============= =============
Dividends accreted on redeemable preferred stock.......... $ 12,273,227 $ 7,275,516 $ 2,216,137
============= ============= =============
Discount accretion on redeemable securities............... $ 9,635,357 $ 6,021,690 $ 1,169,319
============= ============= =============
Issuance of Series B preferred stock...................... $ -- $ -- $ 1,248,210
============= ============= =============
Trade and barter revenue.................................. $ 4,154,986 $ 3,068,354 $ 2,619,245
============= ============= =============
Trade and barter expense.................................. $ 4,166,918 $ 2,604,950 $ 2,426,118
============= ============= =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of the consolidated financial statements.
F-6
<PAGE> 54
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Paxson Communications Corporation (the "Company"), a Delaware corporation,
was organized in December 1993 for the purpose of owning and operating radio and
television broadcasting stations and networks.
On April 14, 1994, the Company acquired 68.1% of the common voting stock of
The American Network Group, Inc. ("ANG"), a Nasdaq Small-Cap Market traded
company. The Company has consolidated the financial results of ANG since that
time. On November 4, 1994, ANG stockholders approved the merger of ANG into the
Company through an exchange of common stock, which resulted in the Company's
Class A common stock becoming publicly-held. In connection with the merger with
ANG, the Company amended its capital structure to provide two classes of common
voting stock, Class A common stock and Class B common stock. The per share
effect of the merger and recapitalization has been presented on the Company's
statement of operations for the year ended December 31, 1994 based on the
weighted average common shares then outstanding (see Note 16).
OPERATIONS
During the three year period ended December 31, 1996, the Company operated
three business segments: (1) inTV is a nationwide network of owned, operated and
affiliated television stations carrying its proprietary network, which
broadcasts long form paid programming consisting primarily of infomercials; (2)
Paxson Radio consists of radio broadcasting stations, radio news and sports
networks and billboard operations; and (3) Paxson Network Affiliated Television
includes network affiliated television broadcasting stations in West Palm Beach,
Florida (see Note 2 -- Discontinued Operations).
At December 31, 1996, the Company's operations were primarily comprised of
the following:
<TABLE>
<S> <C>
inTV............................................ 21 owned(1), 13 time brokered and 4
affiliated stations.
Paxson Radio.................................... 36 owned and 3 time brokered stations, 6
radio networks and 469 billboard faces.
Paxson Network Affiliated....................... 1 owned station and 1 time
Television (See Note 2 -- Discontinued
Operations.) brokered station.
</TABLE>
- ---------------
(1) The number of owned inTV stations includes three stations in which the
Company has a 49% interest at December 31, 1996. The Company plans to
acquire the remaining 51% interest in each station during 1997.
See Note 19 for acquisitions and sales of broadcast properties subsequent
to December 31, 1996.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less. At December 31, 1996 and 1995, approximately
$45 million and $58 million, respectively, of debt securities,
F-7
<PAGE> 55
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
all classified as available for sale and consisting of money market accounts,
commercial paper and overnight repurchase agreements, were included in cash and
cash equivalents.
PROPERTY AND EQUIPMENT
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated using the straight line method over their estimated useful lives
as follows (see Note 5):
<TABLE>
<S> <C>
Broadcasting towers and equipment........................... 6-13 years
Office furniture and equipment.............................. 6-10 years
Buildings, billboards and building improvements............. 15-40 years
Leasehold improvements...................................... Term of lease
Aircraft, vehicles and other................................ 5 years
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
INTANGIBLE ASSETS
The excess of cost over the fair value of acquired net assets has been
recorded as goodwill. Intangible assets are being amortized using the straight
line method over their estimated useful lives as follows (see Note 6):
<TABLE>
<S> <C>
FCC licenses................................................ 25 years
Goodwill.................................................... 25 years
Covenants not to compete.................................... Generally 3 years
Favorable lease and other contracts......................... Contract term
</TABLE>
INVESTMENTS IN BROADCAST PROPERTIES
Investments in broadcast properties represent primarily the Company's
financing of television and radio station acquisitions by third parties,
purchase options and equity investments in entities owning broadcasting
stations. In connection with the financing of acquisitions by third parties, the
Company has entered into time brokerage agreements ("TBAs") with such parties
for the broadcast operations and has, in certain cases, written options to
purchase the related station assets and Federal Communications Commission
("FCC") licenses at various amounts and terms (see Notes 8 and 19).
PROGRAM RIGHTS
The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements. Pursuant
to a licensing agreement, an asset is recorded for the program rights acquired
and a liability is recorded for the obligation incurred, at the gross amount of
the liability when available to air. Program rights are amortized on a method
that approximates the straight line method over the related term. Program rights
which will not be aired are charged to expense. Current program rights represent
programs which will be amortized during the next year; current liabilities
represent program rights which will be paid within the next year under
contractual arrangements (see Note 9).
OTHER ASSETS
Loan origination costs are stated at cost and are amortized to interest
expense over the life of the loan or agreement using the effective interest
method. Escrow funds represent funds held in escrow on acquisitions pending FCC
approval. Other assets are stated at cost (see Note 7).
F-8
<PAGE> 56
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-LIVED ASSETS
The Company reviews long-lived assets, identifiable intangibles and
goodwill based on estimated undiscounted future cash flows and reserves for
impairment whenever events or changes in circumstances indicate the carrying
amount of the assets may not be fully recoverable.
REVENUE RECOGNITION
Revenue is recognized as advertising air time is broadcast.
TRADE AND BARTER AGREEMENTS
The Company enters into trade and barter agreements which give rise to
sales of advertising air time in exchange for products, services and
programming. Sales from trade and barter agreements are recognized at the fair
market value of products, services or programs received as the related
advertising air time is broadcast. Products, services and programs received are
expensed when used or when programs are broadcast. If the Company uses trade
products or services before advertising air time is provided, a trade liability
is recognized. At times, the Company trades air time for property and equipment.
TIME BROKERAGE AGREEMENTS
The Company operates certain stations under a time brokerage agreement
("TBA") whereby the Company has agreed to purchase from the broadcast station
licensee certain broadcast time on the station and to provide programming to and
sell advertising on the station during the purchased time. Accordingly, the
Company receives all the revenue derived from the advertising sold during the
purchased time, pays certain expenses of the station and performs other
functions. The broadcast station licensee retains responsibility for ultimate
control of the station in accordance with FCC policies. At December 31, 1996,
the Company operated 17 stations under TBAs which expire from May 1997 through
July 2006.
STOCK BASED COMPENSATION
The Company's employee stock option plans are accounted for using the
intrinsic value method as prescribed by APB No. 25 "Accounting for Stock Issued
to Employees". During 1996, the Company adopted the disclosure provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123") (see Note 13).
INCOME TAXES
The Company records deferred income taxes using the liability method. Under
the liability method, deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between the financial
statement and income tax bases of the Company's assets and liabilities. An
allowance is recorded, based upon currently available information, when it is
more likely than not that any or all of a deferred tax asset will not be
realized. The provision for income taxes includes taxes currently payable, if
any, plus the net change during the year in deferred tax assets and liabilities
recorded by the Company.
PER SHARE DATA
Per share data give effect to the Company's amended capital structure
related to the merger with ANG and the stock dividend on common shares
outstanding on January 1, 1995 (see Note 16). Due to net losses, the effect of
stock options and warrants is antidilutive and therefore these common stock
equivalents are not included in the calculation of weighted average shares
outstanding.
F-9
<PAGE> 57
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform with the 1996 presentation.
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 its interest in WPBF-TV and thus
discontinue the operations of the Paxson Network Affiliated Television segment.
As a result of the decision to sell both stations, the results of operations for
the Paxson Network Affiliated Television segment, net of applicable income 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. These transactions are
expected to close during the third quarter of 1997 subsequent to the receipt of
all necessary regulatory approvals and will result in a pre-tax gain to the
Company of approximately $70,000,000. The Company does not anticipate a loss
during the phase-out period of this segment.
The Paxson Network Affiliated Television operations generated revenues of
approximately $20,517,000, $16,537,000 and $7,478,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.
The components of net assets of discontinued operations included in the
consolidated balance sheets at December 31, 1996 and December 31, 1995, are as
follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Current assets.............................................. $ 1,580,249 $ 1,431,900
Noncurrent assets........................................... 28,878,167 30,025,242
----------- -----------
Total assets...................................... 30,458,416 31,457,142
----------- -----------
Current liabilities......................................... 2,610,503 2,534,680
Noncurrent liabilities...................................... 1,000,260 432,750
----------- -----------
Total liabilities................................. 3,610,763 2,967,430
----------- -----------
Total net assets.................................. $26,847,653 $28,489,712
=========== ===========
</TABLE>
Net assets of discontinued operations at December 31, 1996 and December 31,
1995 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.
F-10
<PAGE> 58
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. ACQUISITIONS
ACQUISITIONS
During 1996 and 1995, the Company acquired or began operating pursuant to a
time brokerage agreement the assets of certain broadcast properties including:
<TABLE>
<CAPTION>
ACQUISITION/
ACQUISITION/TBA INVESTMENT
DATE STATION/NETWORK MARKET AMOUNT
- --------------- ---------------------- ----------------- ------------
<S> <C> <C> <C>
October 1996 WIOD-AM Miami, FL $13,000,000
October 1996/ WSHE-FM Orlando, FL 22,000,000
May 1996 (formerly WDIZ-FM)
September 1996 KXLI-TV Minneapolis, MN 12,000,000
September 1996 WSNI-FM Tallahassee, FL 21,300,000(2)
WPAP-FM Panama City, FL
WPBH-FM Panama City, FL
August 1996 WHUB-FM Cookeville, TN 3,800,000
WHUB-AM Cookeville, TN
June 1996 WFSJ-FM Jacksonville, FL 5,000,000
June 1996 WTKS-FM(1) Orlando, FL --
May 1996 WPLL-FM Miami, FL --
(formerly WSHE-FM)(1)
WSRF-AM(1) Miami, FL
July 1995/ KTFH-TV Houston, TX 7,900,000
March 1995
May 1995 KZKI-TV Los Angeles, CA 18,000,000
May 1995 WGOT-TV Boston, MA 3,050,000
February 1995 WTGI-TV Philadelphia, PA 10,200,000
</TABLE>
- ---------------
(1) Operated pursuant to a TBA at December 31, 1996. The acquisitions of WTKS-FM
and WPLL-FM/ WSRF-AM closed during January 1997 for consideration of
$25,000,000 and $57,500,000, respectively.
(2) Represents the purchase price for a total of nine stations purchased.
The Company also acquired other broadcast properties during 1996 and 1995.
During 1996, such acquisitions consisted of nine inTV stations and ten radio
stations for total consideration of approximately $88,600,000. During 1995, the
Company made other acquisitions consisting of three inTV stations, two radio
stations and one radio network for total consideration of approximately
$17,025,000.
During 1996, the Company purchased the assets of three billboard companies
for total consideration of approximately $21,000,000.
All of the previously described acquisitions have been accounted for using
the purchase method of accounting. Goodwill recorded in connection with such
transactions (approximately $27,023,000 in 1996 and $1,625,000 in 1995) will be
amortized over a period of 25 years. The financial results of TBA operated
stations have been included in the Company's statement of operations since the
respective date of commencement of the TBA.
PRO FORMA (UNAUDITED)
The Company's results of operations for the years ended December 31, 1996
and 1995 include the results of operations for acquisitions and investments in
broadcast properties from their respective dates of
F-11
<PAGE> 59
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
commencement. The following unaudited pro forma statement of operations data
gives effect to the previously enumerated acquisitions and the sale and
redemption of securities as described in Notes 11, 14 and 16 since January 1,
1995 as if they had occurred on January 1, 1995. In addition, depreciation and
amortization has been increased each period to reflect the initial purchase
price allocation on all acquisitions and investments (whether businesses or
assets), and interest expense on associated debt financing has also been
increased as if such transactions and debt issuance had occurred on January 1,
1995. Pro forma results of operations for the years ended December 31, 1996 and
1995 exclude the results of operations of the Company's Network Affiliated
Television operations which are expected to be sold in 1997 (see Note
2 -- Discontinued Operations).
<TABLE>
<CAPTION>
PRO FORMA
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1996 1995
----------- ----------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Revenues.................................................... $ 157,336 $ 118,635
========== ==========
Operating loss.............................................. $ (8,075) $ (19,706)
========== ==========
Loss from continuing operations before extraordinary item... $ (33,311) $ (46,419)
========== ==========
Net loss attributable to common stock....................... $ (61,685) $ (83,944)
========== ==========
Net loss per share attributable to common stock............. $ (1.31) $ (1.80)
========== ==========
Pro forma weighted average shares outstanding............... 46,992,526 46,722,517
========== ==========
</TABLE>
4. CERTAIN TRANSACTIONS
The Company has entered into certain operating and financing transactions
with related parties as described below.
CHRISTIAN NETWORK, INC.
The Company has entered into several agreements with The Christian Network,
Inc. and certain of its for profit subsidiaries (individually and collectively
referred to herein as "CNI"). The Christian Network, Inc. is a section 501(c)(3)
not-for-profit corporation to which Mr. Lowell W. Paxson, the majority
stockholder of the Company, has been a substantial contributor and of which he
was a member of the Board of Stewards through 1993.
Investment in Broadcast Properties. At December 31, 1996, the Company had
investments in broadcast properties of $12,810,087 ($16,481,345 in 1995) related
to the Company's financing of certain broadcasting acquisitions for CNI and, at
December 31, 1996 as described below, held a demand note from CNI which had been
made to finance working capital requirements. In connection with the financing
of broadcast acquisitions, the Company has obtained TBAs with the applicable
stations and has obtained options to purchase certain of these stations (see
Note 8).
During 1996, the Company acquired certain stations from CNI for total
consideration of approximately $17,200,000.
KLDT-TV. During 1995, in connection with CNI securing the rights to
acquire television station KLDT-TV in Dallas, Texas and, prior to such
acquisition, operate the station pursuant to a TBA, Mr. Paxson initially loaned
CNI $1,000,000 to make a deposit in respect to such acquisition and guaranteed
the obligations of CNI under the purchase agreement and the TBA. On January 9,
1996, the Company purchased such note from Mr. Paxson at its face value.
F-12
<PAGE> 60
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1996, as a result of third party challenges to the FCC license
renewal application by KLDT-TV, CNI withdrew its application with the FCC for
the license of KLDT-TV. In connection therewith, the Company, CNI and certain
parties attempting to acquire KLDT-TV's FCC license entered into a settlement
agreement whereby CNI, and as a result, the Company, would be repaid a total of
$925,000 in connection with their cumulative investments in KLDT-TV. As a result
of the settlement agreement, the Company recorded a charge to operations of
approximately $252,000 in connection with its investment related to KLDT-TV.
CNI Agreement. The Company and CNI entered into an agreement in May 1994
(the "CNI Agreement") under which the Company agreed that, if the tax exempt
status of CNI were jeopardized by virtue of its relationships with the Company
and its subsidiaries, the Company would take certain actions to ensure that
CNI's tax exempt status would no longer be so jeopardized. Such steps could
include, but not be limited to, rescission of one or more transactions or
payment of additional funds by the Company. The Company believes that all of its
agreements with CNI have been on terms as favorable to CNI as it would obtain in
arm's length transactions. The Company intends any future agreements with CNI to
be as favorable to CNI as CNI would obtain in arm's length transactions.
Accordingly, if the Company's activities with CNI are consistent with the terms
governing their relationship, the Company believes that it will not be required
to take any actions under the CNI Agreement. However, there can be no assurance
that the Company will not be required to take any actions under the CNI
Agreement at a material cost to the Company.
Demand Note. At December 31, 1996, the Company had advanced CNI $2,993,000
under a demand note bearing interest at the prime rate (8.25% at December 31,
1996). The outstanding principal is due on or before January 1, 1998 and has
been included within investments in broadcast properties in the accompanying
consolidated balance sheet at December 31, 1996.
WFCT-TV. The Company leases certain broadcasting assets to CNI in
connection with its operation of WFCT-TV for fees of $60,000 per annum.
Worship Channel Studio. CNI and the Company have contracted for the
Company to lease CNI's television production and distribution facility to the
Company for the purpose of producing television programming for inTV. During the
years ended December 31, 1996, 1995 and 1994, the Company incurred rental
charges in connection with this agreement of $193,000, $174,000 and $68,000,
respectively.
SPORTS FRANCHISES
Bobcats. During January 1996, the Company entered into a limited
partnership agreement to co-own and operate an Arena Football League Franchise
in West Palm Beach, Florida. The Company acquired for $900,000 a 1% general
partnership interest and a 44% limited partnership interest in Florida Sports
Enterprises Limited Partnership (FSELP), a Florida limited partnership of which
the managing general partner is Florida Bobcats Football, Inc. The Company then
transferred all of its economic interests in its limited partnership interest to
Mr. Paxson for a cash payment of $900,000. Additionally, the Company retained an
option to reacquire from Mr. Paxson the limited partnership interest for a
period of 10 years for $905,000 in cash. During 1996, the Company made
additional investments in FSELP of approximately $657,000.
During the fourth quarter of 1996, in connection with its acquisition of
another Arena Football League franchise, the Company formally withdrew as a
general partner of FSELP and renounced its rights to acquire the transferred
interests in the limited partnership interest from Mr. Paxson. Further, the
Company wrote off its additional investment of $657,000 in FSELP.
Hockey. During June 1996, the Company, through Palm Beach Hockey Sports
Limited Partnership (PBH), acquired an inactive American Hockey League Franchise
for Palm Beach County, Florida. The cost of acquiring the franchise totaled
approximately $2,285,000 of which the Company paid $1,185,000 at the time the
franchise agreement was signed and agreed to serve as guarantor on a note
payable for $1,100,000 due May 1997 for the remainder of the purchase price. As
part of the franchise agreement, the Company has
F-13
<PAGE> 61
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
agreed to capitalize the partnership with up to $5,000,000, including the
purchase price of the franchise. The terms of the franchise agreement require
PBH to activate the franchise and field a team for the 1997-1998 season.
Miami Arena Football. During the fourth quarter of 1996, the Company
acquired the rights to an Arena Football League franchise in Miami, Florida and
in connection therewith was required to divest itself of its interests in FSELP.
The cost of the franchise was $1,000,000 which was paid by the Company at the
time the agreement was consummated. Under the terms of the franchise agreement,
the Company established a $100,000 standby letter of credit in favor of the
League. The Company is required to field an Arena Football team for the 1998
season under the terms of its agreements with the Arena Football League.
Other Matters. In connection with the preparation, review and analysis of
a project to construct and partially own a sports arena in West Palm Beach,
Florida, the Company incurred approximately $527,000 in costs in 1996 relating
primarily to feasibility and design studies. Subsequent to the completion of
such studies, the Company abandoned the project and charged such costs to 1996
operations.
HOME SHOPPING NETWORK, INC.
On August 25, 1995, the Company and Mr. Paxson agreed with Home Shopping
Network, Inc. ("HSN") to, among other things, terminate HSN's rights under a
consulting agreement between Mr. Paxson and HSN in consideration of a payment to
HSN by the Company of $1,200,000. Mr. Paxson has agreed with the Company that he
will not compete with the Company for a period ending on December 31, 1999 (the
date that the HSN consulting agreement would have otherwise terminated) or the
date of a change in control (as defined with respect thereto) of the Company. In
connection with its payment to HSN, the Company recorded an intangible asset of
$1,200,000 which is being amortized through December 1999.
TODD COMMUNICATIONS, INC.
In 1993, Mr. Paxson contributed to the Company a demand note receivable in
the amount of $1,750,000 from Todd Communications, Inc. ("Todd Communications"),
a company which owned WFSJ-FM (St. Augustine, Florida) and was beneficially
owned by members of Mr. Paxson's family. Interest income recognized related to
the note aggregated approximately $71,000, $110,000 and $70,900 for the years
ended December 31, 1996, 1995 and 1994, respectively. Todd Communications also
had a note outstanding to Mr. Paxson in the principal amount of $1,643,000.
During June 1996, the Company acquired Todd Communications for aggregate
consideration of $5,000,000, consisting of the cancellation of the Todd note
held by the Company in the principal amount of $1,822,000, assumption and
immediate repayment by the Company of the note to Mr. Paxson and the issuance of
shares of Class A Common Stock valued at approximately $1,535,000 to the
shareholders of Todd Communications.
DP MEDIA, INC.
In connection with the acquisition by DP Media, Inc. (DP Media) of WEBZ-FM
(formerly WMTO-FM), during September 1996, the Company agreed to loan up to
$750,000 to DP Media, a company beneficially owned by members of Mr. Paxson's
family. The loan bears interest at the rate of 10%, requires monthly principal
and interest payments and matures in November 2003. The loan is secured by the
assets of DP Media. At December 31, 1996, the outstanding balance on this loan
was approximately $525,000.
In 1996, the Company entered into a five-year agreement with DP Media under
which the Company agreed to pay a net minimum monthly fee of $22,000 for all of
the thirty and sixty second spot time of WEBZ-FM. The agreement is cancellable
upon six months written notice by either party.
F-14
<PAGE> 62
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
WORLD TRAVELERS NETWORK
On January 1, 1996, Mr. Paxson purchased substantially all of the assets of
the World Travelers Network from the Company at their net book value of
approximately $70,000.
SOUTH CAROLINA RADIO NETWORK
Effective January 1, 1996, Mr. Paxson purchased substantially all of the
assets of the South Carolina Radio Network from the Company at their net book
value of approximately $45,000. Mr. Paxson subsequently sold such assets to a
third party for $150,000, with the excess over $45,000 being paid to the Company
in accordance with the parties' agreement.
CONSULTING AGREEMENT
During 1996, the Company entered into a one year consulting arrangement
with the former Chairman of ANG whereby such individual will provide review,
implementation and development consulting services to the Company with respect
to its general and medical insurance programs and policies and executive
insurance, deferred compensation and benefit planning as well as general
financial consulting services. Consulting expense in 1996 related to this
agreement totaled $600,000. This agreement expires in June 1997 and the
Company's commitment under this agreement for 1997 is $600,000. The consultant
was also granted 75,000 nonqualified stock options with a fair value of $930,000
during February 1996.
BOARD OF DIRECTORS
The Company has entered into transactions with certain members of its Board
of Directors.
Communications Equity Associates, Inc. ("CEA"). The Chairman of the Board
and Chief Executive Officer of CEA has been a director of the Company since
February 1995. The Company engaged CEA as a financial advisor in connection with
certain private placements and various other lending relationships. Fees paid to
CEA for these services totaled approximately $250,000, $1,300,000 and $1,855,000
for the years ended December 31, 1996, 1995 and 1994, respectively.
Stockholders Agreement. Certain entities controlled by Mr. Paxson and
entities which are affiliates of a director of the Company are parties to a
stockholders agreement whereby the parties to such agreement were granted
registration rights with respect to certain shares of common stock held by such
parties and the right of first refusal to acquire a pro rata share of any new
securities the Company may issue. Additionally, the stockholders agreement
grants certain cosale rights in the event that Mr. Paxson should sell more than
a predetermined percentage of his ownership interest in the Company.
S. William Scott. S. William Scott, a director of the Company since
February 1995, has an arrangement with the Company to provide consulting
services to the Company with respect to the development of its news programming
for its radio and television broadcast business and its radio network business.
Mr. Scott was paid approximately $81,000, $80,000 and $84,000 for such services
during the years ended December 31, 1996, 1995 and 1994, respectively.
Additionally, Mr. Scott received benefits under the Company's health and
benefits plan and was granted options to purchase 20,000 shares of stock under
the Company's stock incentive plan.
F-15
<PAGE> 63
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Broadcasting towers and equipment..................... $122,771,345 $ 70,179,364
Office furniture and equipment........................ 12,833,246 8,370,232
Buildings, billboards and leasehold improvements...... 21,354,005 9,447,395
Land and land improvements............................ 13,830,692 7,418,039
Aircraft, vehicles and other.......................... 9,422,324 4,851,576
------------ ------------
180,211,612 100,266,606
Accumulated depreciation.............................. (35,796,200) (20,407,526)
------------ ------------
Property and equipment, net........................... $144,415,412 $ 79,859,080
============ ============
</TABLE>
Depreciation expense aggregated $15,197,945, $10,083,135 and $5,433,038 for
the years ended December 31, 1996, 1995 and 1994, respectively.
6. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
FCC licenses.......................................... $191,624,748 $ 76,313,074
Goodwill.............................................. 36,467,957 9,444,500
Covenants not to compete.............................. 17,425,145 14,502,375
Favorable lease and other contracts................... 8,598,155 6,801,433
------------ ------------
254,116,005 107,061,382
Accumulated amortization.............................. (33,706,584) (22,743,235)
------------ ------------
Intangible assets, net................................ $220,409,421 $ 84,318,147
============ ============
</TABLE>
Amortization expense related to intangible assets aggregated $10,669,065,
$7,621,848 and $5,940,575 for the years ended December 31, 1996, 1995 and 1994,
respectively.
7. OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Loan origination costs................................. $11,958,684 $10,722,939
Escrow funds for station acquisitions.................. 10,510,000 6,672,860
Deposits on building and equipment..................... 822,623 1,377,964
Organization costs..................................... 1,650,746 768,307
Other assets........................................... 5,157,348 917,361
----------- -----------
30,099,401 20,459,431
Accumulated amortization............................... (1,949,702) (562,737)
----------- -----------
Other assets, net...................................... $28,149,699 $19,896,694
=========== ===========
</TABLE>
Amortization expense related to organization costs and other assets
aggregated $107,899, $66,126 and $23,915 for the years ended December 31, 1996,
1995 and 1994, respectively. Additionally, during the years
F-16
<PAGE> 64
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ended December 31, 1996, 1995 and 1994, the Company recorded amortization of
loan origination costs of $1,643,000, $948,000 and $1,006,000, respectively, and
classified such amortization as interest expense.
Loan origination costs of $10,625,727 associated with debt extinguished
through proceeds from the senior subordinated notes are reflected in the 1995
statement of operations as an extraordinary item.
8. INVESTMENTS IN BROADCAST PROPERTIES
Investments in broadcast properties represent primarily the Company's
financing of broadcasting asset acquisitions by third party licensees, purchase
options and equity investments in entities owning broadcasting stations.
Interest rates on financing arrangements range from LIBOR plus .5% (8.25% at
December 31, 1996) to 12.125% with loans maturing in five to seven years. In
connection with the financing of acquisitions by third parties, the Company has
obtained the right to provide programming for the related stations pursuant to
TBAs and has obtained options to purchase certain stations. Unpaid principal
balances will be applied toward the acquisition cost upon exercise of purchase
options. The Company records interest on certain investments as received.
Investments in broadcast properties at December 31, 1996 consist of:
<TABLE>
<CAPTION>
INVESTMENT
INVESTMENT IN/STATION AMOUNT
- ------------------------------------------------------- ----------------------
<S> <C>
CNI: $12,810,087
WFCT-TV(1)
WCTD-TV(2)
WIRB-TV(3)
WHKE-TV (See Note 19)
KLDT-TV (See Note 4)
Ponce-Nicasio Broadcasting: 8,549,583
KCMY-TV(4)
Fant Broadcasting: 8,068,500
WNAL-TV (See Note 18)
Roberts Broadcasting: 6,459,163
WRMY-TV (See Note 19)
KZAR-TV (See Note 19)
Southern Land Investors(7) 4,460,000
United Broadcast Group: 3,771,672
KINZ-TV(5)
Cocola Broadcasting: 3,213,122
WHBI-TV(6)
KWOK-TV(8)
Horizon Broadcasting: 2,483,960
WJUE-TV (See Note 18)
Other 3,480,935
-----------
$53,297,022
===========
</TABLE>
- ---------------
(1) The Company has an option to acquire the station through December 2003 for
$191,000 plus any unpaid principal balance.
(2) The Company has an option to acquire the station through April 1999 for
$100,000 plus any unpaid principal balance. Upon exercise of the option, the
Company will repay the remaining principal balance
F-17
<PAGE> 65
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
on a third party note payable with an outstanding balance of approximately
$565,000 at December 31, 1996. The note is guaranteed by Mr. Paxson and the
Company.
(3) The investment at December 31, 1996 represents initial financing of the
station's acquisition by CNI. The Company currently has no purchase option
relating to this station.
(4) The Company has an agreement to purchase the station for $17,000,000 net of
approximately $8,500,000 loaned as of December 31, 1996. The Company has
granted the seller a put option whereby the purchase closing will occur at
the seller's discretion prior to May 31, 1998 or the Company will then be
allowed to exercise its call option and acquire the station (See Note 18).
(5) The Company currently owns 49% of the station and has funded substantially
all of the purchase price of the remaining 51%, which is expected to be
acquired in the second quarter of 1997.
(6) The station is not currently on the air. The investment relates to financed
expenditures for the build-out of the station.
(7) In October 1996, the Company financed the acquisition by a third party of 48
acres of land through a $4,500,000 secured loan which matures in April 1998.
In connection with such financing, the Company was granted an option to
acquire easements on such property to construct eighteen billboard faces in
exchange for $1,500,000 which is payable through the forgiveness of an
equivalent principal amount of the loan. The billboard operations of the
Company are reported as part of the Radio Segment and therefore at December
31, 1996, the secured loan is recorded as an investment in broadcast
properties.
(8) Balance represents buyer's escrow deposit. The Company intends to enter into
a TBA with respect to this station and currently holds no option to acquire.
9. PROGRAM RIGHTS
Program rights relate to the broadcast operations of Paxson Network
Affiliated Television stations as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Program rights............................................ $ 6,463,806 $ 4,290,715
Accumulated amortization.................................. (3,876,251) (2,493,357)
----------- -----------
2,587,555 1,797,358
Less current program rights............................... (1,512,019) (1,412,544)
----------- -----------
Program Rights, net....................................... $ 1,075,536 $ 384,814
=========== ===========
</TABLE>
Program rights amortization expense aggregated $1,381,582, $1,765,942 and
$820,754 for the years ended December 31, 1996, 1995 and 1994, respectively.
Program rights payable represent the obligation incurred to secure the
right to broadcast program material in accordance with related contractual
agreements. Future minimum annual payments under these contractual agreements as
of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
BROADCAST RIGHTS BARTER RIGHTS TOTAL
PAYMENTS EXPIRATION RIGHTS
---------------- ------------- ----------
<S> <C> <C> <C>
1997........................................ $1,210,926 $418,033 $1,628,959
1998........................................ 643,498 149,800 793,298
1999........................................ 183,262 -- 183,262
2000........................................ 23,700 -- 23,700
---------- -------- ----------
$2,061,386 $567,833 $2,629,219
========== ======== ==========
</TABLE>
F-18
<PAGE> 66
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Revolving credit facility, total commitment of $200,000,000,
maturing June 30, 2002.................................... $ -- $10,000,000
Mortgage note payable, interest at 10%, principal and
interest payment of $3,000 due monthly through April 1999,
remaining balance due April 1999.......................... 167,778 184,705
Mortgage note payable, interest at 8.83%, principal and
interest payment of $8,284 due monthly from June 1995 to
May 2010.................................................. 784,463 812,083
Notes payable, interest at 7.75% to 9.325%, aggregate
principal and interest payments of $68,009 due monthly,
maturing at varying dates through June 2003, secured by
purchased assets.......................................... 3,099,956 1,917,826
---------- -----------
4,052,197 12,914,614
Less current portion........................................ (644,509) (430,590)
---------- -----------
$3,407,688 $12,484,024
========== ===========
</TABLE>
During November 1996, the Company amended its revolving credit facility and
increased the total commitment thereunder to $200,000,000. The aggregate
revolving commitment under the credit facility will decrease by $5,000,000 on
December 31, 1997 and by an amount ranging from $7,500,000 to $21,300,000 each
subsequent quarter thereafter until the termination of the credit facility on
June 30, 2002. Certain covenants of the credit facility restrict the amount of
borrowings available to the Company. At December 31, 1996, the Company had
approximately $95,000,000 available for borrowing under the credit facility.
Borrowings under the revolving credit facility will bear interest at a rate
equal to, at the option of the Company, either (i) the base rate (which is
defined as the higher of .5% plus the Federal Funds rate or the prime rate most
recently announced by the agent under the credit facility) or (ii) LIBOR, in
each case plus an applicable margin determined by reference to the ratio of
total debt to cash flow of the Company. This revolving credit facility is
secured by substantially all of the Company's assets (as well as a negative
pledge on all real property interests) and subsidiary guarantees.
The revolving credit facility contains a number of covenants that restrict,
among other things, the Company's ability to incur additional indebtedness,
incur liens, make investments, pay dividends or make other restricted payments,
consummate certain asset sales, consolidate with any other person or sell,
assign, transfer, lease, convey or otherwise dispose of substantially all of the
assets of the Company. Prior to making any advance under the new credit
facility, the Company will be required to be in compliance with all financial
and operating covenants. Certain acquisitions to be funded under the new credit
facility are expected to require approval by 66 2/3% of the lenders thereunder.
The lenders under the new credit facility will be paid a commitment fee at the
rate of 0.5% per year on unused commitments, payable quarterly.
Aggregate maturities of long-term debt at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 644,509
1998........................................................ 709,569
1999........................................................ 861,937
2000........................................................ 484,099
2001........................................................ 307,914
Thereafter.................................................. 1,044,169
----------
$4,052,197
==========
</TABLE>
F-19
<PAGE> 67
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SENIOR SUBORDINATED NOTES
On September 28, 1995, the Company issued $230,000,000 of senior
subordinated notes (the "Notes") at a discount, netting proceeds of $227,309,000
to the Company. The Company accretes the original issue discount over the term
of the Notes using the effective interest method. At December 31, 1996, the
unamortized discount was $2,344,904 ($2,625,089 in 1995). Interest on the Notes
accrues at 11.625% to yield an effective rate per annum of 11.875%. Interest
payments are payable semiannually on each April 1 and October 1, commencing on
April 1, 1996. The principal balance is due at maturity on October 1, 2002. As
part of the Note agreement, the Company filed a registration statement relating
to the Notes with the Securities and Exchange Commission (the "SEC"), and
exchanged the registered notes for the Notes in the first quarter of 1996.
The Notes contain certain covenants which, among other things, restrict
additional indebtedness, payment of dividends, stock issuance of subsidiaries,
certain investments and transfers or sales of assets, and provide for the
repurchase of the Notes in the event of a change in control of the Company. The
Notes are general unsecured obligations of the Company subordinate in right of
payment to all existing and future senior indebtedness of the Company and senior
in right to all future subordinated indebtedness of the Company.
The Notes become redeemable at the option of the Company on October 1,
1999, 2000 and 2001 at a redemption price of 104%, 102% and 100%, respectively,
of the outstanding principal amount, plus accrued interest. Additionally, the
Company may redeem up to 25% of the original principal amount of the Notes with
proceeds from certain sales of Company stock or assets at any time prior to
October 1, 1998 at a redemption price of 110% of the outstanding principal
amount, plus accrued interest. There are no mandatory redemption requirements.
12. INCOME TAXES
As a result of tax losses incurred by the Company during 1996, 1995 and
1994, no current tax provision has been recorded for such years. The deferred
benefit for federal and state income taxes for the three years ended December
31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax benefit
Federal................................... $ -- $(1,152,000) $(1,503,200)
State..................................... -- (128,000) (176,800)
----------- ----------- -----------
Total............................. $ -- $(1,280,000) $(1,680,000)
=========== =========== ===========
</TABLE>
F-20
<PAGE> 68
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax assets and deferred tax liabilities reflect the tax effect of
differences between financial statement carrying amounts and tax bases of assets
and liabilities as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................... $ 24,338,000 $ 13,599,000
Deferred compensation............................... 6,359,000 3,725,000
Allowance for doubtful accounts..................... 599,000 385,000
------------ ------------
31,296,000 17,709,000
Deferred tax asset valuation allowance.............. (23,615,000) (15,009,000)
------------ ------------
Deferred tax assets, net.............................. 7,681,000 2,700,000
Deferred tax liabilities:
Tax over book depreciation and amortization......... (7,681,000) (2,700,000)
------------ ------------
Total....................................... $ -- $ --
============ ============
</TABLE>
A portion of the net operating losses were acquired in the acquisition of
ANG. Future recognition of the benefit from these acquired losses will be
applied first to reduce goodwill related to the acquisition, then to reduce
other non-current intangible assets related to the acquisition and then to
reduce income tax expense.
The Company and its subsidiaries have filed consolidated tax returns for
all periods subsequent to December 15, 1993.
The reconciliation of income tax benefit attributable to continuing
operations, computed at the U.S. federal statutory tax rate, to the provision
for income taxes is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ------------
<S> <C> <C> <C>
Tax benefit at U.S. federal statutory tax
rate..................................... $(8,914,000) $(11,417,000) $ (2,190,305)
State income tax benefit, net of federal
tax...................................... (1,038,000) (1,343,000) (257,682)
Non deductible items....................... 1,346,000 597,000 83,000
Valuation allowance........................ 8,606,000 10,883,000 684,987
----------- ----------- ------------
Benefit for income taxes................... $ -- $ (1,280,000) $ (1,680,000)
=========== ============ ============
</TABLE>
No tax effect has been included related to the discontinuance of the Paxson
Network Affiliated Television segment or the 1995 debt retirement for which the
extraordinary item is included in the Company's net operating loss carryforward
for which a valuation allowance has been provided.
The Company has net operating loss carryforwards for income tax purposes
subject to certain carryforward limitations of approximately $64,048,000 at
December 31, 1996 expiring through 2011. A portion of the net operating losses,
amounting to approximately $7,900,000, relate to ANG and are limited to annual
utilization as a result of the change in ownership. Additionally, further
limitations on the utilization of the Company's net operating tax loss
carryforwards could result in the event of certain changes in the Company's
ownership.
13. EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
SAVINGS AND PROFIT SHARING PLAN
The Company has retirement savings and cafeteria plans pursuant to Sections
401(k) and 125 of the Internal Revenue Code which cover substantially all of the
Company's employees. Employer contributions to the retirement savings plan are
discretionary. For the plan year ended December 31, 1996, the Company made
retirement savings contributions of $175,000. The Company elected not to make
retirement savings contributions for the two plan years ended December 31, 1995.
Under the cafeteria plan, employees may elect
F-21
<PAGE> 69
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to participate in health, dental, life and disability insurance benefit plans
funded through employee payroll deductions.
DEFERRED COMPENSATION PLAN
During 1996, the Company established a supplemental deferred compensation
plan for certain key executives. Under this program, participants may defer
certain amounts of their base compensation and receive a corresponding match by
the Company. Participants vest 100% in the company match after five years of
service. Upon retirement, participants shall be eligible to receive from the
Company certain amounts based on the initial deferral and the Company match.
Certain amounts are also due if a participant terminates employment (other than
by his voluntary action or discharge for cause) before they attain retirement
age. The participants in this plan are general creditors of the Company with
respect to the benefits under the plan. The expense associated with this program
was approximately $66,000 for 1996. The cash surrender value of these policies
at December 31, 1996 is approximately $100,000 and the total liability under
this program at December 31, 1996 is approximately $111,000.
LIFE INSURANCE
The Company maintains a life insurance agreement for the benefit of Mr.
Paxson and his spouse (the "Insureds") whereby the Company assists the owner of
the policy in paying premiums on the policy by contributing toward the payment
of premiums on the policy. Upon the death of the survivor of the Insureds, the
Company will be repaid its premium advance. The policy owner will retain all
remaining proceeds. The expense associated with this agreement was approximately
$139,000 for 1996.
STOCK INCENTIVE PLANS
In November 1994 and October 1996, the Company established the Stock
Incentive Plan (the "1994 Plan") and the 1996 Stock Incentive Plan (the "1996
Plan"), respectively, to provide incentives to officers, employees and others
who perform services for the Company through issuance of options and restricted
stock. The number of options, exercise prices and exercise dates granted under
each plan are at the discretion of the Company's Compensation Committee and may
be in the form of either incentive or nonqualified stock options or awards of
restricted stock. At December 31, 1996, 310,154 shares of Class A common stock
were available for issuance under the Plans.
When options are granted, a non cash charge representing the difference
between the exercise price and the fair market value of the common stock
underlying the vested options on the date of grant is recorded as option plan
compensation expense with the balance deferred and amortized over the remaining
vesting period. For the years ended December 31, 1996 and 1995, the Company
recognized approximately $7,900,000 and $10,800,000, respectively, of option
plan compensation expense and expects to recognize an additional approximate
$6,400,000 of expense over the next five years as such options vest.
Options granted under the 1994 Plan are pursuant to a five year vesting
cycle commencing retroactively to the participant's date of employment or are
exercisable in full at the date of grant. Options granted under the 1996 Plan
are pursuant to a five year vesting cycle commencing January 1, 1996, if the
participant was employed by the Company at January 1, 1996 and January 1, 1997,
if the participant commenced employment with the Company subsequent to January
1, 1996, or, in certain instances, are exercisable in full at date of grant. All
options granted expire over a ten year period.
F-22
<PAGE> 70
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the Company's 1994 and 1996 stock option plans as of December
31, 1996 and 1995 and changes during the years ending on those dates is
presented below:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of year........... 1,752,405 $3.42 -- $ --
Granted.................................. 2,030,216 3.38 1,847,005 3.42
Forfeited................................ (39,000) 3.42 (4,800) 3.42
Exercised................................ (152,928) 3.22 (89,800) 3.42
--------- ----- --------- -----
Outstanding, end of year................. 3,590,693 $3.41 1,752,405 $3.42
========= ===== ========= =====
Weighted average fair value of options
granted during the year................ $8.23 $8.66
===== =====
</TABLE>
The majority of the Company's option grants have been at exercise prices of
$3.42, a price which has historically been below the fair market value of the
underlying common stock at the date of grant.
FAIR VALUE DISCLOSURES
Had compensation cost for the Company's option plans been determined based
on the fair value at the grant dates, consistent with SFAS 123, the Company's
net loss and net loss per share would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net loss:
As reported........................................... $(26,218,901) $(33,473,290)
Pro forma............................................. (28,535,857) (36,677,571)
Net loss per share:
As reported........................................... $ (0.60) $ (0.97)
Pro forma............................................. (0.65) (1.07)
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model assuming a dividend yield of 0.0%,
expected volatility of 70%, a risk free interest rate of 6% and weighted average
expected option terms of 7.5 years for both periods.
The following tables summarize information about employee and director
stock options at December 31, 1996:
OUTSTANDING OPTIONS
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE WEIGHTED
OUTSTANDING AT REMAINING AVERAGE
DECEMBER 31, CONTRACTUAL EXERCISE
EXERCISE PRICES 1996 LIFE PRICE
- --------------- ---------------- ------------ ---------
<C> <C> <C> <C>
$0.01 13,650 7.5 $0.01
$3.42 3,577,043 7.5 $3.42
</TABLE>
F-23
<PAGE> 71
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OPTIONS EXERCISABLE
<TABLE>
<CAPTION>
NUMBER WEIGHTED
EXERCISABLE AT AVERAGE
DECEMBER 31, EXERCISE
EXERCISE PRICES 1996 PRICE
- --------------- --------------- ---------
<C> <C> <C>
$0.01 13,650 $0.01
$3.42 1,759,843 $3.42
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Paxson is employed under an employment agreement providing for him to
be employed through December 31, 1999, unless sooner terminated. The agreement
provides that Mr. Paxson's salary will be $423,500 in 1997, $465,850 in 1998 and
$500,000 in 1999. In addition to his base salary, Mr. Paxson may receive an
annual bonus at the discretion and in an amount set by members of the
Compensation Committee that are not employees of the Company.
The Company has other employment agreements with individuals under which
the individuals are paid a base salary and may receive annual incentives based
on revenue amounts and stock options based on the cash flow of the stations they
manage.
NOTES RECEIVABLE FROM THE SALE OF STOCK
During December 1996, the Company approved a program under which it would
extend up to $2,800,000 of loans to certain members of management for the
purchase, in the open market, of Company common stock by those individuals. The
notes are full recourse promissory notes bearing interest at 5.75% per annum and
are collateralized by the stock purchased with the loan proceeds. Principal and
interest is payable at maturity, March 31, 1999. The outstanding balance on such
loans aggregated $1,873,139 at December 31, 1996 and is reflected as stock
subscription notes receivable in the accompanying balance sheet.
14. REDEEMABLE PREFERRED STOCK
The following represents a summary of the changes in the Company's
preferred stock during the three years ended December 31, 1996:
<TABLE>
<CAPTION>
REDEEMABLE REDEEMABLE REDEEMABLE REDEEMABLE
EXCHANGEABLE JUNIOR SENIOR SERIES B
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1994........ $ -- $ -- $ 11,634,907 $ --
Issuances of shares............... -- 26,694,761 -- 1,248,210
Accretion......................... -- 15,648 325,147 7,968
Accrual of cumulative dividends... -- 97,644 2,100,000 18,493
Redemptions....................... -- -- -- --
------------ ----------- ------------ -----------
Balance at December 31, 1994...... -- 26,808,053 14,060,054 1,274,671
Issuance of shares................ -- -- -- --
Accretion......................... -- 634,988 332,156 325,208
Accrual of cumulative dividends... -- 4,090,869 2,431,872 752,775
Redemptions....................... -- -- -- --
------------ ----------- ------------ -----------
</TABLE>
F-24
<PAGE> 72
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
REDEEMABLE REDEEMABLE REDEEMABLE REDEEMABLE
EXCHANGEABLE JUNIOR SENIOR SERIES B
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995...... -- 31,533,910 16,824,082 2,352,654
Issuances......................... 143,197,254 -- -- --
Accretion......................... 159,977 650,084 1,805,599 3,418,615
Accrual of cumulative dividends... 4,571,919 4,596,502 2,374,740 730,066
Redemption premium................ -- -- 700,000 250,000
Redemptions....................... -- -- (21,704,421) (6,751,335)
------------ ----------- ------------ -----------
Balance at December 31, 1996...... $147,929,150 $36,780,496 $ -- $ --
============ =========== ============ ===========
</TABLE>
REDEEMABLE EXCHANGEABLE PREFERRED STOCK
The Redeemable Exchangeable preferred stock was issued on October 4, 1996
for gross proceeds of $150,000,000. The holder of Redeemable Exchangeable
preferred stock is entitled to cumulative dividends at a rate of 12.5% of the
liquidation price, per annum, payable semi-annually beginning April 30, 1997.
The Company, at its option, may pay dividends on or before October 31, 2002
either in cash or by the issuance of additional shares of Redeemable
Exchangeable preferred stock.
The Company is required, subject to certain conditions, to redeem all of
the Redeemable Exchangeable preferred stock outstanding on October 31, 2006 plus
accumulated and unpaid dividends to the date of redemption. Additionally, the
Redeemable Exchangeable preferred stock is redeemable, subject to certain
restrictions, at the option of the Company on or after October 31, 2001 at the
redemption prices set forth below (expressed as a percentage of liquidation
price):
<TABLE>
<CAPTION>
TWELVE MONTH PERIOD
BEGINNING OCTOBER 31,
- ------------------------------------------------------------
<S> <C>
2001................................................... 106.250%
2002................................................... 104.167%
2003................................................... 102.083%
2004 and thereafter.................................... 100.000%
</TABLE>
The Redeemable Exchangeable preferred stock also provides redemption
features in the event of certain changes in ownership control of the Company.
On or before October 31, 1999, subject to certain restrictions, the Company
may use the proceeds of a Public Equity Offering or a Major Asset Sale, as
defined, to redeem for cash up to an aggregate of 35% of the shares of
Redeemable Exchangeable preferred stock at a redemption price of 112.500% of the
liquidation price of such shares plus accumulated and unpaid dividends.
Subject to certain limitations, the Company may, at its option and provided
it is not contractually prohibited from doing so, exchange the outstanding
Redeemable Exchangeable preferred stock for Exchange Debentures as defined.
Additionally, the Company has agreed to exchange all outstanding Redeemable
Exchangeable preferred stock for Exchange Debentures within 60 days from the
date on which the Company is no longer contractually prohibited from effecting
such exchange.
The Exchange Debentures bear interest at 12.5% per annum and are due
October 31, 2006. The Exchange Debentures have redemption features similar to
those of the Redeemable Exchangeable preferred stock.
Cumulative Redeemable Exchangeable preferred dividends in arrears
aggregated $4,571,919 at December 31, 1996.
F-25
<PAGE> 73
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
REDEEMABLE JUNIOR PREFERRED STOCK
Redeemable Junior preferred stock was issued with 4,853,628 detachable
Class C common stock warrants (after giving effect to the stock dividend during
January 1995) on December 22, 1994 in exchange for $33,000,000. The holder of
Junior preferred stock is entitled to cumulative dividends at a rate of 12% per
annum prior to the seventh anniversary of the issue date (December 22, 2001),
13% per annum from the seventh through the eighth anniversary of the issue date
(December 22, 2002), and 14% per annum after the eighth anniversary of the issue
date. Semi-annual dividend payments are required commencing December 31, 1999.
The Junior preferred shares are redeemable, at the option of the Company,
at $1,030 plus unpaid, deferred, and accrued dividends prior to the third
anniversary of the issue date (December 22, 1997), $1,020 plus unpaid, deferred,
and accrued dividends after the third and prior to the fourth anniversary of the
issue date (December 22, 1998), and $1,000 plus unpaid, deferred, and accrued
dividends per share on or after the fourth anniversary of the issue date. A
mandatory redemption is scheduled on the ninth anniversary of the issue date
(December 22, 2003).
Cumulative Junior preferred dividends in arrears aggregated $8,785,015 and
$4,188,513 at December 31, 1996 and 1995, respectively.
REDEEMABLE SENIOR PREFERRED STOCK
Redeemable Senior preferred stock was originally issued with 225 detachable
redeemable common stock purchase warrants on December 15, 1993 in exchange for
$14,000,000. The holder of Redeemable Senior preferred stock was entitled to
preferential cumulative dividends at a rate of 15% of the liquidation price, per
annum, payable quarterly commencing on December 31, 1993. On January 1 of each
year, accrued and unpaid dividends were added to the liquidation price of the
stock. The holders of the Senior preferred stock, voting as a class, were
entitled to elect 25% of the Company's Board of Directors. Cumulative preferred
dividends in arrears aggregated $4,644,352 at December 31, 1995.
On October 4, 1996, the Company redeemed all of the outstanding shares of
Redeemable Senior preferred stock for an aggregate of $21,704,421. Of this
amount, $700,000 was considered a redemption premium over book value and
accounted for as a preferred stock dividend.
REDEEMABLE SERIES B PREFERRED STOCK
Redeemable Series B preferred stock was issued on December 22, 1994 as a
result of the exercise of 94.6223 detachable redeemable common stock purchase
warrants into 1,310,779 shares of Class A common stock and 436,926 shares of
Class B common stock which were then surrendered for Series B preferred stock.
The holder of Series B preferred stock was entitled to cumulative dividends at a
per annum rate of 15% per share, payable quarterly commencing on December 31,
1994. On January 1 of each year, accrued and unpaid dividends were added to the
liquidation price of the stock. Cumulative Series B preferred dividends in
arrears aggregated $771,268 at December 31, 1995.
On October 4, 1996, the Company redeemed all of the outstanding shares of
Redeemable Series B preferred stock for an aggregate of $6,751,335. Of this
amount, $250,000 was considered a redemption premium over book value and
accounted for as a preferred stock dividend.
F-26
<PAGE> 74
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
REDEMPTION FEATURES OF PREFERRED STOCK
The following table presents the redemption value of the two classes of
preferred stock outstanding at December 31, 1996 should each be redeemed in the
indicated year, assuming no dividends are paid prior to redemption, unless
required:
<TABLE>
<CAPTION>
JUNIOR EXCHANGEABLE
PREFERRED(1) PREFERRED(2)
------------ ------------
<S> <C> <C>
1997................................................... $47,939,640 $ --
1998................................................... 53,412,616 --
1999................................................... 59,102,420 --
2000................................................... 59,102,420 --
2001................................................... 59,102,420 325,005,167
</TABLE>
- ---------------
(1) Mandatorily redeemable on December 22, 2003, redeemable by the Company prior
to that date.
(2) Redeemable at the option of the Company on or after October 31, 2001. See
previous discussion for earlier redemption features on up to 35% of the
shares.
15. COMMON STOCK WARRANTS
CLASS A AND B COMMON STOCK WARRANTS
In connection with the 1993 Redeemable Senior preferred stock issuance, the
Company issued 225 detachable redeemable common stock purchase warrants
entitling the holder to purchase one common share per warrant at an exercise
price of $0.01 per share. On December 22, 1994, 94.6223 of the warrants were
exercised for 1,310,779 shares of Class A common stock and 436,926 shares of
Class B common stock and were then surrendered for the redeemable Series B
preferred stock. The remaining 130.3777 redeemable common stock purchase
warrants entitle the holders to purchase 2,709,129 Class A common shares and
903,043 Class B common shares (after giving effect to the stock dividend).
During April 1996, in connection with the Company's offering of 10.3
million previously unissued shares of Class A common stock, the holders of Class
A and B warrants surrendered their put provision requiring the Company to
repurchase the warrants, at the option of the holder, at the fair market value
per share on or after the seventh anniversary of the issue date (December 15,
2000). The holders of the warrants are entitled to demand registration rights
and piggyback registration rights following certain offerings of shares to the
public. On April 3, 1996, 32.2319 of the remaining warrants were exercised for
893,000 shares of Class A common stock.
CLASS C COMMON STOCK WARRANTS
In connection with the Redeemable Junior preferred stock issuance on
December 22, 1994, the Company issued 4,853,628 detachable Class C common stock
purchase warrants (after giving effect to the stock dividend), entitling the
holder to purchase one Class C common share per warrant at an exercise price of
$0.001 per share. Certain holders of these purchase warrants are entitled to
demand registration rights subsequent to the third anniversary of the issuance
date and piggyback registration rights six months following certain offerings of
shares to the public. During 1996, the terms of the Class C common stock
purchase warrants were modified to allow the issuance of Class A common stock
upon exercise of the warrants. Subsequent to such modification, 2,730,385 Class
C common stock warrants were exercised for 2,730,173 shares of Class A common
stock.
F-27
<PAGE> 75
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. COMMON STOCK
In November 1994, in connection with the merger with ANG, the Company
amended its capital structure to provide two classes of common voting stock,
Class A common stock (45,000,000 shares authorized) and Class B common stock
(7,000,000 shares authorized). Upon consummation of the recapitalization, the
Company's unclassified common stock outstanding was converted into 15,790,974
shares of Class A common stock and 5,263,658 shares of Class B common stock.
Upon consummation of the merger, the holders of ANG common stock received Class
A common stock in exchange for ANG common stock outstanding and such shares of
Class A common stock which were exchanged for the ANG common stock were listed
on the Nasdaq Small-Cap Market.
On December 22, 1994, the Company further amended its capital structure to
increase authorized shares of Class A common stock to 150,000,000 shares and
Class B common stock to 35,000,000 shares, and to designate a third class of
non-voting common stock, Class C common stock, 12,500,000 shares authorized. The
Class C common stock has a $0.001 par value.
On January 1, 1995, the Company announced a stock dividend for its common
stock of an additional one-half share for each common share outstanding for
holders of record on January 1, 1995. Weighted average shares outstanding for
the years ended December 31, 1994 and 1993 give effect to the Company's amended
capital structure related to the merger with ANG, and the stock dividend on
common shares outstanding on January 1, 1995.
On April 3, 1996, the Company sold 10,300,000 previously unissued shares of
its Class A common stock for net proceeds of approximately $154,800,000.
Class A common stock and Class B common stock will vote as a single class
in all matters submitted to a vote of the stockholders with each share of Class
A common stock entitled to one vote and each share of Class B common stock
entitled to ten votes; Class C common stock is non-voting. Each share of Class B
common stock is convertible, at the option of its holder, into one share of
Class A common stock at any time, and under certain circumstances, Class C
common stock may be converted, at the option of the holder, into Class A common
stock.
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting data
to develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The fair value estimates presented herein
are based on pertinent information available to management as of December 31,
1996. Although management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date and current estimates of fair value may differ significantly from the
amounts presented herein. The following methods and assumptions were used to
estimate the fair value of each class of financial instruments for which it is
practicable to estimate such value:
Cash and cash equivalents, accounts receivable, accounts payable and
accrued expenses. The fair values approximate the carrying values due to
their short term nature.
Investments in broadcast properties. The fair value of investments in
broadcast properties is estimated based on the net present value of the
future cash flows using a discount rate approximating current market rates.
The fair value approximates the carrying value.
F-28
<PAGE> 76
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Program rights payable. The fair value of program rights payable is
estimated based on the net present value of the future cash flows using a
discount rate approximating current market rates. The fair value
approximates the carrying value.
Long-term debt and Senior subordinated notes. The fair values of
long-term debt and senior subordinated notes are estimated based on current
market rates and instruments with the same risk and maturities. The fair
values approximate the carrying value.
Mandatorily redeemable securities. Redeemable preferred stock (Junior
and Exchangeable) is being accreted to its respective redemption values.
Interest rate caps. The Company's interest rate cap agreements were
originally entered into to meet covenants under variable rate revolving
credit loan agreements outstanding in prior periods, which were
extinguished during the year ended December 31, 1995, and currently do not
serve as a hedging vehicle. As a result, interest rate cap agreements
previously amortized to interest expense have been marked to market and net
losses of approximately $800,000 were recognized during the year ended
December 31, 1995 which are reflected in the consolidated statement of
operations as other income (expense). The Company has interest rate cap
agreements outstanding at December 31, 1996 with notional amounts totaling
$45 million. There is no variable rate debt outstanding at December 31,
1996. These interest rate cap agreements had no effect on the consolidated
statement of operations for the year ended December 31, 1996. The interest
rate cap agreements have termination dates of July 1997 through December
1997 and result in the Company receiving payments when the LIBOR rate
exceeds between 6.25% and 7.25%.
18. COMMITMENTS AND CONTINGENCIES
The Company incurred total expenses of approximately $7,415,000, $5,334,000
and $2,406,000 for the years ended December 31, 1996, 1995 and 1994,
respectively, under operating leases for broadcasting facilities and equipment,
employment agreements and on-air talent agreements. Future minimum annual
payments under these non-cancelable operating leases and agreements, as of
December 31, 1996, are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 8,702,000
1998........................................................ 7,139,000
1999........................................................ 6,549,000
2000........................................................ 4,101,000
2001........................................................ 3,018,000
Thereafter.................................................. 6,933,000
-----------
$36,442,000
===========
</TABLE>
The Company has entered into commitments for radio broadcast rights related
to sporting events that are not currently available for broadcast and are
therefore not included in the financial statements. The Company incurred total
sports rights expenses of approximately $3,676,000, $2,806,000 and $2,380,000
for the years ended December 31, 1996, 1995 and 1994, respectively, and had
total commitments of approximately $4,061,000 as of December 31, 1996.
As of December 31, 1996, the Company had entered into TBAs with 17 FCC
licensees which require monthly TBA payments ranging from $3,600 to $277,000 and
have effective terms ranging from one to ten years.
WHITEHEAD MEDIA, INC.
The Company initially financed the acquisition by Whitehead Media, Inc.
("Whitehead Media") of WTVX-TV and WOAC-TV. Whitehead Media subsequently
obtained financing from Banque Paribas, an
F-29
<PAGE> 77
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
affiliate of a holder of the Company's Junior preferred stock, the proceeds of
which were used to repay the debt owed by Whitehead Media to the Company and to
fund Whitehead Media's acquisition of WNGM-TV. The third party financing
provided to Whitehead Media, as amended, is unconditionally guaranteed by the
Company. The Company is permitted to operate stations WTVX-TV, WOAC-TV and
WNGM-TV pursuant to TBAs, and as a result of the third party financing to
Whitehead Media, has an option to purchase each of such stations, which options
to purchase would otherwise be prohibited under FCC rules and regulations
because each of such stations serves a market in which the Company owns another
television station which also serves the same market. During February and March
1997, the Company has contracted to sell its interests in these three stations.
(see Note 19).
ACQUISITION COMMITMENTS
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>
STATION MARKET SERVED (1) COMMITMENT AMOUNT
- ------- ----------------- -----------------
<S> <C> <C>
inTV:
WVVI-TV Washington, DC (2) $40,000,000
WBSX-TV Detroit, MI 35,000,000
KCMY-TV Sacramento, CA (3) 17,000,000
KYFC-TV Kansas City, MO 16,400,000
WHRC-TV Boston, MA 15,000,000
KAJW-TV Phoenix, AZ 12,000,000
WNAL-TV Birmingham, AL (4) 10,000,000
KBCB-TV Seattle, WA 8,000,000
KOOG-TV Salt Lake City, UT 7,700,000
WSJN-TV, WKPV-TV and WJWN-TV Puerto Rico (5) 7,000,000
WHBI-TV West Palm Beach, FL(12) 7,000,000
WSWB-TV Wilkes Barre-Scranton, PA 6,200,000
WRMY-TV Raleigh, Durham, NC (See Note 19) 4,150,000
KVUT-TV Little Rock, AR (6) 1,250,000
WOST-TV Providence, RI (7) 1,000,000
WJUE-TV Grand Rapids, MI (11) 1,250,000
KGLB-TV Tulsa, OK (8) 421,000
Paxson Radio:
WPLL-FM and WSRF-AM Ft. Lauderdale, FL (9) 57,500,000
WKES-FM Tampa, FL 35,323,000
WTKS-FM Orlando, FL (10) 25,000,000
WFKZ-FM, Plantation Key, FL 3,500,000
WAVK-FM Marathon, FL
and WKRY-FM Key West, FL
</TABLE>
- ---------------
(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) The purchase price includes $20,000,000 cash, $10,000,000 of Class A common
stock with an additional $10,000,000 cash contingent upon an affirmative
decision by the United States Supreme Court in the case of Turner
Broadcasting Systems, Inc. vs. FCC No. 95-922 regarding must carry rules.
F-30
<PAGE> 78
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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 amount
of $8,500,000 will be applied to the purchase price at the date of closing.
(4) 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.
(5) As of December 31, 1996, the Company owned a 50% interest in these stations
and operated them under a time brokerage agreement. The Company has
purchased the remaining 50% during January 1997 for $7,000,000 (See Note
19).
(6) Station is currently under construction. Company purchased a 49% interest
during 1996 with an option to acquire remaining 51%.
(7) During February 1997 the Company acquired a 50% ownership interest and has
committed to loan up to $3,000,000 for capital improvements and relocation
of the station's tower. Station is currently being relocated.
(8) The Company has acquired a 49% interest in this property; commitment amount
represents purchase price for the remaining 51%.
(9) The Company began operating the stations pursuant to a time brokerage
agreement on May 1, 1996 and completed the purchase in January 1997 (See
Note 19).
(10) The Company began operating WTKS-FM pursuant to a time brokerage agreement
on June 17, 1996 and completed the purchase in January 1997 (see Note 19).
(11) The Company has a 49% interest in the property and has entered a contract
to acquire the remaining 51% for approximately $1,250,000 plus the
forgiveness of amounts advanced to date (see Note 8).
(12) The Company has committed to loan up to $7,000,000 to Cocola Broadcasting
("Cocola") to finance the construction and acquisition of the station. At
December 31, 1996, the Company had advanced approximately $2,700,000 to
Cocola. The Company plans to provide programming for the station pursuant
to an affiliation agreement upon Cocola's acquisition of the Station.
AFFILIATION AGREEMENTS
The Company has entered into inTV affiliation agreements with four
television licensees. Under the agreements, the licensees agree to broadcast
programming provided by inTV during certain times of the day and are compensated
based on the monthly advertising collected and the number of cable homes covered
by the licensees. The Company may terminate these agreements with a ninety to
one hundred eighty day written notice. The minimum amounts due under these
agreements at December 31, 1996 total approximately $622,000.
LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, the ultimate resolution of
these matters will not have a material effect on the Company's consolidated
financial position or results of operations and cash flows.
19. SUBSEQUENT EVENTS
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.
F-31
<PAGE> 79
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During February 1997, the Company executed its option to acquire WHKE-TV
from 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.
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 entering into a five year time brokerage agreement to operate the
station. The note will bear interest at LIBOR plus 3.5%. Interest is payable
monthly with principal payments commencing February 1998 and due monthly in 84
equal installments. The Company expects to recognize a pre-tax gain on sale of
approximately $12,000,000 using the installment method.
During March 1997, the Company entered into agreements to sell its
interests in television stations WOAC-TV and WNGM-TV, which are operated
pursuant to time brokerage agreements with Whitehead Media, for aggregate
consideration of $73.5 million.
The Company has also entered into an agreement to sell the assets of
WSHE-TV (formerly WYVN-TV) to DP Media for $2,470,000 in the form of a
promissory note. This transaction is expected to result in a minimal gain to the
Company. 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
During January 1997, the Company borrowed $80,000,000 under its
$200,000,000 senior secured revolving credit facility.
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 $5,500,000, to be assumed by DP Media, has been advanced to
Roberts Broadcasting as of December 31, 1996 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 lend an additional $2,000,000 to Roberts
Broadcasting and to terminate the Company's 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.
20. SEGMENT DATA
During the three year period ended December 31, 1996, the Company operated
three business segments: (1) inTV is a nationwide network of owned, operated and
affiliated television stations carrying its proprietary network, which
broadcasts long form paid programming consisting primarily of infomercials; (2)
Paxson Radio consists of radio broadcasting stations, radio news and sports
networks and billboard operations; and (3) Paxson Network Affiliated Television
includes two network affiliated television broadcasting stations in West Palm
Beach, Florida (see Note 2 -- Discontinued Operations). 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 retroactively
reclassified as discontinued operations in the accompanying statement of
operations for all periods presented. Corporate and other operations represent
revenue earned through commissions, non-broadcast activities, expenses incurred
for such activities, and corporate overhead expenses, including management
expenses which are not allocated to the individual segments.
F-32
<PAGE> 80
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Selected financial information for these segments follows:
<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
inTV
Total revenue.............................. $ 60,932,449 $ 29,653,278 $ 3,287,285
Operating expenses, less depreciation,
amortization and option plan
compensation............................ 35,328,174 16,266,563 3,401,328
Depreciation and amortization.............. 11,262,363 4,300,151 1,327,884
Option plan compensation................... 478,367 37,506 --
------------ ------------ ------------
Operating income (loss)................. $ 13,863,545 $ 9,049,058 $ (1,441,927)
============ ============ ============
Total identifiable assets............... $249,693,153 $104,106,341 $ 16,212,828
============ ============ ============
Capital expenditures.................... $ 22,206,328 $ 7,703,973 $ 2,527,903
============ ============ ============
PAXSON RADIO
Total revenue.............................. $ 82,164,993 $ 54,752,191 $ 50,363,294
Operating expenses, less depreciation,
amortization and option plan
compensation............................ 67,233,483 44,227,935 39,002,002
Depreciation and amortization.............. 10,278,601 10,020,502 8,202,467
Option plan compensation................... 880,704 1,751,238 --
------------ ------------ ------------
Operating income (loss)................. $ 3,772,205 $ (1,247,484) $ 3,158,825
============ ============ ============
Total identifiable assets............... $146,305,063 $ 68,886,153 $ 67,201,401
============ ============ ============
Capital expenditures.................... $ 5,774,653 $ 9,610,186 $ 2,491,959
============ ============ ============
PAXSON NETWORK AFFILIATED TELEVISION (See
Note 2 -- Discontinued Operations)
Total revenue.............................. $ -- $ -- $ --
Operating expenses, less depreciation and
amortization............................ -- -- --
Depreciation and amortization.............. -- -- --
Option plan compensation................... -- -- --
------------ ------------ ------------
Operating income (loss)................. $ -- $ -- $ --
============ ============ ============
Total identifiable assets............... $ 39,922,571 $ 37,421,642 $ 39,409,693
============ ============ ============
Capital expenditures.................... $ 731,658 $ 2,825,249 $ 657,375
============ ============ ============
CORPORATE AND OTHER
Total revenue.............................. $ 1,400,169 $ 2,131,037 $ 939,356
Operating expenses, less depreciation,
amortization and option plan
compensation............................ 11,036,274 9,814,643 3,819,350
Depreciation and amortization.............. 1,625,413 347,791 324,891
Option plan compensation................... 6,497,463 9,014,497 --
------------ ------------ ------------
</TABLE>
F-33
<PAGE> 81
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Operating loss.......................... $(17,758,981) $(17,045,894) $ (3,204,885)
============ ============ ============
Total identifiable assets............... $107,261,673 $ 83,417,941 $ 29,846,459
============ ============ ============
Capital expenditures.................... $ 7,996,838 $ 4,877,408 $ 239,275
============ ============ ============
CONSOLIDATED
Total revenue.............................. $144,497,611 $ 86,536,506 $ 54,589,935
Operating expenses, less depreciation,
amortization and option plan
compensation............................ 113,597,931 70,309,141 46,222,680
Depreciation and amortization.............. 23,166,377 14,668,444 9,855,242
Option plan compensation................... $ 7,856,534 $ 10,803,241 $ --
------------ ------------ ------------
Operating loss............................. $ (123,231) $ (9,244,320) $ (1,487,987)
============ ============ ============
Total identifiable assets.................. $543,182,460 $293,832,077 $152,670,381
============ ============ ============
Capital expenditures....................... $ 36,709,447 $ 25,016,816 $ 5,916,512
============ ============ ============
</TABLE>
21. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 1996 QUARTERS ENDED
----------------------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Total revenue........................ $ 49,018,663 $35,804,952 $32,085,897 $ 27,588,099
Operating expenses, less
depreciation, amortization and
option plan compensation........... 41,356,502 28,609,203 23,030,508 20,601,718
Depreciation and amortization........ 6,936,517 5,958,051 5,347,058 4,924,751
Option plan compensation............. 5,129,311 435,306 533,549 1,758,368
------------ ----------- ----------- ------------
Operating income (loss).............. $ (4,403,667) $ 802,392 $ 3,174,782 $ 303,262
============ =========== =========== ============
Loss from continuing operations...... $(13,244,162) $(5,183,829) $(1,597,216) $ (6,547,258)
Income (loss) from discontinued
operations......................... 734,207 (519,788) 210,547 (71,402)
------------ ----------- ----------- ------------
Net loss............................. $(12,509,955) $(5,703,617) $(1,386,669) $ (6,618,660)
============ =========== =========== ============
Net loss attributable to common
stock.............................. $(24,541,413) $(8,166,709) $(3,852,754) $(11,566,609)
============ =========== =========== ============
Per share data:
Loss from continuing operations.... $ (0.28) $ (0.11) $ (0.03) $ (0.19)
Income (loss) from discontinued
operations...................... 0.02 (0.01) -- --
Net loss........................... (0.26) (0.12) (0.03) (0.19)
Net loss attributable to common
stock........................... (0.52) (0.17) (0.08) (0.33)
Weighted average common shares
outstanding........................ 47,158,019 46,983,274 46,570,794 34,556,861
============ =========== =========== ============
Stock price (1):
High............................ $ 11 1/8 $ 13 $ 15 3/8 $ 21 1/4
Low............................. $ 6 5/8 $ 9 11/16 $ 10 5/8 $ 13 7/8
</TABLE>
- ---------------
(1) The Company's Class A common stock is listed on the American Stock Exchange
under the symbol PXN.
F-34
<PAGE> 82
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE 1995 QUARTERS ENDED
---------------------------------------------------------
DECEMBER 31 SEPTEMBER 30 JUNE 30 MARCH 31
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Total revenue............................. $26,248,807 $ 23,238,319 $ 20,014,674 $17,034,706
Operating expenses, less depreciation,
amortization and option plan
compensation............................ 19,630,482 18,291,873 16,257,040 16,129,746
Depreciation and amortization............. 5,201,414 3,616,887 3,168,176 2,681,967
Option plan compensation.................. 994,136 404,976 9,404,129 --
----------- ------------ ------------ -----------
Operating income (loss)................... $ 422,775 $ 924,583 $ (8,814,671) $(1,777,007)
=========== ============ ============ ===========
Loss from continuing operations before
extraordinary item...................... $(6,602,099) $ (2,647,970) $(11,406,556) $(3,499,531)
Income (loss) from discontinued
operations.............................. 1,035,930 (203,711) 229,827 246,547
Extraordinary item (1).................... -- (10,625,727) -- --
----------- ------------ ------------ -----------
Net loss.................................. $(5,566,169) $(13,477,408) $(11,176,729) $(3,252,984)
=========== ============ ============ ===========
Net loss attributable to common stock..... $(9,741,895) $(16,734,727) $(14,849,938) $(5,443,936)
=========== ============ ============ ===========
Per share data:
Loss from continuing operations before
extraordinary item................... $ (0.19) $ (0.08) $ (0.33) $ (0.10)
Income (loss) from discontinued
operations........................... 0.03 (0.01) 0.01 0.01
Extraordinary item...................... -- (0.31) -- --
Net loss................................ (0.16) (0.40) (0.32) (0.09)
Net loss attributable to common stock... (0.28) (0.49) (0.43) (0.16)
Weighted average common shares
outstanding............................. 34,503,666 34,458,766 34,448,665 34,354,201
=========== ============ ============ ===========
Stock price(2):
High................................. $ 16 3/8 $ 15 3/4 $ 14 $ 12 5/8
Low.................................. $ 11 1/2 $ 12 $ 8 $ 9
</TABLE>
- ---------------
(1) Extraordinary item relates to the write-off of loan origination costs
associated with the extinguishment of certain debt agreements during the
third quarter (see Note 9).
(2) The Company's Class A common stock is listed on the American Stock Exchange
under the symbol PXN. Prior to July 10, 1995, the Company's Class A common
stock was listed on the NASDAQ Small-Cap Market.
F-35
<PAGE> 83
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Paxson Communications Corporation
Our audits of the consolidated financial statements referred to in our
report dated February 12, 1997, except as to Notes 2, 18 and 19, which are as of
March 26, 1997, appearing in this Form 10-K of Paxson Communications Corporation
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ PRICE WATERHOUSE LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
February 12, 1997
F-36
<PAGE> 84
SCHEDULE II
PAXSON COMMUNICATIONS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------- ----------- ------------------------ ---------- -----------
ADDITIONS
------------------------
BALANCES AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF YEAR EXPENSES OTHER DEDUCTIONS YEAR
----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December
31, 1996
Allowance for doubtful
accounts............... $ 909,713 $1,287,819 $ -- $(620,939)(1) $ 1,576,593
=========== ========== =========== ========= ===========
Deferred tax assets
valuation allowance....... $15,009,000 $ -- $ 8,606,000(2) $ -- $23,615,000
=========== ========== =========== ========= ===========
For the year ended December
31, 1995
Allowance for doubtful
accounts............... $ 556,950 $1,098,181 $ -- $(745,418)(1) $ 909,713
=========== ========== =========== ========= ===========
Deferred tax assets
valuation allowance....... $ 4,126,507 $ -- $10,882,493(2) $ -- $15,009,000
=========== ========== =========== ========= ===========
For the year ended December
31, 1994
Allowance for doubtful
accounts............... $ 212,244 $ 344,706 $ -- $ -- $ 566,950
=========== ========== =========== ========= ===========
Deferred tax assets
valuation allowance....... $ -- $ -- $ 4,126,507(2) $ -- $ 4,126,507
=========== ========== =========== ========= ===========
</TABLE>
- ---------------
(1) Write off of uncollectible receivables.
(2) A valuation allowance related to deferred tax assets.
F-37
<PAGE> 1
===============================================================================
EXHIBIT 4.3.1
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
PAXSON COMMUNICATIONS CORPORATION
The Several Lenders
from Time to Time Parties Hereto
and
UNION BANK OF CALIFORNIA, N.A.,
AS THE AGENT
DATED AS OF NOVEMBER 19, 1996
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS........................... 1
1.1 Defined Terms .................................................................. 1
1.2 Other Definitional Provisions .................................................. 24
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS........................ 24
2.1 Revolving Credit Commitments ................................................... 24
2.2 Procedure for Borrowing ........................................................ 24
2.3 Commitment Fee ................................................................. 25
2.4 Repayment of Loans; Evidence of Debt ........................................... 25
2.5 Optional Prepayments ........................................................... 26
2.6 Termination or Reduction of Commitments and Mandatory Prepayments .............. 26
2.7 Conversion and Continuation Options ............................................ 28
2.8 Minimum Amounts and Maximum Number of Tranches ................................. 28
2.9 Interest Rates and Payment Dates ............................................... 29
2.10 Computation of Interest and Fees ............................................... 29
2.11 Inability to Determine Interest Rate ........................................... 29
2.12 Pro Rata Treatment and Payments ................................................ 30
2.13 Illegality ..................................................................... 31
2.14 Requirements of Law ............................................................ 31
2.15 Taxes .......................................................................... 32
2.16 Indemnity ...................................................................... 34
2.17 Change of Lending Office ....................................................... 34
2.18 Further Assurances Regarding Security; Additional Security ..................... 34
SECTION 3. REPRESENTATIONS AND WARRANTEES ...................... 36
3.1 Organization, Powers, Good Standing and Business ............................... 36
3.2 Authorization of Borrowing, etc................................................. 38
3.3 Financial Condition ............................................................ 39
3.4 No Material Adverse Change; No Restricted Payments ............................. 40
3.5 Title To Properties; Liens ..................................................... 40
3.6 Litigation; Adverse Facts ...................................................... 40
3.7 Payment of Taxes ............................................................... 40
3.8 Performance of Agreements ...................................................... 41
3.9 Governmental Regulation ........................................................ 41
3.10 Securities Activities .......................................................... 41
3.11 Employee Benefit Plans ......................................................... 41
3.12 Certain Fees ................................................................... 42
3.13 Environmental .................................................................. 42
3.14 Solvency ....................................................................... 44
3.15 Related Documents .............................................................. 44
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3.16 Insurance ...................................................................... 44
3.17 Intellectual Property .......................................................... 44
3.18 Disclosure ..................................................................... 44
3.19 Security Documents ............................................................. 45
3.20 Purposes of Loans .............................................................. 45
SECTION 4. CONDITIONS PRECEDENT.............................. 45
4.1 Conditions to Initial Loans .................................................... 45
4.2 Conditions to Each Loan ........................................................ 48
SECTION 5. AFFIRMATIVE COVENANTS............................. 49
5.1 Financial Statements and Systems ............................................... 49
5.2 Maintenance of Existence, etc. ................................................. 53
5.3 Payment of Taxes and Claims; Tax Consolidation ................................. 53
5.4 Maintenance of Properties; Insurance ........................................... 53
5.5 Inspection; Lender Meeting ..................................................... 54
5.6 Compliance with Laws, etc....................................................... 54
5.7 Compliance with Related Documents .............................................. 54
5.8 Environmental Disclosure and Inspection ........................................ 54
5.9 Hazardous Materials; the Borrower's Remedial Action ............................ 56
5.10 FCC Licenses ................................................................... 56
5.11 Additional Loan Parties ........................................................ 56
5.13 Corporate Separateness; Tax Sharing Agreement .................................. 57
SECTION 6. NEGATIVE COVENANTS.................................. 57
6.1 Financial Condition Covenants .................................................. 58
6.2 Limitation on Indebtedness ..................................................... 59
6.3 Liens and Related Matters ...................................................... 60
6.4 Investments; Joint Ventures .................................................... 61
6.5 Contingent Obligations ......................................................... 63
6.6 Restricted Payments ............................................................ 64
6.7 Restriction on Fundamental Changes; Asset Sales ................................ 65
6.8 [INTENTIONALLY LEFT BLANK] ..................................................... 65
6.9 Sales and Lease-Backs .......................................................... 66
6.10 Sale or Discount of Receivables ................................................ 66
6.11 Transactions with Shareholders and Affiliates .................................. 66
6.12 Disposal of Subsidiary Stock ................................................... 66
6.13 Conduct of Business ............................................................ 66
6.14 Amendments or Waivers of Related Documents and Charter Documents;
Limitation on Optional Payments ................................................ 67
6.15 Fiscal Year .................................................................... 67
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SECTION 7. EVENTS OF DEFAULT ................................ 68
SECTION 8. THE AGENT .................................... 71
8.1 Appointment
8.2 Delegation of Duties .......................................................... 72
8.3 Exculpatory Provisions ........................................................ 72
8.4 Reliance by the Agent ......................................................... 72
8.5 Notice of Default ............................................................. 72
8.6 Non-Reliance on the Agent and Other Lenders ................................... 73
8.7 Indemnification ............................................................... 73
8.8 The Agent in Its Individual Capacity .......................................... 74
8.9 Successor the Agent ........................................................... 74
SECTION 9. MISCELLANEOUS................................ 74
9.1 Amendments and Waivers ........................................................ 74
9.2 Notices ....................................................................... 75
9.3 No Waiver; Cumulative Remedies ................................................ 75
9.4 Survival of Representations and Warranties .................................... 76
9.5 Payment of Expenses and Taxes ................................................. 76
9.6 Successors and Assigns; Participations and Assignments ........................ 76
9.7 Adjustments; Set-off .......................................................... 79
9.8 Counterparts; Effectiveness ................................................... 79
9.9 Severability .................................................................. 79
9.10 Integration ................................................................... 80
9.11 GOVERNING LAW ................................................................. 80
9.12 Submission To Jurisdiction; Waivers ........................................... 80
9.13 Acknowledgements .............................................................. 80
9.14 WAIVERS OF JURY TRIAL ......................................................... 81
9.15 Confidentiality ............................................................... 81
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SCHEDULES
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1.1A Lenders, Commitments and Addresses
1.1B Pricing Grid
1.1C Preapproved Acquisitions
1.1D License Companies and Partners
1.1E Discontinued Operations
1.1F Applicable Commitment Fee Rates
3.1(d) Ownership of Subsidiaries
3.1(e) FCC Licenses, Radio and Television Stations
3.1(f) Real Property
3.16 Insurance
3.17(b) Intellectual Property
3.19(b) UCC Filing Offices
5.10 Certain FCC Licenses
6.2(e) Existing Indebtedness and Liens
6.4(f) Existing Investments
7(r) Certain Minority Interests
EXHIBITS
A Form of Note
B Form of Amended and Restated Borrower Pledge Agreement
C Form of Amended and Restated Borrower Security Agreement
D Form of Amended and Restated Subsidiaries Guarantee
E Form of Amended and Restated Subsidiaries Pledge Agreement
F Form of Amended and Restated Subsidiaries Security Agreement
G Form of Borrowing Certificate
H Form of Assignment and Acceptance
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 19, 1996,
among PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Borrower"), the several banks and other financial institutions from time to
time parties to this Agreement (the "Lenders") and UNION BANK OF CALIFORNIA,
N.A., as Agent for the Lenders hereunder.
WITNESSETH:
WHEREAS, the Borrower has requested the Lenders to amend and restate
its Credit Agreement (the "Existing Credit Agreement") dated as of December 19,
1995 to make available a $200,000,000 revolving credit facility to be used by
the Borrower to make Permitted Purchases (each term and each other capitalized
term used but not defined in this introductory statement shall have the meaning
assigned to such term in subsection 1.1) and for general corporate purposes
(including any Investment permitted under the terms hereof).
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Acquisition Capital Expenditures": expenditures to improve or
upgrade the assets acquired pursuant to any Permitted Acquisition or
Preapproved Acquisition or certain assets owned by the Borrower or any
of its Subsidiaries as of the Closing Date and (a) in the case of a
Permitted Acquisition, specifically identified in writing to the
Lenders prior to the consummation of such Permitted Acquisition or (b)
in the case of assets owned as of the Closing Date or a Preapproved
Acquisition, specified in Schedule 1.1C.
"Adjusted Consolidated Operating Cash Flow": (a) at any date
on or prior to December 31, 1998, the sum of (i) the Consolidated
Operating Cash Flow of the Borrower and its Subsidiaries for the twelve
most recently ended calendar months for which the Lenders shall have
received financial statements pursuant to subsection 5.1(b)(i), minus
(ii) Consolidated Operating Cash Flow of the INTV Properties for such
twelve-month period, plus (iii) the product of (x) four times (y) the
Consolidated Operating Cash Flow of the INTV Properties for the three
most recently ended calendar months for which the Lenders shall have
received financial statements pursuant to subsection 5.1(b)(i), plus
(iv) in the case of any calculation of Adjusted Consolidated Operating
Cash Flow at any date occurring on or before September 30, 1997,
Consolidated Corporate Overhead of the Borrower and its Subsidiaries
for that portion of the period from January 1, 1996 through September
30, 1996, which is included in the twelve-month period covered by such
calculation in accordance with clauses (i) and (ii) of this definition;
and (b) at any date after December 31, 1998, Consolidated Operating
Cash Flow of the Borrower and its Subsidiaries.
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"Adjustment Date": with respect to the effectiveness of any
change in the Applicable Margin:
(a) the Closing Date; and
(b) each subsequent date upon which the Agent
receives (i) the financial statements required to be delivered
pursuant to subsection 5.1(b)(ii) or (iii), as the case may
be, for the most recently completed fiscal period and (ii) the
compliance certificate required pursuant to subsection
5.1(b)(iv) with respect to such financial statements (or, if
such compliance certificate and financial statements shall not
have been delivered in a timely manner, each of (x) the date
upon which the compliance certificate required to be delivered
pursuant to subsection 5.1(b)(iv) for the most recently
completed fiscal period was due and (y) the date thereafter on
which such financial statements and compliance certificate
actually are delivered).
"Affiliate" as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Agent": Union Bank of California, N.A., together with its
affiliates, as the arranger of the Commitments and as the agent for the
Lenders under this Agreement and the other Loan Documents.
"Agreement": this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Commitment Fee Rate": for the period commencing
with any Adjustment Date and ending on the day immediately preceding
the next succeeding Adjustment Date, the Applicable Commitment Fee Rate
shall be the rate per annum set forth on Schedule 1.1F opposite the
Leverage Ratio determined on such Adjustment Date; provided, that (a)
from the Closing Date until the receipt of the first financial
statements and certificate referred to in clause (b) of the definition
of "Adjustment Date," the Leverage Ratio shall be deemed for purposes
of this definition to be 4.5 to 1.00; and (b) in the event that the
financial statements required to be delivered pursuant to subsection
5.1(b)(ii) and (iii) are not delivered when due, then during the period
from the date upon which such financial statements were required to be
delivered until the date upon which they actually are delivered, the
Leverage Ratio shall be deemed for purposes of this definition to be
6.5 to 1.00.
"Applicable Margin": for the period commencing with any
Adjustment Date and ending on the day immediately preceding the next
succeeding Adjustment Date,
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the Applicable Margin shall be the rate per annum set forth on Schedule
1.1B opposite the Leverage Ratio determined on such Adjustment Date;
provided, that (a) from the Closing Date until the receipt of the first
financial statements and certificate referred to in clause (b) of the
definition of "Adjustment Date," the Leverage Ratio shall be deemed for
purposes of this definition to be 4.5 to 1.00; and (b) in the event
that the financial statements required to be delivered pursuant to
subsection 5.1(b)(ii) and (iii) are not delivered when due, then during
the period from the date upon which such financial statements were
required to be delivered until the date upon which they actually are
delivered, the Leverage Ratio shall be deemed for purposes of this
definition to be 6.5 to 1.00.
"Asset Sale": any sale, transfer or other disposition by the
Borrower or any of its Subsidiaries of their respective assets
(including any sale and leaseback of assets and any mortgage of real
property), other than the sale or other disposition of property or
assets in the ordinary course of business or an Asset Swap permitted by
subsection 6.7(e) (provided that any Asset Swap permitted by subsection
6.7(e) shall be deemed to be an Asset Sale to the extent provided for
in said subsection).
"Asset Swap": any exchange, with any other Person, of (a)
assets owned by the Borrower or any of its Subsidiaries for (b)
Equivalent Assets of such other Person.
"Assignee": as defined in subsection 9.6(c).
"Available Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Commitment over (b) the aggregate principal amount of all Loans made by
such Lender then outstanding.
"Barter Transaction": any sale of radio or television
advertising time (other than in the ordinary course of business) by the
Borrower to any Person, other than an Affiliate of any Loan Party,
which is paid for by such Person other than in Cash or Cash
Equivalents.
"Base Rate": with respect to each day, the greater on such day
of (a) the per annum rate most recently determined by the Agent at its
U.S. lending office from time to time as its base rate and (b) 1/2% per
annum plus the Federal Funds Rate. Each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in
such base rate or the Federal Funds Rate, as the case may be. The Base
Rate is not intended to be necessarily the lowest rate of interest
charged by the Agent in connection with extensions of credit to
debtors.
"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System.
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"Borrower Pledge Agreement": the Amended and Restated Pledge
Agreement to be executed and delivered by the Borrower, substantially
in the form of Exhibit B, as the same may be amended, supplemented or
otherwise modified from time to time.
"Borrower Security Agreement": the Amended and Restated
Security Agreement to be executed and delivered by the Borrower,
substantially in the form of Exhibit C, as the same may be amended,
supplemented or otherwise modified from time to time.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Broadcast Station": any of the Owned Radio Stations, Owned
Television Stations, LMA Radio Stations and LMA Television Stations,
and "Broadcast Stations", means all such entities collectively.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.
"Cash": money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents": (i) direct obligations of the United
States or any agency thereof, or obligations guaranteed or insured by
the United States, provided that in each case such obligations mature
within one year from the date of acquisition thereof, (ii) certificates
of deposit maturing within one year from the date of creation thereof
issued by any United States national or state banking institution
having capital, surplus and undivided profits aggregating at least
$250,000,000 and rated at least A-1 by Standard & Poor's Corporation
and P-1 by Moody's Investors Service, Inc., (iii) commercial paper with
a maturity of 180 days or less issued by a corporation (except an
Affiliate of the Borrower) organized under the laws of any state of
the United States or the District of Columbia and rated at least A-1 by
Standard & Poor's Corporation or, at least P-1 by Moody's Investors
Service, Inc. and (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by an agency
thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition;
provided that the terms of such
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agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depository Institutions with Securities Dealers
and Others, as adopted by the Comptroller of the Currency and (v)
tax-exempt auction rate securities and municipal preferred stock, in
each case, subject to reset no more than 35 days after the date of
acquisition and having a rating of at least AA by Standard & Poor's
Corporation or AA by Moody's Investors Service, Inc.
"Certificate of Designations": (i) the Certificate of
Designations of Junior Cumulative Compounding Redeemable Preferred
Stock of Paxson Communications Corporation dated as of December 22,
1994, as amended as of the date hereof in accordance with the terms
hereof and thereof, and (ii) the Certificate of Designations of
Exchangeable Preferred Stock of Paxson Communications Corporation dated
as of September 30, 1996.
"Closing Date": the date on which the conditions precedent set
forth in subsection 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commitment": as to any Leader, the obligation of such Lender
to make Loans to the Borrower hereunder in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1A, as such amount may be
reduced from time to time in accordance with the provisions of this
Agreement.
"Commitment Percentage": as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the
aggregate Commitments (or, at any time after the Commitments shall have
expired or terminated, the percentage which the aggregate principal
amount of such Lender's Loans then outstanding constitutes of the
aggregate principal amount of the Loans then outstanding).
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date
on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Communications Act": the Communications Act of 1934, as
amended (including, without limitation, the Cable Communications
Policy Act of 1984 and the Cable Television Consumer Protection and
Competition Act of 1992) and all rules and
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regulations of the Federal Communications Commission, in each case as
from time to time in effect.
"Compliance Certificate": as defined in subsection 5.1(b)(iv).
"Consolidated Capital Expenditures": for any period, the
aggregate of all expenditures (whether paid in cash or accrued as a
liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of the Borrower) by the
Borrower and its Subsidiaries during such period that, in conformity
with GAAP, are included in "additions to property, plant or equipment"
or comparable items reflected in the consolidated statement of changes
in financial position of the Borrower and its Subsidiaries but, in any
event, excluding expenditures in respect of Acquisition Capital
Expenditures, Permitted Purchases or Studio Construction Expenditures.
"Consolidated Cash Interest Expense": for any period,
Consolidated Interest Expense of the Borrower and its Subsidiaries, but
excluding, however, amortization of discount, deferred financing costs
and other items included in interest expense not payable or not
actually paid in cash during such period (including, but not limited
to, any interest on the Exchange Debentures paid in kind).
"Consolidated Corporate Overhead": for any period, the
aggregate amount expended in cash by the Borrower, Paxson
Communications Management Company ("Paxson Management") and PCC Direct,
Inc. ("PCC Direct") on account of services rendered by them on behalf
of Subsidiaries of the Borrower (other than Paxson Management) and for
goods consumed by the Borrower and Paxson Management in rendering such
services (other than for the national sales personnel associated with
the INTV Properties).
"Consolidated Debt Service": for any period, the aggregate
amount of all regularly scheduled payments of principal of and interest
or dividends and fees on any Indebtedness required by the terms of such
Indebtedness to be paid in cash by the Borrower or its Subsidiaries
during such period, including, without limitation, any such payments
with respect to the Loans and the Senior Subordinated Notes and any
obligations paid with respect to Capital Leases, provided that with
respect to the principal amount of the Loans, the amount of
Consolidated Debt Service for any period shall equal the excess, if
any, of (A) the aggregate principal amount of the Loans at the
beginning of such period over (B) the aggregate Commitments at the end
of such period.
"Consolidated Fixed Charges": for any period, without
duplication, the sum of (i) Consolidated Debt Service, (ii)
Consolidated Capital Expenditures to the extent actually made, (iii) to
the extent actually paid in cash during such period, income tax expense
(other than, to the extent otherwise included therein, current income
tax expenses attributable to gains on Asset Sales) and (iv) the
aggregate amount paid in cash during such period in connection with any
(A) dividend or other distribution or
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(B) redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, on account of any
preferred capital stock (including, but not limited to, in respect of
Cumulative Preferred Stock or Exchangeable Preferred Stock) of the
Borrower or its Subsidiaries now or hereafter outstanding, provided
that to the extent any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value is made on the
Cumulative Preferred Stock prior to December 31, 1997, or any dividend
is paid in connection therewith, the amount expended in connection
therewith shall be excluded from any calculations pursuant to this
definition.
"Consolidated Interest Expense": for any period, the total
interest expense (including that portion attributable to Capital
Leases in accordance with GAAP and capitalized interest and the net
cash costs associated with Interest Rate Agreements) of the Borrower
and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries,
including, without limitation, (i) all amounts payable to the Agent
and the Lenders pursuant to subsection 2.9 and all commissions,
discounts and other fees and charges owed with respect to letters of
credit and bankers' acceptance financing and (ii) time brokerage fees
payable by the Borrower and its Subsidiaries relating to a LMA Radio
Station or LMA Television Station expensed during such period prior to
the date such Station is acquired by the Borrower. In determining
Consolidated Interest Expense for any period, there shall be (i)
included all interest expense attributable to Indebtedness incurred or
assumed by the Borrower or any of their Subsidiaries during the period
in connection with any Permitted Purchase as if such Indebtedness was
incurred or assumed on the day before the first day of such period and
bore interest from the first day of such period until the date of such
incurrence or assumption at a rate per annum equal to the weighted
average rate of interest on the other Indebtedness outstanding during
such period and (ii) excluded Consolidated Interest Expense
attributable to that portion of the principal amount of the Loans
prepaid during such period pursuant to subsection 2.6 as if such
portion of the principal amount of the Loans was prepaid on the day
before the first day of such period.
"Consolidated Net Income": for any period, the consolidated
net income (or loss) of the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP; provided that there
shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary of the Borrower or is merged
into or consolidated with the Borrower or any of its Subsidiaries, (b)
the income (or deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is
actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions, (c) the undistributed earnings of
any Subsidiary of the Borrower to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not
at the time permitted by the terms of any Contractual Obligation (other
than under any Loan Document) or Requirement of Law applicable to such
Subsidiary, (d) any after-tax gains or losses attributable to Asset
Sales or returned surplus assets of any Pension
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Plan, and (e) (to the extent not included in clauses (a) through (d)
above) any net extraordinary, unusual or non-recurring gains or net
non-cash extraordinary, unusual or non-recurring losses.
"Consolidated Operating Cash Flow": for any period, the sum (without
duplication) of the amounts for such period of (a) Consolidated Net
Income, (b) Consolidated Interest Expense, (c) actual taxes paid in
cash by the Borrower on a consolidated basis which reduced Consolidated
Net Income, (d) total depreciation expense, (e) total amortization
expense including, without limitation, Programming Amortization
Expense, (f) other non-cash items reducing Consolidated Net Income, and
(g) whether or not includable as a separate item in the statement of
such Consolidated Net Income for such period, losses on sales of assets
less the amounts for such period of (i) Programming Rights Payments,
(ii) non-cash items increasing Consolidated Net Income, (iii) whether
or not includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets,
and (iv) consolidated interest income, all of the foregoing as
determined on a consolidated basis for the Borrower and its
Subsidiaries in conformity with GAAP. For the purposes of calculating
Consolidated Operating Cash Flow for any period (other than in
determining Excess Cash Flow), any acquisition by the Borrower or any
Subsidiary permitted pursuant to the terms hereof shall be deemed to
have occurred on the first day of such period, any Asset Sale by the
Borrower or any Subsidiary shall be deemed to have occurred as of the
day before the first day of such period, and Consolidated Operating
Cash Flow shall be adjusted to give effect to such acquisition or Asset
Sale in accordance with the foregoing.
"Consolidated Senior Debt": as at any date of determination,
the sum of (a) Consolidated Total Debt less (b) Indebtedness of the
Borrower and its Subsidiaries permitted by subsections 6.2(e)(i), (g),
(h), (i) and j).
"Consolidated Total Debt": as at any date of determination,
without duplication, the aggregate amount of (a) all Indebtedness
(including, without limitation, the Loans) other than preferred capital
stock plus (b) the aggregate amount of all Contingent Obligations
(other than any guaranty of the Obligations by any Subsidiary of the
Borrower), in each case, of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Contingent Obligation": as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person (a) with
respect to any indebtedness, lease, dividend or other obligation of
another if the primary purpose or intent thereof by the Person
incurring the Contingent Obligation is to provide assurance to the
obligee of such obligation of another that such obligation of another
will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof, (b)
with respect to any letter of credit issued for the account of that
Person or as to which that Person is otherwise liable for reimbursement
of drawings, or (c) under Interest Rate Agreements. Contingent
Obligations shall include, without
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limitation, (i) the direct or indirect guaranty, endorsement (otherwise
than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (ii) the obligation to make
take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and
(iii) any liability of such Person for the obligations of another
through any agreement (contingent or otherwise) (x) to purchase,
repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or (y) to maintain the solvency or
any balance sheet item, level of income or financial condition of
another, if in the case of any agreement described under subclauses (x)
or (y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent
Obligation (other than Interest Rate Agreements) as of any date shall
be equal to the amount of the obligation as of any date so guaranteed
or otherwise supported. The amount of any Interest Rate Agreement as of
any date shall be equal to the aggregate amount that would be payable
by such Person if such Interest Rate Agreement were terminated on such
date as a result of a default thereunder by such Person.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement (credit or
otherwise), instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.
"Core Business": a radio station, radio network, network
television station, long-form paid programming television station
(which shall not include any television station which airs in excess of
20 hours per month of programming which consists of an electronic
retailing or home shopping business conducted by the Borrower and/or
its Subsidiaries or Unrestricted Subsidiaries) or outdoor advertising
property, in each case, located in the United States.
"Cumulative Preferred Stock": the preferred stock of the
Borrower designated the Junior Cumulative Compounding Redeemable
Preferred Stock, issued by the Borrower pursuant to, and with such
rights, restrictions, privileges and preferences as set forth in, its
Certificate of Designation.
"Default": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Deposit Account": a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable
certificate of deposit.
"Discontinued Operations": the entities and businesses
specified on Schedule 1.1E.
<PAGE> 15
10
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Employee Benefit Plan": any employee benefit plan within the
meaning of Section 3(3) of ERISA which is maintained for employees of
the Borrower or any ERISA Affiliates.
"Environmental Claim": any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person
for any damage, including, without limitation, personal injury
(including sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential damages,
damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or
restrictions, resulting from or based upon (i) the existence of a
Release (whether sudden or non-sudden or accidental or non-accidental),
of, or exposure to, any Hazardous Material, in, into or onto the
environment, (ii) the use, handling, transportation, storage, treatment
or disposal of Hazardous Materials, or (iii) the violation, or alleged
violation, of any Environmental Laws.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"Equivalent Assets": of (i) any radio station: any other radio
station or radio stations; (ii) any radio network: any other radio
network or radio networks; (iii) any network television station: any
other network television station or network television stations; (iv)
any long-form paid programming station: any other long-form paid
programming station or long-form paid programming stations; (v) outdoor
advertising property: any other outdoor advertising property or outdoor
advertising properties; (vi) any Core Business (other than a radio
station): any radio station or radio stations; or (vii) any Non-Core
Business: any Core Business.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate": the Borrower and (a) any corporation which
is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Code of which the Borrower is a member; (b) any
trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning
of Section 414(c) of the Code of which the Borrower is a member; and
(c) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Code of which the Borrower, any
corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.
<PAGE> 16
11
"ERISA Event": (a) the occurrence of a reportable event within
the meaning of Section 4043 of ERISA with respect to any Pension Plan,
(b) a failure to meet the minimum funding standard of Section 412 of
the Code or of Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, (regardless of
the issuance of any waivers in accordance with Section 412(d) of the
Code) and any request for a waiver under Section 412(d) of the Code in
connection with any Pension Plan; (c) the provision of the
administrator of any Pension Plan of a notice pursuant to Section
4041(a)(2) of ERISA to terminate such plan pursuant to Section 4041(c)
of ERISA; (d) the withdrawal by the Borrower or any ERISA Affiliate
from a Pension Plan during a plan year for which it was a "substantial
employer" within the meaning of Section 4001(a)(2) of ERISA; (e) the
institution by the PBGC of proceedings to terminate a Pension Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition which the Borrower or any ERISA Affiliate reasonably
anticipates would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, a
Pension Plan; (f) the withdrawal by the Borrower or any ERISA Affiliate
in a complete or partial withdrawal (within the meaning of Section 4203
or 4205 of ERISA) from a Multiemployer Plan, or the receipt by the
Borrower or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA; (g) the imposition on the Borrower or any ERISA
Affiliate of fines, penalties, taxes or related charges under Chapter
43 of the Code or under Sections 502(c), (i) or (1) or 4071 of ERISA;
(h) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan or the assets thereof, or
against the Borrower or any ERISA Affiliate in connection with any such
plan; or (i) receipt from the Service of notice of the failure of any
Pension Plan to qualify under Section 401(a) of the Code, or the
failure of any trust forming part of a Pension Plan to fail to qualify
for exemption from taxation under Section 501(a) of the Code.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined by the Agent to be equal to the arithmetic mean of the rates
per annum offered by leading banks in the London interbank market at
approximately 11:00 a.m. (London time) two Working Days prior to the
beginning of such Interest Period, as quoted on Telerate Page 3750 or,
in the event that Telerate Page 3750 shall at such time quote such
rates for fewer
<PAGE> 17
12
than two leading banks, the rate at which the Agent is offered Dollar
deposits at or about 11:00 A.M. (London time), two Working Days prior
to the beginning of such Interest Period in the London interbank market
for delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of the
Agent's Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/16th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any period, the Consolidated Operating
Cash Flow of the Borrower and its Subsidiaries for such period minus
for such period, the sum of (a) Consolidated Debt Service, (b)
Consolidated Capital Expenditures and (c) the actual taxes paid by the
Borrower and its Subsidiaries in cash.
"Exchangeable Preferred Stock": the preferred stock of the
Borrower designated the 12 1/2% Cumulative Exchangeable Preferred
Stock, issued by the Borrower pursuant to, and with such rights,
restrictions, privileges and preferences as set forth in its
Certificate of Designations.
"Exchange Debentures": 12 1/2% Exchange Debentures due 2006,
which may be issued by the Borrower pursuant to, and with such rights,
restrictions, privileges and preferences as set forth in the Exchange
Debenture Indenture.
"Exchange Debenture Indenture": the Indenture dated as of
September 30, 1996 pursuant to which the Borrower may issue the
Exchange Debentures, as the same may be amended, supplemented or
otherwise modified from time to time.
"Existing Agreement": as defined in the recitals to this
Agreement.
"Facilities": any and all real property (including, without
limitation, all buildings, fixtures or other improvements located
thereon) now, or hereafter, owned, leased, operated or used by the
Borrower or any of its Subsidiaries or any of their respective
predecessors.
<PAGE> 18
13
"FCC": the Federal Communications Commission and any successor
governmental agency performing functions similar to those performed by
the Federal Communications Commission on the date hereof.
"FCC License": any of the licenses, permits or other
authorizations issued by the FCC relating to or necessary for the
operation of the Broadcast Stations, the loss of which could reasonably
be expected to have a Material Adverse Effect, including, without
limitation, those listed on Schedule 3.1(e) hereto.
"Federal Funds Rate": with respect to each day, the rate per
annum (rounded upward, if necessary, to the nearest 1/16 of 1%) offered
in the interbank market to the Agent as the overnight "federal funds
rate" at or about 10:00 A.M., Los Angeles time, on such day (or, if
such day is not a Business Day, for the next preceding Business Day).
"Financial Statements": the audited consolidated balance
sheet, statement of operations, cash flows and shareholders' equity for
the Borrower and its consolidated Subsidiaries for the fiscal years
ended December 31, 1994 and 1995 and the unaudited interim consolidated
balance sheet, statement of operations, cash flows and shareholders'
equity for the Borrower and its consolidated Subsidiaries for the six
months ended June 30, 1995 and 1996.
"GAAP": generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the
audited financial statements referred to in subsection 3.3.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials": (a) any chemical, material or substance
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", or "toxic substances" or words of similar
import under any applicable Environmental Laws, (b) any oil, petroleum
or petroleum derived substance, any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil, any flammable substances or explosives, any
radioactive materials, any hazardous wastes or substances, any toxic
wastes or substances or any other materials or pollutants which (i)
pose a material hazard to any property of the Borrower or any of its
Subsidiaries or to Persons on or about such property or (ii) cause such
property to be in violation of any Environmental Laws, (c) asbestos in
any form which is or could become friable, urea formaldehyde foam
insulation, polychlorinated biphenyls, and (d) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or may or could pose a hazard
to the health and safety of the owners, occupants or any Persons
surrounding the Facilities.
<PAGE> 19
14
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all bligations of such Person
under Capital Leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (e) all
liabilities secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for
the payment thereof and (f) the liquidation value of any preferred
capital stock of such Person its Subsidiaries held by any Person other
than such Person and its wholly owned Subsidiaries.
"Intellectual Property": all patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or necessary for
the conduct of business of the Borrower and its Subsidiaries as
currently conducted that are material to the condition (financial or
other), business, or operations of the Borrower and its Subsidiaries
taken as a whole.
"Interest Payment Date": (a) as to any Base Rate Loan, the
last day of each March, June, September and December and the date on
which such Loan is paid or converted into a Loan of another Type, (b)
as to any Eurodollar Loan having an Interest Period of three months or
less, the last day of such Interest Period, and (c) as to any
Eurodollar Loan having an Interest Period longer than three months,
each day which is three months or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest
Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three, six or twelve
months thereafter, as selected by the Borrower in its notice
of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three, six or twelve
months thereafter, as selected by the Borrower by irrevocable
notice to the Agent not less than three Working Days prior to
the last day of the then current Interest Period with respect
thereto;
provided that if the Borrower at any time selects an Interest Period
with respect to any Eurodollar Loan of twelve months, such selection is
subject to the availability of Eurodollar Loans having an Interest
Period of twelve months on the part of all of the Lenders; provided,
further, all of the foregoing provisions relating to Interest Periods
are subject to the following:
<PAGE> 20
15
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Working Day, such Interest
Period shall be extended to the next succeeding Working Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on
the immediately preceding Working Day;
(2) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Working Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Working Day
of a calendar month; and
(3) the Borrower shall select Interest Periods with respect to
any Eurodollar Loan so as not to require a payment or prepayment of any
such Eurodollar Loan during an Interest Period for such Loan.
"Interest Rate Agreement": any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect the Borrower or any of its Subsidiaries against
fluctuations in interest rates.
"INTV Properties": the Borrower's network of owned, operated or
affiliated television stations that are dedicated to infomercial programming and
declared by the Board of Directors of the Borrower as INTV Properties.
"Investment": (a) any direct or indirect purchase or other acquisition
by the Borrower or any of its Subsidiaries of, or a beneficial interest in,
stock or other Securities of any other Person, or (b) any direct or indirect
loan, advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by the Borrower or any of its
Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such investment.
Investments shall not include any purchase of Program Rights in the ordinary
course of business.
"Joint Venture": a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form.
"Leverage Ratio": at any date of determination, the ratio of (a)
Consolidated Total Debt of the Borrower and its Subsidiaries on such date to (b)
Adjusted Consolidated Operating Cash Flow as of the last day of the month for
which the
<PAGE> 21
16
Borrower shall have then most recently delivered financial statements pursuant
to subsection 5.1(b)(i).
"License Subsidiary": each Subsidiary of the Borrower which holds any
FCC License relating to a Broadcast Station as specified on Schedule 1. 1.D; and
"License Subsidiaries" means all such Persons collectively.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).
"LMA Agreements": (i) each of the agreements pursuant to which certain
of the Loan Parties operate an LMA Radio Station or LMA Television Station,
together with any amendments, supplements or modifications thereto, as the same
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms hereof and thereof, and (ii) any other local
marketing agreements, local management agreements, local sales agreements, time
brokerage agreements or similar arrangements entered into by the Borrower or
any of its Subsidiaries to the extent permitted hereby.
"LMA Radio Station": each of the radio stations (including, without
limitation, those identified on Schedule 1. 1.D) operated by the Borrower or its
Subsidiaries pursuant to an LMA Agreement.
"LMA Television Station": each of the television stations (including,
without limitation, those identified on Schedule 1. 1.D) operated by the
Borrower or its Subsidiaries pursuant to an LMA Agreement.
"Loan Documents": this Agreement, any Notes and the Security Documents.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document.
"Loans": as defined in subsection 2.1.
"Margin Stock": has the meaning assigned to that term in Regulation U
of the Board as in effect from time to time.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this or any of the other Loan Documents or the rights or
remedies of the Agent or the Lenders hereunder or thereunder.
<PAGE> 22
17
"Multiemployer Plan": a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate has an
obligation to contribute or in respect of which the Borrower or any ERISA
Affiliate has any outstanding liability, contingent or otherwise.
"Net Cash Proceeds": in connection with:
(a) any Asset Sale, the proceeds thereof in the form of Cash and Cash
Equivalents (including any such proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received), net of
attorneys' fees, accountants' fees, investment banking fees, amounts required to
be applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset which is the subject of such Asset Sale (other
than any Lien in favor of the Agent for the benefit of the Lenders) and other
customary fees and expenses actually incurred in connection therewith and net of
taxes paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements); and
(b) any issuance or sale of equity securities or debt securities or
instruments or the incurrence of loans, the Cash proceeds received from such
issuance or incurrence, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith.
"Non-Core Business": any business other than a Core Business.
"Non-Excluded Taxes": as defined in subsection 2.15.
"Note": as defined in subsection 2.4(e).
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Notes and all other obligations and
liabilities of the Borrower to the Agent or to any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, any Interest Rate Agreement entered into
with any Lender, whether on account of principal, interest, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise.
<PAGE> 23
18
"Operating Lease": as applied to any Person, any lease (including,
without limitation, any leases that may be terminated by the lessee at any time)
of any property (whether real, personal or mixed) of such Person that is not a
Capital Lease other than any such lease under which such Person is the lessor.
"Owned Radio Station": each of the radio stations (including, without
limitation, those identified on Schedule 3.1(f)) owned by the Borrower and such
other radio stations acquired pursuant to a Permitted Purchase.
"Owned Television Station": each of the television stations (including,
without limitation, those identified on Schedule 3.1(f)) owned by the Borrower
and such other television stations acquired pursuant to a Permitted Purchase.
"Ownership Report": the Ownership Report of each Loan Party most
recently filed with the FCC.
"Participant": as defined in subsection 9.6(b).
"Paxson": Lowell W. Paxson, residing on the date hereof at 780 South
Ocean Boulevard, Palm Beach, Florida 33480.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Pension Plan": any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Title IV of ERISA.
"Permitted Acquisition": has the meaning assigned to that term in
subsection 6.4(j).
"Permitted Encumbrances": the following types of Liens (provided that
enforcement of the same will not have a Material Adverse Effect except with
respect to clauses (i) and (v) hereof):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 5.3;
(ii) Liens of carriers, warehousemen and other liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made therefor;
(iii) Liens of mechanics and materialmen for sums not yet due or the
validity of which are being contested in good faith;
<PAGE> 24
19
(iv) Liens (other than any Lien imposed pursuant to Section 401(a)(29)
or Section 412(n) of the Code or under ERISA or any Environmental Law) incurred
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) and deposits made pursuant to the terms of
Purchase Agreements permitted hereunder;
(v) any attachment or judgment Lien not constituting an Event of
Default under subsection 7(j);
(vi) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its Subsidiaries;
(vii) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary conduct
of the business of the Borrower or any of its Subsidiaries; and
(vii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement.
"Permitted Purchase": any of (i) a Permitted Acquisition, (ii) a
Preapproved Acquisition or (iii) any other acquisition of a Core Business
permitted hereunder or otherwise consented to by the Required Lenders from time
to time in accordance with the terms hereof.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreements": the collective reference to the Borrower Pledge
Agreement and the Subsidiaries Pledge Agreement.
"Preapproved Acquisition": means each of the acquisitions listed on
Schedule 1.1C, Provided that such acquisition is effected pursuant to the
Purchase Agreement relating to such acquisition.
"Program": any television series or other program produced or
distributed for television release (including any syndicated series or other
program regardless of its
<PAGE> 25
20
medium of initial exploitation), in each case whether recorded on film
videotape, audiotape, cassette, cartridge, disc or by any other means, method,
process or device, whether now known or hereafter developed.
"Program Contracts": all contracts for television broadcast rights of
Programs, including, but not limited to, film, music and related audio rights
and syndicated series exhibition rights acquired under license agreements.
"Program Rights": any right, whether arising under Program Contracts or
otherwise, to broadcast, sell, distribute, subdistribute, exhibit, lease,
sublease, license, sublicense or otherwise exploit Programs.
"Program Rights Costs": the maximum amount which the Borrower and/or
any of its Subsidiaries or its or their co-venturers have furnished or have
contractually committed to furnish (to the extent such commitments shall be
reflected as an asset or liability on the consolidated balance sheet and the
notes thereto of the Borrower) toward the production or acquisition by the
Borrower and/or any of its Subsidiaries or its or their co-venturers of any
Program Rights with respect to any Program.
"Programming Amortization Expense": for any period, total amortization
expense of the Borrower and/or any of its Subsidiaries for such period which is
directly attributable to Programs, Program Rights or Program Contracts,
determined on a consolidated basis in conformity with GAAP.
"Programming Obligations": at any date of determination, all direct or
indirect liabilities, contingent or otherwise, with respect to Program
Contracts, Programs or Program Rights (including, without limitation, all
Program Rights Costs) of the Borrower and its Subsidiaries, to the extent
reflected on the consolidated balance sheet and the notes thereto of the
Borrower and its Subsidiaries prepared in conformity with GAAP.
"Programming Rights Payments": for any period, the aggregate cash
payments scheduled to be made by the Borrower and/or any of its Subsidiaries for
such period in respect of Programming Obligations, determined on a consolidated
basis in conformity with GAAP.
"Purchase Agreements": the agreements, contracts and other documents
pursuant to which the Borrower or its Subsidiaries will consummate a Permitted
Purchase, in form and substance satisfactory to the Agent or, in the case of an
acquisition consented to by the Required Lenders in accordance with clause (iii)
of the definition of the term "Permitted Purchase", the Required Lenders.
"Register": as defined in subsection 9.6(d).
"Related Documents": (a) the Purchase Agreements and (b) the LMA
Agreements.
<PAGE> 26
21
"Release": any release, spill, emission, leaking, plumbing, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment (including, without limitation,
the abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Materials), or into or out of any Facility,
including the movement of any Hazardous Material through the air, soil, surface
water, groundwater or property.
"Required Lenders": at a particular time, the holders of at least 51% of
the aggregate unpaid principal amount of the Loans, or, if no Loans are
outstanding, Lenders the Commitment Percentages of which aggregate at least 51%.
"Requirement of Law": as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Restricted Payment": means (i) any dividend or other distribution,
direct or indirect, on account of any equity interests (including preferred
capital stock) of the Borrower or any of its Subsidiaries now or hereafter
outstanding, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any equity
interests (including preferred capital stock) of the Borrower or any of its
Subsidiaries now or hereafter outstanding, (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire any equity interests (including preferred capital stock) of the Borrower
or any of its Subsidiaries now or hereafter outstanding and (iv) any direct or
indirect payment, loan, contribution or other transfer of funds or other
property to any equity holder of the Borrower or any of its Subsidiaries.
"Securities": any stock, shares, voting trust certificates, bonds,
debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Security Agreements": the collective reference to the Borrower
Security Agreement and the Subsidiaries Security Agreement.
"Security Documents": the collective reference to the Pledge
Agreements, the Subsidiaries Guarantee, the Security Agreements and all other
security documents hereafter delivered to the Agent granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of the
Borrower hereunder and under any of the other Loan Documents or to secure any
guarantee of any such obligations and liabilities.
<PAGE> 27
22
"Senior Debt Ratio": at any date of determination, the ratio of (a)
Consolidated Senior Debt on such date to (b) Adjusted Consolidated Operating
Cash Flow as of the last day of the month for which the Borrower shall have then
most recently delivered financial statements pursuant to subsection 5.1(b)(i).
"Senior Subordinated Note Indenture": the Indenture dated as of
September 28, 1995 pursuant to which the Borrower issued the Senior Subordinated
Notes, as the same may be amended, supplemented or otherwise modified from time
to time.
"Senior Subordinated Notes": the Senior Subordinated Notes due October
1, 2002 of the Borrower in the aggregate principal amount of $230,000,000.
"Solvent": with respect to any Person, that as of the date of
determination, both (A)(i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including Contingent
Obligations) of such Person and (z) greater than the amount that will be
required to pay the probable liabilities of such Person's then existing debts as
they become absolute and matured considering all financing alternatives, sharing
and allocation arrangements and potential asset sales reasonably available to
such Person; (ii) such Person's capital is not unreasonably small in relation to
its business or any contemplated or undertaken transaction; and (iii) such
Person does not intend to incur, or believe or reasonably should believe that
it will incur, debts beyond its ability to pay such debts as they become due
and (B) such Person is solvent within the meaning given that term and similar
terms under applicable laws relating to fraudulent transfers.
"Stockholders' Agreement": the Amended and Restated Stockholders'
Agreement of the Borrower dated as of December 22, 1994, as the same may be
amended, supplemented or otherwise modified from time to time.
"Studio Construction Expenditures": expenditures by the Borrower or its
Subsidiaries for the construction of a new infomercial/electronic retailing
studio facility to be located at either Old Okochobee Road between Australian
Avenue and Florida Mango Road or 1415 W. 45th Street, West Palm Beach, Florida
33407 and related equipment (including software) in an aggregate amount not to
exceed $10,000,000.
"Subsidiaries Guarantee": the Amended and Restated Guarantee to be
executed and delivered by each Subsidiary in favor of the Agent, substantially
in the form of Exhibit D, as the same may be amended, supplemented or otherwise
modified from time to time.
"Subsidiaries Pledge Agreement": the Amended and Restated Subsidiaries
Pledge Agreement to be executed and delivered by each Subsidiary in favor of the
Agent, substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified from time to time.
<PAGE> 28
23
"Subsidiaries Security Agreement": the Amended and Restated
Subsidiaries Security Agreement to be executed and delivered by each
Subsidiary in favor of the Agent, substantially in the form of Exhibit F,
as the same may be amended, supplemented or otherwise modified from time
to time.
"Subsidiaries Security Documents": the collective reference to
the Subsidiaries Pledge Agreement and the Subsidiaries Security
Agreement.
"Subsidiary": as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower. All references in this Agreement to a
"Subsidiary" or "Subsidiaries" of the Borrower shall not include (a) any
Unrestricted Subsidiary of the Borrower or (b) any Discontinued
Operation.
"Subsidiary Guarantor": any Subsidiary of the Borrower that is
a party to the Subsidiaries Guarantee.
"Termination Date": June 30, 2002.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Transferee": as defined in subsection 9.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Unrestricted Subsidiary": any corporation, partnership or
other entity which, but for the operation of this definition, would be a
Subsidiary of the Borrower (i) created, invested in or acquired by the
Borrower or any Subsidiary of the Borrower after December 19, 1995, other
than pursuant to a Preapproved Acquisition, (ii) designated by a
resolution of the Board of Directors of the Borrower as an Unrestricted
Subsidiary and such designation and the basis for such designation are
provided in writing to the Agent, and (iii)(A) into which the Borrower or
any Subsidiary has made any Investment with the proceeds of any issuance
or sale of any class of equity Securities of the Borrower or any
Subsidiary or as permitted by subsection 6.4(d) or (B) acquired in
exchange, in whole or in part, for equity Securities of the Borrower or
any Subsidiary; provided that if such Subsidiary is a
<PAGE> 29
24
partnership, such Subsidiary may be an Unrestricted Subsidiary only if
neither the Borrower nor a Subsidiary of the Borrower is a general
partner of such Subsidiary.
"Warrants": each of the warrants to purchase shares of common
stock or preferred capital stock of the Borrower.
"Working Day": shall mean any Business Day on which dealings
in foreign currencies and exchange between banks may be carried on in
London, England.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate
or other document made or delivered pursuant hereto, accounting terms relating
to the Borrower and its Subsidiaries not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, subsection, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans ("Loans") to the Borrower from time to time during the Commitment
Period in an aggregate principal amount at any one time outstanding not to
exceed the amount of such Lender's Commitment. During the Commitment Period
the Borrower may use the Commitments by borrowing, prepaying the Loans in whole
or in part, and reborrowing, all in accordance with the term and conditions
hereof.
2.2 Procedure for Borrowing. (a) The Loans may from time
to time be (i) Eurodollar Loans or (ii) Base Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with subsections 2.2(b) and 2.7, provided that no Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.
(b) The Borrower may borrow under the Commitments during
the Commitment Period on any Working Day, if all or any part of such Loans are
to be initially Eurodollar Loans, or on a Business Day, if all of such Loans
are to be initially Base Rate
<PAGE> 30
25
Loans, provided that the Borrower shall give the Agent irrevocable notice
(which notice must be received by the Agent prior to 10:00 A.M., Los Angeles
time, (a) three Business Days prior to the requested Borrowing Date, if all or
any part of the requested Loans are to be initially Eurodollar Loans or (b)
one Business Day prior to the requested Borrowing Date, otherwise), specifying
(i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be Eurodollar Loans, Base Rate Loans, or a combination
thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Periods therefor. Each borrowing under the
Commitments shall be in an amount equal to (x) in the case of Base Rate Loans,
$500,000 or a whole multiple of $100,000 in excess thereof (or, if the then
aggregate Available Commitments are less than $100,000, such lesser amount) and
(y) in the case of Eurodollar Loans, $3,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Lender thereof. Each Lender
will make the amount of its pro rata share of each borrowing available to the
Agent for the account of the Borrower at the office of the Agent specified in
subsection 9.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Agent. Such
borrowing will then be made available to the Borrower by the Agent crediting
the account of the Borrower on the books of such office with the aggregate of
the amounts made available to the Agent by the Lenders and in like funds as
received by the Agent.
2.3 Commitment Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a commitment fee for the duration of the
Commitment Period from and including the first day of the Commitment Period,
computed at the Applicable Commitment Fee Rate per annum on the average daily
amount of the Available Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last day of each March,
June, September and December and on the Termination Date or such earlier date
as the Commitments shall terminate as provided herein, commencing on the first
of such dates to occur after the date hereof.
2.4 Repayment of Loans, Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay to the Agent for the account of
each Lender the then unpaid principal amount of each Loan of such Lender on the
Termination Date (or such earlier date on which the Loans become due and
payable pursuant to Section 7). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in subsection 2.9.
(b) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of the Borrower
to such Lender resulting from each Loan of such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Agreement.
(c) The Agent shall maintain the Register pursuant to
subsection 9.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period applicable thereto, (ii) the amount
<PAGE> 31
26
of any principal or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iii) both the amount of any sum
received by the Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of
each Lender maintained pursuant to subsection 2.4(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Agent to maintain the Register or any
such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to the Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Loans of such Lender,
substantially in the form of Exhibit A with appropriate insertions as to date
and principal amount (a "Note").
2.5 Optional Prepayments. The Borrower may, at any time
and from time to time, prepay the Loans, in whole or in part, without premium
or penalty, upon at least three Business Days' irrevocable notice to the Agent
in the case of Eurodollar Loans, and upon at least one Business Days'
irrevocable notice to the Agent in the case of Base Rate Loans, specifying the
date and amount of prepayment and whether the prepayment is of Eurodollar
Loans, Base Rate Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice the
Agent shall promptly notify each Lender thereof. If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to subsection
2.16. Partial prepayments shall be in an aggregate principal amount of $250,000
or a whole multiple of $50,000 in excess thereof.
2.6 Termination or Reduction of Commitments and Mandatory
Prepayments,
(a) The Borrower shall have the right, upon not less than
three Business Days' notice to the Agent, to terminate the Commitments or, from
time to time, to reduce the amount of the Commitments. Any such reduction
shalt be in an amount equal to $500,000 or a whole multiple of $500,000 in
excess thereof and shall reduce permanently the Commitments then in effect.
Termination of the Commitments shall also terminate the obligation of the
Lenders to make Loans.
(b) On each March 31, June 30, September 30 and December
31 during the period from and including December 31, 1997 to the Termination
Date, the Commitment shall be reduced by the amount set forth below opposite
the period in which such date occurs:
<PAGE> 32
27
<TABLE>
<CAPTION>
==========================================================
QUARTERLY
COMMITMENT
DATE OR PERIOD REDUCTION
==========================================================
<S> <C>
December 31, 1997 $ 5,000,000
----------------------------------------------------------
January 1, 1998-December 31, 1998 $ 7,500,000
----------------------------------------------------------
January 1, 1999-December 31, 2000 $10,000,000
----------------------------------------------------------
January 1, 2001-December 31, 2001 $10,625,000
----------------------------------------------------------
January 1, 2002-June 30, 2002 $21,250,000
==========================================================
</TABLE>
(c) If any class of debt Securities or instruments of the
Borrower or any of its Subsidiaries shall be issued or sold or the Borrower or
its Subsidiaries shall incur any indebtedness (other than any debt Securities
or instruments issued or Indebtedness incurred as permitted by subsection 6.2)
an amount equal to 100% of the Net Cash Proceeds from such issuance, sale or
incurrence shall be applied on the date of such issuance, sale or incurrence
toward the reduction of the Commitments in accordance with the provisions of
paragraph (f) of this subsection 2.6.
(d) The Commitments shall be reduced in accordance with
the provisions of paragraph (f) of this subsection 2.6 by an amount equal to
the aggregate amount of Net Cash Proceeds received by the Borrower and its
Subsidiaries from Asset Sales (other than any sale of WPBF-TV and WTVX-TV if
such sale occurs prior to June 30, 1997), except that (i) if the Leverage Ratio
as of the last day of the fiscal quarter preceding such Asset Sale is greater
than 4.50 to 1.00, then the first $50,000,000 of such Net Cash Proceeds
received by the Borrower and its Subsidiaries during the Commitment Period need
not be so applied to reduce the Commitments to the extent the Borrower or any
of its Subsidiaries invests such Net Cash Proceeds, or contracts to invest
(subject only to customary conditions other than the obtaining of financing)
such Net Cash Proceeds on or prior to the 181st day following the date of such
Asset Sale and the Net Cash Proceeds so contractually committed are so invested
within 360 days following the date of such Asset Sale, in Equivalent Assets of
the assets sold (a "Permitted Reinvestment") (provided that, as at the time of
such Permitted Reinvestment and after giving effect thereto no Default or Event
of Default shall have occurred and be continuing or would result therefrom) and
(ii) if the Leverage Ratio is less than or equal to 4.50 to 1.00 as of the last
day of the fiscal quarter preceding such Asset Sale, then the Net Cash Proceeds
of such Asset Sale need not be so applied to reduce the Commitments to the
extent the Borrower or any of its Subsidiaries applies such Net Cash Proceeds
to make a Permitted Reinvestment within the time period for such Permitted
Reinvestment specified in clause (i) of this paragraph (provided that, as at
the time of such Permitted Reinvestment and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing or would
result therefrom).
<PAGE> 33
28
(e) If, for the 1997 fiscal year of the Borrower and any
subsequent fiscal year of the Borrower, (i) there shall be Excess Cash Flow and
(ii) the Leverage Ratio is greater than or equal to 4.50 to 1.00 as of the last
day of such fiscal year, then on the relevant Excess Cash Flow Application Date
(as defined below) there shall be applied toward the reduction of the
Commitment in accordance with the provisions of paragraph (f) of this
subsection 2.6, an amount equal to 50% of such Excess Cash Flow. Each such
Commitment reduction shall be made on the date (an "Excess Cash Flow
Application Date") that is five days after the earlier of (i) the date on which
the financial statements of the Borrower referred to in subsection 5. 1
(b)(iii), for the fiscal year with respect to which such prepayment is made,
are required to be delivered to the Lenders and (h) the date such financial
statements are actually delivered.
(f) Reductions of the Commitments pursuant to this
subsection 2.6 shall be applied to the permanent reduction of the Commitments
to the then remaining scheduled Commitment reductions pro rata according to the
respective amounts thereof. Any reduction of the Commitments pursuant to this
subsection 2.6 shall be accompanied by the prepayment of the Loans (including
accrued interest and any amounts due pursuant to subsection 2.16) to the
extent, if any, that the aggregate then outstanding principal amount of the
Loans exceeds the amount of the Commitments as so reduced.
2.7 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to Base Rate Loans, by
giving the Agent at least two Business Days' prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Agent at least three Working Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Agent shall promptly notify each Lender thereof.
All or any part of outstanding Eurodollar Loans and Base Rate Loans may be
converted as provided herein, provided that (i) no Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and
the Agent has or the Required Lenders have determined that such a conversion is
not appropriate and (ii) no Loan may be converted into a Eurodollar Loan after
the date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon
the expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan may be continued as such (i) when any Event of Default
has occurred and is continuing and the Agent has or the Required Leaders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to the Termination Date and provided, further, that if
the Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period.
<PAGE> 34
29
2.8 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each Eurodollar Tranche shall be equal to
$3,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event
shall there be more than 8 Eurodollar Tranches outstanding at any time.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined with
respect to such Loan for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan,
(ii) any interest payable thereon, (iii) any commitment fee or (iv) any other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), the principal of such overdue Loans
and any such overdue interest, commitment fee or other amount shall bear
interest at a rate per annum which is (x) in the case of principal, the rate
that would otherwise be applicable thereto pursuant to the foregoing provisions
of this subsection plus 2% or (y) in the case of any such overdue interest,
commitment fee or other amount, the rate described in paragraph (b) of this
subsection plus 2%, in each case from the date of such non-payment until such
overdue principal, interest, commitment fee or other amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.10 Computation of Interest and Fees. (a) Interest on
Base Rate Loans and commitment fees shall be calculated on the basis of a 365-
(or 366-, as the case may be) day year for the actual days elapsed. Interest on
Eurodollar Loans shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Agent shall as soon as practicable notify the
Borrower and the Lenders of each determination of a Eurodollar Rate. Any
change in the interest rate on a Loan resulting from a change in the Base Rate
or the Eurocurrency Reserve Requirement, shall become effective as of the
opening of business on the day on which such change becomes effective. The
Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The Agent
shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Agent in determining any interest rate
pursuant to subsection 2.9(a) or (b).
<PAGE> 35
30
2.11 Inability to Determine interest Rate. If prior to
the first day of any Interest Period:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x)
any Eurodollar Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any affected outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Loans to Eurodollar Loans.
2.12 Pro Rata Treatment and Payments. (a) Each borrowing
by the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee hereunder and any reduction of the Commitments of
the Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Loans shall be made pro
rata according to the respective outstanding principal amounts of the Loans
then held by the Lenders. All payments (including prepayments) to be made by
the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall be made
prior to 11:00 A.M. Los Angeles time, on the due date thereof to the Agent,
for the account of the Lenders, at the Agent's office specified in subsection
9.2, in Dollars and in immediately available funds. The Agent shall distribute
such payments to the Lenders promptly upon receipt in like funds as received.
If any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing
by any Lender prior to a borrowing that such Lender will not make the amount
that would constitute its Commitment Percentage of such borrowing available to
the Agent, the Agent may assume that such Lender is making such amount
available to the Agent, and the Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. If such amount is not
made available to the Agent by the required time on the Borrowing Date
<PAGE> 36
31
therefor, such Lender shall pay to the Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Rate for
the period until such Lender makes such amount immediately available to the
Agent. A certificate of the Agent submitted to any Lender with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's Commitment Percentage of such borrowing is
not made available to the Agent by such Lender within three Business Days of
such Borrowing Date, the Agent shall also be entitled to recover such amount
with interest thereon, without duplication of any amounts received by the Agent
from such Lender, at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrower.
2.13 Illegality. Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, other than as a result
of the gross negligence or willful act of such Lender, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to subsection
2.16.
2.14 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any
kind whatsoever with respect to this Agreement, any Note or any
Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for NonExcluded
Taxes covered by subsection 2.15 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
thereunder; or
(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, such Lender
shall notify the Borrower of such increased cost
<PAGE> 37
32
or reduced amount receivable and describe in reasonable detail the basis for
such notification, and the Borrower shall promptly pay such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, the Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for
such reduction.
(c) If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify the
Borrower (with a copy to the Agent) of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender to the Borrower (with a
copy to the Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(d) In the event any Lender delivers a certificate
requesting compensation pursuant to this subsection 2.14, the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Agent, require
such Lender to transfer and assign, without recourse (in accordance with and
subject to the restrictions contained in subsection 9.6), all of its interests,
rights and obligations under this Agreement to an assignee which shall assume
such assigned obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided, however, that (x) such assignment shall not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) the Borrower shall have
received the prior written consent to such assignment of the Agent, which
consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender in immediately available funds
an amount equal to the sum of the principal of the outstanding Loans of such
Lender plus all interest, fees and other amounts accrued and unpaid for the
account of such Lender hereunder (including any amounts under this subsection
2.14); provided, further, that if prior to any such transfer and assignment the
circumstances or event that resulted in such Lender's claim for compensation
under this subsection 2.14 cease to cause such Lender to suffer increased costs
or reductions in amounts received or receivable or reduction in return on
capital (including as a result of any action taken by such Lender pursuant to
subsection 2.17), or if, within twenty days after the Borrower shall have
notified such Lender of its election to exercise its rights pursuant to this
subsection, such Lender shall waive its right to claim further compensation
under this
<PAGE> 38
33
subsection 2.14 in respect of such circumstances or event, then such Lender
shall not thereafter be required to make any such transfer and assignment
hereunder.
2.15 Taxes. (a) All payments made by the Borrower under
this Agreement and any Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Agent or any Lender as a
result of a present or former connection between the Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any Note). If any such non-excluded taxes, levies,
imposts, duties, charges, fees deductions or withholdings ("Non- Excluded
Taxes") are required to be withheld from any amounts payable to the Agent or
any Lender hereunder or under any Note, the amounts so payable to the Agent or
such Lender shall be increased to the extent necessary to yield to the Agent or
such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may become
payable by the Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two
duly completed copies of United States Internal Revenue Service Form
1001 or 4224, or successor applicable form, as the case may be, and
(B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be;
(ii) deliver to the Borrower and the Agent two
further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
<PAGE> 39
34
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested
by the Borrower or the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 9.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
2.16 Indemnity. The Borrower agrees to indemnify each
Lender and to hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance with
the provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.17 Change of Lending Office. Each Lender agrees that if
it makes any demand for payment under subsection 2.14 or 2.15(a), or if any
adoption or change of the type described in subsection 2.13 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to
designate a different lending office if the making of such a designation would
reduce or obviate the need for the Borrower to make payments under subsection
2.14 or 2.15(a), or would eliminate or reduce the effect of any adoption or
change described in subsection 2.13.
<PAGE> 40
35
2.18 Further Assurances Regarding Security, Additional
Security. (a) The Borrower shall, and shall cause each of its Subsidiaries to,
from time to time, execute and deliver to the Agent on behalf of the Lenders,
such additional Security Documents, statements, documents, agreements and
reports as it may from time to time reasonably request to evidence, perfect or
otherwise implement or assure the security for repayment of the Obligations.
With respect to the Lenders' insurance policies, upon the Agent's reasonable
request, the Borrower shall arrange for co-insurance and/or reinsurance, with
companies and in amounts satisfactory to the Agent. All reinsurance policies
shall include direct access agreements acceptable to the Agent.
(b) Notwithstanding anything herein to the contrary, to
the extent this Agreement or any other Loan Document purports to require any
Loan Party to grant to the Agent, on behalf of Lenders, a security interest in
the FCC Licenses of any Loan Party now owned or hereafter acquired, as the case
may be, the Agent, on behalf of Lenders, shall only have a security interest in
such FCC Licenses at such times and to the extent that a security interest in
such licenses is permitted under applicable law. Notwithstanding anything to
the contrary set forth herein, the Agent, on behalf of Lenders, agrees that to
the extent prior FCC approval is required pursuant to the Communications Act
for (a) the operation and effectiveness of any grant, right or remedy hereunder
or under the Security Agreements or (b) taking any action that may be taken by
the Agent hereunder or under the Security Agreements, such grant, right, remedy
or actions will be subject to such prior FCC approval having been obtained by
or in favor of the Agent, on behalf of Lenders. The Borrower agrees that, upon
an Event of Default and at the Agent's request, the Borrower will, and will
cause its Subsidiaries to, immediately file, or cause to be filed, such
applications for approval and shall take all other and further actions
reasonably required by the Agent, on behalf of Lenders, to obtain such FCC
approvals or consents as are necessary to transfer ownership and control to the
Agent, on behalf of Lenders, or their successors, assigns or designees of the
FCC Licenses held by the Borrower, its License Subsidiaries or any of its other
Subsidiaries. To enforce the provisions of this subsection, the Agent is
empowered to request the appointment of a receiver from any court of competent
jurisdiction. Such receiver shall be instructed to seek from the FCC an
involuntary transfer of control of any such FCC License for the purpose of
seeking a bona fide purchaser to whom control will ultimately be transferred.
The Borrower hereby agrees to authorize, and to cause each of its Subsidiaries
to authorize, such an involuntary transfer of control upon the request of the
receiver so appointed, and, if the Borrower shall refuse to authorize or cause
any of its Subsidiaries to so authorize the transfer, its approval may be
required by the court. Upon the occurrence and continuance of an Event of
Default, and the request of the Agent, the Borrower shall further use its best
efforts to assist in obtaining approval of the FCC, if required, for any action
or transactions contemplated by this Agreement or the other Loan Documents,
including, without limitation, the preparation, execution and filing with the
FCC of the assignor's or transferor's portion of any application or
applications for consent to the assignment of any FCC License or transfer of
control necessary or appropriate under the FCC's rules and regulations for
approval of the transfer or assignment of any portion of the Collateral,
together with any FCC License or other authorization.
<PAGE> 41
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(c) The Borrower acknowledges that the assignment or
transfer of such FCC Licenses is integral to the Lenders' realization of the
value of the Collateral, that there is no adequate remedy at law for failure by
the Borrower to comply with the provisions of this subsection and that such
failure would not be adequately compensable in damages, and therefore agrees
that the agreements contained in this subsection may be specifically enforced.
(d) Notwithstanding anything to the contrary contained in
this Agreement or any other Loan Document, neither the Agent nor any Lender
shall, without first obtaining the approval of the FCC, take any action
pursuant to this Agreement or any other Loan Document which would constitute or
result in any assignment of an FCC License or any change of control of the
Borrower or any of its Subsidiaries if such assignment or change in control
would require, under then existing law (including the written rules and
regulations promulgated by the FCC), the prior approval of the FCC.
(e) At any time or from time to time upon the reasonable
request of the Agent, the Borrower shall, and shall cause each of its
Subsidiaries to, execute and deliver such further documents (including without
limitation such financing statements, continuation statements or amendments
thereto and such other documents and certificates as the Agent may reasonably
request to perfect and preserve the security interests granted or purported to
be granted under any of the Security Documents) and do such other acts and
things as the Agent may reasonably request to effect fully the purposes of this
Agreement and the other Loan Documents and to provide for payment of the
Obligations in accordance with the terms of this Agreement and the other Loan
Documents. Without limiting any of the foregoing, in the event a Person
becomes a Subsidiary of the Borrower after the Closing Date, the Borrower shall
cause such Subsidiary to execute and deliver such guarantees, Security
Documents and such other agreements, pledges, assignments, documents and
certificates (including, without limitation, any amendments to the Loan
Documents) as the Agent may reasonably request and do such other acts and
things as the Agent may reasonably request to have such Subsidiary guaranty the
Obligations, grant, subject to the limitation set forth in subsection 2.18(b),
to the Agent on behalf of Lenders, a duly perfected first priority Lien
(subject to Liens permitted hereunder) on all real, personal and mixed property
(in each case, if so requested by the Agent) of such Subsidiary, and effect
fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, in the event the Borrower forms or otherwise acquires a Subsidiary
after the Closing Date, the Borrower shall (i) execute and deliver to the Agent
a pledge agreement substantially in the form attached hereto as Exhibit B and
(ii) cause such Subsidiary to execute and deliver a guarantee substantially in
the form attached hereto as Exhibit E, a pledge agreement substantially in the
form attached hereto as Exhibit E and a security agreement in the form of
Exhibit F.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and warrants to
the Agent and each Lender that:
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3.1 Organization, Powers, Good Standing and Business
(a) Organization and Powers. Each Loan Party is a
corporation or limited partnership, as the case may be, duly formed and validly
existing under the laws of the jurisdiction of its organization. Each Loan
Party has all requisite corporate or partnership, as the case may be, power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, and each Loan Party has all requisite
corporate or partnership, as the case may be, power and authority to enter into
the Related Documents and the Loan Documents, to carry out the transactions
contemplated thereby and to issue the Notes, in each case to the extent it is a
party thereto.
(b) Good Standing. Each Loan Party is in good standing in
every jurisdiction where its assets are located and wherever necessary to carry
out its present business and operations, except where the failure to be so
qualified has not had and could not reasonably be expected to have a Material
Adverse Effect.
(c) Conduct of Business. The Loan Parties are engaged only
in the businesses permitted to be engaged in under subsection 6.13 and are
conducting their businesses in accordance with the provisions of subsection
6.13. Each Loan Party holds all licenses, permits, franchises, leases,
certificates of authority, or any waivers of the foregoing that are necessary
to permit each of them to conduct their respective businesses as now conducted
and to hold and operate their respective properties, except where the failure
to have such licenses, permits, franchises, leases and certificates of
authority, or waivers of any of the foregoing, could not reasonably be expected
to have a Material Adverse Effect. All such licenses, permits, franchises,
leases, certificates of authority and waivers are valid and in full force and
effect, except where the failure to be in full force and effect of such
licenses, permits, franchises, leases, certificates of authority and waivers
could not reasonably be expected to have a Material Adverse Effect.
(d) Ownership and Subsidiaries. All of the issued and
outstanding Capital Stock of each of the other Loan Parties is held directly or
indirectly by the Borrower. The ownership of each of the Loan Parties and each
of the Subsidiaries of each of the Loan Parties is specified correctly and
completely on Schedule 3. 1 (d) annexed hereto. None of the Capital Stock of
the Persons identified on Schedule 3.1(d) annexed hereto is Margin Stock,
except as specified on such Schedule. Each of the Subsidiaries of the Loan
Parties identified on Schedule 3.1(d) annexed hereto is validly existing and in
good standing under the laws of its respective jurisdiction of incorporation or
organization, as the case may be, and has full corporate or partnership, as the
case may be, power and authority to own its assets and properties and to
operate its business as presently owned and conducted except where failure to
be in good standing or a lack of corporate or partnership, as the case may be,
power and authority, has not had and could not reasonably be expected to have a
Material Adverse Effect.
(e) FCC Matters.
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(i) Schedule 3. 1 (e) correctly sets forth all of the FCC
Licenses (other than auxiliary service licenses and receive only earth
stations) owned or held by any Subsidiary of the Borrower or their
respective Affiliates as of the Closing Date or, upon consummation of
any Permitted Purchase, to be held by each Loan Party and correctly sets
forth the expiration date, if any, of each such FCC License. Each FCC
License was duly and validly issued by the FCC pursuant to procedures
which comply with all requirements of applicable law, and neither the
Borrower nor any other Loan Party has any knowledge of the occurrence of
any event or the existence of any circumstance which, in the reasonable
judgment of the Borrower or any other Loan Party, is likely to lead to
the revocation or suspension of any FCC License. The Loan Parties have
the right to use all FCC Licenses required in the ordinary course of
business for the operation of the Broadcast Stations. Each such FCC
License is in full force and effect and each holder thereof is in
substantial compliance therewith with no known conflict with the valid
rights of others which could reasonably be expected to have a Material
Adverse Effect. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation, termination,
modification or restriction of any such FCC License or other right which
could reasonably be expected to have a Material Adverse Effect. The
Borrower does not directly own or hold any FCC License.
(ii) The Loan Parties have duly filed in a timely manner
all material filings which are required to be filed by the Loan Parties
under the Communications Act and are in all material respects in
substantial compliance with the Communications Act, including, without
limitation, the rules and regulations of the FCC relating to the
broadcast of radio and television signals or the operation of the
Broadcast Stations.
(iii) None of the Facilities (including without limitation,
the transmitter and tower sites owned or used by the Borrower or any of
its Subsidiaries) violate in any material respect the provisions of any
applicable building codes, fire regulations, building restrictions or
other governmental ordinances, orders or regulations, and (except as set
forth in Schedule 3.1(f)) each such Facility is zoned so as to permit
the commercial uses intended by the owner or occupier thereof and there
are no outstanding variances or special use permits materially affecting
any of the Facilities or the uses thereof.
(iv) The Ownership Report filed by the Borrower is true,
correct and complete in all material respects, and there has been no
change in control of the ownership of the Loan Parties or the FCC
Licenses of the Loan Parties since the most recently filed Ownership
Report for any of the Loan Parties other than as disclose in writing to
the Agent and the Lenders.
(f) Real Property. Schedule 3.1(f) accurately states all
material real property interests held by the Loan Parties.
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3.2 Authorization of Borrowing. etc.
(a) Authorization of Borrowing. The execution, delivery
and performance of the Loan Documents and the Related Documents and the
issuance, delivery and payment of the Notes have been duty authorized by all
necessary corporate or partnership, as the case may be, action by each Loan
Party a party thereto except, in the case of any Related Document, the failure
of which could not result in a Material Adverse Effect.
(b) No Conflict. The execution, delivery and performance
by each Loan Party of the Loan Documents and the Related Documents, the
issuance, delivery and performance of the Notes and any other transaction
contemplated by the Loan Documents or the Related Documents do not and will not
(i) violate any provision of law applicable to any Loan Party, the Certificate
of Incorporation, Bylaws, Partnership Agreement or other organizational
documents of any Loan Party or any order, judgment or decree of any court or
other agency of government binding on any Loan Party, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both)
a default under any material Contractual Obligation of any Loan Party, (iii)
result in or require the creation or imposition of any material Lien upon any
of the properties or assets of any Loan Party (other than Liens hereunder in
favor of the Agent on behalf of the Lenders) or (iv) require any approval of
stockholders or other equity holders or any approval or consent of any Person
under any Contractual Obligation of any Loan Party, except for such approvals
or consents which have been obtained by the Borrower or its Subsidiaries or
which relate to any Permitted Acquisition and will be obtained prior to the
consummation thereof.
(c) Governmental Consents. The execution, delivery and
performance by each Loan Party of the Loan Documents and the Related Documents
to which it is a party, the issuance, delivery and performance of the Notes and
any other transactions contemplated by the Loan Documents or the Related
Documents, do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body including, without
limitation, the FCC and any issuer of any permit or grant of authority relating
to the Broadcast Stations, except for filings required in connection with the
perfection of the security interests granted pursuant to the Loan Documents,
the consent, if any, required from the FCC in connection with the consummation
or enforcement of the Loan Documents and the Related Documents in each case to
the extent such consummation or enforcement involves the assignment of any FCC
License or may be deemed a "change of control" under the Communications Act,
filings required with the FCC in connection with any License Subsidiary
transfer and the filing with the FCC, for notice purposes only, of this
Agreement and any of the other Loan Documents and the Related Documents
required to be filed, filings pursuant to the Hart-Scott-Rodino Act in
connection with any Permitted Purchase and, with respect to Related Documents,
any registration with, consent or approval of, or notice to, or other action
to, the failure of which to make or obtain could not reasonably be expected to
have a Material Adverse effect.
(d) Binding Obligation. Each of the Loan Documents and the
Related Documents has been duly executed and delivered by each Loan Party which
is a party thereto, and is the legally valid and binding obligation of such
Loan Party, enforceable against such
<PAGE> 45
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Loan Party in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally and subject to the
availability of equitable remedies.
3.3 Financial Condition. The Borrower has heretofore
delivered to the Lenders, at the Lenders' request, the Financial Statements.
All such statements were prepared in conformity with GAAP and, together with
the accompanying notes thereto, if any, fairly present the financial position
(where applicable on a consolidated basis) of the entities described in such
financial statements as at the respective dates thereof and the results of
operations and changes in financial position (where applicable on a
consolidated basis) of the entities described therein for each of the periods
then ended (subject to, in the case of unaudited financial statements, normal
year-end adjustments). The Borrower has no (and will not following the funding
of the Loans have) material Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that is not (or will not be, upon the delivery thereof) reflected in the
foregoing financial statements or the notes thereto or in the annual financial
statements required to be delivered pursuant to subsection 5.1(b)(iii).
3.4 No Material Adverse Change: No Restricted Payments.
Since December 31, 1995, no event or change has occurred that has caused or
evidences, either individually or in the aggregate, a Material Adverse Effect.
Since December 31, 1995, the Borrower has not directly or indirectly declared,
ordered, paid or made or set apart any sum or property for any Restricted
Payment or agreed so to do, except as permitted by subsection 6.6.
3.5 Title To Properties; Liens. Each Loan Party holds
(i) good, marketable and insurable fee simple title, subject to Liens permitted
by subsection 6.3, to all its owned real property, (ii) good, sufficient,
insurable and valid leasehold title, subject to Liens permitted by subsection
6.3, to its respective leased real property and (iii) good, sufficient and
legal title, subject to Liens permitted by subsection 6.3, to all of its
material properties and assets (other than as described in clauses (i) and (ii)
of this sentence) reflected in the balance sheet included with the Financial
Statements or in the most recent financial statements delivered pursuant to
subsection 5.1(b) of this Agreement, except for assets acquired or disposed of
since the date of such financial statements. Except as permitted by subsection
6.3, all such properties and assets are free and clear of Liens.
3.6 Litigation: Adverse Facts. There is no action, suit,
proceeding, governmental arbitration or governmental investigation (whether or
not purportedly on behalf of any Loan Party) at law or in equity or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, including,
without limitation, the FCC, pending or, to the knowledge of the Borrower,
threatened against or affecting any Loan Party or any property of any Loan
Party (but, in any event, excluding suits or proceedings affecting the
broadcasting industry, television industry or radio industry generally) that
has had, or could reasonably be expected to result in any Material Adverse
Effect. Neither the Borrower nor any of its Subsidiaries has received any
notice of termination of any material contract, lease or other agreement, or
suffered any
<PAGE> 46
41
material damage, destruction or loss, (whether or not covered by insurance) or
had any employee strike, work-stoppage, slow-down or lock-out or any
substantial threat directed to it of any imminent strike, work-stoppage,
slow-down or lock out, any of which remain pending and are material to the
conduct of the Borrower or its Subsidiaries' business as presently conducted
that could reasonably be expected to result in a Material Adverse Effect.
3.7 Payment of Taxes. Except to the extent permitted by
subsection 5.3, all tax returns and reports of the Borrower and its
Subsidiaries required to be filed by it or on its behalf have been timely
filed, and all taxes, assessments, fees and other governmental charges upon
such Persons and upon their respective properties, assets, income and
franchises which are due and payable have been paid when due and payable. The
Borrower does not know of any proposed tax assessment against any such Person
which is not being actively contested by such Person, in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have
been made or provided therefor.
3.8 Performance of Agreements. (a) No Loan Party is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except, in each case,
where the consequences, direct or indirect, of such default or defaults, if
any, could not have a Material Adverse Effect.
(b) No Loan Party is a party or subject to any agreement
or instrument which has or could reasonably be expected to have, individually
or the aggregate, a Material Adverse Effect.
3.9 Governmental Regulation. No Loan Party is subject to
regulation under the Public Utility Company Act of 1935, the Federal Power Act
or the Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur Indebtedness.
3.10 Securities Activities. Neither any Loan Party nor
any of their respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock.
3.11 Employee Benefit Plans. (a) The Borrower and each
ERISA Affiliate is in substantial compliance with all provisions and
requirements of ERISA with respect to each Employee Benefit Plan, and have
substantially performed all their obligations under each Employee Benefit Plan.
There are no actions, suits or claims (other than routine claims for benefits)
pending or threatened against any Employee Benefit Plan or its assets, and, to
the best knowledge of the Borrower, no facts exist which could give rise to any
such actions, suits or claims.
(b) Within the period of five years ending on the Closing
Date, no ERISA Event has occurred, and there is no unpaid liability of the
Borrower or any ERISA Affiliate
<PAGE> 47
42
that arose in connection with any ERISA Event that occurred prior to that
five-year period. As of the Closing Date, no ERISA Event is reasonably
expected to occur with respect to any Employee Benefit Plan.
(c) Except to the extent required under Section 4980B of
the Code, no Employee Benefit Plan provides health or welfare benefits (through
the purchase of insurance or otherwise) for any retired or former employees of
the Borrower or any ERISA Affiliate.
(d) As of the most recent valuation date for any Pension
Plan, the excess of the actuarial present value (determined on the basis of
reasonable assumptions employed by the independent actuary for such Pension
Plan) of the benefit liabilities (as defined in Section 4001(a)(16) of ERISA),
whether or not vested, over the fair market value of the assets of such Pension
Plan, individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which there is
no such excess), does not exceed $500,000.
3.12 Certain Fees. No broker's or finder's fee or
commission will be payable by the Borrower or any of its Subsidiaries (or to
the best knowledge of the Borrower, by any other Person), other than to
Communication Equity Associates, Inc., with respect to the making of the Loans,
or any of the other transactions contemplated hereby (except that with respect
to any Permitted Purchase the Borrower has or will inform the Leaders of any
such fees or commissions), and the Borrower hereby indemnifies the Lenders
against and agree that they will hold the Lenders harmless from any claim,
demand or liability for broker's or finder's fees (other than any broker's or
finder's fee of any broker or finder retained by the Agent or the Lenders)
alleged to have been incurred in connection with any such offer, issuance and
sale, or any of the other transactions contemplated hereby or by the Related
Documents and any expenses, including legal fees, arising in connection with
any such claim, demand or liability.
3.13 Environmental.
(i) The operations of the Borrower and its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) comply, and for the period within
any applicable statute of limitations have complied, in all material
respects with all Environmental Laws;
(ii) The Borrower and each of its Subsidiaries has
obtained all permits under Environmental Laws necessary to their
respective operations, and all such permits are in good standing, and
the Borrower and each of its Subsidiaries is in compliance with all
material terms and conditions of such permits;
(iii) Neither the Borrower nor any of its
Subsidiaries has received (a) any notice or claim to the effect that
it is or may be liable to any Person as a result of the Release or
threatened Release of any Hazardous Materials or (b) any letter or
request for information under Section 104 of the Comprehensive
Environmental Response compensation and Liability Act (42 U.S.C.
Section 9604) or comparable state laws, and to
<PAGE> 48
43
the best of the Borrower's knowledge, none of the operations of the
Borrower or any of its Subsidiaries is the subject of any federal or
state investigation evaluating whether any further investigation or
remedial action is needed to respond to a Release or threatened
Release of any Hazardous Material at any Facility or at any other
location;
(iv) None of the operations of the Borrower or any
of its Subsidiaries is subject to any judicial, administrative, or
arbitral proceeding alleging the violation of or liability under
any Environmental Laws which if adversely determined could
reasonably be expected to have a Material Adverse Effect;
(v) The Borrower and each of its Subsidiaries and
all of their Facilities or operations are not subject to any
outstanding written order or agreement with any governmental
authority or private party relating to (a) any Environmental Laws
or (b) any Environmental Claims that in each case could reasonably
be expected to have a Material Adverse Effect;
(vi) To the best knowledge of each Loan Party, neither
the Borrower nor any of its Subsidiaries has any contingent
liability in connection with any Release of any Hazardous Materials
by the Borrower or any Subsidiaries of the Borrower that could
reasonably be expected to have a Material Adverse Effect;
(vii) Neither the Borrower nor any of its Subsidiaries or,
to the best of the Borrower's knowledge, any predecessor of the
Borrower or any Subsidiaries of the Borrower has filed any
notice under any Environmental Law indicating past or present
treatment or disposal of Hazardous Materials at any Facility, and
none of the Borrower's or any of its Subsidiary's operations
involves the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent in material violation of any such
law;
(viii) To the best knowledge of each Loan Party, no
Hazardous Material exists on, under or about any Facility in a
manner that could give rise to an Environmental Claim having a
Material Adverse Effect, and neither the Borrower nor any
Subsidiary of the Borrower has filed any notice or report of a
Release of any Hazardous Materials that could reasonably be
expected to give rise to an Environmental Claim having a Material
Adverse Effect;
(ix) To the best knowledge of each Loan Party, neither
the Borrower nor any Subsidiary of the Borrower (or any of their
predecessors) has disposed of any Hazardous Materials in a manner
that could reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect;
(x) No underground storage tanks or surface impoundments
are on or at the Facilities, other than those that could not
reasonably be expected to give rise to an Environmental Claim
having a Material Adverse Effect;
<PAGE> 49
44
(xi) No Lien in favor of any Person for (a) any liability
under Environmental Laws, or (b) damages arising from or costs
incurred by such Person in response to a Release has been filed
or has been attached to the Facilities; and
(xii) There is no radio frequency radiation,
electromagnetic field or similar condition of or about any property
owned, operated, or otherwise used by any Loan Party that could
reasonably be expected to give rise to a Material Adverse Effect.
3.14 Solvency. Each Loan Party is, and on and after the
consummation of the transactions contemplated hereby will be, Solvent.
3.15 Related Documents. As of the Closing Date and with
respect to any Related Documents executed and delivered on any Borrowing Date,
as of such Borrowing Date, the Related Documents have been duly authorized,
executed and delivered by each Loan Party and their respective Subsidiaries, to
the extent each is a party thereto, and are in full force and effect and no
material term or condition thereof has been amended or modified in any respect
that could reasonably be expected to have a Material Adverse Effect, without
the consent of the Agent and the Required Lenders. The Borrower has delivered
or offered to deliver to the Lenders complete and correct copies of the Related
Documents and of all exhibits and schedules delivered to or by any Loan Party
or their respective Subsidiaries in connection with Related Documents.
3.16 Insurance. The Borrower and its Subsidiaries maintain,
with financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of its Subsidiaries,
against loss or damage of the kinds customarily insured against by entities
of established reputation engaged in the same or similar business of such types
and in such amounts as are customarily carried under similar circumstances
by such other entities. Schedule 3.16 is a complete and accurate description
of all policies of insurance that will be in effect as of the Closing Date
for the Borrower and its Subsidiaries.
3.17 Intellectual Property. (a) The Borrower and its
Subsidiaries own, or are licensed to use, the Intellectual Property and all
such Intellectual Property is, in all material respects, fully protected and
duly and property registered, filed or issued in the appropriate office and
jurisdictions for such registrations, filing or issuances.
(b) Except as disclosed on Schedule 3.17(b), (i) no
material claim has en asserted by any Person with respect to the use of any
such Intellectual Property, or challenging or questioning the validity or
effectiveness of any such Intellectual Property; (ii) to the best of the
Borrower's knowledge, the use of such Intellectual Property by the Borrower or
any of its Subsidiaries does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the aggregate, give rise to any
liabilities on the part of the Borrower or any of its Subsidiaries that are
material to the Borrower or any of its Subsidiaries; and (iii) the consummation
of the transactions contemplated by this Agreement will not in any material
manner or to any material extent impair the ownership of (or the license to
use, as the case may be) any of such Intellectual Property by the Borrower or
any of its Subsidiaries.
<PAGE> 50
45
3.18 Disclosure. No representation or warranty of any
Loan Party contained in any Loan Document or Related Document or any other
document, certificate or written statement furnished to the Lenders by or on
behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement (including any Permitted Purchase) contains any
untrue statement of a material fact or omits to state a material fact (known to
the Borrower in the case of any document not furnished by it) necessary in
order to make the statements contained herein or therein not misleading in
light of the circumstances in which the same were made. The projections and
pro forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by the Borrower to be reasonable at
the time made, it being recognized by the Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no fact known (or which should upon the reasonable exercise
of diligence be known) to the Borrower (other than matters of a general
economic nature or relating to the broadcasting industry generally) that has
had or could reasonably be expected to have a Material Adverse Effect and that
has not been disclosed herein or in such other documents, certificates and
statements furnished to the Lenders for use in connection with the transactions
contemplated hereby.
3.19 Security Documents. (a) Each of the Pledge Agreements
is effective to create in favor of the Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Securities
described therein and proceeds thereof and, when the Pledged Notes described
therein and stock certificates representing the Pledged Stock described therein
are delivered to the Agent, each such Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title
and interest of the relevant Loan Party in such Pledged Securities and the
proceeds thereof, as security for the Obligations (as defined in the relevant
Pledge Agreement), in each case prior and superior in right to any other
Person.
(b) Each of the Security Agreements is effective to
create in favor of the Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof, and when financing statements in appropriate form are filed in the
offices specified on Schedule 3.19(b), each such Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, to the extent permitted under the Communications Act, as security for
the Obligations (as defined in the relevant Security Agreement), in each case
prior and superior in right to any other Person, other than with respect to
Liens expressly permitted by subsection 6.3.
3.20 Purposes of Loans. The proceeds of the Loans may be
used by the Borrower to make Permitted Purchases and general corporate purposes
(including any Investment permitted under the terms hereof), including the
payment of fees and expenses incurred in connection with the execution and
delivery of this Agreement.
<PAGE> 51
46
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The agreement of each
Lender to make the initial Loan requested to be made by it is subject to the
satisfaction on or prior to November 30, 1996 of the following conditions
precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) each of the Pledge
Agreements, each executed and delivered by a duly authorized officer
of the parties thereto, with a counterpart or a conformed copy for each
Lender, (iii) the Subsidiaries Guarantee, executed and delivered by
a duly authorized officer of the parties thereto, with a counterpart or
a conformed copy for each Lender, (iv) the Security Agreements,
executed and delivered by a duly authorized officer of the parties
thereto, with a counterpart or a conformed copy for each Lender and
(v) for the account of each relevant Lender, Notes conforming to the
requirements hereof and executed and delivered by a duly authorized
officer of the Borrower.
(b) Related Agreements. The Agent shall have received,
with a copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the LMA Agreements, the Purchase
Agreements, the Exchange Debenture Indenture and such other documents
or instruments as may be reasonably requested by the Agent, including,
without limitation, a copy of any debt instrument, security agreement
or other material contract to which the Borrower or any of its
Subsidiaries may be a party.
(c) Borrowing Certificate. The Agent shall have received,
with a counterpart for each Lender, a certificate of each Loan Party,
dated the Closing Date, substantially in the form of Exhibit G, with
appropriate insertions and attachments, satisfactory in form and
substance to the Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the
Borrower.
(d) Corporate Proceedings of the Borrower. The Agent shall
have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of the Borrower authorizing (i) the execution,
delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant
to the Borrower Security Documents, certified by the Secretary or an
Assistant Secretary of the Borrower as of the Closing Date, which
certificate shall be in form and substance satisfactory to the Agent
and its counsel and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(e) Borrower Incumbency Certificate. The Agent shall have
received, with a counterpart for each Lender, a Certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of
the officers of the Borrower executing any Loan
<PAGE> 52
47
Document satisfactory in form and substance to the Agent executed by the
President or any Vice President and the Secretary or any Assistant Secretary of
the Borrower.
(f) Organizational Proceedings of Subsidiaries. The
Agent shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the Board of
Directors of each Subsidiary (and its general partner, if applicable) which is
a party to a Loan Document authorizing (i) the execution, delivery and
performance of the Loan Documents to which it is a party and (ii) the granting
by it of the Liens created pursuant to the Subsidiaries Security Documents to
which it is a party, certified by the Secretary or an Assistant Secretary of
each such Subsidiary (and its general partner, if applicable) as of the Closing
Date, which certificate shall be in form and substance satisfactory to the
Agent and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(g) Subsidiary Incumbency Certificates. The Agent shall
have received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing Date, as to
the incumbency and signature of the officers of such Subsidiaries (and its
general partner, if applicable) executing any Loan Document, satisfactory in
form and substance to the Agent executed by the President or any Vice President
and the Secretary or any Assistant Secretary of each such Subsidiary (and its
general partner, if applicable).
(h) Organizational Documents. The Agent shall have
received with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws or other organizational documents of
each Loan Party, certified as of the Closing Date as complete and correct
copies thereof by the Secretary or an Assistant Secretary of the such Loan
Party (or, in lieu of such copies, certification that such documents have not
been amended, supplemented or otherwise modified subsequent to the date of
delivery thereof to the Agent in connection with the closing of the Existing
Credit Agreement).
(i) Exchangeable Preferred Stock and Exchange Debentures.
The Lenders shall be satisfied with the terms and conditions of the
Exchangeable Preferred Stock and the Exchange Debentures.
(j) Fees. All fees and expenses which the Borrower has
agreed to pay in connection with the execution and delivery of this Agreement
and all fees and expenses then accrued and unpaid under the Existing Credit
Agreement shall have been paid in full to the Agent and Lenders on the date on
which this Agreement shall become effective in accordance with subsection 9.8.
(k) Legal Opinions. The Agent shall have received, with
a counterpart each Lender, the following executed legal opinions:
<PAGE> 53
48
(i) the executed legal opinion of Holland &
Knight, counsel to the Borrower and the other Loan Parties, in
form and substance satisfactory to the Agent and the Lenders;
(ii) the executed legal opinion of Dow Lohnes &
Albertson, special FCC counsel to the Borrower and the other
Loan Parties, in form and substance satisfactory to the Agent
and the Lenders; and
(iii) the executed legal opinion of Anthony L.
Morrison, General Counsel to the Borrower, in form and substance
satisfactory to the Agent and the Lenders.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may
reasonably require.
(l) Pledged Stock: Stock Powers: Pledged Notes. The
Agent shall have received the certificates representing the shares
pledged pursuant to each of the Pledge Agreements, together with an
undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof, and the notes pledged
pursuant to each of the Pledge Agreements, each endorsed in blank by a
duly authorized officer of the pledgor thereof.
(m) Actions to Perfect Lien. The Agent shall have
received evidence in form and substance satisfactory to it that all
filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements
on form UCC-1, necessary or, in the opinion of the Agent, desirable to
perfect the Liens created by the Security Documents shall have been
completed.
(n) Lien Searches. The Agent shall have received the
results of a recent search by a Person satisfactory to the Agent, of
the Uniform Commercial Code, judgement and tax lien filings which may
have been filed with respect to personal property of the Borrower, and
the results of such search shall be satisfactory to the Agent.
(o) Insurance. The Agent shall have received evidence in
form and substance satisfactory to it that all of the requirements of
subsection 5.4 shall have been satisfied.
4.2 Conditions to Each Loan. The agreement of each
Lender to make any Loan requested to be made by it on any date (including,
without limitation, its initial Loan) is subject to the satisfaction of the
following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower and its
Subsidiaries in or pursuant to the Loan Documents shall be true and
correct in all material respects on and as of such date as if made on
and as of such date except for any representation and warranty which
is
<PAGE> 54
49
expressly made as of an earlier date, which representation and
warranty shall have been true and correct in all material respects as
of such earlier date.
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect to
the Loans requested to be made on such date.
(c) Acquisition Compliance Certificate. With respect to
any borrowing of Loans the proceeds of which shall be used by the
Borrower or any of its Subsidiaries to make a Permitted Purchase, the
Agent shall have received a certificate which sets forth in reasonable
detail a calculation of the Leverage Ratio of the Borrower and its
Subsidiaries as at the date of such Loan.
(d) Indebtedness Incurrence Certificate. The Agent shall
have received a certificate indicating compliance with Section 4.06
(Limitation on Additional Indebtedness) of the Senior Subordinated
Note Indenture and, if any Exchange Debentures shall be then
outstanding, the corresponding Section of the Exchange Debenture
Indenture, in each case, after giving effect to the Loans requested to
be made on such date.
(e) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement, the
other Loan Documents shall be reasonably satisfactory in form and
substance to the Agent, and the Agent shall have received such other
documents and legal opinions in respect of any aspect or consequence
of the transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained
in this subsection have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document, the Borrower shall and (except in the case of
delivery of financial, information, reports and notices) shall cause each of
its Subsidiaries to:
5.1 Financial Statements and Systems.
(a) Accounting System: Maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP.
(b) Financial Statements and Other Reports: Deliver to
the Lenders:
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50
(i) Monthly Financial: as soon as practicable
and in any event with 30 days after the end of each fiscal month
of the Borrower, copies of the monthly sales pacing reports and
operating cash flow statements form each operating property for such
month, and copies of the consolidated and consolidating income
statement, operating cash flow statement and performance to budget
analysis for the Borrower and its Subsidiaries for and as of the end of
such fiscal month;
(ii) Quarterly Financial: as soon as practicable
and in any event within 45 days after the end of each fiscal quarter
of the Borrower ending after the Closing Date, a consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end
of such period, and the related unaudited consolidated statements of
income and of cash flows, as contained in the Form 10-Q for such
fiscal quarter provided by the Borrower to the Securities and Exchange
Commission (or any successor or analogous Governmental Authority), and
if such Form 10-Q is no longer required to be so provided by the
Borrower, then the Borrower shall provide the Lenders with comparable
financial statements, certified by the chief financial officer of the
Borrower that they fairly present the financial condition and results
of operations of the Borrower and its Subsidiaries, as appropriate, as
at the end of such periods and for such periods, subject to changes
resulting from audit and normal year-end adjustments;
(iii) Year-End Financial: as soon as practicable and
in any event within 90 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet of the Borrower and
its consolidated Subsidiaries, as at the end of such year, and the
related consolidated statements on income, shareholders' equity and
cash flows of the Borrower and its Subsidiaries for such fiscal year,
(a) accompanied by a report thereon of independent certified public
accountants of recognized national standing selected by the Borrower
and reasonably satisfactory to Agent and the Required Lenders, which
report shall contain no qualifications with respect to the continuance
of the Borrower and its consolidated Subsidiaries as going concerns
and shall state that such financial statements present fairly the
financial position of the Borrower and its consolidated Subsidiaries
as at the dates indicated and the statements of income and cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise stated therein) and
that the examination by such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards without any limitations being imposed on
the scope of such examination and (b) certified by the chief financial
officer of the Borrower that they fairly present the financial
condition and results of operation of the Borrower and its
Subsidiaries, as at the dates and for the periods indicated, as
appropriate;
(iv) Officer's and Compliance Certificate: together
with each delivery of financial statements of the Borrower and its
Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) and
Officer's Certificate of the Borrower stating that the signers have
reviewed the terms of this Agreement and the Notes and have made, or
caused to by made under their supervision, a review in reasonable
detail of the transactions and condition of the Borrower and its
Subsidiaries during the accounting period covered by
<PAGE> 56
51
such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the
signers do not have knowledge of the existence as at the date of such
Officers' Certificate, of any condition or event which constitutes an
Event of Default or Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence
thereof and what action the Borrower has taken, is taking and proposes
to take with respect thereto; and (b) a certificate (a "Compliance
Certificate") in a form satisfactory to the Agent demonstrating in
reasonable detail compliance during and at the end of the applicable
accounting periods with the provisions of subsection 2.6 and Section
6;
(v) Reconciliation Statement: if, as a result of any
change in accounting principles and policies from those used in the
preparation of the Financial Statements, the financial statements of
the Borrower and its consolidated Subsidiaries delivered pursuant to
subsections (ii), (iii) or (xii) of this subsection 5.1 (b) will
differ in any material respect from the financial statements that would
have been delivered pursuant to such subsections had no such change in
accounting principles and policies been made, then, together with the
first delivery of financial statements pursuant to subsection (ii),
(iii) or (xii) following such change, financial statements of the
Borrower and its consolidated Subsidiaries prepared on a pro forma
basis, for (y) the current year to the effective date of such change
and (z) the one full fiscal year immediately preceding the fiscal year
in which such change is made, as if such change had been in effect
during such period;
(vi) Accountants' Certification: together with each
delivery of consolidated financial statements of the Borrower and its
Subsidiaries pursuant to subdivision (iii) above, to the extent
available, a written statement by the independent public accountants
giving the report thereon (a) stating that their audit examination has
included a review of the terms of this Agreement and the Notes as they
relate to accounting matters, (b) stating whether, in connection with
their audit examination, any condition or event that constitutes an
Event of Default or Default has come to their attention and, if such a
condition or event has come to their attention, specifying the nature
and period of existence thereof, provided that such accountants shall
not be liable by reason of any failure to obtain knowledge of any such
Event of Default or Default with respect to accounting matters that
would not be disclosed in the course of their audit examination and (c)
stating that, based on their audit examinations nothing has come to
their attention that causes them to believe that the information
contained in the Compliance Certificate delivered therewith pursuant to
clause (b) of subdivision (iv) above for the applicable fiscal year
are not stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
significant reports submitted to the Borrower by independent public
accountants in connection with each annual, interim or special audit of
the financial statements of the Borrower made by such accountants,
including, without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
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52
(viii) Reports and Filings: within five days after the same
are sent, copies of all financial statements and reports which the
Borrower sends to its stockholders, and within five days after the same
are filed, copies of all financial statements and reports which the
Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(ix) Events of Default etc.: promptly upon, but in any
event no later than two Business Days after, any officer of the
Borrower obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Default, or becoming aware that any
Lender or the Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Default under this Agreement,
(b) that any Person has given any notice to the Borrower or any of its
Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 7(b)
and (e), (c) of any condition or event that would be required to be
disclosed in a current report filed by the Borrower with the Securities
and Exchange Commission on Form 8-K (Items 1, 2, 4 and 5 of such Form
as in effect on the date hereof) or (d) of any condition or event which
has had or could reasonably be expected to have a Material Adverse
Effect (which, for such purposes, shall be determined with respect to
the Borrower individually), an Officer's Certificate specifying the
nature and period of existence of such condition or event, or
specifying the notice given or action taken by such holder or Person
and the nature of such claimed default, Event of Default, Default,
event or condition, and what action the Borrower has taken, is taking
and proposes to take with respect thereto;
(x) Litigation: promptly upon any officer of the Borrower
obtaining knowledge of (a) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or
affecting any Loan Party or any property of any Loan Party not
previously disclosed by the Borrower or the other Loan Parties to the
Lenders or (b) any material adverse development in any such action,
suit, proceeding, governmental investigation or arbitration that, in
any case:
(y) involves claims in excess of $1,000,000 in
the aggregate; or
(z) would reasonably be expected to cause a
Material Adverse Effect;
the Borrower shall promptly give notice thereof to the Lenders and
provide such other information as may be reasonably available to them
to enable the Lenders and their counsel to evaluate such matters;
(xi) ERISA Events. promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event in
connection with any Employee Benefit Plan or any trust created
thereunder, with a written notice specifying the nature thereof, what
action the Borrower or ERISA Affiliate has taken, is taking or proposes
to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;
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53
(xii) ERISA Notices: with reasonable promptness, copies of
(a) all notices received by the Borrower or any of its ERISA
Affiliates from the PBGC relating to an ERISA Event, (b) each Schedule
B (Actuarial Information) to the annual report (Form 5500 Series)
filed by the Borrower or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan, if any, and (c) all
notices received by the Borrower or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event;
(xiii) Financial Plans: as soon as practicable and in any
event no later than the 30 days after the end of any fiscal year of
the Borrower, a budget and financial forecast for the Borrower and its
Subsidiaries including, (a) a forecasted operating cash flows
statement of the Borrower and its Subsidiaries for the next succeeding
fiscal year, (b) forecasted operating cash flows statement of the
Borrower and its Subsidiaries for each fiscal quarter of the next
succeeding fiscal year and (c) such other information and projections
as any Lender may reasonably request, in each case, in a format
satisfactory to the Agent; and
(xiv) Other Information: with reasonable promptness, such
other information and data with respect to the Borrower or any of its
Subsidiaries or Affiliates as from time to time may be reasonably
requested by any Lender.
5.2 Maintenance of Existence, etc.. Except as permitted
by subsection 6.7, preserve and keep in full force and effect its corporate or
partnership existence, as the case may be, and rights and franchises material
to its business.
5.3 Payment of Taxes and Claims: Tax Consolidation. Pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its franchises, business,
income or property, non-payment of which would cause a Material Adverse Effect,
before any penalty accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a material Lien
upon any of its properties or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided that no such tax,
assessment, charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor. Neither the Borrower nor
any of its Subsidiaries will file or consent to the filing of any consolidated
income tax return with any Person (other than the Borrower or its
Subsidiaries).
5.4 Maintenance of Properties: Insurance. Maintain in
good repair, working order and condition all material properties used or useful
in the business of the Borrower and its Subsidiaries (including, without
limitation, Intellectual Property) and from time to time will make or cause to
be made all appropriate (as reasonably determined by the Borrower) repairs,
renewals and replacements thereof. The Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Subsidiaries (including without
<PAGE> 59
54
limitation, business interruption insurance and insurance on plant, property
and equipment) against loss or damage of the kinds customarily carried or
maintained under similar circumstances by entities of established reputation
engaged in similar businesses and shall maintain key man life insurance in a
benefit amount payable to the Company of not less than $5,000,000 for Paxson.
On or before the end of the second fiscal quarter of each fiscal year, the
Borrower shall submit to the Agent an Officers' Certificate updating the
information contained in Schedule 3.16 as of such date. Each such policy of
insurance (other than business interruption insurance) shall name the Agent as
the loss payee or as additional insured, as the Agent may require, for the
benefit of the Lenders thereunder and provide for at least thirty (30) days
prior written notice (or such other period as is customary in the industry) to
the Agent of any material modification or any cancellation of such policies.
5.5 Inspection, Lender Meeting. Subject to subsection
9.15, permit any authorized representatives designated by the Agent to visit
and inspect any of the properties of the Borrower, any of its Subsidiaries or
any Broadcast Station, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their officers and
independent public accountants, all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested. Without in any way limiting the foregoing, the Borrower will, upon
the request of the Required Lenders, participate in a meeting with the Agent
and the Lenders once during each fiscal year to be held at the Borrower's
corporate offices at such time as may be agreed to by the Borrower an the
Required Lenders.
5.6 Compliance with Laws, etc. (a)(i) Comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, including, without limitation, the Communications Act,
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect and (ii) comply in all material respects at all times with all
provisions of all FCC Licenses, certifications and permits, franchises or other
permits and authorizations relating to the operation of the Broadcast Stations
and all other material agreements, licenses and leases to which it is a party
or of which it is a beneficiary and suffer no loss or forfeiture thereof or
thereunder except for any non-compliance or a loss or forfeiture which does not
have and could not reasonably be expected to have a Material Adverse Effect;
and
(b) Not engage in any transaction or permit the
occurrence of any act or omission, and shall cause each ERISA Affiliate not to
engage in any transaction or to permit the occurrence of any act or omission,
which would constitute, or would give rise to, an ERISA Event which would cause
a Material Adverse Effect.
5.7 Compliance with Related Documents. Comply at all
times with the covenants under the Related Documents except for any failure to
comply which could not reasonably be expected to result in a Material Adverse
Effect or an Event of Default or Default, or otherwise adversely affect the
interests of the Lenders under this Agreement or any of the other Loan
Documents. The Borrower and its Subsidiaries shall deliver to the Agent copies
of all reports, notices and other information received or required to be
delivered
<PAGE> 60
55
by the Borrower and its Subsidiaries with respect to the Related Documents, if
so requested by any Lender or if such information relates to any matter or
matters which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
5.8 Environmental Disclosure and Inspection. (a) Comply, and undertake all
reasonable efforts to ensure that all tenants under any lease or occupancy
agreement affecting any portion of the Facilities and all other Persons on or
occupying such property comply, in all materials respects with all Environmental
Laws, provided that upon teaming of any noncompliance with Environmental Laws by
the Borrower or any of its Subsidiaries, shall promptly undertake all reasonable
efforts to remedy such non-compliance.
(b) Agree that the Agent is entitled (but has no obligation), from time to
time (upon the Agent's determination in its reasonable discretion that any of
the following is advisable), upon notice to the Borrower and as often as may
reasonably be requested, retain, at the Borrower's expense, an independent
professional consultant to review any report relating to Hazardous Materials
prepared by or for the Borrower and to conduct its own investigation of any
Facility. The Borrower hereby grants to the Agent, its agents, employees,
consultants and contractors the right to enter into or on to the Facilities upon
reasonable notice and at such times during normal business hours and as often as
may reasonably be requested to perform such tests on such property as are
reasonably necessary to conduct such a review and/or investigation. The Borrower
may receive copies of any reports prepared by independent experts, but the
Lenders shall have no duty to disclose or discuss any information produced by
such reviews or investigations with the Borrower or any of its Subsidiaries.
(c) Promptly advise the Lenders in writing and in reasonable detail of (i)
any Release of any Hazardous Material (of which the Borrower is aware) required
to be reported to any federal, state or local governmental or regulatory agency
under any applicable Environmental Laws, (ii) any and all written communications
with respect to Environmental Claims or any Release of Hazardous Material
required to be reported to any federal, state or local governmental or
regulatory agency, (iii) any remedial action taken by the Borrower or any other
Person in response to (a) any Hazardous Material on, under or about any
Facility, the existence of which could reasonably be expected to result in an
Environmental Claim having a Material Adverse Effect or (b) any Environmental
Claim that could reasonably be expected to have a Material Adverse Effect, (iv)
the Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that could cause such Facility or
any part thereof to be classified as a "border-zone property" or to be otherwise
subject to any restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws that could reasonably be expected to have a
Material Adverse Effect, and (v) any request for information from any
governmental agency that indicates such agency is investigating whether the
Borrower or any of its Subsidiaries may be potentially responsible for a Release
of Hazardous Materials.
(d) Promptly notify the Lenders'of any proposed acquisition or disposition
of stock, assets, or property by any Loan Party, that could reasonably be
expected to expose the Borrower or any of its Subsidiaries to, or result in,
Environmental Claims that could have a
<PAGE> 61
56
Material Adverse Effect and of any proposed action to be taken by the Borrower
or any of its Subsidiaries to commence or cease manufacturing, industrial or
other operations that could reasonably be expected to subject the Borrower or
any of its Subsidiaries to additional laws, rules or regulations, including,
without limitation, laws, rules and regulations requiring additional
environmental permits or licenses.
(e) At their own expense, provide copies of such documents or information
as the Agent may reasonably request in relation to any matters disclosed
pursuant to this subsection.
5.9 Hazardous Materials; the Borrower's Remedial Action. Take promptly any
and all necessary remedial action required by all applicable Environmental Laws
and perform such remedial action in compliance with all applicable Environmental
Laws and orders and directives of all federal, state and local governmental
authorities except when and only to the extent that the Borrower's or such
Subsidiary's liability for the presence, storage, use, disposal, transportation
or discharge of any Hazardous Material is being contested in good faith by the
Borrower or such Subsidiary by appropriate proceedings, and the pendency of such
proceedings is not reasonably likely to give rise to a Material Adverse Effect.
5.10 FCC Licenses, (a) Use their best efforts to keep in full force and
effect all of the FCC Licenses of the Borrower, if any, and its Subsidiaries.
The Loan Parties shall provide a copy of any (or, in the event of any notice
based on knowledge of such Loan Parry, a brief description of such default and
the basis of such knowledge) notice from the FCC of any violation with respect
to any FCC License received by it or any of its respective Subsidiaries (or
with respect to which any of such Loan Parties may have any knowledge).
(b) The Borrower shall establish and maintain wholly-owned License
Subsidiaries for the purpose of holding the FCC Licenses related to the
Broadcast Stations owned by them on and after the Closing Date and shall cause
the License Subsidiaries not to own any material assets other than the FCC
Licenses or to have any material liabilities (other than pursuant to the
Subsidiary Guarantee or the guarantees with respect to the Senior Subordinated
Notes). At all times on and after the date hereof (or (i) in the case of those
FCC Licenses described in Schedule 5. 1 0, as soon as practicable following the
date hereof and at all times thereafter or (ii) in the case of any FCC License
acquired subsequent to the date hereof with respect to which it is not
practicable to cause such FCC License to be acquired directly by a License
Subsidiary, as soon as practicable following the date of acquisition and at all
times thereafter), the Borrower shall, and shall cause its Subsidiaries to,
cause each new FCC License issued by the FCC to be issued to, and held by, a
License Subsidiary.
5.11 Additional Loan Parties. In the event that (i) any Permitted Purchase
is to be made by any Subsidiary or Affiliate of the Borrower and such Subsidiary
or Affiliate is not a Loan Party hereunder or under any of the other Loan
Documents immediately prior to the consummation of any such transaction, or (ii)
the Borrower proposes for any other reason to add any Subsidiary or Affiliate
thereof as a Loan Party hereunder (each such Subsidiary or Affiliate in any case
referred to herein as an "Additional Loan Party" and collectively as the
<PAGE> 62
57
"Additional Loan Parties"), then, on or before the consummation of any such
transaction or addition as a Loan Party hereunder, such Additional Loan Party
shall deliver appropriate counterparts and assumptions of each Loan Document to
which it is to be a party and all such documents, opinions of counsel,
certificate and instruments as such Additional Loan Party would have been
required to deliver pursuant to subsection 4.1 had such Additional Loan Party
been a Loan Party hereunder on the Closing Date and such other documents,
certificates, instruments and assurances as are consistent with the provisions
of subsection 2.18 and Section 4 in relation to such Additional Loan Party's
proposed status hereunder and under the other Loan Documents (including, without
limitation, taking into consideration whether the obligations of such Additional
Loan Party are to be of a limited recourse nature or otherwise), all as shall be
determined at the time such Additional Loan Party is approved by the Agent. Upon
satisfaction of the foregoing conditions, such Additional Loan Party shall be a
Loan Party for all purposes hereunder and under the other Loan Documents.
5.12 Schedule Supplements. Each of the Schedules referred to in subsection
3.1 shall be automatically amended from time to time upon written notice by the
Borrower to the Agent and the Lenders to reflect additional information
described in such notice under this Agreement including, without limitation, the
addition (or deletion) of any Subsidiaries, Broadcast Stations, FCC Licenses or
LMA Agreements resulting from a Permitted Purchase or any other transaction
permitted hereunder, and any modifications resulting from the renewal or
additional grant of any FCC Licenses or LMA Agreements. Without limiting the
foregoing, on the request of the Agent or any Lender (in the event that such
information is not otherwise delivered by the Borrower to the Agent or the
Lenders pursuant to this Agreement), the Borrower will supplement each Schedule
hereto, or representation herein or in any other Loan Document with respect to
any matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Schedule or as an exception to such representation or which is necessary to
correct any information in such Schedule or representation which has been
rendered inaccurate thereby; provided, that such supplement to such Schedule or
representation shall not be deemed an amendment thereof if such amendment would
require the consent of the Required Lenders under the terms of this Agreement,
unless expressly consented to in writing by the Required Lenders, and no such
amendments, except as the same may be consented to in a writing which expressly
includes a waiver, shall be or be deemed a waiver by the Lenders of any Event of
Default or Default disclosed therein.
5.13 Corporate Separateness: Tax Sharing Agreement. (a) Cause the
management, business and affairs of each Unrestricted Subsidiary to be conducted
in such a manner so that such Unrestricted Subsidiary will be perceived as a
legal entity separate and distinct from the Borrower and its Subsidiaries.
(b) Enter in a tax sharing agreement on terms and conditions customary and
reasonably satisfactory to the Agent if the Agent shall reasonably determine
that such an agreement is necessary to provide for the fair and reasonable
allocation of federal, state and local tax liabilities and benefits between and
among (i) the Borrower and its Subsidiaries and (ii) any Unrestricted
Subsidiaries.
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58
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants. (a) Leverage Ratio. Pemnit the Leverage
Ratio as of the last day of each calendar quarter occurring during any of the
periods set forth below to be greater than the correlative ratio indicated:
Period Ended Leverage Ratio
==================================== ==============
Closing Date - March 31, 1997 6.35:1.00
April 1, 1997 - September 30, 1997 6.25:1.00
October 1, 1997 - September 30, 1998 5.50:1.00
October 1, 1998 - thereafter 5.00:1.00
(b) Cash Interest Coverage. Permit the ratio of (y) Adjusted Consolidated
Operating Cash Flow to (z) Consolidated Cash Interest Expense of the Borrower
and its Subsidiaries for the four quarter period ending on the last day of each
calendar quarter occurring during the periods specified below to be less than
the correlative ratio indicated:
Cash Interest
Period Coverage Ratio
==================================== ==============
Closing Date -
March 31, 1997 1.40:1.00
April 1, 1997 - December 31, 1998 1.50:1.00
Thereafter 2.00:1.00
(c) Senior Debt Ratio. Permit the Senior Debt Ratio as of the last day of
each calendar quarter occurring during any of the periods set forth below to be
greater than the correlative ratio indicated:
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Senior
Period Ended Debt Ratio
====================================== ==========
Closing Date - September 30, 1997 4.00:1.00
October 1, 1997 - September 30, 1998 3.75:1.00
October 1, 1998 - and thereafter 3.50:1.00
(d) Fixed Charge Coveage. Permit the ratio of (y) Adjusted Consolidated
Operating Cash Flow to (z) Consolidated Fixed Charges of the Borrower and its
Subsidiaries for the twelve consecutive month period ending as of the last day
of any calendar quarter to be less than 1.10:1.00.
(e) Cash Flow from LMA-Agreernents. Permit more than 25% of Consolidated
Operating Cash Flow to be earned or generated pursuant to LMA Agreements for any
fiscal period.
6.2 Limitation LM. Create, incur, assume, guaranty, or otherwise become or
remain directly or indirectly liable with respect to, any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Contingent Obligations permitted by subsection 6.5 and, upon any
obligations actually arising pursuant thereto, the Indebtedness corresponding to
the Contingent Obligations so extinguished;
(c) purchase money Indebtedness incurred in the ordinary course of business
not in excess of $20,000,000 in the aggregate outstanding at any time;
(d) Indebtedness in respect of Capital Leases not in excess of $10,000,000
in the aggregate outstanding at any time;
(e) (i) the Senior Subordinated Notes, the Exchangeable Preferred Stock,
any Exchangeable Preferred Stock issued in accordance with subsection 6.2(i) or
(j)(ii), any Exchange Debentures issued in accordance with subsection 6.2(h) or
(j)(i) and (ii) Indebtedness existing as of the Closing Date as set forth in
Schedule 6.2(e), and renewals, refinancings, extensions and modifications of any
Indebtedness described in this paragraph (e) which do not increase the principal
amount thereof and which, after giving effect thereto, contain terms and
conditions (including, without limitation, subordination provisions (if any),
covenants and events of default) that are no more favorable in any material
respect to the holders thereof than the terms and conditions thereof applicable
before giving effect thereto;
(f) Indebtedness of the Borrower or any Subsidiary to any Subsidiary and of
any Subsidiary to the Borrower or any Subsidiary;
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(g) Unsecured Indebtedness of the Borrower in an aggregate principal amount
not in excess of $150,000,000 at any time outstanding; provided that (i) (x) no
part of the principal of such Indebtedness is stated to be payable or is
required to be paid in cash (whether by way of mandatory sinking fund, mandatory
redemption, mandatory prepayment or otherwise) prior to October 1, 2002, and the
payment of the principal of and interest on which and other obligations of the
Borrower in respect thereof are subordinated to the prior payment in full of the
principal of and interest (including post-petition interest) on the Notes and
all other obligations and liabilities of the Borrower to the Agent and the
Lenders hereunder on terms and conditions and (y) otherwise containing terms,
covenants and conditions, in the case of clauses (x) and (y), satisfactory in
form and substance to the Agent, as evidenced by its prior written approval
thereof, (ii) the term and conditions of such Indebtedness (including, without
limitation, subordinated provisions, covenants and events of default) are no
more favorable in any material respect to the holders thereof than the terms and
conditions of the Senior Subordinated Notes applicable to the holders thereof
and (iii) at the time of issuance of such Subordinated Debt no Default or Event
of Default shall have occurred and be continuing or would result therefrom;
(h) Exchange Debentures issued in exchange for Exchangeable Preferred Stock
in accordance with the provisions of the applicable Certificate of Designations
(as in effect on the date hereof) and the Exchange Debenture Indenture (as in
effect on the date hereof); provided that at the time of issuance of such
Exchange Debentures no Default or Event of Default shall have occurred and be
continuing or would result therefrom;
(i) additional Exchangeable Preferred Stock in an aggregate amount not to
exceed $40,000,000; provided that (i) at the time of issuance of such
Exchangeable Preferred Stock no Default or Event of Default shall have occurred
and be continuing or would result therefrom and (ii) such issuance shall occur
prior to December 3 1, 1997;
(j) (i) Exchange Debentures issued as interest on other Exchange Debentures
in accordance with the Exchange Debenture Indenture and (ii) Exchangeable
Preferred Stock issued as dividends on other Exchangeable Preferred Stock in
accordance with its Certificate of Designation; and
(k) additional unsecured Indebtedness of the Borrower not exceeding
$10,000,000 in aggregate principal amount at any one time outstanding.
6.3 Liens and Related Matters.
(a) Prohibitions on Liens. Create, incur, assume or permit to exist any
Lien on or with respect to any property or asset (including any document or
instrument in respect of goods or accounts receivable) of the Borrower or any of
its Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, except:
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61
(i) Permitted Encumbrances;
(ii) Liens securing purchase money Indebtedness permitted pursuant to
subsection 6.2(c); provided that such Liens shall encumber only the assets
purchased with the proceeds of such Indebtedness;
(iii) Liens granted pursuant to the Loan Documents;
(iv) Liens securing Capital Leases permitted under subsection 6.2(d); and
(v) Liens on assets listed on Schedule 6.2(e) securing Indebtedness on
Schedule 6.2(e), other than Liens in respect of the Senior Subordinated Notes
and the Preferred Stock.
(b) Eguitable Lien in Favor of the Leaders. Create or assume any Lien upon
any of its property or assets, whether now owned or hereafter acquired, other
than Liens excepted by the provisions of this subsection, unless the Borrower
and its Subsidiaries make or cause to be made effective provision whereby the
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided that, notwithstanding the foregoing, this covenant shall not
be construed as a consent by the Required Lenders to any creation or assumption
of any such Lien not permitted by the provisions of this subsection.
(c) No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness otherwise permitted
pursuant to subsections 6.2 and 6.3 or to be sold pursuant to an executed
agreement with respect to an Asset Sale or Asset Swap, enter into any agreement
prohibiting (i) the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired or (ii) any incurrence of any
Contingent Obligations.
(d) No Restrictions on Subsidiary Distributions to the Borrower. Except as
provided herein, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to (a) pay dividends or make any other distribution on any of
such Subsidiary's capital stock, partnership interests or other interests, as
the case may be, owned by the Borrower or any Subsidiary of the Borrower, (b)
subject to subordination provisions any payments in respect of any Indebtedness
owed to the Borrower or any Subsidiary of the Borrower, (c) make loans or
advances to the Borrower or any Subsidiary of the Borrower or (d) transfer any
of its property or assets to the Borrower or any Subsidiary of the Borrower.
6.4 Investments; Joint Ventures. Make or own any Investment, directly or
indirectly, in any Person including any Joint Venture, except:
(a) Investments in Cash and Cash Equivalents;
(b) Consolidated Capital Expenditures otherwise permitted herein;
<PAGE> 67
62
(c) Investments arising from Barter Transactions; provided, however, that
no Barter Transaction giving rise to Investments may be consummated (A) if (i)
at such time of consummation an Event of Default or Default shall have occurred
and be continuing or (ii) after giving effect to such Barter Transaction, the
aggregate value o advertising sold pursuant to all Barter Transactions for the
Borrower and its Subsidiaries during any calendar year would exceed $5,000,000,
and (B) unless all personal property received by the Borrower pursuant to any
one or more Barter Transactions (including, without limitation, any notes,
instruments, securities or other evidence of equity interests or indebtedness)
the value of which exceeds $1,000,000 shall be pledged and, if required by the
Security Documents, delivered to the Agent, on behalf of the Lenders, unless
otherwise consented to in writing by the Agent, as "Collateral" under the
Borrower Pledge Agreement or the Borrower Security Agreement;
(d) Investments in Unrestricted Subsidiaries in an aggregate amount not to
exceed $35,000,000; provided that (i) the proceeds thereof are used to make an
acquisition of a Core Business in circumstances where such acquisition would not
constitute a Permitted Acquisition or an acquisition of a Non-Core Business and
(ii) at the time of such acquisition no Default or Event of Default shall have
occurred and be continuing or would result therefrom;
(e) Investments (including, without limitation, Investments in Unrestricted
Subsidiaries) made solely with (x) any proceeds of the sale or issuance of
equity Securities by the Borrower or any Subsidiary which are not used to make
an optional payment or prepayment permitted by subsection 6.14(c) or (y) with
equity Securities of the Borrower;
(f) Investments in effect on the Closing Date as set forth on Schedule
6.4(f);
(g) the exercise of any option acquired in connection with a Permitted
Acquisition permitted by subsection 6.4(j) or a Preapproved Acquisition
permitted by subsection 6.4(k); provided that at the time of such exercise no
Default or Event of Default shall have occurred and be continuing or would
result therefrom;
(h) Investments consisting of promissory notes or other securities issued
by a purchaser to the extent the Borrower or any Subsidiary receives less than
100% cash consideration in an Asset Sale as permitted by subsection 6.7(b);
(i) Investments by the Borrower in its Subsidiaries and Investments by
Subsidiaries in the Borrower and in other Subsidiaries;
(j) any acquisition (it being understood that, as used in this paragraph,
the term "acquisition" shall mean any acquisition by means of a purchase of
stock or assets or a merger or other similar transaction and shall also include
a transaction in which a Loan Party (i) enters into an LMA Agreement with the
owner of a radio station or television station, (ii) either makes a loan to, or
guarantees a loan made by a
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third party to, such owner secured by a Lien on the assets of such radio station
or television station and (iii) obtains an option to acquire the FCC License
covering such radio station or television station that satisfies the
requirements of clause (v)(B) of this paragraph) not otherwise permitted under
this subsection 6.4 (each such transaction referred to herein as a "Permitted
Acquisition" and collectively as the "Permitted Acquisitions"), on the following
terms and conditions: (i) (A) such Permitted Acquisition involves the
acquisition of a Core Business located in either (x) an "Area of Dominant
Influence" ranked numbers I to 100 or (y) an "Area of Dominant Influence" in the
state of Florida in which the Borrower or one of its Subsidiaries owns on the
date hereof a television station or a radio station or (B) such Permitted
Acquisition involves the acquisition of a Core Business and the aggregate
consideration paid or to be paid by the Borrower or its Subsidiaries for all
such Core Businesses acquired pursuant to this subsection 6.4(j)(i)(B)
subsequent to the date hereof shall not exceed $25,000,000, (ii) such Core
Business is projected by the Borrower to have operating cash flow for the
period commencing on the date of such Permitted Acquisition through the
Termination Date; (iii) after giving effect to such Permitted Acquisition and
the borrowing of any Loan in connection therewith, no Event of Default or
Default shall exist; (iv) such Permitted Acquisition shall be consummated
pursuant to documents containing terms and conditions in form and substance
satisfactory to the Agent and the Borrower shall satisfy the requirements of
subsection 5.11 in connection therewith, (v) such acquisition shall result in
the assets so acquired being owned by the Borrower or a wholly owned Subsidiary
of the Borrower and, if such Permitted Acquisition involves the acquisition of
a television station or a radio station, the Borrower or a wholly owned
Subsidiary shall have acquired in connection therewith either (A) the FCC
License held by such Core Business or (B) an option to acquire such FCC
License for a period greater than five years and (vi) if such Permitted
Acquisition involves the acquisition of a television station or a radio station
and is funded with the proceeds of Loans the FCC shall have approved such
acquisition and the FCC's order of approval shall have become final and
non-appealable and nonchallengeable;
(k) Preapproved Acquisitions; provided that at the time of such acquisition
no Default or Event of Default shall have occurred and be continuing or would
result therefrom;
(1) Investments by the Borrower or any Subsidiary arising from the
acquisition of any Equivalent Assets in connection with any Asset Swap, provided
that, (i) such Investment satisfies the requirements for a Permitted Acquisition
specified in subsection 6.4(j) (it being agreed that, if the Borrower or any
Subsidiary gives consideration for the Equivalent Assets acquired by it in
connection with such Asset Swap that is in addition to the assets transferred by
it in exchange therefor, such . additional consideration shall be included in
determining compliance with subclause (i)(B) of said subsection (to the extent
applicable) in connection with such Asset Swap and all subsequent determinations
of whether the requirements for a Permitted Acquisition shall be satisfied, (ii)
after giving effect to such Investment, no Default or Event of Default shall
have occurred and be continuing and (iii) no Asset Swap shall
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be permitted in any calendar year if, after giving effect thereto, all the
assets transferred by the Borrower and its Subsidiaries pursuant to Asset
Swaps during such calendar year shall have generated during the immediately
preceding calendar year an aggregate amount of Consolidated Operating Cash
Flow that exceeds 10% of Consolidated Operating Cash Flow of the Borrower
and its Subsidiaries for such immediately preceding calendar year; and
(m) Investments constituting acquisitions of equity interests in and/or
loans to (i) the owner of a radio station or television station or (ii) the
holder of a permit from the FCC to construct a radio station or television
station, provided that (1) the Borrower or another Loan Party holds an option to
acquire such radio station or television station, (2) any such loan is secured
by the assets of such radio station or television station, (3) the acquisition
of such radio station or television station, when completed pursuant to the
option described in clause (1) above, will constitute a Permitted Acquisition,
(4) the holder of such Investment shall create in favor of the Agent, for the
ratable benefit of the Lenders, a first priority Lien on such Investment and (5)
the aggregate principal amount of all such Investments described in this
paragraph shall not exceed $25,000,000 at any one time outstanding.
6.5 Contingent Obligations. Create or become or be liable, directly or
indirectly, with respect to any Contingent Obligation except:
(a) Contingent Obligations incurred pursuant to the Loan Documents;
(b) Contingent Obligations in respect of Interest Rate Agreements in a
notional amount not in excess of the aggregate principal amount of the
Indebtedness of the Borrower and its Subsidiaries the interest rate on which is
not fixed;
(c) Contingent Obligations resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Contingent Obligations in respect of Operating Leases;
(e) Contingent Obligations in respect of Indebtedness permitted under
subsection 6.2(e); and
(f) Contingent Obligations in respect of loans by third parties to owners
or holders of options to acquire LMA Radio Stations or LMA Television Stations
otherwise permitted by subsection 6.4(j) and in respect of obligations not
exceeding $65,000,000 in aggregate principal amount at any time outstanding.
6.6 Restricted Payments. Declare, order, pay, make or set apart any sum,
directly or indirectly for any Restricted Payment except, so long as no Event of
Default or Default has occurred and is continuing or would result therefrom:
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65
(a) so long as the Leverage Ratio of the Borrower and its Subsidiaries as
of the last day of the most recently ended calendar quarter is less than 4.50:
1.00, the Borrower may pay in cash annual dividends owed to the holders of the
Cumulative Preferred Stock and the Exchangeable Preferred Stock in accordance
with the terms and conditions of their respective Certificate of Designations;
(b) Restricted Payments with any proceeds from the issuance of equity
Securities permitted by subsection 6.7(d);
(c) payments under time brokerage agreements and LMA Agreements; provided
such payments are made in the ordinary course of business and such agreements
are no less favorable to the Borrower or any Subsidiary, as the case may be,
than those that would otherwise be obtained in an arms-length transaction;
(d) any Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor;
(e) the Borrower may from time to time exchange Exchangeable Preferred
Stock for an equal amount of Exchange Debentures to the extent permitted by
subsection 6.2(h); provided that the exchange of 100% (but not less than 100%)
of the Exchangeable Preferred Stock outstanding at any time shall be subject to
the Agent's consent (which may be withheld for any reason or no reason at all
in the Agent's sole discretion);
(f) any redemption of the Cumulative Preferred Stock (including any accrued
pay-in-kind dividends) on or prior to December 31, 1997;
(g) any additional redemption in an amount not to exceed $100,000; and
(h) (i) Exchange Debentures issued as interest on other Exchange Debentures
in accordance with the Exchange Debenture Indenture and (ii) Exchangeable
Preferred Stock issued as a dividend on other Exchangeable Preferred Stock in
accordance with its Certificate of Designation.
6.7 Restriction on Fundamental Changes: Asset Sala, Alter the corporate,
partnership, capital or legal structure of the Borrower or any of its
Subsidiaries or enter into any transaction of merger, or consolidate, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any part of its
business, property or assets (including, without limitation, any of the capital
stock or partnership interests held by such Person in any of its Subsidiaries),
whether now owned or hereafter acquired (other than in the ordinary course of
business), or acquire by purchase, lease or otherwise (in one transaction or a
series of related transactions) all or any part of the business, property or
fixed assets of, or stock or other evidence of beneficial ownership of, any
Person (other than purchases or other acquisitions of inventory, leases,
materials, property and equipment in the ordinary course of business) or agree
to do any of the foregoing at any future time, except:
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(a) Consolidated Capital Expenditures otherwise permitted herein;
(b) Asset Sales so long as (w) the consideration received shall be an
amount at least equal to the fair market value thereof; (x) at least 85% of the
consideration received shall be Cash; (y) the proceeds of such Asset Sale are
applied as required by subsection 2.6(d); and (z) no Default or Event of Default
shall have occurred and be continuing or would result therefrom;
(c) Investments permitted by subsection 6.4; and
(d) the issuance of equity Securities of the Borrower and its Subsidiaries
not otherwise prohibited by this Agreement; and
(e) so long as after giving effect thereto no Default or Event of Default
shall have occurred and be continuing, any Asset Swap, provided that (i) the
consideration received therefor shall be at least equal to the fair market value
thereof, (ii) if and to the extent that the Borrower or any Subsidiary receives
consideration for the assets transferred by it in connection with such Asset
Swap that is in addition to the Equivalent Assets received in exchange therefor,
such Asset Swap shall be deemed to be an Asset Sale and shall be permitted only
if the provisions of subsection 6.7(b)(y) shall be complied. with in connection
therewith and (iii) no Asset Swap shall be permitted in any calendar year if,
after giving effect thereto, all the assets transferred by the Borrower and its
Subsidiaries pursuant to Asset Swaps during such calendar year shall have
generated during the immediately preceding calendar year an aggregate amount of
Consolidated Operating Cash Flow that exceeds 10% of Consolidated Operating Cash
Flow of the Borrower and its Subsidiaries for such immediately preceding
calendar year.
6.8 [INTENTIONALLY LEFT BLANK].
6.9 Sales and Lease-Backs. Become or remain liable, directly or indirectly,
as lessee or as guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real or personal or
mixed) whether now owned or hereafter acquired, (i) which the Borrower or any of
its Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than the Borrower or any of its Subsidiaries), or (ii) which the
Borrower or any such Subsidiary of the Borrower intends to use for substantially
the same purpose as any other property which has been or is to be sold or
transferred by the Borrower or any such Subsidiary of the Borrower to any Person
(other than the Borrower or one of its Subsidiaries) in connection with such
lease.
6.10 Sale or Discount of Receivables. Sell, directly or indirectly, any of
their notes or accounts receivable other than in the ordinary course of
business.
6.11 Transactions with Shareholders and Affiliates. Enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service), directly or
indirectly, with any holder (other
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than any Subsidiary directly or indirectly wholly owned by the Borrower) of 5%
or more of any class of equity Securities or other interests of the Borrower or
any of its Subsidiaries or with any Affiliate of the Borrower or of any such
holder, as the case may be, on terms that are less favorable to the Borrower or
any Subsidiary, as the case may be, than those that might be obtained at the
time from Persons who are not such a holder or Affiliate.
6.12 Disposal of Subsidiary Stock. Except as permitted by subsection 6.7:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock, partnership interests, or other
equity securities of (or warrants, rights or options to acquire shares or
other equity securities of) any of its Subsidiaries, except to qualify
directors if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock, partnership interests, or other securities of (or warrants, rights
or options to acquire shares or other securities of) any of its
Subsidiaries, except to the Borrower, a Subsidiary of the Borrower, or to
qualify directors if required by applicable law.
6.13 Conduct of Business. Engage in any business other than (i) a Core
Business, (ii) the ownership of Unrestricted Subsidiaries acquired in connection
with Investments permitted by subsections 6.4(d) and (e) and (iii) such other
lines of business as may be consented to by the Agent and the Required Lenders;
provided that neither the Borrower nor any of its Subsidiaries (other than a
License Subsidiary) shall directly own or hold any FCC License applicable to its
business, it being understood that all such interests, if owned, shall be owned
and maintained by the License Subsidiaries. Notwithstanding anything to the
contrary in this Agreement, including, without limitation, any references to
"Subsidiaries", (A) neither the Borrower nor any of its Subsidiaries shall (i)
except as permitted by subsection 6.4, create or acquire any interest in a
Subsidiary after the Closing Date other than maintenance of their interests in
their respective Subsidiaries as of the Closing Date, or (ii) operate, or
(except through its ownership of an Unrestricted Subsidiary) hold any interest
in, any television or radio broadcast station, cable, microwave or other
television signal transmission system other than the ownership and operation of
Broadcast Stations and (B) no License Subsidiary of the Borrower shall engage in
any business or incur any liabilities other than the ownership of its FCC
Licenses and the execution, delivery and performance of the Loan Documents and
Related Documents to which it is a party and activities necessary to the
foregoing.
6.14 Amendments or Waivers of Related Documents and Charter Documents:
Limitation on Optional Payments.
(a) Agree to any amendment to, or waive any of its lights under, any of the
Re lated Documents (other than non-material amendments or waivers which
individually, or together with all other amendments, waivers or changes made,
would not be adverse to the Borrower or any of its Subsidiaries or the Agent or
any Lender), without obtaining the written
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68
consent, not to be unreasonably withheld, of the Agent and the Required Lenders
to such amendment or waiver.
(b) Agree to any amendment to, or waive any of its rights under, its
articles of incorporation (including but not limited to the Certificate of
Designations), by-laws, partnership agreement or other documents relating to its
capital stock or other equity interests of the Borrower or its Subsidiaries
(other than amendments or waivers which individually, or together with all other
amendments, waivers or changes made, would not be adverse to the Borrower or any
of its Subsidiaries or the Agent or any Lender) without, in each case, obtaining
the written consent of the Agent and the Required Lenders to such amendment or
waiver.
(c) Other than with the Net Cash Proceeds of the sale or issuance of equity
Securities or in connection with any refinancing of Indebtedness permitted under
subsection 6.2, make any optional payment or prepayment on or redemption,
defeasance or purchase of any Indebtedness (excluding the Obligations, but
including but not limited to the Exchangeable Preferred Stock, Exchange
Debentures, Senior Subordinated Notes or Subordinated Debt), except that the
Exchangeable Preferred Stock and the Cumulative Preferred Stock may be redeemed
to the extent permitted by subsections 6.6(e) and 6.6(f), respectively; or
amend, modify or change, or consent or agree to any amendment, modification or
change to, any of the terms relating to (i) any Indebtedness other than the
Obligations and the preferred stock (other than any such amendment, modification
or change (including, without limitation, pursuant to a waiver) which would
extend the maturity or reduce the amount of any payment of principal thereof or
which would reduce the rate or extend the date for payment of interest thereon
or pursuant to Section 8.01 of the Senior Subordinated Note Indenture or Section
8.01 of the Exchange Debenture Indenture), or (ii) the subordination of the
Senior Subordinated Notes, the Exchange Debentures or Subordinated
Debt.
6.15 Fiscal Year, Change its fiscal year-end from December 31 without the
consent of the Required Lenders.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Failure of any Loan Party to pay any installment of principal of
any Loan when due in accordance with the terrns thereof or hereof; or any
Loan Party shall fail to pay any interest on any Loan when due or any other
amount due pursuant to the Loan Documents within two Business Days after
the date due in accordance with the terms thereof or hereof, or
(b) Failure of any Loan Party or any of their respective Subsidiaries
or any Unrestricted Subsidiary, to pay when due (x) any principal or
interest on any Indebtedness (other than Indebtedness referred to in
paragraph (a) of this Section and
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69
intercompany debt) in an individual principal amount of $5,000,000 or more or
items of Indebtedness with an aggregate principal amount of $5,000,000 or more
or (y) any Contingent Obligation in an individual principal amount of $5,000,000
or more or Contingent Obligations with an aggregate principal amount of
$5,000,000 or more, in each case beyond the end of any grace period provided
therefor; or
(c) Breach or default of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary, with respect to any other material
term of (i) (x) any evidence of any Indebtedness (other than intercompany debt)
in an individual principal amount of $5,000,000 or more or items of Indebtedness
(other than intercompany debt) with an aggregate principal amount of $5,000,000
or more or any Contingent Obligation in an individual principal amount of
$5,000,000 or more or Contingent Obligations with an aggregate principal amount
of $5,000,000 or more or (y) any loan agreement, mortgage, indenture or other
agreement relating thereto, if the effect of such failure, default or breach is
to cause, or to permit the holder or holders of that Indebtedness or Contingent
Obligation (or a trustee on behalf of such holder or holders) then to cause,
that Indebtedness or Contingent Obligation to become or be declared due prior to
its stated maturity (or the stated maturity of any underlying obligation, as the
case may be) or (ii) the Related Documents; or
(d) Failure of the Borrower to perform or comply with any term or condition
contained in subsection 5.2 or Section 6; or
(e) 'Any representation, warranty, certification or other statement made by
any Loan Party in any Loan Document or in any statement or certificate at any
time given by any Loan Party in writing pursuant hereto or in connection
herewith or therewith, shall be false in any material respect on the date as of
which made; or
(f) Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or the other Loan Documents, applicable to
that Loan Party, other than those referred to elsewhere in this Section 7 and
such default shall not have been remedied or waived within 30 days after the
earlier of (i) receipt by the Borrower of notice from any Lender or the Agent of
such default or (ii) the Borrower's knowledge of such default; or
(g) (i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal or state law; or
(ii) an involuntary case is commenced against any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over any Loan Party or any of their respective
Subsidiaries or
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any Unrestricted Subsidiary, or over all or a substantial part of its property,
shall have been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary for all or a substantial part of its
property; or the issuance of a warrant of attachment, execution or similar
process against any substantial part of the property of any Loan Party or any of
their respective Subsidiaries or any Unrestricted Subsidiary, and the
continuance of any such event in clause (ii) for 60 days unless dismissed,
bonded or discharged, or
(h) Any Loan Party or any of their respective Subsidiaries or any
Unrestricted Subsidiary shall have an order for relief entered with respect to
it or commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; the making by
any Loan Party or any of their respective Subsidiaries or any Unrestricted
Subsidiary of any assignment for the benefit of creditors; or
(i) The inability or failure of any Loan Party or any of their respective
Subsidiaries or any Unrestricted Subsidiary, or the admission by any Loan Party
or any of their respective Subsidiaries or any Unrestricted Subsidiary in
writing of its inability, to pay its debts as such debts become due; or the
Board of Directors (or any committee thereof) of any Loan Party or any of their
respective Subsidiaries or any Unrestricted Subsidiary adopts any resolution or
otherwise authorizes action to approve any of the actions referred to in this
clause (i); or
j) Any money judgment, writ or warrant of attachment, or similar process
involving (i) in any individual case an amount in excess of $5,000,000, or (ii)
in the aggregate at any time an amount in excess of $5,000,000, and in either
case not adequately covered by insurance as to which the insurance company has
acknowledged coverage shall be entered or filed against any Loan Party or any of
their respective Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 30 days or in any
event later than five days prior to the date of any proposed sale thereunder, or
(k) Any order, Judgment or decree shall be entered against any Loan Party
or any of their respective Subsidiaries decreeing a dissolution or split-up of
any Loan Party or any of their respective Subsidiaries, and such order shall
remain undischarged or unstayed for a period in excess of 30 days; or
(1) There occurs one or more ERISA Events which singly or in the aggregate
results in liability to the Borrower or any ERISA Affiliate in excess of
$1,000,000; or there exists, as of any valuation date for a Pension Plan, an
excess of the actuarial present value (determined on the basis of reasonable
assumptions employed by the independent actuary for such Pension Plan) of the
benefit liabilities (as defined in
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Section 4001(a)(16) of ERISA), whether or not vested over the fair market value
of the assets of such Pension Plan, individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans with
respect to which there is no such excess) which exceeds $1,000,000; or
(m) Any Guaranty for any reason, other than the satisfaction in full of all
Obligations, ceases to be in full force and effect (other than in accordance
with its terms) or is declared to be null and void, or any Loan Party denies
that it has any further liability, including without limitation with respect to
future advances by the Lenders, under any Loan Document to which it is a party,
or gives notice to such effect; or
(n) Any Security Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral in accordance with the
terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party or the Agent shall
not have or cease to have a valid and perfected first priority security interest
in the Collateral other than the failure of the Agent or any Lender to take any
action within its control; or
(o) Any FCC License shall be (i) canceled, terminated or finally denied
renewal for any reason; or (ii) renewed on terms which materially adversely
affect the economic or commercial value or usefulness thereof; or
(p) Any event having a Material Adverse Effect shall occur and such default
shall not have been remedied or waived within 30 days after receipt by the
Borrower of notice from any Lender or the Agent of such default; or
(q) The Borrower or any of its Subsidiaries shall fail to comply with the
requirements of any FCC consent obtained to consummate any acquisition; or
(r) Any of the following shall occur (i) any Subsidiary of the Borrower
shall issue or have outstanding any Capital Stock (or any security convertible
into any of its Capital Stock) which is not pledged to the Agent for the benefit
of the Lenders in a manner reasonably satisfactory to the Required Lenders,
except to the extent listed on Schedule 7(r) or waived by the Agent or the
Lenders hereunder in accordance with the terms hereof; (ii) the Borrower or a
Subsidiary of the Borrower shall fail to own and control, of record and
beneficially, 100% of the issued and outstanding Capital Stock of each License
Subsidiary free and clear of all Liens (except Liens created pursuant to the
Borrower Pledge Agreement or the Subsidiaries Pledge Agreement), except to the
extent listed on Schedule 7(r) or waived by the Agent or the Lenders hereunder
in accordance with the terms hereof; (iii) Paxson (or, after his death,
collectively, his heirs or estate or both) shall cease to own and control, of
record and beneficially, Capital Stock of the Borrower possessing the voting
power under normal circumstances to cast 51 % or more of the total votes
entitled to be cast for the election of directors of the Borrower and (iv)
Paxson (or, after his death, collectively, his heirs
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or estate or both) shall no longer have the voting power or the
contractual right to elect a majority of the Borrower's directors;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraphs (g), (h) or (i) of this Section with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Required Lenders, the Agent may, or upon the request
of the Required Lenders, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Agent may, or upon the request of the Required Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
SECTION 8. THE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Agent as the agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes the Agent, in such
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as me expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report,
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statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
the Borrower to perform its obligations hereunder or thereunder. The Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower.
8.4 Reliance by the Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
8.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
8.6 Non-Refiance on the Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations,
<PAGE> 79
74
property, financial and other condition and creditworthiness of the Borrower and
made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Leaders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their Commitment Percentages immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder.
8.8 The Agent in Its Individual Capacity. The Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower as though the Agent were not the Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it, the Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any Lender and may exercise the same as though it were not the Agent, and the
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.
8.9 Successor the Agent. The Agent may resign as the Agent upon 10 days'
notice to the Lenders and the Agent may be removed at any time with or without
cause by an instrument or concurrent instruments in writing delivered to the
Borrower and Agent and signed by Required Lenders. If the Agent shall resign or
be removed as the Agent under this Agreement and the other Loan Documents, then
the Required Lenders shall appoint from
<PAGE> 80
75
among the Lenders a successor agent for the Lenders, which successor agent shall
be approved by the Borrower, whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "the Agent" shall mean such
successor agent effective upon such appointment and approval, and the former the
Agent's rights, powers and duties as the Agent shall be terminated, without any
other or further act or deed on the part of such former the Agent or any of the
parties to this Agreement or any holders of the Loans. After any retiring the
Agent's resignation as the Agent, the provisions of this Section 8 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
the Agent under this Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) enter into with the Borrower written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any
scheduled payment of any Loan or of any scheduled installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the aggregate amount or extend the
expiration date of any Lender's Commitments, in each case without the consent of
each Lender affected thereby, or (ii) amend, modify or waive any provision of
this subsection or reduce the percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents or
release all or substantially all of the Collateral or any material Subsidiary
from the Subsidiaries Guarantee, in each case except in connection with any
Asset Sale permitted by subsection 6.7, and in each case without the written
consent of all the Lenders, or (iii) amend, modify or waive any provision of
Section 8 without the written consent of the then the Agent. Any such waiver and
any such amendment, supplement, modification or release shall apply equally to
each of the Lenders and shall be binding upon the Borrower, the Lenders, the
Agent and all future holders of the Loans. In the case of any waiver, the
Borrower, the Lenders and the Agent shall be restored to their former positions
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile
transmission) and,
<PAGE> 81
76
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made (a) in the case of delivery by hand, when delivered, (b) in the
case of delivery by mail, three days after being deposited in the mails, postage
prepaid, or (c) in the case of delivery by facsimile transmission, when sent and
receipt has been confirmed, addressed as follows in the case of the Borrower and
the Agent, and as set forth in Schedule 1. IA in the case of the other parties
hereto, or to such other address as may be hereafter notified by the respective
parties hereto:
The Borrower Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Arthur Tek
Fax: 407-659-4252
with a copy to Anthony Morrison at the foregoing address
The Agent: Union Bank
445 South Figueroa Street
Los Angeles, California 90071-1602
Attention: Christine A. Ball
Fax: 213-236-4096
with a copy to Gabriel A. Renga at the foregoing address
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 2.5, 2.6, 2.7, 2.12 or 9.6 shall not be effective
until received.
9.3 No Waiver, Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or
<PAGE> 82
77
reimburse each Lender and the Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Agent, (c) to pay, indemnify, and hold each Lender and the Agent harmless
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other taxes
(which are Non-Excluded Taxes), if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Agent harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any of
its properties or assets (all the foregoing in this clause (d), collectively,
the "indemnified liabilities"), provided, that the Borrower shall have no
obligation under this subsection 9.5 to the Agent or any Lender with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Agent or any such Lender. The agreements in this subsection shall survive
repayment of the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns: Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Agent and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Any Leader may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. The Borrower agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this
<PAGE> 83
78
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in subsection
9.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of subsections 2.14, 2.15,
2.16 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of subsection 2.15, such Participant shall have complied with the requirements
of said subsection and provided further, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Borrower and the Agent (which in each case shall not be unreasonably withheld),
to an additional bank or financial institution ("an Assignee") all or any part
of its rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
H, executed by such Assignee, such assigning Lender (and, in the case of an
Assignee that is not then a Lender or an affiliate thereof, by the Borrower and
the Agent) and delivered to the Agent for its acceptance and recording in the
Register provided that (i) no such assignment to an Assignee (other than any
Lender or any affiliate thereof) shall be in an aggregate principal amount of
less than $5,000,000 (other than in the case of an assignment of all of a
Lender's interests under this Agreement) and (ii) after giving effect to any
such assignment (other than an assignment of all of a Lender's interests under
this Agreement), the assigning Lender (together with any Lender which is an
affiliate of such assigning Lender) shall retain Loans and/or Commitments
aggregating not less than $5,000,000. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this subsection, the
consent of the Borrower shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be required to be
executed and delivered by the Borrower, for any assignment which occurs at any
time when any of the events described in paragraphs (g), (h) or (i) of Section 7
shall have occurred and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the address of
the Agent referred to in subsection 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amounts of
the Loans owing to, each Lender from
<PAGE> 84
79
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Lenders may (and, in the
case of any Loan or other obligation hereunder not evidenced by a Note, shall)
treat each Person whose name is recorded in the Register as the owner of a Loan
or other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder not evidenced
by a Note shall be effective only upon appropriate entries with respect thereto
being made in the Register. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Agent) together
with payment by such Lender or Assignee to the Agent of a registration and
processing fee of $2,500 the Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or
Assignee that agrees to be bound by the terms and conditions of subsection 9.15
(each, a "Transferee") and any prospective Transferee any and all financial
information in such Lender's possession concerning the Borrower and its
Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
9.7 Adjustments: Set-off, (a) If any Lender (a "benefitted Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by setoff, pursuant to events or proceedings of the nature
referred to in paragraphs (g), (h) or (i) of Section 7, or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest thereon,
such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Leader's Loan, or
shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefitted Lender,
such purchase shall
<PAGE> 85
80
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
9.8 Counteparts: Effectiveness. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. This
Agreement shall become effective when counterparts hereof shall have been
executed by each of the parties hereto. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the Agent.
9.9 Severability. Any provision of this Agreement which 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 hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Borrower, the Agent and the Lenders with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by the Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction: Waivers. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a
party, or for
<PAGE> 86
81
recognition and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 9.2 or at such other address of which the Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
9.13 Acknowledaements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship with or
duty to the Borrower arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between the Agent and the
Lenders, on one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
9.14 WAIVERS OF JURY TRIAL THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
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82
9.15 Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this Agreement
that is designated by the Borrower in writing as confidential; provided that
nothing herein shall prevent any Lender from disclosing any such information (i)
to the Agent or any other Lender, (ii) to any Transferee, (iii) to its
employees, directors, agents, attorneys, accountants and other professional
advisors, (iv) upon the request or demand of any Governmental Authority having
jurisdiction over such Lender, (v) in response to any order of any court or
other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
<PAGE> 88
83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
PAXSON COMMUNICATIONS
CORPORATION
By:
-----------------------------
Title:
UNION BANK OF CALIFORNIA, N.A.,
as the Agent and as a Lender
By:
-----------------------------
Title:
THE BANK OF NEW YORK
By:
-----------------------------
Title:
CIBC, INC.
By:
----------------------------
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
----------------------------
Title:
<PAGE> 89
84
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:
----------------------------
Title:
<PAGE> 1
EXHIBIT 10.140
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
HOUSING DEVELOPMENT ASSOCIATES S.E.
AND
PAXSON COMMUNICATIONS OF SAN JUAN, INC.
NOVEMBER 12, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Terms Defined in this Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Terms Defined Elsewhere in this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Clarifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. AT CLOSING; PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Preclosing Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. REPRESENTATIONS AND WARRANTIES OF HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Organization of HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Absence of Conflicting Agreements; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Organization, Standing, Authority, Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. CERTAIN PRECLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Indebtedness and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.8 HDA Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.10 Capital Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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5.11 Shareholder and Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Control of the Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.5 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.6 Buyer Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.7 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.8 Agreement with ECOC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.9 Studio Lease Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.10 Cancellation of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.11 Shareholder and Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.12 Ponce Transmitter Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.13 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Conditions to Obligations of HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Deliveries by HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Termination by HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.4 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . 19
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Indemnification by HDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.5 Certain Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.6 Exclusivity of Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.8 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.10 Guaranty of PCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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<PAGE> 5
EXHIBITS AND SCHEDULES TO
STOCK PURCHASE AGREEMENT
EXHIBITS
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EXHIBIT A -- ECOC Amendment
EXHIBIT B -- Studio Lease Agreement
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SCHEDULES
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Schedule 3.4 -- HDA Consents
Schedule 3.7 -- Mortgage
Schedule 8.2(e) -- Officers and Directors to Resign
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<PAGE> 6
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made as of November 12, 1996, by and
between PAXSON COMMUNICATIONS OF SAN JUAN, INC., a Florida corporation
("Buyer"), and HOUSING DEVELOPMENT ASSOCIATES S.E., a Puerto Rico special
partnership ("HDA").
R E C I T A L S:
A. S & E Network Inc., a Puerto Rico corporation (the "Company"),
owns television stations WSJN-TV, San Juan, Puerto Rico, WKPV(TV), Ponce,
Puerto Rico and WJWN-TV, San Sebastian, Puerto Rico (the "Stations") pursuant
to licenses issued by the Federal Communications Commission (the "FCC").
B. HDA owns fifty percent (50%) of the issued and outstanding shares
of the common stock of the Company and Buyer owns the remaining fifty percent
(50%) of the issued and outstanding shares of the common stock of the Company.
C. Buyer desires to buy from HDA and HDA desires to sell to Buyer
all of HDA's shares of the common stock of the Company on the terms and
conditions hereinafter set forth.
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, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement, intending to be bound
legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1 Terms Defined in this Section. The following terms, as used in
this Agreement, have the meanings set forth in this Section:
"Affiliate" means (a) any Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with another Person, or (b) an officer or director of an affiliate
within the meaning of (a) above.
"Buyer Consents" means the Consents required to be obtained by Buyer to
permit Buyer to buy the Stock pursuant to this Agreement.
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"Closing" means the consummation of the purchase and sale of the Stock
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.
"Communications Act" means the Communications Act of 1934, as amended.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Stock to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Effective Time" means 12:01 a.m., local San Juan time, on the Closing
Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
transfer of the Stock to Buyer as contemplated by this Agreement.
"FCC Licenses" means those licenses, permits, and authorizations issued
by the FCC to the Company in connection with the business and operations of the
Stations.
"First Purchase Agreement" means the Stock Purchase Agreement, dated as
of January 31, 1996, by and among the Company, Buyer and HDA.
"HDA Consents" means the Consents required to be obtained by HDA to
permit HDA to sell the Stock pursuant to this Agreement as listed in Schedule
3.4.
"Licenses" means all licenses, permits, construction permits, and other
authorizations issued by the FCC, the Federal Aviation Administration, or any
other federal, state, or local governmental authorities to the Company,
currently in effect and 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.
"Management Agreement" means the Management Agreement, dated as of
August 30, 1996, by and among Buyer, the Company and HDA.
"Material Contract" means any contract, lease, non-governmental license,
agreement, or commitment to which HDA is a party, except for any contract,
lease, non-governmental license, agreement, or commitment, (i) the obligations
under which will be fully performed
<PAGE> 8
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prior to Closing; or (ii) except for film or programming, entered into in the
ordinary course of business and not involving a commitment in excess of $5,000.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"Shareholder Agreement" means the Shareholder Agreement dated as of
August 30, 1996, by and among Buyer, the Company and HDA.
"Stations" means television stations WSJN-TV, San Juan, Puerto Rico,
WKPV(TV), Ponce, Puerto Rico and WJWN-TV, San Sebastian, Puerto Rico.
"Stock" means 500 shares of voting common stock, par value $.01 per
share which, as of the Effective Time, shall represent fifty percent (50%) of
the issued and outstanding shares of capital stock of the Company.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
---- -------
Buyer Preamble
Claimant Section 10.4(a)
Company Recitals
ECOC Section 6.8
ECOC Agreement Section 6.8
ECOC Amendment Section 6.8
GE Loan Section 5.4
HDA Preamble
Indemnifying Party Section 10.4(a)
IRS Deb Section 5.4
Purchase Price Section 2.2
Studio Lease Agreement Section 6.9
1.3 Clarifications. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender and any other number as the context requires. Use of the word
"including" herein shall be deemed and
<PAGE> 9
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construed to mean "including but not limited to." Except as specifically
otherwise provided in this Agreement in a particular instance, a reference to a
Section, Exhibit or Schedule is a reference to a Section of this Agreement or
an Exhibit or Schedule hereto, and the terms "hereof," "herein" and other like
terms refer to this Agreement as a whole, including the Schedules hereto, and
not solely to any particular part hereof.
SECTION 2. AT CLOSING; PURCHASE PRICE.
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, HDA hereby agrees to sell, transfer and deliver to
Buyer on the Closing Date, and Buyer agrees to purchase, the Stock, free and
clear of any claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges, or encumbrances of any nature whatsoever.
2.2 Purchase Price. The purchase price for the Stock (the "Purchase
Price") shall be Seven Million Dollars ($7,000,000), adjusted as provided in
Section 6.12 and payable by federal wire transfer of same-day funds pursuant to
wire instructions which shall be delivered by HDA to Buyer at least two
business days prior to the Closing Date.
2.3 Preclosing Distribution. At least ten days prior to the Closing,
HDA and Buyer shall use good faith efforts to agree on the amount of a dividend
(the "Dividend") to be declared by the Company in the aggregate amount of the
excess of the Stations' cash receipts for the period January 31, 1996 through
the Closing Date over the Stations' operating expenses (excluding noncash
charges) for the same period. Immediately preceding the Closing, HDA and Buyer
shall cause the Company to declare the Dividend which shall be payable within
30 days after the Closing Date, one-half to HDA and one-half to Buyer, as
shareholders of record immediately preceding the Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF HDA.
HDA represents and warrants to Buyer as follows:
3.1 Organization of HDA. HDA is a partnership duly organized and
validly existing under the laws of the Commonwealth of Puerto Rico. HDA has the
requisite partnership power and authority to execute, deliver and perform this
Agreement and the documents contemplated hereby according to their respective
terms.
3.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by HDA have been duly authorized by all necessary
partnership action on the part of HDA. This Agreement has been duly executed
and delivered by HDA and constitutes the legal, valid, and binding obligation
of HDA, enforceable in accordance with
<PAGE> 10
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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 Stock. HDA owns beneficially and of record the Stock free and
clear of any mortgages, liens, claims, charges, encumbrances, assessments or
other adverse interests of any kind or nature whatsoever except for
encumbrances created by the Shareholder Agreement. The Stock constitutes fifty
percent (50%) of the issued and outstanding shares of the capital stock of the
Company. The Stock and the five hundred (500) shares of common stock of the
Company owned by Buyer constitute the only issued and outstanding equity
interest in the Company. The Stock has been duly and validly issued, is fully
paid and nonassessable and was issued in accordance with all applicable laws.
There are no outstanding options or other rights to acquire the Stock. Except
for the Shareholder Agreement, there are no voting trust agreements or other
contracts, agreements or arrangements restricting voting or dividend rights or
the issuance or transferability of the Stock.
3.4 Absence of Conflicting Agreements; Consents. Subject to obtaining
the FCC Consent provided for in Section 6.1, the Buyer Consents and the HDA
Consents described on Schedule 3.4, the execution, delivery and performance by
HDA of this Agreement and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (a) do not require the
consent of any third party; (b) will not conflict with any provision of the
Certificate of Incorporation or Bylaws of the Company or the Partnership
Agreement of HDA; (c) will not conflict with, result in a breach of, or
constitute a default under any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (d) 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 Material Contract. Except for the FCC Consent provided for in Section
6.1, the Buyer Consents and the HDA Consents described in Schedule 3.4, no
consent, approval, permit, or authorization of, or declaration to, or filing
with any governmental or regulatory authority or any other third party is
required to permit HDA to consummate this Agreement and the transactions
contemplated hereby.
3.5 Claims and Legal Actions. There is no claim, legal action,
counterclaim, suit, arbitration, or other legal, administrative, or tax
proceeding, nor any order, decree, or judgment, in progress or pending, or to
the knowledge of HDA threatened, against HDA or relating to alleged actions or
omissions of HDA which could impair HDA's ability to consummate the
transactions contemplated hereby or affect the business or operations of any
Station, nor does HDA know of any basis for the same.
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3.6 Broker. Neither HDA nor any Person 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.
3.7 Real Property. All indebtedness and other payments secured by the
mortgage described in Schedule 3.7 hereto (the "Mortgage") have been paid in
full by the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to HDA as follows:
4.1 Organization, Standing, Authority, Ownership. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida and has the requisite corporate power and
authority to execute, deliver, and perform this Agreement and the documents
contemplated hereby according to their respective terms and to own the Stock.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a 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 the receipt of 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): (a) do not require the consent of any third
party; (b) will not conflict with the Articles of Incorporation or By-laws of
Buyer; (c) will not conflict with, result in a breach of, or constitute a
default under, any applicable law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (d) 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. Except for the FCC Consent, the HDA Consents and
the Buyer 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 to permit Buyer to consummate this Agreement and
the transactions contemplated hereby.
<PAGE> 12
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4.4 Brokers. Neither Buyer nor any Person acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Investment Purpose. Buyer is acquiring the Stock for investment
for its own account and not with a view to the sale or distribution of any part
thereof, and not including collateral assignments or pledges of the Stock for
financing purposes, Buyer has no present intention of selling, granting
participations in, or otherwise distributing the Stock.
4.6 Qualifications. Assuming the Company's existing FCC authorization
to operate WKPV(TV) and WJWN-TV as satellites of WSJN-TV pursuant to Section
73.3555, Note 5, of the FCC's rules and regulations is not terminated, Buyer is
legally qualified under the Communications Act and FCC rules, regulations and
policies to acquire the Stock and to operate the Stations.
SECTION 5. CERTAIN PRECLOSING COVENANTS.
HDA covenants and agrees that between the date hereof and the Closing
Date, HDA shall comply with the following covenants:
5.1 Encumbrances. HDA will not create, assume, or permit to exist any
mortgage, pledge, lien, or other charge or encumbrance affecting the Stock.
5.2 Dispositions. HDA will not sell, assign, lease, or otherwise
transfer or dispose of the Stock.
5.3 Access to Information. HDA will give to Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to all information that they reasonably request relating to the Stock.
5.4 Indebtedness and Obligations. HDA shall either prepay, or pay
promptly when due, all payment obligations (including principal, interest,
penalties and other amounts) payable under the Promissory Notes of the Company
to General Electric Capital Corporation of Puerto Rico (collectively, the "GE
Loan") and all indebtedness of the Company to the Internal Revenue Service (the
"IRS Debt"), which payment obligations have been assumed by HDA pursuant to an
Assumption Agreement, dated August 30, 1996, by and among HDA, Buyer and the
Company.
5.5 Compliance with Laws. HDA shall comply in all material
respects with all laws, rules, and regulations except to the extent that
noncompliance would not have a material
<PAGE> 13
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adverse effect on the Company or the Stock or that noncompliance is caused by
an agent of Buyer.
5.6 Licenses. HDA shall not cause any of the Licenses issued by the
FCC with respect to the Stations to expire or to be revoked, suspended, or
modified, or take any action that could reasonably be expected to cause the FCC
or any other governmental authority to institute proceedings for the
suspension, revocation, or material adverse modification of any of such
Licenses.
5.7 No Inconsistent Action. HDA shall not take any action that is
inconsistent in any material respect with its obligations under this Agreement
or that could reasonably be expected to hinder or delay the consummation of the
transactions contemplated by this Agreement. Neither HDA nor any of its
representatives or agents shall, directly or indirectly, solicit, initiate, or
participate in any way in discussions or negotiations with, or provide any
confidential information to, any Person (other than Buyer or any Affiliate or
associate of Buyer and their respective representatives and agents) concerning
any possible disposition of the Stock or any similar transaction.
5.8 HDA Consents. HDA shall use its best efforts to obtain all HDA
Consents without any change in the terms or conditions of any contract or
license to which such Consent relates. HDA shall promptly advise Buyer of any
difficulties experienced in obtaining any of the HDA Consents and of any
conditions proposed, considered, or requested for any of the HDA Consents.
5.9 Notification. HDA shall promptly notify Buyer in writing of any
material change in any of the information contained in the representations and
warranties contained in Section 3 of this Agreement.
5.10 Capital Improvements. Prior to the Closing Date, HDA shall have
paid to the Company $50,000 for the repair of the retaining wall at the Cubuy
tower site. HDA shall also have paid to the Company the necessary funds in
excess of insurance proceeds to repair the other damage from Hurricane Bertha
at the Cubuy tower site.
5.11 Shareholder and Management Agreement. HDA shall comply with all of
the terms and conditions of the Shareholder Agreement and the Management
Agreement.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.
6.1 FCC Consent.
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(a) The sale of the Stock as contemplated by this Agreement is
subject to the prior consent and approval of the FCC.
(b) HDA and Buyer shall, and shall cause the Company to, prepare
and, within five (5) business days after the date hereof, file with the FCC an
appropriate application for the FCC Consent. HDA and Buyer shall, and shall
cause the Company to, thereafter prosecute the application for the FCC Consent
with all reasonable diligence and otherwise use their respective best efforts
to obtain a grant of the application for the FCC Consent as expeditiously as
practicable. Each party agrees to comply, and cause the Company to comply,
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition if (i) the condition was imposed on it
as the result of a circumstance the existence of which does not constitute a
breach by that party of any of its representations, warranties, or covenants
hereunder, and (ii) compliance with the condition would have a material adverse
effect upon it. HDA and Buyer shall, and shall cause the Company to, oppose
any petitions to deny or other objections filed with respect to the application
for the FCC Consent and any requests for reconsideration or judicial review of
the FCC Consent. The cost of such opposition shall be borne by the party whose
qualifications are being challenged in such petition to deny, objection,
request for reconsideration or judicial review.
(c) 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
effective periods of the FCC Consent shall limit the exercise by either party
of its right to terminate the Agreement under Section 9.
6.2 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including the requirements of HDA's
and Buyer's lenders, and the operation of the Stations pursuant to the
Management Agreement and except as and to the extent required by law, each
party will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this 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.
6.3 Cooperation. Buyer and HDA 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 HDA 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
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the foregoing, and except as otherwise expressly provided in this Agreement,
Buyer shall have no obligation to agree to any adverse change in any License or
contract in order to obtain a Consent required with respect thereto.
6.4 Control of the Stations. Prior to Closing, the operations of the
Stations, including complete control and supervision of all of the Stations'
programs, employees, and policies, shall be the sole responsibility of the
Company as managed by Buyer pursuant to the Management Agreement.
6.5 No Inconsistent Action. Buyer shall not take any action that is
inconsistent in any material respect with its obligations under this Agreement
or that could reasonably be expected to hinder or delay the consummation of the
transactions contemplated hereby. Without limiting the generality of the
foregoing, Buyer shall not take any action that could result in its
disqualification under the Communications Act or FCC rules and regulations to
purchase the Stock or operate the Stations. If Buyer becomes aware of any fact
that could result in such disqualification, it will so inform HDA and use its
best efforts to eliminate any such disqualifying fact.
6.6 Buyer Consents. Buyer shall use its best efforts to obtain all of
the Buyer Consents. Buyer shall promptly advise HDA of any difficulties
experienced in obtaining any of the Buyer Consents and of any conditions
proposed, considered or requested for any of the Buyer Consents.
6.7 Exclusivity.
(a) During the Exclusivity Period (defined below) Buyer shall
cause the Stations not to broadcast any Interactive Gaming Programming (defined
below) except for (i) Interactive Gaming Programming provided under the ECOC
Agreement as amended pursuant to Section 6.8, (ii) Interactive Gaming
Programming produced by or broadcast during time purchased by HDA or an
Affiliate of HDA or (iii) RFR Waiver Programming (defined below).
(b) The "Exclusivity Period" shall mean the period commencing on
the date hereof and ending on the second anniversary of the Closing Date;
provided, however, that the Exclusivity Period shall be extended following the
second anniversary of the Closing Date for so long as HDA or an HDA Affiliate
shall offer to purchase at least 2 hours per week of broadcast time on the
Stations for broadcast of Interactive Gaming Programming which 2 hours
requirement shall not be satisfied by the broadcast of Interactive Gaming
Programming under the ECOC Agreement.
<PAGE> 16
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(c) During the Exclusivity Period, Buyer shall cause the Company
to sell to HDA or an HDA Affiliate, upon request, broadcast time on the
Stations for Interactive Gaming Programming in a minimum and maximum amount of
2 hours per week and 10 hours per week, respectively. Buyer shall cause the
Stations to make such broadcast time available at such times as shall be
requested by HDA at least 30 days prior to the broadcast, but shall not be
required to provide more than 2 hours per day. The hourly rate charged for
such broadcast time shall equal the average of the rate charged for each hour
immediately preceding and immediately following such broadcast time (not
including advertising revenues for individual spots of one minute or less
broadcast during such hour).
(d) During the Exclusivity Period Buyer shall cause the Company
to notify HDA of any bona fide offer from any person to purchase broadcast time
on the Stations for the broadcast of Interactive Gaming Programming which the
Company desires to accept ("Proposed Programming"). Such notice shall be in
writing and shall set forth all material terms of the Proposed Programming
including the schedule and number of hours per week of proposed broadcast time,
a detailed description of the content of the Proposed Programming, the
consideration to be received by the Company in respect of the Proposed
Programming and the duration of the commitment to purchase broadcast time.
Following receipt of such notice, HDA shall have 60 days to notify the Company
whether it wishes to purchase broadcast time for Interactive Gaming Programming
on the same terms as the Proposed Programming. If HDA notifies the Company
within such period of its desire to purchase broadcast time on such terms, the
Company shall sell to HDA or an Affiliate of HDA such broadcast time on such
terms provided that HDA or an Affiliate of HDA makes available to the Stations
such programming within 120 days of HDA's receipt of notice of the Proposed
Programming from Buyer pursuant to the first sentence of this paragraph (d).
If HDA notifies the Company that it declines to purchase such broadcast time or
fails to notify the Company within the 60-day period or fails to provide such
programming within the 120-day period, the Company may broadcast the Proposed
Programming in accordance with the terms thereof (hereafter "RFR Waiver
Programming").
(e) "Interactive Gaming Programming" shall mean programming
permitted under applicable law the content of which determines or announces the
outcome of a Sponsored Gaming Activity (defined below). "Sponsored Gaming
Activity" shall mean any parimutuel wagering, sports betting or other game,
lottery or contest where winners are determined predominantly by chance with
respect to which (i) participants in the Sponsored Gaming Activity provide
consideration for an opportunity to win a cash and/or non cash prize, and (ii)
the purchaser of broadcast time for determining or announcing the outcome of
such Sponsored Gaming Activity (or an Affiliate thereof) receives directly or
indirectly some portion of such consideration or a fee paid by some other
person who receives some portion of such consideration.
<PAGE> 17
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Interactive Gaming Programming shall not include (i)
advertisements for casinos, government lotteries, sports books or other
gambling venues or gambling opportunities, or (ii) "no purchase necessary"
sweepstakes or other games of chance where participants have an opportunity to
win a prize but provide no consideration for such opportunity.
(f) Notwithstanding the foregoing, the Company shall retain the
right to interrupt or preempt the programming of HDA or an Affiliate thereof to
be broadcast hereunder in case of an emergency or for noncommercial public
service programming which, in the good faith judgment of the Company, is of
greater local or national public importance and the Company shall not be
required to broadcast any programming of HDA or an Affiliate thereof that
violates any applicable laws, rules, regulations or policies of any
governmental entity, including the FCC.
6.8 Agreement with ECOC. Simultaneously with the Closing, Buyer and HDA
shall cause the Company and HDA shall cause ECOC to amend the Agreement (the
"ECOC Agreement"), dated as of February 1, 1996, between the Company and El
Comandante Operating Co., Inc. ("ECOC"), pursuant to the Amendment to the ECOC
Agreement attached hereto as Exhibit A (the "ECOC Amendment").
6.9 Studio Lease Agreement. Simultaneously with the Closing, Buyer and
HDA shall cause the Company and HDA shall cause ECOC to enter into the studio
lease agreement attached hereto as Exhibit B (the "Studio Lease Agreement").
6.10 Cancellation of Note. Simultaneously with the Closing, the
Company shall repay to HDA all capital funding notes issued by the Company
pursuant to the Shareholder Agreement.
6.11 Shareholder and Management Agreements. Simultaneously with the
Closing, Buyer and HDA shall, and shall cause the Company to, terminate the
Shareholder Agreement and the Management Agreement except that with respect to
HDA, Section 7.4 of the Shareholder Agreement shall survive such termination
for the term set forth in such Section.
6.12 Ponce Transmitter Site. The parties hereto acknowledge that they
have agreed to cause the Company to relocate the tower site for television
station WKPV(TV), Ponce, Puerto Rico. HDA shall pay and reimburse Buyer and/or
the Company, as applicable, for 25% of the costs and expenses relating to such
relocation regardless of whether such costs and expenses are incurred prior to
or after the Closing Date, provided that HDA's reimbursement obligation
hereunder shall not exceed $100,000. At Closing, the Purchase Price shall be
reduced by the amount of the relocation costs and expenses incurred by Buyer
and/or the Company as of such date for which HDA is responsible hereunder and
Buyer's reasonable estimate of the amount of the relocation costs and expenses
to be incurred by
<PAGE> 18
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Buyer and/or the Company following the Closing for which HDA is responsible
hereunder provided that such reduction in the Purchase Price shall not exceed
$100,000. Upon completion of the relocation, Buyer shall promptly pay to HDA
the amount, if any, by which such reduction in the Purchase Price exceeded the
aggregate amount of relocation costs and expenses actually incurred by Buyer
and/or the Company for which HDA is responsible hereunder and HDA shall
promptly pay to Buyer the amount, if any, by which such reduction in the
Purchase Price is less than the aggregate amount of relocation costs and
expenses actually incurred by Buyer and/or the Company for which HDA is
responsible hereunder. Relocation costs and expenses payable hereunder by HDA
shall include all out-of-pocket costs and expenses incurred by Buyer and/or the
Company relating to such relocation; provided that relocation costs and
expenses payable by HDA hereunder shall not include any lease payments to be
made by the Company if the Company elects to lease the site to which it will
relocate the WKPV(TV) transmitter site.
6.13 Mortgage. Prior to and after the Closing, HDA shall use
commercially reasonable efforts to assist the Company and Buyer in obtaining
the release of record of the Mortgage.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND HDA.
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing hereunder 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 HDA 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. HDA 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 without any
adverse change in the terms or conditions of any Material Contract or any
License.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer or the Company of any conditions that need not
be complied with by Buyer or the Company under Section 6.1 hereof and HDA shall
have complied with any conditions imposed on it by the FCC Consent.
<PAGE> 19
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(e) Governmental Authorizations. The Company shall be the
holder of all FCC Licenses and there shall not have been any modification,
revocation, or non-renewal of any License that could have an adverse effect on
the Stations or the conduct of their 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 FCC License.
(f) Deliveries. HDA shall have made or stand willing to make
all the deliveries to Buyer described in Section 8.2.
(g) Station Authorizations. The Company shall continue to have
all waivers and authorizations from the FCC to operate Station WKPV(TV) and
Station WJWN-TV as satellites of Station WSJN-TV pursuant to Section 73.3555,
Note 5, of the FCC's rules and regulations, 47 C.F.R. Section 73.3555 and
there shall be no proceedings pending or threatened to revoke or suspend such
waivers or authorizations.
(h) No Proceeding. No administrative or judicial proceeding by
any governmental authority or any other person shall have been instituted or
threatened that questions the validity or legality of the transactions
contemplated by this Agreement.
(i) Stations' Operation. Buyer shall have received evidence
that HDA shall have made the payments to the Company required by Section 5.10
hereof.
(j) Carmen Jovet Programming Agreement. The termination
agreement relating to the Carmen Jovet Programming Agreement shall be in full
force and effect and HDA shall have made all payments required by the Company
thereunder.
(k) ECOC Amendment. ECOC shall have executed and delivered to
Company the ECOC Amendment and the ECOC Agreement as amended by the ECOC
Amendment shall be in full force and effect and ECOC shall be in compliance in
all material respects therewith.
(l) Studio Lease Agreement. ECOC shall have executed and
delivered to Company the Studio Lease Agreement and such Studio Lease Agreement
shall be in full force and effect.
(m) GE Loan and IRS Debt. Buyer shall have received evidence
that the GE Loan and the IRS Debt shall have been repaid in full by HDA or HDA
shall have delivered to Buyer a release from General Electric Capital
Corporation of Puerto Rico and the Internal Revenue Service releasing the
Company from any and all liabilities or obligations thereunder. General
Electric Capital Corporation of Puerto Rico and the Internal Revenue Service
shall have released any and all liens that they may have in the assets of the
Company and shall
<PAGE> 20
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have delivered termination statements and releases reasonably satisfactory to
Buyer with respect thereto.
(n) Equipment Lease. The lease of equipment between the
Company and ECOC shall be in full force and effect.
7.2 Conditions to Obligations of HDA. All obligations of HDA at the
Closing hereunder are subject at HDA'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 described in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on HDA of any conditions that need not be complied with
by HDA under Section 6.1 hereof, and Buyer and the Company shall have complied
with any conditions imposed on them by the FCC Consent.
(e) No Proceeding. No administrative or judicial proceeding by
any governmental authority or any other person shall have been instituted or
threatened that questions the validity or legality of the transactions
contemplated by this Agreement.
(f) ECOC Amendment. The Company shall have executed and
delivered to ECOC the ECOC Amendment and the ECOC Agreement as amended by the
ECOC Amendment shall be in full force and effect and the Company shall be in
compliance in all material respects therewith.
(g) Studio Lease Agreement. The Company shall have executed and
delivered to ECOC the Studio Lease Agreement and such Studio Lease Agreement
shall be in full force and effect.
(h) Carmen Jovet Programming Agreement. Buyer shall have paid
$64,486 to HDA, $30,000 of which represents one-half of the amount previously
paid by HDA to
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Carmen Jovet and $34,486 of which represents the estimated book value as of
December 31, 1996 of production equipment for the Carmen Jovet show owned by
HDA and to be conveyed "as is" to the Company on or before the Closing pursuant
to documentation reasonably satisfactory to Buyer.
SECTION 8. CLOSING AND CLOSING DELIVERIES.
8.1 Closing.
(a) Closing Date.
(1) Except as provided below in this Section 8.1(a) or as
otherwise agreed to by Buyer and HDA, 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
HDA, which shall be not earlier than the first business day after the FCC
Consent is granted and not later than ten business days after the FCC Consent
is granted.
(2) Except as provided below in this Section 8.1(a), if
Buyer fails to specify the date for Closing pursuant to the preceding sentence
prior to the fifth business day after the date upon which the FCC Consent has
been granted, the Closing shall take place on the tenth business day after the
date upon which the FCC Consent has been granted.
(3) If there is in effect on the date on which the Closing
would otherwise occur pursuant to this Section 8.1(a) any judgment, decree, or
order that would prevent or make unlawful the Closing on that date, the Closing
shall be postponed until a date within the effective period of the FCC Consent
(as it may be extended pursuant to Section 6.1), to be agreed upon by Buyer and
HDA when such judgment, decree, or order no longer prevents or makes unlawful
the Closing. If the Closing is postponed pursuant to this paragraph, the date
of the Closing shall be mutually agreed to by HDA and Buyer.
(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
HDA.
8.2 Deliveries by HDA. Prior to or on the Closing Date, HDA shall
deliver to Buyer the following, in form and substance reasonably satisfactory
to Buyer and its counsel:
(a) Stock. Certificates representing all of the Stock,
which shall be either duly endorsed or accompanied by stock powers duly
executed in favor of Buyer.
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(b) Resolutions. Copies of resolutions adopted by the managing
general partner of the managing partner of HDA authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary of such
managing general partner as being true and complete on the Closing Date.
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of HDA by the President of the managing
partner of HDA, certifying: (1) that the representations and warranties of HDA
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 HDA has
in all material respects performed and complied with all of its obligations,
covenants, and agreements in this Agreement to be performed and complied with
on or prior to the Closing Date.
(d) Opinions of Counsel. Opinions of HDA's counsel and
communications counsel dated as of the Closing Date, in form and substance
satisfactory to Buyer's counsel.
(e) Resignations. Written resignations effective as of the
Closing Date of the officers and directors of the Company set forth on Schedule
8.2(e) hereto or any successor to any such officers or directors.
(f) GE and IRS Debt. Evidence reasonably satisfactory to Buyer
that the GE Debt and the IRS Loan shall have been paid in full or the Company
shall have been discharged from all liabilities and obligations thereunder and
that General Electric Capital Corporation of Puerto Rico and the Internal
Revenue Service shall have released all liens, security interests, claims and
other encumbrances that they may have in the Company's assets.
(g) Other Agreements. The documents required by Sections 7.1(k),
(l) and (m).
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to HDA the following, in form and substance reasonably satisfactory to
HDA and its counsel:
(a) Purchase Price. The payment described in Section 2.2.
(b) Resolutions. Copies of resolutions adopted by the Board of
Directors of Buyer, authorizing and approving the execution of this Agreement
and the consummation of the transactions contemplated hereby, certified by its
Secretary as being true and correct on the Closing Date.
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by the Chairman or President of
Buyer, certifying (1) that the representations
<PAGE> 23
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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 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, in form and substance satisfactory to HDA's counsel.
(e) Other Agreements. The agreements duly executed by the
Company required by Sections 7.2(f) and (g).
SECTION 9. TERMINATION.
9.1 Termination by HDA This Agreement may be terminated by HDA, if
HDA 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 HDA set
forth in this Agreement has not been satisfied or waived in writing by HDA.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or
prior to July 1, 1997.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer,
if Buyer is not then in material default, upon written notice to HDA, 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 has 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.
<PAGE> 24
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(c) Upset Date. If the Closing shall not have occurred on or
prior to July 1, 1997.
9.3 Rights on Termination. If this Agreement is terminated by either
party due to the other party's breach of any provision of this Agreement, such
party shall have all rights and remedies available at law or equity.
9.4 Specific Performance. The parties recognize that if HDA 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, to obtain specific performance of the terms of this
Agreement. If any action is brought by Buyer to enforce this Agreement, HDA
shall waive the defense that there is an adequate remedy at law.
9.5 Attorneys' Fees. In the event of a default by either party that
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses (whether incurred in
arbitration, at trial, or on appeal).
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES.
10.1 Survival. Without prejudice to representations and warranties in
other agreements delivered hereunder, all representations and warranties of
Buyer and HDA herein and all covenants of Buyer and HDA herein with respect to
periods prior to Closing shall be deemed continuing representations, warranties
and covenants, and shall survive the Closing for a period of eighteen (18)
months. Any investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
either party shall affect the other party's right to rely on any
representation, warranty, or covenant made by such party or relieve such party
of any obligations under this Agreement as the result of a breach of any of its
representations and warranties.
10.2 Indemnification by HDA. Notwithstanding the Closing but subject
to Section 10.5, HDA 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 HDA contained herein or in any certificate, document, or instrument
delivered to Buyer hereunder;
<PAGE> 25
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(b) any and all losses, liabilities or damages resulting from the
threatened claims and legal actions described in Section 8 of Schedule 1 to the
Officer's Certificate of the Company and HDA dated as of August 30, 1996
delivered at the closing under the First Purchase Agreement;
(c) any and all losses, liabilities, or damages resulting from
any claim by Angulo Capital Corporation relating to the matters alleged in its
letter dated October 29, 1996 to Mr. Dean Goodman;
(d) any and all losses, liabilities, or damages resulting from
any claim that any current use of the property described on Schedule 3.7 to the
First Purchase Agreement in which the Company has a 17.96% ownership interest
does not comply with applicable deed restrictions or zoning requirements;
provided that Buyer uses commercially reasonable efforts to mitigate any such
losses, liabilities or damages;
(e) any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity; and
(f) in the event of an early termination of the Company's
leasehold interest under the Studio Lease Agreement resulting from any order by
the Puerto Rico Racing Board, (i) any out-of-pocket costs not to exceed
$150,000 of relocating the Company's studio to another facility, plus (ii) the
rent differential between (A) rent payable under the Studio Lease Agreement for
the remainder of the five-year term then in effect at the time of termination,
and (B) rent payable by the Company for a replacement studio not to exceed
8,000 square feet for the same period; provided, however, that if the Company
enters into a lease for a replacement studio in excess of 8,000 square feet,
then HDA's reimbursement obligation shall apply only to that portion of the
space equal to 8,000 square feet.
10.3 Indemnification by Buyer. Notwithstanding the Closing but subject
to Section 10.5, Buyer hereby agrees to indemnify and hold HDA harmless against
and with respect to, and shall reimburse HDA 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 herein or in any certificate, document, or
instrument delivered to HDA hereunder; and
(b) any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or
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judgment incident to the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim.
If the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five business
days after written notice of such action, suit, or proceeding was given to
Claimant.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation,
the Claimant agrees to make available to the Indemnifying Party and 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
in good faith 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> 27
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(e) The indemnifications rights provided in Section 10.2 and
Section 10.3 shall extend to the partners, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Certain Limitations.
(a) Except as provided in paragraph (c) of this Section 10.5,
notwithstanding anything in this Agreement to the contrary, neither party shall
indemnify or otherwise be liable to the other party with respect to any claim
for any breach of a representation or warranty, or for the breach of any
covenant contained in Section 5 of this Agreement, (i) unless notice of the
claim is given within eighteen months after the Closing Date and (ii) except to
the extent the losses, obligations, liabilities, costs and expenses of such
party arising therefrom exceed in the aggregate Ten Thousand Dollars ($10,000).
(b) Notwithstanding anything in this Agreement to the contrary,
no indemnification shall be payable by HDA or by Buyer to any Claimant in
excess of Two Hundred Thousand Dollars ($200,000) in the aggregate, except with
respect to Sections 3.5, 3.3, 5.10, 6.12, 10.2(c), 10.2(d) and 10.2(f) or with
respect to the failure of Buyer to pay the Purchase Price.
(c) The limitations on indemnification set forth in paragraph (a)
of this Section 10.5 shall not apply to indemnification obligations of HDA
under Sections 10.2(c), 10.2(d) or 10.2(f).
10.6 Exclusivity of Remedy. Except as otherwise specifically provided
for in this Agreement, the provisions of this Section 10 shall be the sole
recourse of Buyer and HDA for any matters relating to or arising in connection
with this Agreement, and such recourse is explicitly limited to the amounts and
time limits set forth in Section 10.5.
SECTION 11. MISCELLANEOUS.
11.1 Fees and Expenses. HDA shall pay any filing fees, transfer taxes,
document stamps, or other charges levied by any governmental entity on account
of the transfer of the Stock from HDA to Buyer. Except as provided in Section
6.1(b) of this Agreement, Buyer and HDA shall each pay one-half of any fees
charged by the FCC in connection with obtaining the FCC Consent. Except as
otherwise specifically 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.
<PAGE> 28
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11.2 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be in writing and
shall be addressed as follows:
If to Buy: Paxson Communications
of San Juan, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attn: Mr. Lowell W. Paxson
with copies (which shall not John R. Feore, Jr., Esq.
constitute notice) to: Dow, Lohnes & Albertson
1200 New Hampshire Ave., N.W.
Suite 800
Washington, D.C. 20036
If to HDA: Housing Development
Associates S.E.
650 Munoz Rivera Avenue,
7th Floor
Hato Rey
Puerto Rico 00918
Attention: President
with a copy (which shall not W. Andrew Jack, Esq.
constitute notice) to: Covington & Burling
1201 Pennsylvania Avenue, N.W.
Washington, D.C. 20044-7566
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2. A notice mailed by registered or certified mail, postage prepaid and
return receipt requested, shall be deemed to have been duly delivered and
received on the date of receipt shown on the return receipt.
11.3 Benefit and Binding Effect. No party hereto may assign this
Agreement without the prior written consent of the other parties hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement to another entity without seeking or obtaining HDA's prior approval
provided, further, that Buyer shall guarantee such assignee's performance
hereunder. Upon any assignment by Buyer or permitted assignment by HDA in
accordance with this Section 11.3, all references to "Buyer" herein shall be
deemed to be references to Buyer's assignee and all references to "HDA" herein
shall be deemed to be references to HDA's assignee. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
<PAGE> 29
- 24 -
11.4 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement.
11.5 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).
11.6 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
11.7 Entire Agreement. This Agreement, the schedules hereto, the
First Purchase Agreement, the Shareholder Agreement, the Management Agreement,
and all documents, certificates, and other documents to be delivered or
previously delivered by the parties pursuant hereto or thereto (including the
Assumption Agreement and the Closing Agreement executed at the closing of the
First Purchase Agreement), collectively represent the entire understanding and
agreement between Buyer and HDA with respect to the subject matter of this
Agreement. 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 that is signed
by the party against which enforcement of any such amendment, supplement, or
modification is sought.
11.8 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.8.
11.9 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.10 Guaranty of PCC. In consideration of the execution and delivery
of this Agreement by HDA, Paxson Communications Corporation ("PCC") agrees as
follows:
<PAGE> 30
- 25 -
(a) PCC hereby guarantees the full, complete and timely
performance by Buyer of each and every obligation of Buyer under this
Agreement. If any default shall be made by Buyer in the performance of any of
such obligations, then PCC will itself perform or cause to be performed such
obligation upon receipt of notice from HDA specifying in summary form the
default;
(b) PCC waives presentment, protest, demand or action in
respect of any of the obligations of Buyer under this Agreement. PCC waives
all notices of nonperformance, notices of protest, notices of dishonor and
notices of acceptance of this guaranty; and
(c) this guaranty shall be deemed a continuing guaranty, and
the above consents and waivers of PCC shall remain in full force and effect
until the satisfaction in full of all obligations of Buyer under this
Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 31
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IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of Buyer and HDA as of the date first written above.
PAXSON COMMUNICATIONS OF SAN JUAN, INC.
By: /s/ William L. Watson
---------------------------------------
Name: William L. Watson
Title: Secretary
HOUSING DEVELOPMENT
ASSOCIATES S.E.
By: Equus Gaming Company L.P.,
its managing partner
By: Equus Management Company,
its managing general partner
By: /s/ Donald G. Blakeman
-------------------------------
Name: Donald G. Blakeman
Title: President
With respect to Section 11.10 only:
PAXSON COMMUNICATIONS CORPORATION
By: /s/ William L. Watson
----------------------------------------
Name: William L. Watson
Title: Assistant Secretary
<PAGE> 32
SCHEDULE 3.4
HDA CONSENTS
None.
<PAGE> 33
SCHEDULE 3.7
MORTGAGE
The mortgage set forth below on land in Cubuy, Canovanas, Puerto Rico
which land is described in Schedule 3.7 to the First Purchase Agreement and in
which the Company has a 17.96% ownership interest:
Mortgage in the principal sum of $170,000 in favor of bearer, created
as per Deed No. 43 executed on March 2, 1987 before Notary Public William A.
Power, duly recorded at page 248(r) of Canovanas, 14th inscription.
Mortgage in favor of bearer in the principal sum of $150,000 created
as per Deed No. 56 executed on May 31, 1989 before notary Public Sergio A.
Ramirez de Arellano, duly recorded at page 250 of book 98 of Canovanas, 17th
and last inscription.
<PAGE> 34
SCHEDULE 8.2(e)
OFFICERS AND DIRECTORS TO RESIGN
Directors
Donald G. Blakeman
Gretchen Gronau
Officers
Donald G. Blakeman Vice President
Gretchen Gronau Assistant Secretary
<PAGE> 35
EXHIBIT A
FORM OF ECOC AMENDMENT
<PAGE> 36
FIRST AMENDMENT TO AGREEMENT
This FIRST AMENDMENT TO AGREEMENT (the "Amendment") dated as of
_______________ 1996 by and among S&E Network, Inc. ("S&E"), Paxson
Communications Corporation ("Paxson") and El Comandante Operating Company,
Inc. ("Producer").
WITNESSETH:
WHEREAS, S&E and Producer entered into that certain Agreement dated
as of February 1, 1996 relating to certain television programming (the
"Agreement"), and
WHEREAS, S&E and Producer wish to amend the Agreement in certain
respects, including to provide for a guarantee by Paxson of S&E'S obligations
under the Agreement as amended,
NOW, THEREFORE, the parties hereto intending to be legally bound
hereby agree as follows:
1. Defined Terms. All capitalized terms not defined herein shall
have the meanings defined in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
(a) The second and third sentences of Section 2 of the
Agreement shall be deleted and the following shall be added in lieu thereof:
Until December 31, 2011, this rate per hour shall increase or decrease
annually consistent with the annual percentage changes in the Consumer Price
Index For Wage Earners 1967-100 issued and published by the Bureau of Labor
Statistics of the Commonwealth of Puerto Rico Department of Labor ("CPI").
After December 31, 2011 this rate per hour shall be the lower of (i) the
pre-December 31, 2011 rate with continued CPI adjustments, or (ii) lowest
current rate on the Stations for the same time period on other days of the week
on which the Programming is not broadcast. Hours after 7 p.m. shall be
available until (i) December 31, 2011, at the rate of Nine Hundred Dollars
($900) per hour adjusted annually by the percentage changes in CPI, and (ii)
after
<PAGE> 37
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December 31, 2011, at the lowest current rate on the Stations for the same
time period on other days of the week.
(b) The first two sentences of Section 4 of the Agreement
shall be deleted and the following shall be substituted in lieu thereof:
4. Term. The initial term of this Agreement shall commence on
February 1, 1996 and shall expire on December 31, 2001. The term shall be
automatically extended for successive five (5) year periods (each an "Extended
Term") unless Producer notifies S&E in writing of its intention not to renew
the term at least six (6) months prior to the expiration of the initial term
or any subsequent Extended Term.
(c) Section 5 of the Agreement shall be amended in its
entirety as follows:
5. Early Termination/Breach. In the event either party shall breach,
default or fail to perform any material term or condition of this Agreement
(other than as a result of a Force Majeure Event under Section 12), and shall
fail to cure the same within (5) days after receipt of written notice from the
aggrieved party, the aggrieved party, so long as it is not in breach or default
of this Agreement, may, in addition to any other remedies (except as otherwise
provided herein), elect to terminate this Agreement by written notice thereof
to the breaching party. In the event that S&E elects to terminate this
Agreement prior to expiration of the term (other than pursuant to the preceding
sentence of this Section 5 as a result of a breach, default or failure to
perform by Producer) or Producer terminates this Agreement pursuant to the
preceding sentence of this Section 5 as a result of a breach, default or
failure to perform by S&E, S&E shall pay Producer a termination fee in the
amount of Two Million Dollars ($2,000,000) adjusted annually by the annual
percentage change in CPI, the payment of which termination fee if Producer
elects to receive such fee, shall be the sole and exclusive remedy available to
Producer upon such termination.
3. Guaranty by Paxson. In consideration of the execution and
delivery of this Amendment by Producer, Paxson agrees as follows:
(a) Paxson hereby guarantees the full, complete and timely
performance by S&E of each and every obligation of S&E under the Agreement as
amended hereby. If any default shall be made by S&E in the performance of any
of such
<PAGE> 38
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obligation, then Paxson will itself perform or cause to be performed such
obligation upon receipt of notice from Producer specifying in summary form the
default;
(b) Paxson waives presentment, protest, demand or action in
respect of any of the obligations of S&E under the Agreement as amended hereby,
Paxson waives all notices of nonperformance, notices of protest, notices of
dishonor and notices of acceptance of this guaranty; and
(c) this guaranty shall be deemed a continuing guaranty, and
the above consents and waivers of Paxson shall remain in full force and effect
until the satisfaction in full of all obligations of S&E under the Agreement as
amended hereby.
4. Effect of Amendment. Except as amended hereby, all other terms of
the Agreement shall remain in full force and effect.
5. Counterparts. This Amendment 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 have executed this Agreement on the
date written above.
S & E NETWORK INC. EL COMANDANTE OPERATING CO. INC.
____________________ _____________________________________
PAXSON COMMUNICATIONS CORPORATION
_____________________________________
<PAGE> 39
EXHIBIT B
FORM OF STUDIO LEASE AGREEMENT
<PAGE> 40
SUB-LEASE AGREEMENT
THIS SUB-LEASE AGREEMENT (hereinafter referred to as the "Sub-Lease")
entered into this____ day of ____ by and between EL COMANDANTE OPERATING
COMPANY, INC., (hereinafter referred to as ("Sub-Lessor") and S&E NETWORK
INC., hereinafter referred to as "Tenant").
WITNESSETH:
In consideration of the mutual covenants and agreements herein
contained, Sub-Lessor and Tenant agree as follows:
1. FUNDAMENTAL SUB-LEASE PROVISIONS: The following fundamental sub-
lease provisions are hereinafter enumerated for convenience purposes: Each one
of these provisions must be construed together with all the other sections of
this Sub-Lease which cover the same subject.
In the event of any conflict between any Fundamental Sub-Lease
Provision and the balance of the Sub-Lease, the latter shall prevail.
Fundamental Sub-Lease Provisions:
(a) DATE OF COMMENCEMENT (Paragraph 3):
The closing date determined pursuant to Section 8 of the
Stock Purchase Agreement dated _____________ by and
between Housing Development Associates S.E. and Paxson
Communications of San Juan, Inc.
(b) SUB-LESSOR'S MAILING ADDRESS:
El Comandante Rack Track
Highway #3, Km 15.3
Canovanas, Puerto Rico 00729
(c) TENANT'S MAILING ADDRESS:
El Comandante Rack Track
Highway #3, Km 15.3
Canovanas, Puerto Rico 00729
(d) PREMISES (Paragraph 2):
El Comandante Race Track
Floor: Ground
Floor Area: Approximately 17,600 square feet of rentable
area shown in Exhibit "A"
(e) TERM (Paragraph 3): Five (5) years ("Original Term") plus
up to nine (9) successive five (5) year additional
periods (each an "Extended Term" and collectively the
"Term").
(f) BASIC RENT (Paragraph 4):
The Basic Rent will be $30,000 annually, with annual
percentage increases commencing January 1, 1998 in the
Consumer Price Index for Wage Earners (1967-100) issued
and published by the Bureau of Labor Statistics of the
Commonwealth of Puerto Rico's Department of Labor ("CPI")
over the CPI published for the end of the prior year
(i.e., the increase in Basic Rent commencing January 1,
1998 shall be equal to the percentage increase in the CPI
at December 31, 1997 over the CPI at December 31, 1996).
<PAGE> 41
(g) SECURITY DEPOSIT: None
(h) EXHIBITS: Exhibit "A" - Floor plan of Premises
(i) RENEWAL OPTION (Paragraph 14) AND CANCELLATION RIGHTS: The
term of this Sub-Lease shall be automatically extended for
successive five (5) year periods ("Extended Terms"), up to
a maximum of nine (9) Extended Terms, unless Tenant gives
Sub-Lessor written notice of its intention not to extend
no later than six (6) months prior to the expiration of
the Original Term or of any Extended Term of this
Sub-Lease. The terms and conditions during any Extended
Term shall be the same as the terms and conditions during
the Original Term.
(j) PARKING SPACES: The Tenant shall have a minimum of sixty
(60) parking spaces in the parking lot located at the rear
entrance to the Building.
2. BUILDING: Sub-Lessor is the lessor of a 257 acre of land located
at Km 15.3, Highway 3, Canovanas, Puerto Rico (the "Property"), which Property
contains various buildings and improvements, including a six-level building
used as a grand stand and clubhouse for horse racing operations and for
administrative and other racing support services (hereinafter referred to as
the "Building"). The Tenant will occupy the area of the Building described
above in Paragraph 1 (d) (the "Premises").
3. TERM: Sub-Lessor agrees to Sub-Lease to Tenant and Tenant agrees
to sub-lease from sub-lessor the Premises in the Building for the Term (as
defined in Paragraph 1 (e) hereof) commencing on the Date of Commencement (as
defined in Paragraph 1 (a) hereof), upon and subject to all of the terms and
conditions set forth in this Sub-Lease.
4. BASIC RENT: Tenant shall pay the Basic Rent (as defined in
Paragraph 1 (f) hereof) in lawful money of the United States of America in equal
monthly installments in advance without deduction of offset, on the first day
of each and every month during the Term, at the offices of Sub-Lessor, or at
such other place as Sub-Lessor may designate in writing.
5. ADDITIONAL RENT: The Tenant shall pay the following amounts on a
monthly basis as additional rent:
(a) Electricity costs incurred by Sub-Lessor as measured by
sub-meters for the Premises and billed by Sub-Lessor to
Tenant.
(b) Cost of guard security services requested by Tenant over
and above the guard services provided for the Sub-Lessor's
horse racing operations.
In addition, Tenant shall reimburse Sub-Lessor for any personal
property taxes assessed on Sub-Lessor for leasehold improvements on the
Premises. Tenant shall pay such taxes to the Sub-Lessor within five (5) days
after the Sub-Lessor notifies the Tenant the amount of taxes that are due and
payable by Sub-Lessor.
6. SERVICES TO BE FURNISHED BY SUB-LESSOR: Sub-Lessor agrees to
furnish Tenant:
a. Water and sewer services on a 24-hour basis
b. Electricity and air conditioning on a 24 hour basis.
2
<PAGE> 42
c. Janitorial and cleaning services: One person four hours a
day, five days a week, for the Premises, plus janitorial
and cleaning services for the common areas of the Building.
d. Guard security services to the extent provided by
Sub-Lessor for its horse racing operations.
e. Repair services which includes repair of parking areas,
maintenance of landscaping, structural repairs to exterior
and interior walls (other than Tenant's leasehold
improvements or damage caused by Tenant), exterior
foundations and roofs, plumbing by Tenant of the Building
and other similar maintenance services.
7. ALTERATIONS: Tenant shall make no alterations, decorations,
installations, additions or improvements in or to the Premises without
Sub-Lessor's prior written consent, and then only in accordance with plans and
specifications approved by Sub-Lessor, which approval shall not be unreasonably
withheld. All such work shall be done at Tenant's sole expense. All
alterations, decorations, installations, additions or improvements upon the
Premises, made by either party, shall, unless Sub-Lessor elects otherwise
(which election shall be made by giving notice pursuant to the provisions of
this Sub-Lease not less than ten (10) days prior to the expiration or other
termination of this Sub-Lease) become the property of Sub-Lessor, and shall
remain upon and be surrendered with the Premises, as part thereof, at the end
of the Term. In the event Sub-Lessor shall so elect, all such alterations,
decorations, installations, additions or improvements made by Tenant, except
those which Sub-Lessor may select, shall be removed by Tenant and Tenant shall
restore the Premises to their original condition at Tenant's sole cost and
expense prior to the expiration of the Term.
8. SIGNS AND ANTENNAS: Tenant shall be permitted to install a sign on
the entrance road to the building, which sign should not be larger than four
feet by eight feet without Sub-Lessor's written approval. In addition, Tenant
may place a sign not to exceed three feet by three feet near the rear entrance
of the Building where visitors of Tenant enter the Building. Tenant shall be
permitted to maintain on the roof of the Building the microwave and satellite
antennas currently located thereon together with any related wiring currently
located elsewhere in the Building. Tenant shall be permitted reasonable access
to the roof and other portions of the Building for purposes of maintaining or
replacing such antennas and wiring, provided that such access shall nor
interfere with the operations of Sub-Lessor. Tenant shall hold Sub-Lessor
harmless from (i) any damage to the Building or injury to any person arising
from Tenant's use of the Building permitted under this section, and (ii) any
liability arising from any damage to any of Tenant's property located outside
of the Premises.
9. USE: Sub-Lessor acknowledges and agrees that Tenant will be using
the Premises on a 24-hour basis. Tenant shall use the Premises only for
television broadcasting and related operations.
10. REQUIREMENTS OF LAW; INSURANCE REQUIREMENTS : Tenant, at its sole
expense, agrees that it shall comply with all applicable laws, orders and
regulations of federal, commonwealth or municipal authorities with respect to
the Premises or the use or occupation thereof. Tenant shall not do or permit
to be done any act or thing upon the Premises which will invalidate or be in
conflict with or increase the rate of any fire insurance policies covering the
Building, and shall not do, or permit of be done,
3
<PAGE> 43
any act or thing upon the Premises which shall or might subject Sub-Lessor to
any liability or responsibility for injury to any person or persons or to
property by reason of any business or operation being carried on upon the
Premises or for any other reason.
Tenant shall comply with all regulations of the National Board of Fire
Underwriters, or any other body now or hereafter exercising similar functions,
which may be applicable to the Premises or the Building or any part thereof,
and with the requirements of all policies of public liability, fire and all
other types of insurance at any time in force with respect to Premises or the
Building; and in any event, Tenant shall not keep or permit to be kept in or
about the Building any article of dangerous, inflammable or explosive character
which increases the danger of fire, or which would be deemed "hazardous" or
"extra hazardous" by any responsible insurance company. If by reason of the
failure of Tenant to comply with the provisions of this Paragraph, including,
but not limited to, the mere use to which Tenant puts the Premises, the fire
insurance rate shall at the beginning of this Sub-Lease or at any time
thereafter be higher than it otherwise would be, then without prejudice to
Sub-Lessor's exercise of all rights available to Sub-Lessor as a result of such
failure, Tenant shall reimburse Sub-Lessor as additional rent hereunder, for
that part of all fire insurance premiums thereafter paid by Sub-Lessor, which
shall have been charged because of such failure by Tenant.
11. ACCESS TO PREMISES: Tenant shall permit Sub-Lessor to erect, use
and maintain such pipes, conduits and wiring in and through the Premises as
Sub-Lessor may deem necessary or desirable. Sub-Lessor or Sub-Lessor's agents
shall have the right to enter the Premises during business hours to examine the
same, and shall be allowed to take all material into and upon the Premises that
may be required for the maintenance thereof without the same constituting an
eviction of Tenant in whole or in part, and the rent reserved shall in no way
abate while said maintenance is being accomplished.
12. TENANT'S INDEMNITY OBLIGATIONS: Tenant agrees to indemnify and
save Sub-Lessor harmless against and from all liabilities, obligations,
damages, penalties, claims, costs, charges and expenses, including without
limitation, reasonable attorney's fees, which may be imposed upon or incurred
by Sub-Lessor by reason of any of the following occurring during the term of
this Sub-Lease or any extension thereof: (i) any matter, cause or thing arising
out of Tenant's use, control or management of the Premises; (ii) any work or
thing done by Tenant or any of its employees or agents, in or about the
Premises or Building; (iii) any willful misconduct on the part of Tenant or any
of its employees or agents, (iv) any negligence on the part of Tenant or its
employees or agents, (v) any accident , injury or damage (including death)
occurring on or about the Property, the Premises or the Building where such
accident, damage or injury results or is claimed to have resulted from an act
or omission on the part of the Tenant or any of its employees or agents, and
(vi) any failure on the part of the Tenant to perform or comply with any of the
agreements, terms or conditions contained in this Sub-Lease on its part to be
performed or complied with. Sub-Lessor shall notify Tenant of any such claims
asserted against it and shall send to Tenant copies of all papers or legal
process served upon it in connection with any action or proceeding brought
against Sub-Lessor by reason of such claim. In case any such action or
proceeding is brought against Sub-Lessor, Tenant, upon written notice from
Sub-Lessor, shall, at Tenant's sole cost and expense, resist or defend such
action or proceeding by counsel approved by Sub-Lessor, and shall pay any
judgment or perform any decree resulting therefrom. Nothing contained in this
Paragraph shall be deemed to impose any obligation on Tenant for acts of
negligence or willful misconduct of Sub-Lessor or any of its agents or
employees acting on Sub-Lessor's behalf.
4
<PAGE> 44
Notwithstanding anything herein to the contrary, Tenant shall have the right to
self-insure its obligations hereunder;
Tenant covenants and agrees to maintain in companies authorized to do
business in Puerto Rico, acceptable to Sub-Lessor, liability insurance,
insuring Sub-Lessor and Tenant (as their interests may appear) against all
claims, demands or actions for injury to or death of any one person or persons
in one accident with a combined limit of Five Million Dollars ($5,000,000.)
applicable to bodily injury and property damage, made by or on behalf of any
person or persons, firm or corporation arising from, related to, or connected
with the conduct and operation of Tenant's business in the Premises, or caused
by actions of Tenant, its agents, servants, licensees, invitees,
concessionaires, employees or contractors. It is understood that said insurance
coverage shall be in form satisfactory to Sub-Lessor and shall provide that it
shall not be subject to cancellation, termination or change except after at
least thirty (30) days prior written notice to Sub-Lessor. The policy or
policies, or duly executed certificate of insurance for the same, shall be
delivered by Tenant to Sub-Lessor not less than ten (10) days prior to the
expiration of the term of such coverage. In the event Tenant fails to comply
with such requirements, Sub-Lessor may obtain such insurance and keep the same
in effect; and Tenant shall pay Sub-Lessor the premium cost thereof upon demand.
13. ASSIGNMENT AND SUBLETTING: Tenant shall not assign, transfer,
mortgage or otherwise encumber this Sub-Lease or any interest of Tenant hereon,
in whole or in part without first obtaining Sub-Lessor's written permission.
Tenant may not sublet the whole or any part of the Premises or permit the
Premises or any part thereof to be used or occupied by others, without
Sub-Lessor's written permission. In each instance in which Sub-Lessor's
permission is required, such permission shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant may, upon five (5) days prior written
notice to Sub-Lessor, (i) assign this Sub-Lease to any affiliate of Tenant, or
(ii) grant a collateral assignment of this Sub-Lease to any creditor of Tenant
or any affiliate of Tenant.
14. RENEWAL OPTION: The term of this Sub-Lease shall be automatically
extended for successive five (5) year periods not exceeding nine (9) such
periods unless Tenant gives Sub-Lessor written notice of its intention not
extend no later than six (6) months prior to the expiration of the Original
Term or of any Extended Term. The Basic and Additional Rent under any Extended
Term shall be determined on the same basis as amounts payable pursuant to the
terms and conditions of the Original Term.
15. END OF TERM: Upon the expiration or other termination of the Term
of this Sub-Lease, Tenant shall quit and surrender the Premises to Sub-Lessor,
broom clean, in good order and condition, ordinary wear and tear excepted; and
subject to the provisions of Paragraph 7 hereof, Tenant shall remove all of its
property form the Premises prior to such expiration or other termination.
16. HOLDOVER: In the event Tenant remains in possession of the
Premises after the expiration of the tenancy created hereunder and without the
execution of a new agreement, Tenant, at the option of Sub-Lessor, shall be
deemed to be occupying said Premises as a Tenant from month to month at 150% of
the monthly installment of Basic Rent last paid plus 100% of all additional
rents and charges provided herein, subject to all other conditions, provisions
and obligations of this Sub-Lease insofar as the same are applicable to a
month-to-month tenancy.
17. TENANTS DEFAULTS; REMEDIES:
17.A DEFAULTS: The occurrence of any one or more of the
following events shall constitute a default and breach of this Sub-Lease by
Tenant:
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(1) The vacating or abandonment of the
Premises prior to the expiration of the Term;
for a period in excess of twenty (20)
consecutive days.
(2) The failure by Tenant to make any
payment of rent or any other payment required
to be made by Tenant hereunder, as and when
required and such failure shall continue for a
period of ten (10) days after receipt by Tenant
of written notice thereof from Sub-Lessor to
Tenant;
(3) The failure by Tenant to observe or
perform any of the agreements, convenants,
conditions or other provisions of this Sub-Lease
to be observed or performed by Tenant, other
than described in Paragraph (2) above, where such
failure shall continue for a period of thirty
(30) days after receipt by Tenant of written
notice thereof from Sub-Lessor to Tenant;
17.B REMEDIES: In the event of any such default or breach by
Tenant, Sub-Lessor may at any time thereafter, with or without notice or demand
and without limiting Sub-Lessor in the exercise of any right or remedy which
Sub-Lessor may have by reason of such default or breach:
(1) Terminate Tenant's right to possession
of the Premises by any lawful means, in which
case this Sub-Lease shall terminate and Tenant
shall immediately surrender possession of the
Premises to Sub-Lessor. In such event Sub-Lessor
shall be entitled to recover from Tenant all
damages incurred by Sub-Lessor by reason of
Tenant's default, including, but not limited to,
the cost of recovering possession of the
Premises; and Sub-Lessor may relet the Premises
or any part or parts thereof, either in the name
of the Sub-Lessor or otherwise, for a term or
terms which may at Sub-Lessor's option be less
than or exceed the period which would have
otherwise constituted the balance of the term of
this Sub-Lease and may grant concessions or free
rent; and Tenant shall also pay Sub-Lessor as
liquidated damages for the failure of Tenant to
observe and perform the terms, agreements and
covenants herein contained, any deficiency
between the Basic Rent and additional rent herein
agreed to be paid by Tenant and the net amount,
if any, of the rents collected on account of any
new Sub-Lease or Sub-Leases of the Premises for
each monthly period which would otherwise have
constituted the balance of the term of this
Sub-Lease. This provision and all other
pertinent provisions of this Sub-Lease shall
survive the termination of this Sub-Lease.
Unpaid installments of rent or other sums shall
bear interest at the prevailing market rates.
Notwithstanding anything to the contrary herein,
Tenant shall not be in default if its failure to
make a payment of the full amount of the rent is
due to Sub-Lessor's failure to provide a written
notice of any change in the rent or any other
amount that is due and payable under this
Sub-Lease, it being understood that this
provision does not apply to the payment of the
rent due under this Sub-Lease once it has been
established for any given year during the term of
this Sub-Lease.
(2) Maintain Tenant's right to possession
in which case this Sub-Lease shall continue in
effect whether or nor Tenant shall have
abandoned the Premises. In such event Sub-Lessor
shall be entitled to enforce all of Sub-Lessor's
rights and remedies under this Sub-Lease,
including, without limitation, the right to
recover the rent as it becomes due hereunder.
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(3) Pursue any other remedy now or hereafter
available to Sub-Lessor under the laws of the
Commonwealth of Puerto Rico.
18. DESTRUCTION OF PREMISES: If the Premises shall be partially
damaged by fire or other cause, unless caused by Tenant's, or any of Tenant's
agents, employees' or invitees', negligence or willful misconduct, the damages
shall be repaired promptly by Sub-Lessor and there shall be an abatement of
rent and other charges proportionate to the amount of square feet of damaged
floor space. Said abatement shall continue until Sub-Lessor restores the
damaged areas to the condition they were in prior to the damage. No penalty
shall accrue for delays which may arise by reason of adjustment of insurance by
Sub-Lessor or for reasonable delays for any cause beyond Sub-Lessor's control.
If the Premises are rendered wholly untenantable by fire or other cause, and if
Sub-Lessor shall decide not to restore or rebuild the same, or if the Building
be so damaged that Sub-Lessor shall decide to demolish it or to rebuild it with
substantial modifications, then or in any such event Sub-Lessor may, within
thirty (30) days after such fire or other cause, give Tenant notice in writing
of such decision and thereupon the term of this Sub-Lease shall expire. Upon
the termination of this Sub-Lease under the conditions provided for in the
sentence immediately preceding, Tenant's liability for rent shall cease accruing
as of the day following the casualty.
19. PROPERTY-LOSS OR DAMAGE: Sub-Lessor and its agents shall not be
liable for any damage to property of Tenant by theft, riot, civil disorder or
strike, sabotage, pollution, hurricane, storm, earthquake or otherwise.
Sub-Lessor and its agents shall not be liable for any injury or damage to
property or to Tenant or any person resulting from fire, electricity, water,
rain or leaks from any part of the Building or from the pipes, appliances or
plumbing works or from the roof, street, or sub-surface or from any other place
or by dampness or by any other cause of whatsoever nature, unless caused by the
negligence of the Sub-Lessor, its agents or employees; Tenant shall give
immediate oral and written notice to Sub-Lessor in case of fire or accident in
the Premises or Building or of any defect therein or in any fixture or
equipment.
20. QUIET ENJOYMENT: Sub-Lessor covenants and agrees with Tenant that
upon Tenant paying the rent and additional rent and observing and performing all
the terms, covenants and conditions on Tenant's part to be observed and
performed under this Sub-Lease, Tenant may peaceably and quietly enjoy the
Premises, subject nevertheless to the terms and conditions of this Sub-Lease
and including the underlying lease and mortgages to which the Building is now
or may hereafter be subject.
21. NO OTHER REPRESENTATIONS BY SUB-LESSOR: Tenant acknowledges and
warrants to Sub-Lessor that neither Sub-Lessor or Sub-Lessor's agents have
made any representations or promises with respect to this Sub-Lease, the
Building or the Premises except as herein set forth.
22. SUBORDINATION: The Sub-Lessor leases the Building from Housing
Development Associates S.E. ("HDA") pursuant to an Amended and Restated Lease
Agreement dated December 15, 1993, as amended (the "Lease"). This Sub-Lease is
subject and subordinate to the Lease and to all mortgages which are now placed
on or affect the Building or modifications, consolidations or extensions
thereof prior to or subsequent to the execution of this Sub-Lease. Tenant,
after receiving written notice from HDA or from any person that holds a
mortgage on the Building, agrees that for so long as the Lease or mortgage
exists to give to the mortgagee or HDA the same notices as are required to be
given Sub-Lessor hereunder. Notwithstanding any provisions of this Paragraph
to the contrary, if any mortgagee shall elect to have this Sub-Lease subordinate
to the lien of its mortgage, and shall give written
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notice thereof at any rime to Tenant, this Sub-Lease shall be deemed subordinate
to such mortgage, whether this Sub-Lease is dated prior or subsequent to the
date of said mortgage. Tenant agrees to execute any documents required to
effectuate such subordination.
Tenant shall in the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under any
mortgage made by HDA covering the Premises, attorn to the purchaser upon any
such foreclosure or sale and recognize such purchaser as the Sub-Lessor under
this Sub-Lease.
23. DEFAULT BY SUB-LESSOR: Sub-Lessor shall not be in default in the
performance of any covenant, obligation or agreement to be performed by
Sub-Lessor under this Sub-Lease unless Sub-Lessor fails to perform an
obligation required of Sub-Lessor within a reasonable time, but in no event
later than thirty (30) days after written notice by Tenant to Sub-Lessor and to
the holder of any mortgage covering the Building whose name and address shall
have there-to-fore been furnished to Tenant in writing specifying where
Sub-Lessor has failed to perform such obligation; provided, however, that if
the nature of Sub-Lessor's obligation is such that more than thirty (30) days
are required for performance, Sub-Lessor shall not be in default if Sub-Lessor
commences performance of such obligation within such thirty (30) days period
and thereafter diligently prosecutes the same to completion.
24. ATTORNEY'S FEES: If Sub-Lessor or Tenant litigate any provision of
this Sub-Lease or the subject matter of this Sub-Lease, the unsuccessful
litigant shall pay to the successful litigant all costs and expenses, including
attorney's fees and court costs, incurred by the successful litigant at trial
and/or on appeal.
25. NOTICES: All notices or communications which Sub-Lessor may desire
or be required to give to Tenant, shall be deemed sufficiently given or
rendered if delivered to Tenant personally or sent by registered or certified
mail addressed to Tenant at Tenant's Mailing Address or at such other address
as Tenant may designate by written notice from time to time, and the time of
the giving of such notice or communication shall be deemed to be the time when
the same is delivered to Tenant or mailed, as the case may be and sent by
registered mail addressed to the Tenant. Any notice by Tenant to Sub-Lessor
must be served by registered or certified mail addressed to Sub-Lessor at Sub-
Lessor's mailing address or at such other address as Sub-Lessor nay designate
by written notice from time to time.
26. NO WAIVER: The failure of Sub-Lessor to seek redress for violation
of or to insist upon the strict performance of any covenant, agreement or
condition of this Sub-Lease, or any of the rules and regulations which may from
time to time be prescribed by Sub-Lessor, shall not prevent a subsequent act
which would have originally constituted a violation from having all the force
and effect of an original violation. The receipt by Sub-Lessor of rent with
knowledge of the breach of any covenant or agreement of this Sub-Lease shall
not be deemed a waiver of such breach. No payment by Tenant or receipt by
Sub-Lessor of a lesser amount than the Basic Rent herein stipulated and
additional rent and other charges due hereunder shall be deemed to be other
than on account of the earliest stipulated rent or additional rent or other
charge due hereunder, nor shall any endorsement or statement on any check or
letter accompanying any check or payment as rent or additional rent or other
charge be deemed an accord and satisfaction, and Sub-Lessor may accept such
check or payment without prejudice to Sub-Lessor's right to recover the balance
of such rent or other charge or pursue any other remedy available under this
Sub-Lease.
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27. CUMULATIVE REMEDIES: Each right and remedy of Sub-Lessor provided
in this Sub-Lease shall be cumulative and shall be in addition to every other
right or remedy now or hereafter existing at law or by statute or otherwise,
and the exercise or beginning of the exercise by Sub-Lessor of any one or more
of the rights or remedies provided in this Sub-Lease or now or hereafter
existing at law or by statute or otherwise shall not preclude the simultaneous
or later exercise by Sub-Lessor of any or all other rights or remedies provided
for in this Sub-Lease or now or hereafter existing at law or by statute or
otherwise.
28. INVALIDITY OF PARTICULAR PROVISIONS: If any provisions of this
Sub-Lease are null, void, unenforceable or unconstitutional in any respect, the
other provisions of this Sub-Lease shall be so harmonized as to properly
ascertain the intent of the contracting parties and shall remain in full force
and effect.
29. MODIFICATION OF SUB-LEASE: No modification, amendment or waiver of
any provision of this Sub-Lease, nor consent to any departure by the Tenant
therefrom, shall be effective unless the same shall be in writing and signed by
Tenant and Sub-Lessor and consented to by HDA.
30. PARAGRAPH HEADINGS: The paragraph headings through this Sub-Lease
are for convenience and reference only, and the words contained therein shall
in no way be held or construed to explain, modify, limit, amplify, or otherwise
aid in the interpretation, construction or meaning of the provisions of this
Sub-Lease.
31. ENTIRE AGREEMENT: Each of the parties acknowledges that it has not
relied on any agreements or commitments by the other party with respect to the
subject matter hereof except the agreements and commitments specifically set
forth herein. This Sub-Lease supersedes and nullifies all prior understanding
and agreements and sets forth the entire agreement of the parties with respect
to the subject matter hereof.
32. BINDING EFFECT; CHOICE OF LAW: Subject to the provisions hereof
restricting assignment or subletting by Tenant, this Sub-Lease shall bind the
parties and their respective heirs, personal representatives, successors and
assigns. This Sub-Lease shall be governed by the laws of the Commonwealth of
Puerto Rico.
THIS IS THE SUB-LEASE that the appearing parties hereby execute in the
respective capacity that each appear hereunder, and they hereby ratify this
instrument in all its parts and bind themselves to stand for all the terms
therein contained at all times under the legal responsibilities arising
therefrom according to law, and thus the appearing parties hereby accept this
instrument in all its parts, as drafted, being all well informed of its
contents, and they do hereby consent to the execution of this Sub-Lease.
IN WITNESS WHEREOF, the parties have executed this Sub-Lease at
Canovanas, Puerto Rico, on __________________________.
SUB-LESSOR: TENANT:
EL COMANDANTE OPERATING COMPANY, INC. S & E NETWORK INC.
BY:_____________________________ BY:_______________________
Name: Name:
Title: Title:
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HDA hereby consents to this Sub-Lease Agreement. In the event that this Lease is
terminated HDA shall be substituted for Sub-Lessor as the lessor hereunder and
shall honor this Sub-Lease in accordance with its terms.
HOUSING DEVELOPMENT ASSOCIATES S.E.
BY:
-------------------------------
Name:
Title:
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EXHIBIT A
BLUEPRINT OF TELENET MASTER CONTROL
<PAGE> 1
EXHIBIT 10.141
ASSET PURCHASE AGREEMENT
DATED AS OF NOVEMBER 21,1996
BY AND AMONG
VALUEVISION INTERNATIONAL, INC.;
VVI MANASSAS, INC.; WVVI(TV), INC.;
PAXSON COMMUNICATIONS OF WASHINGTON-66, INC.;
AND
PAXSON COMMUNICATIONS CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C> <C>
SECTION 1 CERTAIN DEFINITIONS........................................................ 1
1.1 Terms Defined in this Section ............................................. 1
1.2 Terms Defined Elsewhere in this Agreement ................................. 4
SECTION 2 PURCHASE AND SALE OF ASSETS............................................... 6
2.1 Agreement to Sell and Buy ................................................. 6
2.2 Excluded Assets ........................................................... 7
2.3 Purchase Price and Purchase Price Adjustment .............................. 8
2.4 Working Capital Credits and Payment ....................................... 9
(a) Prorations ............................................................ 9
(b) Expenses and Revenues Not Proprorated ................................. 9
(c) Manner of Determining Prorations ...................................... 10
(d) Payments at Closing With Respect to Working Capital Credits ........... 10
(e) Payments to Reflect Final Determination of Working Capital Credits .... 11
2.5 Assummption of Liabilities and Obligations ................................ 11
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS AND
VALUEVISION................................................................ 12
3.1 Organization, Standing and Authority ...................................... 12
3.2 Authorization and Binding Obligation ...................................... 12
3.3 Absence of Conflicting Agreements ......................................... 12
3.4 Governmental .............................................................. 13
3.5 Real Property ............................................................. 13
3.6 Tangible Personal Property ................................................ 13
3.7 Contracts ................................................................. 13
3.8 Consents .................................................................. 14
3.9 Intangibles ............................................................... 14
3.10 Financial Statements ...................................................... 14
3.11 Insurance ................................................................. 14
3.12 Reports ................................................................... 14
3.13 Labor Relations ........................................................... 14
3.14 Taxes ..................................................................... 14
3.15 Claims and Legal Actions .................................................. 15
3.16 Compliance with Licenses .................................................. 15
3.17 Conduct of Business in Ordinary Course .................................... 15
3.18 Transactions with Affiliates .............................................. 15
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<TABLE>
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3.19 No Broker ................................................................. 15
3.20 Accredited Investor Investment Knowledge; Distribution .................... 15
3.21 Disclaimer Warranties ..................................................... 16
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER AND PCC............................ 16
4.1 Organization Standing, and Authority ...................................... 16
4.2 Authorization and Binding Obligation ...................................... 16
4.3 Absence of Conflict Agreements ............................................ 16
4.4 Licensee Qualifications ................................................... 17
4.5 No Broker ................................................................. 17
4.6 Acknowledgment of "As-Is-Where-Is" Sale ................................... 17
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING................................. 18
5.1 Generally ................................................................. 18
5.2 Contracts ................................................................. 18
5.3 Disposition of Assets ..................................................... 18
5.4 Encumbrances .............................................................. 18
5.5 Licenses .................................................................. 18
5.6 Obligations ............................................................... 18
5.7 Exclusivity ............................................................... 19
5.8 Access to Information ..................................................... 19
5.9 Maintenance of Asssets .................................................... 20
5.10 Insurance ................................................................. 20
5.11 Consents .................................................................. 20
5.12 Books and Records ......................................................... 20
5.13 Notification .............................................................. 20
5.14 Financial Information ..................................................... 20
5.15 Compliance with Laws ...................................................... 20
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS ............................................ 21
6.1 FCC Consent ............................................................... 21
6.2 Control of the Station .................................................... 21
6.3 Risk of Loss .............................................................. 21
6.4 Confidentiality ........................................................... 22
6.5 Cooperation ............................................................... 22
6.6 Access to Books and Records ............................................... 22
6.7 [Intentionally omitted] ................................................... 22
6.8 HSR Act Filling ........................................................... 22
6.9 Title to Real Property .................................................... 23
6.10 Environmental Survey ...................................................... 24
6.11 Engineering Study ......................................................... 24
6.12 Sales Tax Fillings ........................................................ 25
6.13 Accounts Receivable ....................................................... 25
</TABLE>
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<TABLE>
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(a) Collection ............................................................ 25
(b) Payments to Value Vision .............................................. 25
(c) Further Obligations ................................................... 25
6.14 No Inconsistent Action .................................................... 25
6.15 CTN Lease ................................................................. 26
6.16 Acquisition of Transmitter Site and Relocation of Studio .................. 26
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT
CLOSING.................................................................... 26
7.1 Conditions to Obligations of Buyer......................................... 26
(a) FCC Consent ........................................................... 26
(b) [Intentionally omitted ................................................ 26
(c) HSR Act ............................................................... 26
(d) Deliveries ............................................................ 26
(e) Station ............................................................... 26
7.2 Conditions to Obligations of Buyers of Sellers............................... 26
(a) Representations and Warranties ........................................ 26
(b) Covenants and Conditions .............................................. 27
(c) Deliveries ............................................................ 27
(d) FCC Consent ........................................................... 27
(e) HSR Act ............................................................... 27
(f) Judgments ............................................................. 27
SECTION 8 CLOSING AND CLOSING DELIVERIES............................................. 27
8.1 Closing ................................................................... 27
(a) Closing Date .......................................................... 27
(b) Closing Place ......................................................... 28
8.2 Deliveries by Sellers...................................................... 28
(a) Deeds ................................................................. 28
(b) Other Conveyancing Documents .......................................... 28
(c) Working Capital Payment ............................................... 28
(d) Estoppel Certificates and Lessor's Consents ........................... 28
(e) Consents .............................................................. 28
(f) Certificate ........................................................... 28
(g) Licenses, Contracts, Business Records, Etc ............................ 28
8.3 Deliveries by Buyer and PCC................................................ 29
(a) Purchase Price ........................................................ 29
(b) Working Capital Payment ............................................... 29
(c) Assumption Agreements ................................................. 29
(d) Certificate ........................................................... 29
SECTION 9 TERMINATION................................................................ 29
9.1 Termination by Sellers and Value Vision.................................... 29
(a) Conditions ............................................................ 29
</TABLE>
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(b) Judgments ............................................................. 29
(c) Upset Date ............................................................ 29
(d) Breach ................................................................ 29
9.2 Termination by Buyer and PCC............................................... 30
(a) Title Defects ......................................................... 30
(b) Environmental Hazards ................................................. 30
(c) Technical Deficiencies ................................................ 30
(d) Material Contracts .................................................... 30
9.3 Escrow Deposit ............................................................ 30
9.4 Rights on Termination ..................................................... 31
9.5 Specific Performance ...................................................... 31
9.6 No Special Damages ........................................................ 32
SECTION 10 INDEMNIFICATION............................................................ 32
10.1 Indemnification by Sellers and ValueVision ................................ 32
10.2 Indemnification by Buyer and PCC .......................................... 32
10.3 Procedure for Indemnification ............................................. 33
SECTION 11 [Intentionally omitted].................................................... 33
SECTION 12 MISCELLANEOUS.............................................................. 34
12.1 Fees and Expenses ......................................................... 34
12.2 Notices ................................................................... 34
12.3 Arbitration ............................................................... 35
12.4 Benefit and Binding Effect ................................................ 35
12.5 Further Assurances ........................................................ 36
12.6 GOVERNING LAW ............................................................. 36
12.7 Headings .................................................................. 36
12.8 Gender and Number ......................................................... 36
12.9 Entire Agreement .......................................................... 36
12.10 Waiver Compliance; Consents ............................................... 36
12.11 Counterparts .............................................................. 36
ADDENDUM I Registration Rights Provisions
</TABLE>
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of November 21, 1996, by and
among VVI MANASSAS, INC., a Minnesota corporation("VVI Manassas"); WVVI(TV),
INC., a Virginia corporation ("WVVI"); VALUEVISION INTERNATIONAL INC., a
Minnesota corporation ("Value Vision"); PAXSON COMMUNICATIONS OF WASHINGTON-66,
INC., a Florida corporation ("Buyer"); and PAXSON COMMUNICATIONS CORPORATION, a
Delaware corporation ("PCC").
PRELIMINARY STATEMENT
WHEREAS, WVVI is the licensee of television station WVVI in Manassas,
Virginia (the "Station") pursuant to licenses issued by the Federal
Communications Commission (the "FCC") and the owner of certain assets used in
the operation of the Station; and
WHEREAS, VVI Manassas is the owner of all of the outstanding capital
stock of WVVI and certain assets used in the operation of the Station; and
WHEREAS, VVI Manassas and WVVI desire to sell the assets used or held
for use in the operation of the Station to Buyer, and Buyer desires to purchase
such assets from VVI Manassas and WVVI, for the consideration and on the terms
and conditions herein provided; and
WHEREAS, each of VVI Manassas and WVVI is sometimes hereinafter
referred to as a "Seller," and together they are hereinafter sometimes referred
to as "Sellers."
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, the parties hereto, intending to be
bound legally, agree as follows:
SECTION 1 CERTAIN DEFINITIONS.
1.1 Terms Defined in this Section. The following terms, as used
in this Agreement, shall have the meanings set forth in this Section:
"Affiliate' means "affiliate" as defined in Rule 12b-2 promulgated
under the Exchange Act.
"Affirmative Decision" means either: (a) a ruling by the Supreme Court
in the Turner v. FCC case that affirms in whole (not in part) without remand
for further determination of any issues, eq # the decision of the United States
District Court in Turner v. FCC or (b) a ruling by the Supreme Court in the
Turner v. FCC case that affirms the constitutionality of Section 4 of the Cable
Television Consumer Protection and Competition Act of 1992 as applied to any
class or category of television stations that is finally determined to include
the Station.
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<PAGE> 7
"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 (a) all Material Contracts, (b) any other
Contract fisted on Schedule 3.7 with respect to which Sellers are able to
obtain and deliver to Buyer at or prior to the Closing any Consent required for
the assignment of such Contract to Buyer, (c) contracts entered into prior to
the date of this Agreement with advertisers for the sale of advertising time or
production services for cash at rates consistent with past practices, (d) any
Contracts entered into by any Seller between the date of this Agreement and the
Closing Date that Buyer agrees in writing to assume, and (e) other contracts
entered into by any Seller between the date of this Agreement and the Closing
Date in compliance with Section 5.2.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"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,
including consents to the assignment of the Assumed Contracts.
"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 any Seller is a party or that are binding upon
any Seller and that relate to or affect the Assets or the business or
operations of the Station, and (a) that are in effect on the date of this
Agreement or (b) that are entered into by any Seller between the date of this
Agreement and the Closing Date.
"CTN" means Capital Television Network, Inc., a Virginia corporation.
"Effective Time" means 12:01 a.m., Eastern time, on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement to be entered into among
Buyer, ValueVision, and the Escrow Agent in accordance with Section 9.3.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
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<PAGE> 8
"Excluded Assets" means the assets described in Section 2.2(a) through
(k) of this Agreement.
"FCC Consent" means action or actions by the FCC granting its consent
to the assignment of all the FCC Licenses to Buyer as contemplated by this
Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Sellers in
connection with the existing or currently authorized business or operations of
the Station.
"Final Decision" means (a) a decision by the United States Supreme Court
from which no further rehearing, remand, stay, injunction or other judicial
proceedings are required or may be taken, or (b) a decision by a lower federal
court, after remand from the United States Supreme Court, from which no further
appeal, writ of certiorari, rehearing, remand, stay, injunction or other
judicial proceedings are required or may be taken.
"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 any Seller or under which any Seller is licensed or franchised and that are
used or useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, construction permits, and
other authorizations issued by the FCC, the Federal Aviation Administration, or
any other federal, state, or local governmental authorities to any Seller,
currently in effect and used 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.
"Material Contracts" means those Assumed Contracts that are designated
on Schedule 3.7 as "Material Contracts."
"NCCB" means National Capital Christian Broadcasting Inc., a Virginia
corporation.
"PCC Common Stock" means fully paid, non-assessable shares of the
Class A Common Stock, $0. 00 I par value, of PCC, which shares shall not be
registered under the Securities Act
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<PAGE> 9
when issued, but shall be subject to the registration rights set forth in
Addendum I to this Agreement.
"Permitted Encumbrances" means (a) liens for current taxes not yet due
and payable, (b) easements, covenants, conditions, and restrictions that are
disclosed on Schedule 3.5, (c) other easements, covenants, conditions, and
restrictions of record that affect any Real Property Interest and do not have a
material adverse effect on the use of such Real Property Interest in the
conduct of the business of the Station or materially detract from the value of
such Real Property Interest in the conduct of the business of the Station, and
(d) other Title Defects that constitute Permitted Encumbrances pursuant to
Section 6.9(c).
"Person" means an individual, corporation, association, partnership,
joint venture, joint stock company, trust, estate, limited liability company,
limited liability partnership, governmental entity, or other entity or
organization.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property, and all buildings and other
improvements thereon, whether or not owned or held by any Seller, used or
useful in the business or operations of the Station, subject to the provisions
of Section 6.16 of this Agreement.
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and sublease holds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, owned or held by any Seller that are used or useful
in the business or operations of the Station, subject to the provisions of
Section 6.16 of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property owned or held by
any Seller that is used or useful in the conduct of the business or operations
of the Station, together with any additions thereto between the date of this
Agreement and the Closing Date.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of
this Agreement, the following terms have the meanings set forth in the Sections
indicated:
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<PAGE> 10
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Adjustment Factor Section 2.3(c)
Buyer Preliminary Statement
Buyer's Working Capital Credits Section 2.4(a)
Claimant Section 10.3(a)
Collection Period Section 6.13 (a)
Contingent Cash Payment Section 2.3(a)
CTN Lease Section 6.15
DOJ Section 6.8
Environmental Hazard Section 6.1O(b)
FCC Preliminary Statement
Financial Statements Section 3.10
FTC Section 6.8
In A Material Way Section 8.2(f)
Indemnifying Party Section 10.3
Law Engineering Phase I Report Section 6.1O(a)
Non-Discretionary Carriage Decision Section 2.3(c)
Non-Discretionary Carriage Homes Section 2.3(c)
PCC Preliminary Statement
PCC Stock Consideration Section 2.3 (a)
Seller Preliminary Statement
Sellers' Working Capital Credits Section 2.4(a)
Station Preliminary Statement
Stations' Receivables Section 6.13(a)
Technical Deficiency Section 6.11 (a)
Title Defect Section 6.9(b)
Transmitter Site Section 6.16
Turner v. FCC Section 2.3 (a)
Value Vision Preliminary Statement
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C>
VVI Manassas Preliminary Statement
Working Capital Credits Section 2.4(a)
WVVI Preliminary Statement
</TABLE>
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, Sellers hereby agree to sell, transfer,
convey, assign, and deliver to Buyer on the Closing Date (and ValueVision
agrees to cause each other Seller to sell, transfer, convey, assign, and
deliver to Buyer on the Closing Date), and Buyer agrees to purchase, all of
each Seller's right, title, and interest in 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, covenants, easements, restrictions,
encroachments, leases, or encumbrances of any nature (except for Permitted
Encumbrances), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of any Seller relating
to the, operation of the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of each Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) All chosen in action of any Seller relating to the ownership or
operations of the Station to the extent they relate to the period after the
Effective Time; and
(h) Copies of 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:
(a) [Intentionally omitted.]
(b) Any Seller's cash on hand as of the Closing and any Seller's
interest in its bank accounts;
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<PAGE> 12
(c) Any insurance policies, promissory notes, amounts due from
employees, bonds, letters of credit, certificates of deposit, other similar
items, or deposits or prepaid items (except to the extent that Sellers receive
a Working Capital Credit for any such deposit or prepaid item pursuant to
Section 2.4(a)), and any cash surrender value in regard thereto;
(d) Any pension, profit-sharing, or employee benefit plans, including
any Seller's interest in any welfare plan, pension plan, or benefit
arrangement;
(e) Any collective bargaining agreements;
(f All tax returns and supporting materials, all original financial
statements and supporting materials, all books and records that any Seller is
required by law to retain, and all records of any Seller relating to the sale
of the Assets;
(g) Any interest in and to any refunds of federal, state, or local
franchise, income, or other taxes for periods prior to the Closing Date;
(h) All accounts receivable of Sellers as of the Closing Date and any
intercompany accounts between the Sellers or any Affiliates thereof,
(i) Any claim or cause of action by any Seller relating to the period
before the Effective Time, including all claims arising under the purchase
agreement pursuant to which WI Manassas purchased the Station and any right to
any funds deposited in the escrow account established pursuant to that certain
Indemnity Escrow Agreement dated as of March 28, 1994, by and among WI
Manassas, NCCB, and Norwest Bank Minnesota, N.A.; and
(j) The property and equipment obtained by Sellers and their
Affiliates pursuant to that certain Agreement and Mutual Release with NCCB,
CTN, Lester R. Raker, and others entered into on or about April 11, 1996; and
(k) Any Real Property or Real Property Interest constituting the
current studio site utilized by the Station located at 9008 Center Street,
Manassas, Virginia 22110, or any proceeds of the foregoing, if Sellers shall
exercise their right pursuant to Section 6.16 of this Agreement to discontinue
use of such studio and relocate a similar studio to the Transmitter Site at no
cost or expense to Buyer; provided, however, that in the event Sellers exercise
such right pursuant to Section 6.16 and the studio shall not have been
relocated to the Transmitter Site prior to the Closing Date, Buyer shall have
the right, without payment of additional consideration to Sellers, to use the
current studio site until such studio shall have been relocated to the
Transmitter Site.
2.3 Purchase Price and Purchase Price Adjustment.
(a) Subject to Sections 2.3(b) and (c) hereof, the purchase price for
the Assets (the "Purchase Price") shall be Forty Million Dollars ($40,000,000),
payable as follows at Closing or as otherwise provided: (i) Twenty Million
Dollars ($20,000,000) in cash by wire transfer of immediately available funds,
plus (ii) a fixed number of shares of PCC Common Stock (the "PCC Stock
Consideration") equal to (x) Ten Million Dollars ($ 1 0,000,000) divided by (y)
the arithmetic average of the closing prices per share of PCC Common Stock as
reported on the American Stock Exchange for the sixty (60) consecutive trading
days commencing on the first
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<PAGE> 13
trading day following the date of execution of this Agreement, plus (iii) a
contingent payment (the "Contingent Cash Payment"), equal to Ten Million
Dollars ($10,000,000), payable in the event of an Affirmative Decision in the
case of Turner Broadcasting Systems. Inc. v. FCC, No. 95-922 ("Turner v. FCC")
on the later to occur of (x) the Closing Date and (y) thirty (30) days after
any Final Decision that constitutes an Affirmative Decision.
(b) Notwithstanding Section 2.3(a) hereof, in the event that there is
any ruling by the United States Supreme Court in Turner v. FCC which is not an
Affirmative Decision, then the aggregate Purchase Price set forth in Section
2.3(a) hereof payable to Sellers shall be reduced to Thirty Million Dollars
($30,000,000), such adjustment to be effected as follows: (i) If the adjustment
required to be made to the Purchase Price arises on or before the Closing Date,
then Sellers may elect to adjust the Purchase Price by (x) terminating PCC's
obligation to issue the PCC Stock Consideration and electing that the
Contingent Cash Payment be made at Closing or (y) terminating Buyer's
obligation to make the Contingent Cash Payment, or (ii) if the adjustment
required to be made to the Purchase Price arises after the Closing, then,
within thirty (30) days after such decision, Sellers may elect to adjust the
Purchase Price by (x) returning all of the shares of PCC Stock Consideration
issued to Sellers at Closing upon the payment by Buyer to Sellers of the
Contingent Cash Payment or (y) terminating the Buyer's obligation to make the
Contingent Cash Payment. An election by Sellers to receive the Contingent Cash
Payment or PCC Stock Consideration under this Section 2.3(b) shall be
irrevocable once made, and any adjustment to the Purchase Price shall be made
solely pursuant to Section 2.3(c), if applicable.
(c) In the event the decision in Turner v. FCC is not an Affirmative
Decision, but nevertheless such decision (a "Non-Discretionary Carriage
Decision!") results in the actual nondiscretionary requirement of carriage, or
continuation of carriage, of the Station (not on an interim or temporary basis)
by one or more cable television systems through no effort of the Station other
than its election to be so carried (the cable homes on the cable television
systems carrying the Station as a result of any such Non-Discretionary Carriage
Decision being referred to herein as "Non-Discretionary Carriage Homes"), the
Purchase Price set forth in Section 2.3(b) shall be increased by either (i) if
Sellers shall have elected option 2.3(b)(i)(y) or 2.3(b)(ii)(y) above, then an
amount in cash equal to the product of (w) Ten Million Dollars ($10,000,000.00)
and (x) a fraction whose numerator is the total number of Non-Discretionary
Carriage Homes and the denominator of which is 1,301,430 (the "Adjustment
Factor") or (ii) if Sellers shall have elected option 2.3(b)(i)(x) or
2.3(b)(ii)(x), a number of shares of PCC Common Stock equal to the product of
(Y) the PCC Stock Consideration and (Z) the Adjustment Factor, it being the
intention of the parties hereto that under no circumstances shall Buyer be
required to pay more than Thirty Million Dollars ($30,000,000.00) of the
Purchase Price, as adjusted pursuant to this Section 2.3(c), in cash. Any
increase to the Purchase Price required to be made pursuant to the preceding
sentence shall be made on the later to occur of the Closing Date and the date
that is thirty (30) days after any Final Decision that constitutes a
Non-Discretionary Carriage Decision.
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<PAGE> 14
2.4 Working Capital Credits and Payment.
(a) Prorations. All revenues and expenses arising from the operation
of the Station, including tower rental, business and license fees, utility
charges, real and personal property taxes and assessments levied against the
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, taxes (except for taxes arising from the transfer of
the Assets under this Agreement), and similar prepaid and deferred items, shall
be prorated between Buyer and Sellers in accordance with the principle that
Sellers shall receive all revenues and shall be responsible for all expenses,
costs, and liabilities allocable to the operations of the Station for the
period prior to the Effective Time, and Buyer shall receive all revenues and
shall be responsible for all expenses, costs, and obligations allocable to the
operations of the Station for the period after the Effective Time, subject to
Section 2.4(b). To effectuate the proration of expenses and revenues pursuant
to this Section 2.4(a), but subject to Section 2.4(b), Sellers shall receive a
credit equal to the amount of any expenses, costs, or liabilities that are paid
or incurred by Sellers and are allocable to the operations of the Station for
the period after the Effective Time plus the amount of any revenues that are
received by Buyer, and are allocable to the operations of the Station for the
period before the Effective Time, and Buyer shall receive a credit equal to the
amount of any expenses, costs, or liabilities that are paid or incurred by
Buyer and are allocable to the operations of the Station for the period before
the Effective Time plus the amount of any revenues that are received by Sellers
and are allocable to the operations of the Station for the period after the
Effective Time. The credits to Sellers pursuant to this Section 2.4(a) are
referred to as "Sellers, Working Capital Credits," the credits to Buyer
pursuant to this Section 2.4(a) are referred to as "Buyer's Working Capital
Credits," and Sellers' Working Capital Credits and Buyer's Working Capital
Credits are referred to collectively as the "Working Capital Credits."
(b) Expenses and Revenues Not Prorated.
(1) There shall be no proration of, and Sellers shall remain
solely liable with respect to, liabilities and obligations arising under 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.
(2) Buyer shall receive a credit pursuant to Section 2.4(a) to the
extent that Buyer assumes any liability under any Assumed Contract to refund
(or to credit against payments otherwise due) any security deposit or similar
prepayment paid to any Seller by any lessee or other third party.
(3) No proration shall be made in favor of either Sellers or Buyer
for any difference between the value of the goods or services to be received by
the Station under its trade or barter agreements as of the Effective Time and
the value of any advertising time remaining to be run by the Station as of the
Effective Time.
(4) There shall be no proration of earned vacation time or other
employee compensation. Sellers shall be solely responsible for the payment of
all compensation and commissions owed to the Station's employees up to the
Effective Time. Buyer may, as of
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<PAGE> 15
the Effective Time, employ those employees of the Station as Buyer may elect
on terms and conditions determined by Buyer.
(5) There shall be no proration of music license fees (ASCAP, BMI,
SESAC, etc.); Sellers shall be responsible for filing and paying all music
license fees due and payable as of the Effective Time, and Buyer shall be
responsible for filing and paying all such fees after the Effective Time.
(c) Manner of Determining Prorations and Credits. The prorations and
Working Capital Credits required by Section 2.4(a) shall be determined finally
in accordance with the following procedures:
(1) ValueVision, on behalf of Sellers, shall prepare and deliver
to Buyer not later than five (5) days before the Closing Date a preliminary
settlement statement which shall set forth ValueVision's good faith estimate of
the Working Capital Credits, taking into account all prorations under Section
2.4(a). The preliminary settlement statement (A) shall contain all information
reasonably necessary to determine the Working Capital Credits, taking into
account all prorations under Section 2.4(a), to the extent such prorations can
be determined or estimated as of the date of the preliminary settlement
statement, and such other information as may be reasonably requested by Buyer,
and (B) shall be certified by ValueVision to be true and complete to
ValueVision's knowledge as of the date thereof.
(2) Not later than sixty (60) days after the Closing Date, Buyer
shall deliver to ValueVision a statement setting forth Buyer's determination of
the Working Capital Credits pursuant to Section 2.4(a). Buyer's statement (A)
shall contain all information reasonably necessary to determine the Working
Capital Credits, taking into account all prorations under Section 2.4(a), and
such other information as may be reasonably requested by ValueVision, and (B)
shall be certified by Buyer to be true and complete to Buyers knowledge as of
the date thereof. If ValueVision disputes the amount of the Working Capital
Credits determined by Buyer, it shall deliver to Buyer within thirty (30) days
after its receipt of Buyers statement a statement setting forth its
determination of the amount of the Working Capital Credits. If ValueVision
notifies Buyer of its acceptance of Buyers statement, or if ValueVision fails
to deliver its statement within the thirty-day period specified in the
preceding sentence, Buyers determination of the Working Capital Credits shall
be conclusive and binding on Sellers and ValueVision as of the last day of the
thirty-day period.
(3) If ValueVision disputes the amount of the Working Capital
Credits determined by Buyer, Buyer and ValueVision shall use good faith efforts
to resolve any dispute involving the determination of the Working Capital
Credits as expeditiously as practicable.
(d) Payments at Closing With Respect to Working Capital Credits. At
Closing:
(1) Sellers shall pay or cause to be paid to or for the account of
Buyer, by wire transfer, the amount, if any, by which Buyees Working Capital
Credits exceed Sellers' Working Capital Credits, each as estimated in
ValueVision's preliminary settlement statement pursuant to Section 2.4(c)(1).
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<PAGE> 16
(2) Buyer shall pay or cause to be paid to or for the account of
Sellers, by wire transfer, the amount, if any, by which Sellers' Working
Capital Credits exceed Buyers Working Capital Credits, each as estimated in
ValueVision's preliminary settlement statement pursuant to Section 2.4((c)(l).
(e) Payments to Reflect Final Determination of Working Capital
Credits. Within five (5) business days after the date on which the Working
Capital Credits are finally determined pursuant to Section 2.4(c):
(1) Sellers shall pay or cause to be paid to or for the account of
Buyer, by wire transfer, the amount, if any, by which the sum of the amount of
Buyees Working Capital Credits, as finally determined pursuant to Section
2.4(c), plus the amount of any payment made by Buyer pursuant to Section
2.4(d)(2) exceeds the sum of amount of Sellers' Working Capital Credits, as
finally determined pursuant to Section 2.4(c), plus the amount of any payment
made by Sellers pursuant to Section 2.4(d)(1).
(2) Buyer shall pay or cause to be paid to or for the account of
Sellers, by wire transfer, the amount, if any, by which the sum of the amount
of Sellers' Working Capital Credits, as finally determined pursuant to Section
2.4(c), plus the amount of any payment made by Sellers pursuant to Section
2.4(d)(1) exceeds the sum of amount of Buyer's Working Capital Credits, as
finally determined pursuant to Section 2.4(c), plus the amount of any payment
made by Buyer pursuant to Section 2.4(d)(2).
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 any Seller under the Licenses and the Assumed Contracts to
the extent that either (a) the obligations and liabilities relate to the time
after the Effective Time or (b) Buyer received a Working Capital Credit
therefor under Section 2.4(a) as a result of the proration of such obligations
and liabilities. Buyer shall not assume any other obligations or liabilities of
any Seller, including (i) any obligations or liabilities under any Contract
(including any film or programming license agreement) not included in the
Assumed Contracts, (ii) any obligations or liabilities under the Assumed
Contracts relating to the period prior to the Effective Time except insofar as
Buyer receives a Working Capital Credit therefor under Section 2.4(a), (iii)
any claims, litigation, or proceedings relating to the operation of the Station
prior to the Closing, whether asserted or filed before or after the Effective
Time, (iv) any obligations or liabilities of any Seller under any management
incentive, employee pension, retirement, or other benefit plans, (v) any
obligations or liabilities of any Seller under any collective bargaining
agreements, (vi) any obligation to any employee of the Station for severance
benefits, vacation time, or sick leave accrued prior to the Closing Date, (vii)
any credit agreements, note purchase agreements, indentures, or other financing
arrangements, other than leases or agreements listed on Schedule 3.7 and
included in the Assumed Contracts, (viii) any agreements entered into other
than in the ordinary course of business of the Station, or (ix) any obligations
or liabilities caused by, arising out of, or resulting from any action or
omission of any Seller prior to the Closing, and all such obligations and
liabilities shall remain and be the obligations and liabilities solely of
Sellers.
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<PAGE> 17
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS AND VALUEVISION.
Sellers and ValueVision, jointly and severally, represent and warrant
to Buyer and PCC as follows:
3.1 Organization, Standing, and Authority. Each of VVI Manassas and
ValueVision is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Minnesota. WVVI is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Virginia. Each Seller is duly qualified to conduct business as
a foreign corporation in each state in which the nature of its business or the
ownership of its assets requires it to be so qualified, all of which are
identified on Schedule 3. 1. Each Seller has all requisite corporate power and
authority (a) to own, lease, and use the Assets as now owned, leased, and used
by it, (b) to conduct the business and operations of the Station as now
conducted by it, and (c) 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 such Seller
hereunder and thereunder. ValueVision owns, directly or indirectly, all of the
outstanding shares of each Seller.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by each Seller and ValueVision have been duly
authorized by all necessary actions on the part of such Seller and ValueVision.
This Agreement has been duly executed and delivered by each Seller and
ValueVision and constitutes the legal, valid, and binding obligation of each
Seller and ValueVision, 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
governmental Consents provided for in Section 6.1 and Section 6.8 and the other
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): (a) do not require the consent
of any third party, (b) will not conflict with any provision of the Articles of
Incorporation or By-Laws of any Seller or ValueVision; (c) 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, (d) 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 any Seller or
ValueVision is a party or by which any Seller or ValueVision may be bound
legally; and (e) will not create any claim, liability, mortgage, lien, pledge,
condition, charge, or encumbrance of any nature upon any of the Assets.
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<PAGE> 18
3.4 Governmental Licenses.
(a) Schedule 3.4 includes a true and complete fist of the
Licenses. Sellers have made available to Buyer true and complete copies of the
Licenses (including any, amendments and other modifications thereto). The
Licenses have been validly issued, and the Seller designated as such on
Schedule 3.4 is the authorized legal holder thereof. The Licenses listed on
Schedule 3.4 comprise all licenses, permits, and other authorizations required
from the FCC and, to each Seller's knowledge, from any other governmental or
regulatory authority for the lawful conduct in all material respects 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 unusual or
special restriction or condition that could reasonably be expected to limit the
full operation of the Station as now operated. Seller has no reason to believe
that, under existing law, rules, regulations, policies, and procedures of the
FCC, any of the Licenses would not be renewed by the FCC or other granting
authority in the ordinary course. Except as set forth in Schedule 3.4, the
Licenses are in full force and effect. Sellers have timely paid to the FCC all
annual regulatory fees payable with respect to the FCC Licenses.
(b) Schedule 3.4 also includes a true and complete list, to each
Seller's knowledge, of (i) all cable television systems that carry the signal
of the Station, (ii) all retransmission consent and other similar agreements
entered into by any Seller with respect to the Station, and (iii) all cable
television systems to which either Seller has delivered a must carry notice or
retransmission consent notice in accordance with Section 4 of the Cable
Television Consumer Protection and Competition Act of 1992 and the rules and
regulations of the FCC promulgated thereunder.
3.5 Real Property. Schedule 3.5 contains a complete and accurate
description of all Real Property and all Real Property Interests (including
street address, legal description (where known), owner, and Sellers' use
thereof), and all claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges, covenants, easements, restrictions,
encroachments, leases, or encumbrances known to any Seller.
3.6 Tangible Personal Property. Schedule 3.6 lists all material items
of Tangible Personal Property, to the best of Sellers' knowledge without
inquiry. Except as described in Schedule 3.6, one of the Sellers, as designated
on Schedule 3.6, owns and has good title to each item of Tangible Personal
Property and none of the Tangible Personal Property owned by any 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.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts except contracts with advertisers for production or the sale of
advertising time on the Station for cash at rates consistent with past
practices and that may be canceled by Sellers without penalty on not more than
thirty(30)days notice. Sellers have delivered to Buyer true and complete copies
of all written Assumed Contracts and true and complete descriptions of all oral
Assumed Contracts (including any amendments and other modifications to such
Contracts). Schedule 3.7 also includes (a) a schedule summarizing as of the
date of such schedule all contracts with advertisers for production or the sale
of advertising time on the Station and (b) a schedule setting forth the
following information as of the date of such schedule with respect to each
Assumed Contract
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under which the Station is licensed to broadcast any programming: (i) the
identity of the licensed programming, (ii) the number of exhibitions thereof
originally licensed, (iii) the number of exhibitions on the Station then
available to Sellers, (iv) the unpaid license fees on a monthly basis, (v) the
expiration of the license, (vi) the purchase price for each program, and (vii)
the purchase price for additional episodes for which Buyer may be liable.
Except for the need to obtain the Consents listed on Schedule 3.3, the Seller
that is a party to each Assumed Contract has full legal power and authority to
assign its rights under such Assumed Contracts to Buyer in accordance with this
Agreement, and such assignment will not affect the validity, enforceability, or
continuation of such Assumed Contract.
3.8 Consents. Except for the governmental Consents provided for in
Section 6.1 and Section 6.8 and the other Consents described in Schedule 3.3,
to each Seller's knowledge, no consent, approval, permit, or authorization of,
or declaration to, or filing with any governmental or regulatory authority or
any other third party is required to consummate this Agreement and the
transactions contemplated hereby or to permit Sellers to assign or transfer the
Assets to Buyer.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of Licenses listed in Schedule 3.4) that are used in the
conduct of the business and operations of the Station as now conducted. Sellers
have made available to Buyer copies of all documents establishing or evidencing
the Intangibles listed on Schedule 3.9. There is no claim or action pending, or
to the knowledge of any Seller threatened, relating to the Station with respect
to any actual or alleged infringement by any Seller upon any trademark, trade
name, service mark, service name, copyright, patent, patent application,
know-how, method, or process owned by any other Person.
3.10 Financial Statements. Sellers have furnished Buyer with true and
complete copies of the unaudited financial statements of the Station,
containing a balance sheet and a statement of income, as at and for the period
from February 1, 1995 through January 31, 1996, and the seven (7) months ended
August 31, 1996 (collectively, the "Financial Statements").
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of any 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.
3.12 Reports. All reporting requirements of the FCC and, to each
Seller's knowledge, any other governmental authority with respect to the
Station have been complied with by Sellers in all material respects.
3.13 Labor Relations. No labor union or other collective bargaining
unit represents or claims to represent any of the employees of the Station. To
each 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.
3.14 Taxes. Each Seller has filed or caused to be filed all federal,
state, county, local, or city tax returns that are required to be filed with
respect to the ownership and operation of the Station, and each Seller has paid
or caused to be aid all taxes shown on those returns or on any
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tax assessment received by it to the extent that such taxes have become due.
There are no legal, administrative, or tax proceedings pursuant to which any
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 any Seller.
3.15 Claims and Legal Actions. Except as disclosed on Schedule 3.15
and except for any FCC rulemaking proceedings generally affecting the
television broadcasting industry and not particular to any Seller, there is no
claim, legal action, counterclaim, suit, arbitration, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or to the knowledge of any Seller threatened, against or
relating to any 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 any Seller know of any basis for the same.
3.16 Compliance with Licenses. Each Seller has complied in all
material respects with the Licenses.
3.17 Conduct of Business in Ordinary Course. Since August 31, 1996,
the Sellers have conducted the business and operations of the Station only in
the ordinary course and, except as disclosed in Schedule 3.17:
(a) The Station has not suffered any material damage destruction,
or loss affecting any assets or transferred any material assets used or useful
in the conduct of the business of the Station;
(b) The Station has not suffered any material write-down of the
value of any Assets; and
(c) The Station has not 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. No Seller has been involved in any
business arrangement or relationship relating to the Station with any Affiliate
of any Seller (other than another Seller or ValueVision), and no Affiliate of
any Seller (other than another Seller or ValueVision) owns any property or
right, tangible or intangible, that is used in the business of the Station.
3.19 No Broker. Except as set forth in Schedule 3.19, neither the
Sellers nor ValueVision has employed, nor obligated itself Buyer or PCC to
compensate, any finder, broker, advisor or similar Person in connection with
the transactions contemplated by this Agreement.
3.20 Accredited Investor, Investment Knowledge; Distribution.
ValueVision is an accredited investor within the meaning of Rule 501
promulgated under the Securities Act. ValueVision 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 is capable of bearing the
economic risks of such investment. ValueVision has had an opportunity to
discuss the business, management and financial affairs of PCC with PCC's
representatives, and ValueVision
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has had its questions concerning PCC and its business answered to its full
satisfaction. ValueVision has received from PCC all of the documentation it
requires in order to make its investment decision. The shares of PCC Common
Stock to be transferred hereunder to ValueVision are being acquired for
ValueVision's own account for the purpose of investment and not with a view to
or for resale in connection with any distribution thereof or interest therein.
ValueVision understands that (a) such shares of PCC Common Stock 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 (b) such shares of PCC Common Stock must be
held indefinitely unless subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, and (c) such PCC Shares
shall bear a legend to such effect.
3.21 Disclaimer of Warranties. Except for the foregoing
representations and warranties specifically set forth in Section 3.1 through
Section 3.20 of this Agreement and the representations and warranties in the
certificate delivered by Sellers pursuant to Section 8.2(f), the Assets are
being transferred by Sellers to Buyer on an "as-is-where-is" basis without any
representation or warranty, all other representations and warranties of any
kind, either express or implied, including warranties of fitness, being hereby
expressly disclaimed.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER AND PCC.
Buyer and PCC, jointly and severally, represent and warrant to Sellers
and ValueVision 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, on the Closing Date, will be duly qualified to conduct business
in the Commonwealth of Virginia. PCC is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. Buyer
and PCC each 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 it hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer and PCC have been duly authorized by all
necessary actions on the part of Buyer and PCC. This Agreement has been duly
executed and delivered by Buyer and PCC and constitutes the legal, valid, and
binding obligation of Buyer and PCC, enforceable against Buyer and PCC in
accordance with its terms except as the enforceability of this Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
governmental Consents provided for in Section 6.1 and Section 6.8 and the other
Consents fisted on Schedule 4.3, the execution, delivery, and performance by
Buyer and PCC of this Agreement and the documents contemplated hereby (with or
without the giving of notice, the lapse of time, or both): (a) do not require
the consent of any third party; (b) will not conflict with the Certificate of
Incorporation or By-Laws of Buyer or PCC; (c) will not conflict with, result in
a breach of, or
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<PAGE> 22
constitute a default under, any law, judgment, order, injunction, decree, rule,
regulation, or ruling of any court or governmental instrumentality; or (d) 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 or PCC is a party or by which Buyer or PCC may be bound
legally, such that Buyer could not acquire or operate the Assets or PCC could
not perform its obligations hereunder.
4.4 Licensee Qualifications. To Buyees knowledge, there is no fact
that would, under the Communications Act of 1934, as amended, and the rules and
regulations of the FCC, each as in effect on the date of this Agreement,
disqualify Buyer from being the licensee of the Station other than Buyees or
its Affiliate's interest in the television station described on Schedule 4.3.
Buyer has sufficient net liquid assets on hand or available from committed
sources to consummate the transactions contemplated by this Agreement and to
operate the Station for three (3) months after Closing and is otherwise
financially qualified under the Communications Act of 1934, as amended, and the
rules and regulations of the FCC, each as in effect on the date of this
Agreement, to be the licensee of the Station.
4.5 No Broker. Except as set forth in Schedule 4.5, neither Buyer nor
PCC has employed, nor obligated itself, any Seller or ValueVision to
compensate, any finder, broker, advisor or similar Person in connection with
the transactions contemplated by this Agreement.
4.6 Acknowledgment of "As-Is-Where-Is" Sale. Buyer acknowledges and
agrees that it is purchasing and accepting the Assets on an "as-is-where-is"
basis, except for the representations and warranties specifically set forth in
Section 3.1 through Section 3.20 of this Agreement and the representations and
warranties in the certificate delivered by Sellers pursuant to Section 8.2(f).
To the fullest extent permitted by law, Buyer and PCC hereby unconditionally
and irrevocably waive and release any and all actual or potential claims that
it might have against any Seller or ValueVision regarding any form of warranty,
express or implied, of any kind or type, including warranties of fitness,
relating to or in connection with the purchase of the Assets, other than the
representations and warranties specifically set forth in Section 3.1 through
Section 3.20 of this Agreement and the representations and warranties in the
certificate delivered by Sellers pursuant to Section 8.2(f). This waiver and
release is, to the fullest extent permitted by law, absolute, complete, total,
and unlimited in every way and includes, to the fullest extent permitted by
law, a waiver and release of express warranties (other than the representations
and warranties specifically set forth in Section 3.1 through Section 3.20 of
this Agreement and the representations and warranties in the certificate
delivered by Sellers pursuant to Section 8.2(f)), implied warranties,
warranties of fitness for a particular use, warranties of merchantability,
warranties of habitability, claims based on apparent or latent defects or
deficiencies, whether now or hereafter existing, and strict liability rights
and claims of every kind and type (including claims regarding defects that were
not or are not discoverable and all other extant or later created or conceived
of strict liability or strict liability-type claims and rights).
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<PAGE> 23
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING.
Between the date of this Agreement and the Closing Date, Sellers shall
comply, and ValueVision shall cause-each Seller to comply, with the covenants
in this Section 5:
5.1 Generally. Except as otherwise provided in this Agreement, Sellers
shall operate the Station diligently in the ordinary course of business in
accordance with past practices (except where such conduct would conflict with
the following covenants or with Sellers' other obligations under this
Agreement).
5.2 Contracts. Sellers will not amend or terminate any Material
Contract (or waive any material right thereunder), or enter into any contract
or commitment relating to the Station or the Assets (except as provided in
Section 6.16), or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness and obligations arising
from the amendment of any existing Contract, regardless whether such Contract
is a Material Contract) that will be binding on Buyer after Closing, except for
(a) cash time sales agreements and production agreements made in the ordinary
course of business consistent with Sellers' past practices, and (b) other
contracts (excluding film or programming license agreements and trade or barter
agreements) entered into in the ordinary course of business consistent with
Sellers' past practices that do not involve consideration, in the aggregate, in
excess of $25,000 measured at Closing. Prior to the Closing Date, Sellers shall
deliver to Buyer a list of all Contracts entered into between the date of this
Agreement and the Closing Date and shall make available to Buyer copies of such
Contracts.
5.3 Disposition of Assets. No Seller shall sell, assign, lease, or
otherwise transfer or dispose of any assets that are used or useful in
connection with the conduct of the business or operations of the Station,
except for (a) any transaction permitted by Section 6.16, (b) dispositions of
assets in connection with the acquisition of replacement property of equivalent
kind and value and (c) the assignment and transfer of assets and liabilities
between Sellers and/or ValueVision.
5.4 Encumbrances. No Seller shall create, assume, or permit to exist
any claim, liability, security interest, mortgage, lien, pledge, condition,
charge, covenant, easement, restriction, encroachment, lease, or encumbrance of
any nature upon the Assets, except for (a) liens disclosed on Schedule 3.5 or
Schedule 3.6 that will be removed prior to the Closing Date, and (b) Permitted
Encumbrances.
5.5 Licenses. No Seller shall cause or permit, by any act or failure
to act, any of the Licenses required to be listed on Schedule 3.4 to expire or
to be revoked, suspended, or modified, or take any action that could reasonably
be expected to cause the FCC or any other governmental authority to institute
proceedings for the suspension, revocation, or material adverse modification of
any of the Licenses. Sellers shall use reasonable efforts to prosecute (a) any
applications to any governmental authority necessary for the operation of the
Station and (b) any must-carry proceedings described on Schedule 5.5.
5.6 Obligations. Sellers shall pay all obligations relating to the
Station as they become due, consistent with past practices, so that all such
obligations shall be current as of the Closing Date.
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<PAGE> 24
5.7 Exclusivity
(a) Neither any Seller nor any officer, director, representative,
or agent of any Seller shall, directly or indirectly, (i) solicit, initiate, or
encourage the submission of any proposal or offer relating to (A) any
liquidation, dissolution, or recapitalization of any Seller, (B) any merger or
consolidation of any Seller with any other Person, (C) any acquisition or
purchase of securities or assets by any Person from any Seller, or (D) any
similar transaction or business combination involving any Seller, or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Sellers shall notify Buyer as soon as practicable if any Person
makes any proposal with respect to any of the foregoing.
(b) Section 5.7(a) shall not apply to any action by any Seller or
any officer, director, representative, or agent of any Seller with respect to
(i) the assignment and transfer by either Seller of all its assets and
liabilities to the other Seller or to ValueVision, or (ii) so long as
ValueVision's ability to perform its obligations under this Agreement is not
adversely affected, any recapitalization of ValueVision, any merger or
consolidation of ValueVision with any other Person, or any acquisition or
purchase of securities or assets (other than the Assets) by any Person from
ValueVision.
5.8 Access to Information.
(a) Each Seller shall give Buyer and its counsel, accountants,
engineers, and other authorized representatives reasonable access to the Assets
and to all other books, records, and documents relating to the Station for the
purpose of audit and inspection, and will furnish or cause to be furnished to
Buyer or its authorized representatives all 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, a list of all employees of the
Station and a description of their base compensation).
(b) Without limiting the generality of the foregoing, Sellers
shall give Buyer and its counsel, accountants, and other authorized
representatives reasonable access to Sellers' financial records relating to the
operations of the Station and the Station's employees, counsel, accountants,
and other representatives for the purpose of preparing and auditing such
financial statements as Buyer determines, in its reasonable 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. Sellers agree to provide financial statements concerning the operations
of the Station, reviewed by Sellers' accountants, containing reasonably
requested customary representations; provided, however, that the parties hereto
agree that Buyer shall have no right under any circumstance to delay the
Closing or terminate this Agreement on account of the information contained in
any such financial statement or the inability of Sellers or their accountants
in good faith to make any representation requested by Buyer. The preparation
and auditing of any financial statements pursuant to this Section 5.8(b) shall
be at Buyees sole cost and expense.
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<PAGE> 25
5.9 Maintenance of Assets. Except as provided in Section 6.16, Sellers
shall maintain all of the Assets in their condition on the date of this
Agreement (ordinary wear and tear excepted), and use, operate, and maintain all
of the Assets in a reasonable manner. Seller shall maintain inventories of
spare parts and expendable supplies at levels consistent with past practices.
If any insured or indemnified loss, damage, impairment, confiscation, or
condemnation of or to any of the Assets occurs, Sellers shall repair, replace,
or restore the Assets to their prior condition as soon thereafter as possible,
and Sellers shall use the proceeds of any claim under any property damage
insurance policy or other recovery solely to repair, replace, or restore any of
the Assets that are lost, damaged, impaired, or destroyed.
5.10 Insurance. Sellers shall maintain the existing insurance policies
on the Station and the Assets.
5.11 Consents. Sellers shall use their respective reasonable efforts
to obtain all Consents, without any change in the terms or conditions of any
Assumed Contract or License that could reasonably be expected to be less
advantageous to Buyer than those pertaining under the Assumed Contract or
License as in effect on the date of this Agreement. Sellers shall request
estoppel certificates from the lessors of all leasehold and sublease hold
interests included in the Real Property Interests, consents of such lessors to
the collateral assignment by Buyer to its lenders of such leasehold and
sublease hold interests, and estoppel certificates of contracting parties to
all Material Contracts. Sellers shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents.
5.12 Books and Records. Each Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.13 Notification. Sellers shall promptly notify Buyer in writing of
any material change in any of the information contained in Sellers' and
ValueVision's representations and warranties contained in Section 3 of this
Agreement.
5.14 Financial Information. Sellers shall furnish to Buyer within
forty-five (45) days after the end of each month ending between the date of
this Agreement and the Closing Date a statement of income and expense and a
balance sheet for and as of the end of such month. All financial information
delivered by Sellers to Buyer pursuant to this Section shall be prepared from
the books and records of Sellers in accordance with generally accepted
accounting principles consistently applied, shall accurately reflect the books,
records, and accounts of the Station, shall be complete and correct in all
material respects, and shall present fairly the financial condition of the
Station as at their respective dates and the results of operations for the
periods then ended.
5.15 Compliance with Laws. Each Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
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SECTION 6 SPECIAL COVENANTS AND AGREEMENTS.
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Sellers and Buyer shall prepare and within five (5) business
days after the date of this Agreement shall file with the FCC appropriate
applications for the FCC Consent, which shall include a commitment by Buyer to
sell the television station described in Schedule 4.3. Buyer shall file with
the FCC the necessary application to sell the television station described in
Schedule 4.3, together with a copy of the executed purchase and sale agreement,
within ten (10) business days of the aforementioned filings by Sellers and
Buyer and shall use its reasonable efforts to sell such station as
expeditiously as practicable. The parties shall prosecute the foregoing
applications (including Buyees application to sell the station described in
Schedule 4.3) with all reasonable diligence and otherwise use their reasonable
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.
(c) Within five (5) business days of any written request of
Sellers, Buyer agrees to use its best efforts to file for and prosecute a
request for any temporary waiver of the FCC rules deemed by Sellers in their
sole discretion to be necessary or desirable in order to permit the Closing to
occur prior to the divestiture of the television station described in Schedule
4.3, the form and substance of which waiver request shall be reasonably
acceptable to Sellers and Buyer.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station's programs, employees,
and policies, shall be the sole responsibility of Sellers until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage or impairment confiscation, or
condemnation of any of the Assets from any cause shall be borne by Sellers at
all times prior to the completion of the Closing, except that Buyer will be
required to purchase the Assets notwithstanding any such loss, damage or
impairment, confiscation, or condemnation if the conditions contained in
Section 7.1 to the obligations of Buyer at the Closing are nonetheless
satisfied.
(b) In the event of any damage or destruction of the Assets
described above, if the damaged or destroyed Assets have not been restored or
replaced prior to the Closing Date, Sellers shall deliver to Buyer all
insurance proceeds received in connection with such damage or destruction of
the Assets to the extent of the costs and expenses arising in connection with
such restoration and replacement.
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<PAGE> 27
6.4 Confidentiality. (a) Except as necessary for the consummation of
the transactions contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including disclosure requirements of federal or state securities laws and rules
and regulations of securities markets, each party will keep confidential any
information obtained from any other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated, each party
will return to any other party that furnished it with information in connection
with the transactions contemplated by this Agreement all such information.
(b) No party shall publish any press release or make any other
public announcement concerning this Agreement or the transactions contemplated
hereby without the prior written consent of each other party, which shall not
be withheld unreasonably; provided, however, that nothing contained in this
Agreement shall prevent any party, after notification to each other party, from
making any filings with governmental authorities that, in its judgment, may be
required or advisable in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
6.5 Cooperation. Each party hereto shall cooperate fully with each
other party 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 the parties hereto shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their reasonable efforts to consummate the
transactions contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, and except as otherwise expressly
provided in this Agreement, (a) Buyer shall have no obligation to expend funds
to obtain any of the Consents (other than any fee payable to the FCC in
connection with the filing of the applications for FCC Consent and any fee
imposed by the FTC in connection with filings made pursuant to the HSR Act, in
each case to the extent provided in Section 12. 1), and (b) Sellers shall have
no obligation to expend funds to obtain any of the Consents (other than any fee
payable to the FCC in connection with the filing of the applications for FCC
Consent and any fee imposed by the FTC in connection with filings made pursuant
to the HSR Act, in each case to the extent provided in Section 12. 1).
6.6 Access to Books and Records. Each Seller shall provide Buyer
access and the right to copy for a period of two (2) years from the Closing
Date any books and records relating to the Assets but not included in the
Assets. Buyer shall provide Sellers access and the right to copy for a period
of two (2) years after the Closing Date any books and records relating to the
Assets that are included in the Assets.
6.7 [Intentionally omitted].
6.8 HSR Act Filing. ValueVision 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, that are required in connection with
the transactions contemplated hereby under the HSR Act within forty-five (45)
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
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<PAGE> 28
or documents 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 that relates to the transactions contemplated hereunder,
and to the extent practicable, to permit each other to participate in any
conferences with the FTC or DOJ.
6.9 Title to Real Property.
(a) Buyer may, at its option and expense, obtain the following
title commitments, surveys, and related information:
(1) with respect to each fee estate included in the Real
Property Interests, a title commitment issued by a title insurer satisfactory
to Buyer disclosing the condition of title to such fee estate and all
easements, rights-of-way, and restrictions of record with respect thereto, as
of a date not earlier than the date of this Agreement;
(2) with respect to each leasehold included in the Real
Property Interests, a title commitment issued by a title insurer satisfactory
to Buyer disclosing the condition of title to such leasehold as of a date not
earlier than the date of this Agreement;
(3) with respect to each Real Property Interest as to which a
title commitment is obtained pursuant to this Section 6.9(a), copies of all
instruments evidencing the scope and extent of all easements, rights-of-way,
and restrictions of record with respect thereto; and
(4) with respect to each Real Property Interest as to which a
title commitment is obtained pursuant to this Section 6.9(a), a current survey
of the relevant parcel, prepared and certified to Buyer and to the title
insurer of such Real Property Interest 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.
(b) If the title-commitments, surveys, and related information
obtained by Buyer pursuant to Section 6.9(a) reveal (i) any easement, covenant,
condition, restriction, encroachment, lack of practical access to public roads,
or other encumbrance, defect, or condition with respect to any Real Property
Interest (other than any easement, covenant, condition, or restriction that is
disclosed on Schedule 3.5) that, individually or in the aggregate, has a
material adverse effect on the use of such Real Property Interest in the
conduct of the business of the Station or materially detracts from the value of
such Real Property Interest in the conduct of the business of the Station
(each, a "Title Defect"), Buyer may give Sellers written notice of its
objection to any such Title Defect at any time within thirty (30) days after
the date of this Agreement. Within seven (7) days after their receipt of Buyees
objection to any such Title Defect, Sellers shall notify Buyer whether they
agree to cure or correct such Tide Defect prior to the Closing. If Sellers do
not agree to cure or correct any such Title Defect, Buyer may terminate this
Agreement pursuant to Section 9.2(a).
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(c) For purposes of this Agreement, "Permitted Encumbrances" shall
include, in addition to the matters described in Section 1. 1, any Title Defect
(other than any claim, liability, security interest, mortgage, hen (including
any tax or judgment lien), pledge, or other monetary charge) that is disclosed
in the title commitments, surveys, and related information obtained by Buyer
pursuant to Section 6.9(a) if (i) Buyer does not object to such Title Defect on
or before the date specified above for Buyer's objection, or (ii) Buyer objects
to such Title Defect and Sellers notify Buyer within seven (7) days after their
receipt of Buyer's objection of Sellers' election not to cure or correct such
Title Defect.
(d) Sellers shall remove prior to Closing any claim, liability,
security interest, mortgage, lien (including any tax or judgment lien), pledge,
or other monetary charge except for Permitted Encumbrances with respect to any
Real Property Interest. 6.10 Environmental Survey.
6.10 Environmental Survey
(a) Sellers have heretofore provided to Buyer a copy of the Phase
I Environmental Site Assessment of 6740 Arrington Road, Fairfax, Virginia,
prepared for Sellers by Law Engineering and Environmental Services, Inc., dated
October 4, 1996, and Addendum No. I thereto dated October 10, 1996 (together,
the "Law Engineering Phase I Report"), for the information of Buyer, but
without any representation or warranty being made by Sellers or ValueVision as
to the accuracy or completeness of any of the information contained therein.
(b) Buyer may, at its option and expense, retain an environmental
consultant to be selected by Buyer to perform Phase I environmental surveys of
the properties of the Station. If such survey discloses any material
environmental hazard or material possibility of future material liability for
environmental damages or clean-up costs not identified in the Law Engineering
Phase I Report (each, an "Environmental Hazard"), Buyer shall so notify Sellers
as soon as practicable.
(c) If Buyer notifies Sellers pursuant to Section 6.10(b) of any
Environmental Hazard as indicated in an environmental study described in
Section 6.10(b), within thirty (30) days after the date of this Agreement, then
Sellers may, by notice delivered to Buyer within seven (7) days after their
receipt of such notice from Buyer, agree to remedy such Environmental Hazard
prior to the Closing Date. If Sellers do not agree prior to the end of such
seven-day period to remedy such Environmental Hazard prior to the Closing Date,
then Buyer may terminate this Agreement pursuant to Section 9.2(b).
6.11 Engineering Study
(a) Buyer may, at its option arid expense, retain an engineering
firm or other broadcast engineer to conduct proof of performance studies 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 either study discloses any material
deficiencies in the operations or equipment of the Station (each, a "Technical
Deficiency"), Buyer shall so notify Sellers as soon as practicable.
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(b) If Buyer notifies Sellers pursuant to Section 6.11(a) of any
Technical Deficiency, as indicated in either engineering study described in
Section 6.11(a), within thirty (30) days after the date of this Agreement, then
Sellers may, by notice delivered to Buyer within seven (7) days after-Sellers'
receipt of such notice from Buyer, agree to remedy such Technical Deficiency
prior to the Closing Date. If Sellers do not agree pursuant to this Section
6.11(b) prior to the end of such seven-day period to remedy any Technical
Deficiency prior to the Closing Date, then Buyer may terminate this Agreement
pursuant to section 9.2(c).
6.12 Sales Tax Fillings. Sellers shall continue to file Virginia sales
tax returns with respect to the Station in accordance with all applicable legal
requirements and shall concurrently deliver copies of all such returns to
Buyer.
6.13 Accounts Receivable.
(a) Collection. At the Closing, Sellers shall designate Buyer as
their agent to collect any accounts receivable of Sellers in existence on the
Closing Date and arising from the sale of advertising time by the Station prior
to the Closing Date (the "Station's Receivables"). Buyer shall use reasonable
efforts to collect the Stations Receivables during the "Collection Period,"
which shall be the period beginning on the Closing Date and ending on the last
day of the fourth calendar month beginning after the Closing Date. Buyer shall
not be obligated to use any extraordinary efforts to collect any of the
Station's Receivables or to refer any of the Station's Receivables to a
collection agency or attorney for collection, and Buyer shall not make any such
referral or compromise, nor settle or adjust the amount of any of the Station's
Receivables, except with the approval of ValueVision. Sellers and their
respective representatives and agents may undertake to collect any of the
Stations Receivables during the Collection Period so long as Sellers first
notify and consult with Buyer concerning Sellers' proposed collection efforts.
(b) Payments to ValueVision. On or before the twentieth day after
the end of each full calendar month during the Collection Period, Buyer shall
furnish to ValueVision (i) a list of the amounts collected before the end of
such month with respect to the Station's Receivables, and (ii) the amount
collected during such month with respect to the Station's Receivables. On or
before the twentieth day after the end of the Collection Period, Buyer shall
furnish ValueVision with a list of all of the Station's Receivables that remain
uncollected at the end of the Collection Period.
(c) Further Obligations. After the expiration of the Collection
Period, Buyer shall have no further obligation hereunder other than to make the
payment under Section 6.13(b) and to remit to ValueVision any payments with
respect to any of the Stations Receivables that Buyer subsequently receives,
and any Seller itself may act to collect any of the Station's Receivables that
remain uncollected without restriction.
6.14 No Inconsistent Action. Between the date of this Agreement and
the Closing Date, no party shall take any action that is inconsistent with its
obligations under this Agreement in any material respect or that could
reasonably be expected to hinder or delay the consummation of the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Buyer shall not take any action that would disqualify Buyer from
being the
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licensee of the Station under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, each as in effect on the date of this
Agreement.
6.15 CTN Lease. VVI Manassas shall give notice of termination to CTN
of that certain Lease by and between VVI Manassas and CTN dated as of March 28,
1994 (the "CTN Lease"), promptly after execution of this Agreement.
6.16 Acquisition of Transmitter Site and Relocation of Studio.
Anything herein to the contrary notwithstanding, it is expressly agreed by the
parties that Sellers may, in their sole discretion, elect to purchase the real
property currently leased as the transmitter site for the Station and to
relocate the studio for the Station to such site (the "Transmitter Site"). In
the event Sellers elect to enter into any transaction described in the
preceding sentence, such transaction shall be binding on Buyer and shall not
result in any amendment to this Agreement or any change in the Purchase Price,
and Buyer consents in advance to any such transaction(s), whether consummated
before or after the Closing Date, and agrees to cooperate with Sellers in
effectuating such transaction(s), provided that any initial purchase by Sellers
of the Transmitter Site is consummated pursuant to terms and conditions which
shall not impose liability for any portion of the purchase price of the
Transmitter Site on Buyer and any relocation of the studio for the Station is
accomplished at no cost to Buyer prior to Closing or as soon thereafter as
reasonably practicable.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT
CLOSING.
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject to the fulfillment prior to or at the Closing Date of
each of the following conditions, any of which may be waived by Buyer in
writing:
(a) FCC Consent. The FCC Consent shall have been granted.
(b) [Intentionally omitted].
(c) HSR Act. The waiting period under the HSR Act shall have
expired or been terminated without action by the DOJ or the FTC to prevent the
Closing.
(d) Deliveries. Sellers shall have made or stand willing to make
all the deliveries to Buyer set forth in Section 8.2(a),(b), and (e).
(e) Station. The FCC shall have (i) approved the sale of the
television station described in Schedule 4.3 in accordance with the
requirements of Section 6.1(b) and the closing of such sale shall have occurred
or shall be scheduled to occur immediately prior to the Closing, or (ii) the
FCC shall have granted to Buyer a temporary waiver permitting the Closing to
occur prior to the sale of the station described in Schedule 4.3.
7.2 Conditions to Obligations of Sellers. All obligations of Sellers
at the Closing are subject to the fulfillment prior to or at the Closing Date
of each of the following conditions, any of which may be waived by ValueVision
in writing:
(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
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the Closing Date as though made at and as of that time, and Sellers shall have
received a certificate, executed on behalf of Buyer by an authorized officer,
to that effect.
(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, and Sellers shall have received a certificate,
executed on behalf of Buyer by an authorized officer, to that effect.
(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.
(e) HSR Act. The waiting period under the HSR Act shall have
expired or been terminated without action by the DOJ or the FTC to prevent the
Closing.
(f) Judgments. There shall not be in effect any judgment, decree,
or order that would prevent or make unlawful the Closing.
SECTION 8 CLOSING AND CLOSING DELIVERIES.
8.1 Closing.
(a) Closing Date.
(1) Except as provided in the following sentence or as
otherwise agreed to by Buyer and ValueVision, but subject to Section 8.1(a)(2),
the Closing shall take place at 10:00 a.m. on a date, to be set by Buyer on at
least five (5) days' written notice to ValueVision, which shall be not earlier
than the later of February 3, 1997 or the first business day after the FCC
Consent is granted and not later than twenty (20) business days following the
date upon which the FCC Consent has become a Final Order. Except as otherwise
agreed to by Buyer and ValueVision, but subject to Section 8.1(a)(2), if Buyer
fails to specify the date for Closing pursuant to the preceding sentence prior
to the fifteenth business day after the date upon which the FCC Consent has
become a Final Order, the Closing shall take place on the twentieth business
day after the date upon which the FCC Consent has become a Final Order.
(2) Notwithstanding Section 8.1(a)(1), if on the date that but
for this Section 8. 1 (a)(2), would be the Closing Date pursuant to Section
8.1(a)(1), the certificate provided to Buyer under Section 8.2(f) discloses, or
the Buyer has notified Sellers in writing that it has determined that, any
representation or warranty of Sellers and ValueVision contained in this
Agreement is not true and complete In A Material Way, or that Sellers have
failed to comply with their obligations and covenants to be performed under
this Agreement In A Material Way, then (A) Sellers shall take any actions
necessary or appropriate to make such representation or warranty true and
complete or to comply with such obligations and covenants, and (B) the Closing
shall be postponed for such period as is required to cure the conditions
warranting such postponement.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson in Washington, D.C., or any other place that is agreed
upon by Buyer and ValueVision.
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8.2 Deliveries by Sellers. Prior to or on the Closing Date, Sellers
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Deeds. Duly executed quitclaim deeds that are sufficient to
vest all of any Seller's right, title, and interest in and to all Real Property
Interests (including any real property acquired before Closing pursuant to
Section 6.16 of this Agreement) in the name of Buyer, free and clear of all
claims, liabilities, security interests, mortgages, liens, pledges, conditions,
charges, covenants, easements, restrictions, encroachments, leases, or
encumbrances of any nature, except for Permitted Encumbrances.
(b) Other Conveyancing Documents. Duly executed bills of sale,
motor vehicle titles, assignments, and other transfer documents that are
sufficient to vest good title to all Assets (other than Real Property
Interests) in the name of Buyer, free and clear of all claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, covenants,
easements, restrictions, encroachments, leases, or encumbrances of any nature.
(c) Working Capital Payment. Any payment required to be made by
Sellers pursuant to Section 2.4(d)(1).
(d) Estoppel Certificates and Lessor's Consents. Any estoppel
certificates and consents of lessors that Sellers shall have obtained pursuant
to Section 5.1 1.
(e) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent.
(f) Certificate. A certificate, dated as of the Closing Date,
executed on behalf of each Seller by an authorized officer, certifying that,
except as specifically stated in such certificate, (1) the representations and
warranties of each Seller and ValueVision 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) each Seller and ValueVision 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; provided, however, that if such certificate shall
disclose, or Buyer shall notify Sellers in writing prior to the Closing Date
that Buyer has determined that, any representation or warranty of Sellers or
ValueVision contained in this Agreement is not true and complete as of the
Closing Date In A Material Way, or that Sellers or ValueVision have failed to
comply with their obligations and covenants to be performed under this
Agreement as of the Closing Date In A Material Way, Buyer may elect to delay
the Closing until such representation or warranty is made materially true and
complete or such obligation or covenant is complied with in all material
respects, as the case may be, and Buyer's sole remedy hereunder shall be the
remedy of specific performance to compel Sellers or ValueVision to make such
representation or warranty materially true and complete or such obligation or
covenant to be complied with in all material respects. For purposes of this
Agreement, "In A Material Way" shall mean that an expenditure in excess of
$100,000.00 is reasonably estimated to be required to make such representation
or warranty materially true and complete or to materially comply with such
obligation or covenant.
(g) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering
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records, and all files and records used by any Seller in connection with its
operation of the Station and included in the Assets.
8.3 Deliveries by Buyer and PCC. Prior to or on the Closing Date,
Buyer and PCC shall deliver to Sellers the following, in form and substance
reasonably satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in Section 2.3.
(b) Working Capital Payment. Any payment required to be made by
Buyer pursuant to Section 2.4(d)(2).
(c) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform each Seller's
obligations under the Licenses and Assumed Contracts to the extent provided in
Section 2.5.
(d) Certificate. A certificate, dated as of the Closing Date,
executed on behalf of Buyer by an authorized officer, certifying that, except
as specifically stated in such certificate, (1) the representations and
warranties of Buyer and PCC 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) Buyer and PCC have in all material respects performed and
complied with all of their obligations, covenants, and agreements set forth in
this Agreement to be performed and complied with on or prior to the Closing
Date.
SECTION 9 TERMINATION.
9.1 Termination by Sellers and ValueVision. This Agreement may be
terminated by Sellers and ValueVision and the purchase and sale of the Station
abandoned, 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 Sellers set forth in
this Agreement have not been satisfied or waived in writing by Sellers.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order that would prevent
or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or prior
to October 1, 1997; provided, however, that Sellers and ValueVision shall not
be entitled to terminate this Agreement pursuant to this Section 9.l(c) if (a)
the Closing shall not have occurred on or prior to October 1, 1997, as a result
of the intentional breach of this Agreement by Sellers or (b) the Closing has
been postponed beyond October 1, 1997 pursuant to Section 8.1 (a)(2), but only
for such period as is required to cure the condition warranting such
postponement.
(d) Breach. If Buyer or PCC is in breach in any material respect
of any of its representations, warranties, or covenants under this Agreement.
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(e) If Buyer shall not have filed with the FCC the necessary
application to sell the station described in Schedule 4.3 within fifteen (15)
business days of the date that Seller and Buyer shall have filed with the FCC
the necessary applications for the FCC Consent, as required by Section 6.1(b).
9.2 Termination by Buyer and PCC. This Agreement may be terminated by
Buyer and PCC and the purchase and sale of the Station abandoned, if Buyer and
PCC are not then in material default, upon written notice to Sellers and
ValueVision, upon the occurrence of any of the following:
(a) Title Defects. If Buyer shall have notified Sellers pursuant
to Section 6.9(b) of any Title Defect within thirty (30) days after the date of
this Agreement and Sellers shall not have agreed within the period specified in
Section 6.9(b) to cure or correct such Title Defect; provided, however, that
Buyer may only terminate this Agreement pursuant to this Section 9.2(a) by
delivering written notice to ValueVision within seven (7) days after the end of
the period specified in Section 6.9(b) during which Sellers had the right to
elect to cure or correct such Title Defect.
(b) Environmental Hazards. If Buyer shall have notified Sellers
pursuant to Section 6.10(a) of any Environmental Hazard within thirty (30)
days after the date of this Agreement and Sellers shall not have agreed within
the period specified in Section 6.10(b) to remedy such Environmental Hazard;
provided, however, that Buyer may only terminate this Agreement pursuant to
this Section 9.2(b) by delivering written notice to ValueVision within seven
(7) days after the end of the period specified in Section 6.10(b) during which
Sellers had the right to elect to remedy such Environmental Hazard.
(c) Technical Deficiencies. If Buyer shall have notified Sellers
pursuant to Section 6.10(a) of any Technical Deficiency within thirty (30) days
after the date of this Agreement and Sellers shall not have agreed "Within the
period specified in Section 6.11(b) to remedy such Technical Deficiency;
provided, however, that Buyer may only terminate this Agreement pursuant to
this Section 9.2(c) by delivering written notice to ValueVision within seven
(7) days after the end of the period specified in Section 6.11(b) during which
Sellers had the right to elect to remedy such Technical Deficiency.
(d) Material Contracts. If Sellers shall not have obtained and
delivered to Buyer, within thirty (30) days after the date of this Agreement,
with respect to each Material Contract, any consent required for the assignment
to Buyer of such Material Contract, without any change in the terms or
conditions of such Material Contract that could reasonably be expected to be
less advantageous to Buyer than those pertaining under the Material Contract as
in effect on the date of this Agreement; provided, however, that Buyer may only
terminate this Agreement pursuant to this Section 9.2(d) by delivering written
notice to ValueVision within seven (7) days after the end of such thirty-day
period if such Consent has not been delivered to Buyer.
9.3 Escrow Deposit. Simultaneously with the execution and delivery of
this Agreement, Buyer has deposited with the Escrow Agent the amount of One
Million Dollars ($1,000,000.00) in accordance with the Escrow Agreement. All
funds and documents deposited
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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, Buyer and ValueVision shall jointly instruct
the Escrow Agent to disburse 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, to or at the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1(a),
(b) or (c), by Sellers and ValueVision, Buyer and ValueVision shall jointly
instruct the Escrow Agent to disburse 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, to or at the direction of
ValueVision.
(c) If this Agreement is terminated by Buyer and PCC pursuant to
Section 9.2, then Buyer and ValueVision shall jointly instruct the Escrow Agent
to disburse 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, to or at the direction of Buyer.
9.4 Rights on Termination.
(a) If this Agreement is terminated by Sellers and ValueVision
pursuant to Section 9.1 (a), (b), (c), or (e), Buyer shall promptly pay or
cause to be paid to Sellers the sum of Two Million Dollars ($2,000,000.00),
which amount shall be liquidated damages and shall constitute full payment and
the exclusive remedy for any damages suffered by Sellers and ValueVision by
reason of such event. The parties hereto agree in advance that actual damages
would be difficult to ascertain and that the sum of Two Million Dollars
($2,000,000.00) is a fair and equitable amount to reimburse Sellers and
ValueVision for damages sustained due to such event. Any payment to ValueVision
pursuant to Section 9.3(b) shall be credited against Buyer's obligation to
Sellers pursuant to this Section 9.4(a).
(b) If this Agreement is terminated by Sellers and ValueVision
pursuant to Section 9.1(d), Sellers and Value Vision may pursue any remedy
available at law or equity against Buyer and PCC as a result of such breach,
including without limitation an action to recover damages from such breach
(without any limitation as set forth in Section 9.4(a) of this Agreement).
(c) Termination of this. Agreement by Buyer and PCC pursuant to
Section 9.2 shall be without liability or obligation on the part of any Seller
or ValueVision to Buyer or PCC.
9.5 Specific Performance. The parties recognize that if any Sellers
breach this Agreement and refuse to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled to obtain specific performance of
the terms of this Agreement, which shall be Buyer's exclusive remedy hereunder.
If any action is brought by Buyer to enforce this Agreement, each Seller shall
waive the defense that there is an adequate remedy at law.
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9.6 No Special Damages. No party to this Agreement shall be entitled
to any special, incidental, or consequential damages as a result of the breach
of this Agreement by any other party to this Agreement.
SECTION 10 INDEMNIFICATION.
10.1 Indemnification by Sellers and ValueVision. After the Closing,
and regardless of any investigation made at any time by or on behalf of Buyer
or PCC or any information Buyer or PCC may have, each Seller and ValueVision
hereby agree, jointly and severally, to indemnify and hold Buyer and PCC and
their officers, directors, employees, and representatives harmless against and
with respect to, and shall reimburse Buyer and its officers, directors,
employees, and representatives for:
(a) 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 that relate to
events occurring prior the Closing Date, or resulting from any other
obligations of any Seller that are not assumed by Buyer pursuant to this
Agreement, including any liabilities arising at any time under any Contract
that is not included in the Assumed Contracts;
(b) Any loss, liability, obligation, or cost resulting from any
agreement with any finder, broker, advisor, or similar Person retained by or on
behalf of any Seller relating to the transactions contemplated by this
Agreement;
(c) Any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.2 Indemnification by Buyer and PCC. After the Closing, and
regardless of any investigation made at any time by or on behalf of any Seller
or ValueVision or any information any Seller or ValueVision may have, Buyer and
PCC hereby agree, jointly and severally, to indemnify and hold each Seller and
ValueVision and their officers, directors, employees, and representatives
harmless against and with respect to, and shall reimburse each Seller and
ValueVision and their officers, directors, employees, and representatives for:
(a) Any and all obligations of such Seller assumed by Buyer
pursuant to this Agreement;
(b) Any and all losses, liabilities, or damages resulting from the
operation or ownership of the Station after the Closing;
(c) Any loss, liability, obligation, or cost resulting from any
agreement with any finder, broker, advisor, or similar Person retained by or on
behalf of Buyer relating to the transactions contemplated by this Agreement;
and
(d) Any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or
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judgment incident to the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity.
10.3 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.
(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
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed
upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity 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, if the
Indemnifying Party notifies the Claimant in writing within ten (IO) days of its
receipt of notice from the Claimant of the third-party claim that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement, the Indemnifying Party shall have the right at its own expense,
to participate in or assume control of the defense of such claim, and the
Claimant shall cooperate fully with the Indemnifying Party, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party. If the Indemnifying Party elects
to assume control of the defense of any third-party claim, the Claimant shall
have the right to participate in the defense of such claim at its own expense.
If the Indemnifying Party fails timely to notify the Claimant in writing that
the Indemnifying Party acknowledges its potential liability to the Claimant
under this Agreement or if the Indemnifying Party does not elect to assume
control or otherwise participate in the defense of any third-party claim, the
Indemnifying Party shall be bound by the results obtained by the Claimant with
respect to such claim.
(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) For the purpose of the procedures set forth in this Section
10.3, any indemnification claim by any officer, director, employee, or
representative of Buyer shall be made by and through PCC, and any
indemnification claim by any officer, director, employee, or representative of
any Seller shall be made by and through ValueVision.
SECTION 11 (Intentionally omitted]
- 33 -
<PAGE> 39
SECTION 12 MISCELLANEOUS.
12.1 Fees and Expenses. ValueVision and Buyer shall each pay one-half
of any filing fees, transfer taxes, recordation taxes, sales taxes, document
stamps, or other charges levied by any governmental entity in connection with
the transactions contemplated by this Agreement, including any fees payable to
the FCC in connection with the filing of the applications for FCC Consent and
the fee imposed by the FTC in connection with filings made pursuant to the HSR
Act. Except as otherwise provided in this Agreement, each party shall pay its
own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses
of counsel, accountants, agents and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar Person retained by or on behalf of such party.
12.2 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by telecopier, by personal delivery, by commercial delivery service,
or by registered or certified mail, return receipt requested, (c) deemed to
have been given on the date on which the telecopy is confirmed, the date of
personal delivery, or the date set forth in the records of the delivery service
or on the return receipt, as applicable, and (d) addressed as follows:
If to any Seller or ValueVision: ValueVision International, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344
Attention: Robert L. Johander
Telecopier: 1-612-947-0188
With copies to: Wilmer, Cutler &
Pickering 2445 M Street, N.W.
Washington, D.C. 20037-1420
Attention: M. Carolyn Cox
Telecopier: 1-202-663-6363
If to Buyer or PCC: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, Chairman
Telecopier: 1-407-6594252
With a copy to: Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-1802
Attention: John R. Feore, Jr.
Telecopier: 1-202-776-2222
- 34 -
<PAGE> 40
or to any other or additional Persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.2.
12.3 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Sellers and/or
ValueVision and Buyer and/or PCC are unable to resolve by themselves shall be
settled by arbitration in Washington, D.C., by a panel of three arbitrators.
Sellers and/or ValueVision and Buyer and/or PCC shall each designate one
disinterested arbitrator, and the two arbitrators so designated shall select
the third arbitrator. The persons selected as arbitrators 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 for large cases of the
American Arbitration Association. The written decision of a majority of the
arbitrators shall be final and binding on all Sellers, ValueVision, Buyer, and
PCC. The costs and expenses of the arbitration proceeding shall be assessed
between Sellers 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 any Seller, ValueVision, Buyer or
PCC against any other party except (a) an action to compel arbitration pursuant
to this Section 12.3, (b) an action to enforce the award of the arbitration
panel rendered in accordance with this Section or (c) a suit for specific
performance pursuant to Section 9.5.
12.4 Benefit and Binding Effect. (a) No party may assign this
Agreement without the prior written consent of the other parties hereto, except
that (a) without the consent of any Seller or ValueVision, Buyer may (i)
collaterally assign its rights and interests under this Agreement to its
lenders, and (b) without the consent of Buyer or PCC, either Seller may assign
its rights and interests under this Agreement to the other or to ValueVision in
connection with the assignment of all its assets and liabilities to the other
or to ValueVision. If either Seller assigns all its assets to the other or to
ValueVision as contemplated by the preceding sentence and, in connection
therewith, ValueVision assumes all obligations and liabilities of such Seller
under this Agreement, Buyer and Sellers agree to amend this Agreement so as to
eliminate such Seller as a party hereto and to reflect the assumption by
ValueVision of all obligations and liabilities of Seller under this Agreement.
This Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns.
(b) Upon notice by either Seller or Buyer that an assignment
permitted by Section 12.4(a) has occurred, the other party shall enter into an
Amended and Restated Asset Purchase Agreement to reflect the new parties hereto
as a result of such assignment; provided that the other party shall not
condition its execution of such Amended and Restated Asset Purchase Agreement
upon the modification or inclusion of any provision therein. The other party
shall execute any such Amended and Restated Asset Purchase Agreement within two
(2) business
- 35 -
<PAGE> 41
days of presentation of same by Sellers or Buyer, as the case may be, and any
failure or refusal to do so shall be a material breach of this Agreement.
12.5 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
Sellers, any additional deeds, bills of sale, 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.
12.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
12.7 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.
12.8 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.
12.9 Entire Agreement. This Agreement, the Escrow 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, PCC, Sellers, and ValueVision with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior negotiations among Buyer, PCC, Sellers, and ValueVision and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and that is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
12.10 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 in this
Agreement 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 12.10.
12.11 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
- 36 -
<PAGE> 42
IN WITNESS WHEREOF, this Agreement has been executed by Sellers,
ValueVision, Buyer, and PCC as of the date first written above.
VALUEVISION INTERNATIONAL, INC.
By: /s/ Robert L. Johander
---------------------------------------
Name: Robert L. Johander
-------------------------------------
Title: Chairman and CEO
------------------------------------
VVI MANASSAS, INC.
By: /s/ Robert L. Johander
---------------------------------------
Name: Robert L. Johander
-------------------------------------
Title: Chairman and CEO
------------------------------------
WVVI(TV), INC.
By: /s/ Robert L. Johander
---------------------------------------
Name: Robert L. Johander
-------------------------------------
Title: Chairman and CEO
------------------------------------
PAXSON COMMUNICATIONS OF
WASHINGTON-66, INC.
By: /s/ Lowell W. Paxson
---------------------------------------
Name: Lowell W. Paxson
-------------------------------------
Title: Chairman
------------------------------------
- 37 -
<PAGE> 43
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
---------------------------------------
Name: Lowell W. Paxson
-------------------------------------
Title: Chairman
------------------------------------
- 38 -
<PAGE> 1
EXHIBIT 10.142
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
MILWAUKEE-55, INC.
AND
CHANNEL 55 OF MILWAUKEE, INC.
* * *
NOVEMBER 21, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
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
"Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
</TABLE>
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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.15 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.17 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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5.18 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.20 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 RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.8 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.9 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.10 Title Insurance and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.12 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.13 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.14 Buyer Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.4 Survival of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<TABLE>
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<S> <C> <C>
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.12 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<PAGE> 6
LIST OF SCHEDULES
<TABLE>
<S> <C> <C>
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(i) -- Opinion of Seller's Counsel
Schedule 8.3(d) -- Opinion of Buyer's Counsel
</TABLE>
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<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of the 21st day of November,
1996, by and between Paxson Communications of Milwaukee-55, Inc., a Florida
corporation ("Buyer"), and Channel 55 of Milwaukee, 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 July 9, 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
WHKE-TV, Kenosha, Wisconsin (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 (i) run on the Station by Seller prior
to the Closing Date or (ii) run on the Station prior to the date that Seller
acquired the Station.
"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.
"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.
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<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.
"Loan Agreement" means the Loan Agreement dated as of July 9, 1996,
between Buyer and Seller.
"Note" means the Promissory Note dated July 9, 1996, in the principal
amount of $6,000,000, delivered by Seller to Buyer pursuant to the Loan
Agreement.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of July 9, 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:
(a) The Tangible Personal
Property;
(b) The Real Property;
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<PAGE> 10
(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.
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
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<PAGE> 11
interest, fees, expenses and other charges owed by Seller to Buyer as of the
Closing Date pursuant to the Loan Agreement and the Note.
(a) Prorations. The Purchase
Price shall be increased or decreased as required to effectuate the proration
of expenses, other than expenses for which Buyer is obligated to reimburse
Seller under the Time Brokerage Agreement, for which no proration shall be
required. All expenses arising from the operation of the Station, including
business and license fees, utility charges, real and personal property taxes
and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except
for taxes arising from the transfer of the Assets under this Agreement), FCC
regulatory fees, and similar prepaid and deferred items, shall be prorated
between Buyer and Seller in accordance with the principle that Seller shall be
responsible for all expenses, costs, and liabilities allocable to the period
prior to the Closing Date, other than expenses for which Buyer is obligated to
reimburse Seller under the Time Brokerage Agreement, and Buyer shall be
responsible for all expenses, costs, and obligations allocable to the period on
and after the Closing Date. Notwithstanding the preceding sentence, there
shall be no adjustment for, and Seller shall remain solely liable with respect
to, any Contracts not included in the Assumed Contracts and any other
obligation or liability not being assumed by Buyer in accordance with Section
2.5.
(b) Manner of Determining
Adjustments. Any adjustments will, insofar as feasible, be determined and paid
on the Closing Date, with final settlement and payment by the appropriate party
occurring no later than ninety (90) days after the Closing Date or such other
date as the parties shall mutually agree upon.
2.4 Payment of Purchase Price. The cash portion
of the Purchase Price, as adjusted, shall be paid by Buyer to Seller at Closing
by wire transfer of same-day funds pursuant to wire instructions which shall be
delivered by Seller to Buyer, at least two days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations.
As of the Closing Date, Buyer shall assume and undertake to pay, discharge, and
perform all obligations and liabilities of Seller under the Licenses and the
Assumed Contracts insofar as they relate to the time on and after the Closing
Date, and arise out of events related to Buyer's ownership of the Assets or its
operation of the Station on or after the Closing Date. Buyer shall not assume
any other obligations or liabilities of Seller, including (i) any obligations
or liabilities under any Contract not included in the Assumed Contracts, (ii)
any obligations or liabilities under the Assumed Contracts relating to the
period prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under capitalized leases or other
financing agreements not assumed by Buyer, (v) any obligations or liabilities
arising under agreements entered into other than in the ordinary course of
business, (vi) any obligations or liabilities of Seller under any employee
pension, retirement, or other benefit plans or collective bargaining agreements,
(vii) any obligation to any employee of the
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<PAGE> 12
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 and is duly qualified 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 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
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<PAGE> 13
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 Milwaukee, Wisconsin
Area of Dominant Influence as defined by the 1991-1992 Area of Dominant
Influence Market Guide published by The Arbitron Co. and the Milwaukee,
Wisconsin 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. All
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<PAGE> 14
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 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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<PAGE> 15
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. 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
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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<PAGE> 16
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 (segregated to the extent required by generally
accepted accounting principles) with respect
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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, complaints or proceedings pending or, to the best of its
knowledge, threatened (i) before the FCC relating to the business or operations
of the Station other than rule making proceedings which affect the television
industry generally, (ii) before any federal or state agency relating to the
business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.15 Environmental Matters.
(a) Seller has complied in all
material respects with all laws, rules, and regulations of all federal, state,
and local governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against Seller in connection with its
ownership or operation of the Station alleging any failure to comply with any
such law, rule, or regulation.
(b) To the best of Seller's
knowledge, Seller has no liability relating to its ownership and operation of
the Station that could reasonably be expected to have a material adverse effect
on the business or operations of the Station (and there is no basis related to
the present operations, properties, or facilities of Seller for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against Seller giving rise to any such liability) under any
law, rule, or regulation of any federal, state, or local government (or agency
thereof) concerning release or threatened release of hazardous substances,
public health and safety, or pollution or protection of the environment.
(c) To the best of Seller's
knowledge, Seller has no liability relating to its ownership and operation of
the Station that could reasonably be expected to have a material
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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 July 9, 1996, Seller has conducted the business and operations of the
Station only in the ordinary course and has not:
(a) Suffered any material
adverse change in the assets or properties of the Station, including any
damage, destruction, or loss affecting any assets used or useful in the conduct
of the business of the Station;
(b) Made any sale, assignment,
lease, or other transfer of any of the Station's properties other than in the
normal and usual course of business with suitable replacements being obtained
therefor;
(c) Canceled any debts owed to
or claims held by Seller with respect to the Station, except in the normal and
usual course of business;
(d) Suffered any material
write-down of the value of any Assets or any material write-off as
uncollectible of any accounts receivable of the Station; or
(e) Transferred or granted any
right under, or entered into any settlement regarding the breach or
infringement of, any license, patent, copyright, trademark, trade name,
franchise, or similar right, or modified any existing right relating to the
Station.
3.18 Transactions with Affiliates. Seller has not
been involved in any business arrangement or relationship relating to the
Station with any affiliate of Seller, and no affiliate of Seller owns any
property or right, tangible or intangible, which is used in the business of the
Station, other than such arrangements and relationships between Seller and The
Christian Network, Inc. that have been disclosed to Buyer. As used in this
paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934.
3.19 Broker. Neither Seller nor any person acting
on Seller's behalf has incurred any liability for any finders' or brokers' fees
or commissions in connection with the transactions contemplated by this
Agreement.
3.20 Full Disclosure. No representation or
warranty made by Seller in this Agreement or in any certificate, document, or
other instrument furnished or to be furnished by Seller pursuant hereto
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact and required to make any statement made
herein or therein not misleading.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Florida and is duly qualified and in good standing
under the laws of the State of Wisconsin. 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. Buyer knows of no fact that would, under existing law
and the existing rules, regulations, policies and procedures of the FCC
disqualify Buyer as an assignee of the FCC Licenses or as the owner and operator
of the Station.
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<PAGE> 21
4.6 Full Disclosure. No representation or
warranty made by Buyer in this Agreement or in any certificate, document, or
other instrument furnished or to be furnished by Buyer pursuant hereto contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact and required to make any statement made herein or
therein not misleading.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the
date of this Agreement and the Closing Date, Seller shall operate the Station
diligently in the ordinary course of business in accordance with its past
practices (except where such conduct would conflict with the following
covenants or with Seller's other obligations under this Agreement), and in
accordance with the other covenants in this Section 5.
5.2 Compensation. Seller shall not increase the
compensation, bonuses, or other benefits payable or to be payable to any person
employed in connection with the conduct of the business or operations of the
Station, except in accordance with past practices.
5.3 Contracts. Seller will not, without the
prior written consent of Buyer, enter into any contract or commitment relating
to the Station or the Assets, or amend or terminate any Assumed Contract (or
waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing. Prior to the
Closing Date, Seller shall deliver to Buyer a list of all Contracts entered
into between the date of this Agreement and the Closing Date, together with
copies of such Contracts.
5.4 Disposition of Assets. Seller shall not
sell, assign, lease, or otherwise transfer or dispose of any of the Assets,
except where no longer used or useful in the business or operations of the
Station or in connection with the acquisition of replacement property of
equivalent kind and value.
5.5 Encumbrances. Seller shall not create,
assume or permit to exist any claim, liability, mortgage, lien, pledge,
condition, charge, or encumbrance of any nature whatsoever upon the Assets,
except for (i) liens disclosed on Schedule 3.5 and Schedule 3.6, which shall be
removed on or prior to the Closing Date, (ii) liens for current taxes not yet
due and payable, and (iii) mechanics' liens and other similar liens, which
shall be removed on or prior to the Closing Date.
5.6 Licenses. Seller shall not cause or permit,
by any act or failure to act, any of the Licenses to expire or to be revoked,
suspended, or modified, or take any action that could cause the FCC or any
other governmental authority to institute proceedings for the suspension,
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<PAGE> 22
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 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 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 shall not
constitute a material breach of this Agreement. Seller shall promptly advise
Buyer of any difficulties experienced in obtaining any of the Consents and of
any conditions proposed, considered, or requested for any of the Consents. Upon
Buyer's request, Seller shall cooperate with Buyer and use it best efforts to
obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's lenders may request.
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<PAGE> 23
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 such financial information regarding the Assets and the business or
operations of the Station (including information on payables and receivables)
as Buyer may reasonably request. All financial information delivered by Seller
to Buyer pursuant to this Section shall be prepared from the books and records
of Seller in accordance with generally accepted accounting principles
consistently applied, shall accurately reflect the books, records, and accounts
of the Station, shall be complete and correct in all material respects, and
shall present fairly the financial condition of the Station as at their
respective dates and the results of operations for the periods then ended.
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 any other material change in the
Station's programming policies, except such changes as in the good faith
judgment of the Seller are required by the public interest.
5.19 Preservation of Business. 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.
5.20 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.
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<PAGE> 24
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC
Licenses in connection with the purchase and sale of the Assets pursuant to
this Agreement shall be subject to the prior consent and approval of the FCC.
(b) Seller and Buyer shall
promptly prepare an appropriate application for the FCC Consent and shall file
the application with the FCC within five (5) business days of the execution of
this Agreement. The parties shall prosecute the application with all
reasonable diligence and otherwise use their best efforts to obtain a grant of
the application as expeditiously as practicable. Each party agrees to comply
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition if (1) the condition was imposed on it
as the result of a circumstance the existence of which does not constitute a
breach by the party of any of its representations, warranties, or covenants
under this Agreement, and (2) compliance with the condition would have a
material adverse effect upon it. Buyer and Seller shall oppose any requests
for reconsideration or judicial review of the FCC Consent. If the Closing
shall not have occurred for any reason within the original effective period of
the FCC Consent, and neither party shall have terminated this Agreement under
Section 9, the parties shall jointly request an extension of the effective
period of the FCC Consent. No extension of the FCC Consent shall limit the
exercise by either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing,
Buyer shall not, directly or indirectly, control, supervise, direct, or attempt
to control, supervise, or direct, the operations of the Station; such
operations, including complete control and supervision of all of the Station
programs, employees, and policies, shall be the sole responsibility of Seller
until the Closing.
6.3 RESERVED.
6.4 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 from Buyer's conduct or actions
under the Time Brokerage Agreement, which (i) causes the Station to cease
broadcasting operations for a period of three or more days or (ii) prevents in
any material respect
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<PAGE> 25
signal transmission by the Station in the normal and usual manner and Seller
fails to restore or replace the Assets so that normal and usual transmission is
resumed within seven days of the damage, destruction or other event, Buyer, in
its sole discretion, may (x) terminate this Agreement forthwith without any
further obligations hereunder upon written notice to Seller or (y) proceed to
consummate the transaction contemplated by this Agreement and complete the
restoration and replacement of the Assets after the Closing Date, in which event
Seller shall deliver to Buyer all insurance proceeds received in connection with
such damage, destruction or other event.
6.5 Confidentiality. Except as necessary for
the consummation of the transaction contemplated by this Agreement, including
Buyer's obtaining of financing related hereto, and except as and to the extent
required by law, including, without limitation, disclosure 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.
6.6 Environmental Audit. Buyer may, at its
option and expense and within thirty (30) days of the date hereof, 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.
6.7 Engineering Study. Buyer may, at its option
and expense and within thirty (30) days of the date hereof, 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.
6.8 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.
6.9 Bulk Sales Law. If applicable, the Bulk
Sales law of the State of Wisconsin shall be complied with by Seller and
Buyer. Any loss, liability, obligation, or cost suffered by Seller
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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 Buyer.
6.10 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 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, Buyer will procure a current survey of the
parcel, prepared by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters customarily shown on such surveys, and showing access
affirmatively to public streets and roads.
6.11 Sales Tax Filings. Through the Closing Date,
Seller shall continue to file Wisconsin 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.
6.12 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
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<PAGE> 27
the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets.
6.13 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.
6.14 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. 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.
(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 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
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<PAGE> 28
effect on the Station or the conduct of its business and operations. No
proceeding shall be pending the effect of which could be to revoke, cancel, fail
to renew, suspend, or modify adversely any License.
(f) Deliveries. Seller shall
have made or stand willing to make all the deliveries to Buyer set forth in
Section 8.2.
(g) Adverse Change. Between the
date of this Agreement and the Closing Date, 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) Loan Agreement. There shall
exist no Event of Default as defined in the Loan 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.
(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.
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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 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;
(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) Title Insurance and Surveys.
The title insurance and surveys described in Section 6.10;
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<PAGE> 30
(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. An
Opinion of Seller's counsel dated as of the Closing Date, substantially in the
form of Schedule 8.2(i) hereto; and
(i) Lenders Certificates. Such
certificates and confirmations to Buyer's lenders as Buyer may reasonably
request in connection with obtaining financing for the performance of its
payment obligations hereunder, provided that Buyer shall bear any reasonable
and necessary expense incurred by Seller to obtain such certificate and
confirmation.
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 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.
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<PAGE> 31
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 May 21, 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.
(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 May 21, 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 three days unless
such interruption of service is due to actions of Buyer under the Time
Brokerage Agreement.
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<PAGE> 32
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.
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:
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<PAGE> 33
(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 and all losses,
liabilities, or damages resulting from the operation or ownership of the
Station prior to the Closing, including any liabilities arising under the
Licenses or the Assumed Contracts which relate to events occurring prior the
Closing Date.
(d) Any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs, and expenses,
including reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding
the Closing, and regardless of any investigation made at any time by or on
behalf of Seller or any information Seller may have, Buyer hereby agrees,
subject to the limitation in the last sentence of Section 9.3, to indemnify and
hold Seller harmless against and with respect to, and shall reimburse Seller
for:
(a) Any and all losses,
liabilities, or damages resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Buyer contained in this
Agreement or in any certificate, document, or instrument delivered to Seller
under this Agreement.
(b) Any and all obligations of
Seller assumed by Buyer pursuant to this Agreement.
(c) Any and all losses,
liabilities or damages resulting from the operation or ownership of the Station
on and after the Closing.
(d) Any and all losses,
liabilities or damages resulting from any action taken by Buyer or its
employees and agents with respect to the Station, or any failure by Buyer or
its 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
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<PAGE> 34
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 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.
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<PAGE> 35
(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.
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.
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<PAGE> 36
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.
The written decision of a majority of the arbitrators shall be final and
binding on Seller and Buyer. The costs and expenses of the arbitration
proceeding shall be assessed between Seller and Buyer in a manner to be decided
by a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not
paid within thirty days, may be entered in any court having jurisdiction over
the matter. No action at law or suit in equity based upon any claim arising
out of or related to this Agreement shall be instituted in any court by Seller
or Buyer against the other except (i) an action to compel arbitration pursuant
to this Section, (ii) an action to enforce the award of the arbitration panel
rendered in accordance with this Section, or (iii) a suit for specific
performance pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests
required or permitted to be given under the provisions of this Agreement shall
be (a) in writing, (b) delivered by personal delivery, or sent by commercial
delivery service or registered or certified mail, return receipt requested, (c)
deemed to have been given on the date of personal delivery or the date set
forth in the records of the delivery service or on the return receipt, and (d)
addressed as follows:
If to Seller: Mr. James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, FL 34624
With a copy to: Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
Mr. Lowell W. Paxson
If to Buyer: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
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<PAGE> 37
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party
hereto may assign this Agreement without the prior written consent of the other
party hereto; provided, however, that Buyer may assign its rights and
obligations under this Agreement, in whole or in part, to one or more
subsidiaries or commonly controlled affiliates of Buyer, prior to the filing of
the FCC application, without seeking or obtaining Seller's prior approval,
provided that such assignment shall not constitute a release of Buyer's
obligations hereunder, and Buyer may collaterally assign its rights and
interests hereunder to its lenders without seeking or obtaining Seller's prior
approval. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take
any actions and execute any other documents that may be necessary or desirable
to the implementation and consummation of this Agreement, including, in the
case of Seller, any additional bills of sale, deeds, or other transfer
documents that, in the reasonable opinion of Buyer, may be necessary to ensure,
complete, and evidence the full and effective transfer of the Assets to Buyer
pursuant to this Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
FLORIDA (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are
included for ease of reference only and shall not control or affect the meaning
or construction of the provisions of this Agreement.
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
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<PAGE> 38
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as
otherwise provided in this Agreement, any failure of any of the parties to
comply with any obligation, representation, warranty, covenant, agreement, or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement, or condition shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any
party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.10.
11.11 Press Release. Prior to the Closing, neither
party shall publish any press release, make any other public announcement or
otherwise communicate with any news media concerning this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party; provided, however, that nothing contained herein shall prevent either
party from promptly making all filings with governmental authorities as may, in
its judgement be required or advisable in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
11.12 Consent to Jurisdiction and Service of
Process. All judicial proceedings brought against Buyer or Seller arising out
of or relating to this Agreement may be brought in any state or federal court
of competent jurisdiction in the State of Florida and, by execution and
delivery of this Agreement, Buyer and Seller each accepts for itself and in
connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Seller designates and
appoints James L. West, and Buyer designates and appoints William L. Watson,
and such other persons as may hereafter be selected by Buyer or Seller, as its
respective agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by Buyer
and Seller to be effective and binding service in every respect. A copy of any
such 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
MILWAUKEE-55, INC.
By: /s/ William L. Watson
-------------------------------------
William L. Watson
Secretary
CHANNEL 55 OF MILWAUKEE, INC.
By: /s/ James L. West
--------------------------------------
James L. West
Chairman
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<PAGE> 1
EXHIBIT 10.143
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF THE KEYS, INC.
AND
KEY CHAIN, INC.
FOR
RADIO STATIONS
WFKZ-FM, PLANTATION KEY, FLORIDA
WAVK-FM, MARATHON, FLORIDA
AND
WKRY-FM, KEY WEST, FLORIDA
DECEMBER 13, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Material Adverse Effect" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"To the best knowledge of Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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
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3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.21 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 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5 OPERATIONS OF THE STATIONS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.17 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.18 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.20 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.21 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.11 Studio Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.12 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.13 C-2 Upgrade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 Notice of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.15 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8 CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.7 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.11 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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LIST OF SCHEDULES
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Schedule 2.2 -- Excluded Property
Schedule 2.5 -- Sales Commissions
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 Matters
Schedule 3.11 -- Insurance Policies
Schedule 3.13 -- Employee Matters
Schedule 3.19 -- Transactions with Affiliates
Schedule 8.2(h) -- Form of Opinions of Seller's Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
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<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 13th day of December,
1996, by and between Paxson Communications of the Keys, Inc., a Florida
corporation ("Buyer"), and Key Chain, Inc., a Florida corporation ("Seller").
R E C I T A L S
A. Seller is the licensee of and owns and operates radio stations
WFKZ-FM, Plantation Key, Florida, WAVK-FM, Marathon, Florida, and WKRY-FM, Key
West, Florida (each individually, a "Station" and collectively, the
"Stations"), pursuant to licenses issued by the Federal Communications
Commission (the "FCC").
B. Seller desires to sell, and Buyer desires to buy, substantially
all the assets that are used or useful in the business or operations of the
Stations, 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, which are incorporated herein
by reference, 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 program time run on the Stations 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 Stations, (ii) any Contracts entered
into by Seller between the date of this
<PAGE> 8
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 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.
"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 Stations.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests, and the time for
the FCC to set aside the action on its own motion, have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and
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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
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 governmental authorities to Seller in connection with the
conduct of the business or operations of the Stations, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Material Adverse Effect" means any materially adverse change in or
materially adverse effect on the business, assets, results of operations or
financial condition of any Station taken as a whole, or any event or
circumstance which could reasonably be expected to prevent or materially delay
the Closing.
"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 Stations,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Stations, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"To the best knowledge of Seller" or any similar formulation thereof
means to the actual knowledge of Joel Day or Lee Day after reasonable inquiry.
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 Stations, 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,
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<PAGE> 10
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 Accounts Receivable as of 11:59 p.m., Miami time, on
the day prior to the Closing Date;
(f) The Intangibles and all intangible assets of Seller
relating to the Stations that are not specifically included within the
Intangibles, including the goodwill of the Stations, if any;
(g) To the extent not included in the Intangibles, all of
Seller's proprietary information, technical information and data, machinery and
equipment warranties, maps, computer discs and tapes, plans, diagrams,
blueprints, and schematics, including filings with the FCC relating to the
business and operation of the Stations;
(h) All choses in action of Seller relating to the Stations;
and
(i) All books and records relating to the business or
operations of the Stations, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Stations.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Seller's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; 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;
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(d) All rights of Seller under this Agreement; and
(e) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets shall be THREE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000) adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the 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, 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 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 (a) 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
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its operation of the Stations on or after the Closing Date and (b) undertake
to pay all sales commissions with respect to the Accounts Receivable collected
after the Closing Date in accordance with the policy set forth on Schedule 2.5.
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 any 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 any
Station for severance benefits, vacation time, or sick leave accrued prior to
the Closing Date, and (viii) any obligations or liabilities caused by, arising
out of, or resulting from any action or omission of Seller prior to the
Closing, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Seller.
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 Stations 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 Stations 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[s]. 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.
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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, other than such consents the
failure of which to obtain would not have a Material Adverse Effect; (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, other than
such conflicts, breaches and defaults that would not have a Material Adverse
Effect; (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 and
accelerations that would not have a Material Adverse Effect; (v) will not
create any mortgage, lien, pledge or encumbrance of any nature whatsoever upon
any of the Assets; and (vi) to the best knowledge of Seller, will not create
any claim, liability, condition or charge 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 issued or granted to Seller by the FCC and FAA and, to the
best knowledge of Seller, each other governmental authority. Seller has
delivered to Buyer true and complete copies of the Licenses listed on Schedule
3.4 (including any amendments and other modifications thereto). The Licenses
listed on Schedule 3.4 have been validly issued, and Seller is the authorized
legal holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Stations in the manner and to the full extent they are now conducted,
except for such licenses, permits and other authorizations the failure of which
to obtain would not have a Material Adverse Effect. Except as specifically set
forth on Schedule 3.4, none of the Licenses listed on Schedule 3.4 is subject
to any restriction or condition that would limit the full operation of the
Stations as now operated. The Licenses listed on Schedule 3.4 are in full
force and effect, and the conduct of the business and operations of the
Stations is in accordance therewith. Seller has no reason to believe that any
of the Licenses listed on Schedule 3.4 would not be renewed by the FCC or other
granting authority in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
complete and accurate description of all Real Property and Seller's interests
therein (including street address, legal description, owner, and use and the
location of all improvements thereon). The Real Property listed on Schedule
3.5 comprises all real property interests necessary to conduct the business and
operations of the Stations as now conducted. Except as described in Schedule
3.5, Seller's interests in the Real Property are free and clear of all liens,
mortgages, pledges, covenants, easements, encroachments, leases, charges and
other claims
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and encumbrances, except liens for taxes not yet due and payable. 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. To
the best knowledge of Seller, all towers, guy anchors, and buildings and other
improvements included in the Assets are located entirely on the Real Property
listed in Schedule 3.5. All Real Property (including the improvements thereon)
(i) is in good condition and repair consistent with its present use, (ii) is
available for immediate use in the conduct of the business and operations of
the Stations, and (iii) to the best knowledge of Seller, complies with all
applicable building or zoning codes and the regulations of any governmental
authority having jurisdiction. Seller has full legal and practical access to
the Real Property. To the best knowledge of Seller, 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 Stations as now conducted. Except as described in Schedule 3.6, Seller
owns and has good title to each item of Tangible Personal Property, and none of
the Tangible Personal Property owned by Seller is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens listed on Schedule 3.6, which liens shall be
released at Closing, and liens for current taxes not yet due and payable. Each
item of Tangible Personal Property is available for immediate use in the
business and operations of the Stations. All items of transmitting and studio
equipment included in the Tangible Personal Property (i) have been maintained
in a manner consistent with generally accepted standards of good engineering
practice, and (ii) permit the Stations and any auxiliary broadcast stations
used in connection with the operation of the Stations 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 Stations for cash at prevailing rates and which have not been prepaid and
which may be canceled by the Stations without penalty on not more than thirty
days' notice. Seller has delivered to Buyer true and complete copies of all
written Assumed Contracts, true and complete memoranda of all oral Assumed
Contracts (including any amendments and other modifications to such Assumed
Contracts), and a schedule summarizing Seller's obligations under trade and
barter agreements relating to the Stations. 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
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<PAGE> 15
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, to the best knowledge of Seller, any other third
party is required (i) to consummate this Agreement and the transactions
contemplated hereby, (ii) to permit Seller to assign or transfer the Assets to
Buyer, or (iii) to enable Buyer to conduct the business and operations of the
Stations in essentially the same manner as such business and operations are now
conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all 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 Stations as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of Seller's unaudited financial statements including a balance
sheet as of September 30, 1996 and an income statement for the period ending
September 30, 1996 (collectively, 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 Stations (which
books, records, and accounts are complete and correct), are complete and
correct in all material respects, and present fairly the financial condition of
the Stations as at their respective dates and the results of operations for the
periods then ended; provided, however, that the Financial Statements are
subject to normal year-end adjustments (which will not be material) and lack
footnotes. None of the Financial Statements understates the true costs and
expenses of conducting the
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business or operations of the Stations, fails to disclose any material
contingent liabilities, or inflates the revenues of the Stations.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Stations. All policies of insurance listed in Schedule 3.11 are in full
force and effect. During the past three years, no insurance policy of Seller
on the Assets or the Stations 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 Stations
are currently required to file with the FCC or with any other governmental
agency have been filed, except for such reports the failure of which to file
would not have a Material Adverse Effect, and all reporting requirements of the
FCC and other governmental authorities having jurisdiction over Seller and the
Stations have been complied with, except for such requirements the failure of
which to satisfy would not have a Material Adverse Effect. 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) Employees and Compensation. Schedule 3.13 contains a
true and complete list of all employees of the Stations, their job titles, date
of hire, current salary and date and amount of last salary increase. Except as
disclosed on Schedule 3.13, Seller does not have any employee benefit plans or
arrangements applicable to the employees of the Stations or any fixed or
contingent liabilities or obligations with respect to any person now or
formerly employed by Seller at the Stations, including any 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.
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 any plans and arrangements listed on Schedule 3.13. All employee
benefits and welfare plans or arrangements listed in Schedule 3.13 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;
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(b) Labor Relations. Seller is not a party to or subject to
any collective bargaining agreements with respect to any Station. Seller has
no written or oral contracts of employment with any employee of any 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, except for such noncompliance that would not have a Material Adverse
Effect. 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 knowledge
of Seller, threatened, between Seller and any employee (singly or collectively)
of any Station. No labor union or other collective bargaining unit represents
or claims to represent any of the employees of any Station. To the best
knowledge of Seller, there is no union campaign being conducted to represent
employees of any Station or solicit cards from employees to authorize a union
to request a National Labor Relations Board certification election with respect
to any employees at any Station; and
(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.
3.14 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
Stations, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.15 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry or as noted on
Schedule 3.4, 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
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to its ownership or operation of any Station or otherwise relating to the
Assets or the business or operations of any 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 noted on Schedule 3.4,
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 any Station other than rule making proceedings which affect the
radio broadcasting industry generally, (ii) before any federal or state agency
relating to the business or operations of any 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 any Station involving zoning issues under any
federal, state, or local zoning law, rule, or regulation.
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 Stations
alleging any failure to comply with any such law, rule, or regulation;
(b) To the best knowledge of Seller, after due investigation,
Seller has no liability relating to its operation of the Stations (and there is
no basis related to the Seller's past or present operations, properties, or
facilities 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 knowledge of Seller, after due investigation,
Seller has no liability relating to its operation of the Stations (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) from the
handling or disposal of any substance or for illness or personal injury
therefrom;
(d) To the best knowledge of Seller, after due investigation,
Seller has no liability relating to its operation of the Stations (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
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<PAGE> 19
federal, state, or local government (or agency thereof) concerning employee
health and safety;
(e) To the best knowledge of Seller, after due investigation,
Seller has no liability relating to its operation of the Stations (and Seller
has complied with the guidelines issued by the American National Standards
Institute concerning exposure of workers and the general public to radio
frequency radiation and has not exposed any employee to any other 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 under any
law concerning radiofrequency radiation;
(f) In connection with its operation of the Stations, 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; and
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its operation of the Stations.
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 Stations. To the best knowledge of Seller, 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.
3.18 Conduct of Business in Ordinary Course. Since September 30, 1996,
Seller has conducted the business and operations of the Stations only in the
ordinary course and has not:
(a) Suffered any Material Adverse Effect;
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(b) Made any material increase in compensation payable or to
become payable to any of the employees of the Stations, or any bonus payment
made or promised to any employee of the Stations, or any material change in
personnel policies, employee benefits, or other compensation arrangements
affecting the employees of the Stations;
(c) Made any sale, assignment, lease, or other transfer of
any of the Stations' properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by Seller with
respect to the Stations, except in the normal and usual course of business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Stations; or
(f) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Stations.
3.19 Transactions with Affiliates. Except as disclosed on Schedule
3.19, Seller has not been involved in any business arrangement or relationship
relating to the Stations 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 Stations. As used in this paragraph, "affiliate" has the
meaning set forth in Rule 12b-2 promulgated under the Securities and Exchange
Act of 1934.
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.
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:
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<PAGE> 21
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 Escrow Agreement and the documents contemplated
hereby and thereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Buyer hereunder and
thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Buyer have been
duly authorized by all necessary actions on the part of Buyer. This Agreement
and the Escrow Agreement have been duly executed and delivered by Buyer and
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Qualification. Buyer is legally qualified under the
Communications Act of 1934, as amended, and the FCC's rules and regulations to
acquire the FCC Licenses and to operate the Stations.
4.6 Access Buyer has had reasonable opportunities to inspect the
Assets and to ask questions of and receive answers from persons acting on
behalf of Seller concerning the Assets and the transactions contemplated by
this Agreement.
4.7 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished
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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 STATIONS PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Stations diligently in
the ordinary course of business in accordance with 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 Stations,
except in accordance with past practices.
5.3 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, except for (a) cash
time sales agreements made in the ordinary course of business, (b) contracts
that do not involve obligations in excess of Ten Thousand Dollars ($10,000) in
the aggregate, and (c) contracts or commitments relating to the acquisition or
installation of facilities and equipment contemplated by the construction
authorization described in Section 7.1(h) (the "Construction Permit") that have
been approved in writing by Buyer, which approval shall not be unreasonably
withheld. 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 Stations 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) conditions
specifically disclosed on Schedule 3.4, (ii) liens disclosed on Schedule 3.5
and Schedule 3.6, which shall be removed prior to the Closing Date, (iii) liens
for current taxes not yet due and payable, and (iv) mechanics' liens and other
similar liens, which shall be removed prior to the Closing Date.
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5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or,
except for the modification contemplated by the Construction Permit, modified,
or take any action that could cause the FCC or any other governmental authority
to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the operation of the Stations.
5.7 Rights. Seller shall not waive any right relating to the
Stations or any of the Assets.
5.8 No Inconsistent Action. Seller shall not take any action that is
inconsistent with its obligations under this Agreement or that could hinder or
delay the consummation of the transactions contemplated by this Agreement.
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 Stations 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 Stations that Buyer
may reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Stations). 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 maintain all of the Assets
in good condition (ordinary wear and tear excepted), and use, operate, and
maintain all of the Assets 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.
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5.11 Insurance. Seller shall maintain the existing insurance policies
on the Stations 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
Stations than those pertaining under the Contract or License as in effect on
the date of this Agreement. Seller shall promptly advise Buyer of any
difficulties experienced in obtaining any of the Consents and of any conditions
proposed, considered, or requested for any of the Consents. Upon Buyer's
request, Seller shall cooperate with Buyer and use their 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. Upon Buyer's request, Seller
shall use its reasonable best efforts to deliver to Buyer on or before the
Closing Date such certificates and confirmations to Buyer's lenders as Buyer
may reasonably request in connection with obtaining financing for the
performance of its payment obligations hereunder.
5.13 Books and Records. Seller shall maintain their books and records
relating to the Stations 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 any Station.
5.15 Financial Information. Seller shall furnish to Buyer within
twenty (20) days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense of the
Stations for the month just ended and such other financial information
(including information on payables and receivables) as Buyer may reasonably
request. All financial information delivered by Seller to Buyer pursuant to
this Section shall be prepared from the books and records of Seller in
accordance with generally accepted accounting principles consistently applied,
shall accurately reflect the books, records, and accounts of the Stations,
shall be complete and correct in all material respects, and shall present
fairly the financial condition of the Stations, as at their respective dates
and the results of operations for the periods then ended.
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 Stations.
5.17 Financing Leases. Except for obligations assumed by Buyer
pursuant to Section 2.5, 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
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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
Stations, or make any other material change in the Stations' programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.19 Preservation of Business. Seller shall use its best efforts to
preserve the business and organization of the Stations and use its best efforts
to keep available to the Stations their present employees and to preserve the
audience of the Stations and the Stations' present relationships with
suppliers, advertisers, and others having business relations with them, to the
end that the business, operations, and prospects of the Stations shall be
unimpaired at the Closing Date. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Stations shall
be maintained.
5.20 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Stations only in the ordinary course consistent with
their past practices and will not take any action designed or likely to
accelerate the collection of their accounts receivable.
5.21 Personnel Recommendations. Seller shall promptly notify Buyer as
personnel vacancies occur at the Stations and consider for employment all
personnel recommended by Buyer for such vacant 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; and
(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
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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 any 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 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.
(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; and
(b) If any damage or destruction of the Assets or any other
event occurs which (i) causes any Station to cease broadcasting operations for
a period of three (3) or more days or (ii) prevents in any material respect
signal transmission by any Station in the normal and usual manner and Seller
fails to restore or replace the Assets so that normal and usual transmission is
resumed within seven days of the damage, destruction or other event, Buyer, in
its sole discretion, may (x) terminate this Agreement forthwith without any
further obligations hereunder by providing to Seller written notice of
termination no later than ten (10) business days following the end of such
seven-day period, 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) if
Buyer fails to provide written notice of termination within the specified
period, 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.
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6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental audit of the properties of the Stations, and such audit shall be
completed within 45 days of the date hereof. If such audit discloses any
material environmental hazard or material possibility of future liability for
environmental damages or clean-up costs, Buyer shall provide Seller with a copy
of the audit report within 50 days of 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 Stations and
to prepare a report on the Stations' compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If such study discloses any material deficiencies in the
operations or equipment of the Stations, Buyer shall provide Seller with a copy
of the engineering report within 50 days of 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 or desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.8 Sales Tax Filings. Seller shall file such Florida sales tax
returns with respect to the Stations as required 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 access
and the right to copy for a period of three (3) 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
(3) years from the Closing Date any books and records relating to the Assets
and delivered to Buyer at the Closing.
6.10 Appraisal. Buyer and Seller agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by BIA Consulting, Inc. and paid for by Buyer.
6.11 Studio Option. Seller shall use its best efforts to enter into
prior to Closing an option to purchase the 12,000 square foot studio building
for Station WFKZ-FM for a purchase price of not more than $600,000 (the
"Option"). The Option shall be assignable by Seller to Buyer without the
consent of the landlord of such building and shall contain such
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other terms and conditions that are reasonably acceptable to Buyer. Upon the
Closing, Seller shall assign the Option to Buyer.
6.12 Employees.
(a) On or before the Closing Date, Buyer shall offer to
employ each individual listed on Schedule 3.13 upon such terms and conditions
as Buyer may elect in its sole discretion; provided, however, that the terms
and conditions governing Buyer's employment of Joel Day and Lee Day shall be as
set forth in the Employment Agreements described in Section 6.15.
(b) In the event the Closing does not occur, neither Buyer
nor any of its affiliates will, directly or indirectly, offer employment to or
otherwise solicit any employee of Seller. This provision shall survive
notwithstanding the failure of the consummation of the transactions
contemplated hereby.
6.13 C-2 Upgrade. Following the grant by the FCC of the FCC Consent
and the Construction Permit, Buyer shall loan Seller an amount not to exceed
$50,000 (the "Construction Loan") for the reasonable and necessary expenses
required to purchase and construct the facilities authorized in the
Construction Permit. Seller agrees to execute and deliver to Buyer a promissory
note (the "Note") and such other documents as Buyer may reasonably request in
connection with the Construction Loan. Upon the Closing, Seller's obligation
to repay the Construction Loan shall be forgiven. In the event that the
Closing does not occur, Seller shall repay the Construction Loan in accordance
with the terms of the Note within ten (10) days following the termination of
this Agreement.
6.14 Notice of Developments. Buyer shall promptly notify Seller in
writing of (a) any material change in any of the information contained in
Buyer's representations and warranties contained in Section 4 of this Agreement
and (b) if and to the extent actually known by Buyer, any material breach by
Seller of Seller's representations or warranties in Section 3 of this
Agreement. Seller shall promptly notify Buyer in writing of (c) any material
change in any of the information contained in Seller's representations and
warranties contained in Section 3 of this Agreement and (d) if and to the
extent actually known by Seller, any material breach by Buyer of Buyer's
representations or warranties in Section 4 of this Agreement. If Seller fails
to cure any material breach of its representations or warranties within thirty
(30) days after Seller provides or receives written notice of such breach,
Buyer shall have thirty (30) days after the end of such 30-day cure period
within which to exercise any right Buyer may have under this Agreement as a
result of Seller's material breach. If Buyer fails to cure any material breach
of its representations or warranties within thirty (30) days after Buyer
provides or receives written notice of such breach, Seller shall have thirty
(30) days after the end of such 30-day cure period within which to exercise any
right Seller may have under this Agreement as a result of Buyer's
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material breach. If either Buyer or Seller shall fail to exercise its rights
after such thirty (30) day period, then the change or changes noted in the
written notice shall be deemed accepted and the rights of Buyer or Seller, as
the case may be, triggered by such written notice shall be deemed waived for
all purposes hereunder.
6.15 Employment Agreements. Buyer shall deliver to Seller, within a
reasonable period following the date hereof, draft Employment Agreements for
Joel Day and Lee Day which shall contain the principal terms set forth in
paragraph 2(c) of the letter of intent dated October 29, 1996, between Key
Chain, Inc. and Paxson Communications Corporation and such other terms that are
reasonably acceptable to Buyer, Joel Day and Lee Day.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time;
(b) Covenants and Conditions. Seller shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date;
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization;
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on 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 Licenses and there shall not have been any modification of any License
that could have a Material Adverse Effect. 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;
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(g) Adverse Change. Between the date of this Agreement and
the Closing Date, there shall have been no Material Adverse Effect; and
(h) WAVK-FM. The FCC shall have authorized the modification
of the facilities of Station WAVK-FM to operate as a Class C-2 FM station
substantially in accordance with the operating parameters specified in the
pending application for construction permit filed by Seller on September 30,
1996 (File No. BPH-960930IF), and such authorization shall have become a Final
Order.
7.2 Conditions to Obligations of Seller. All obligations of Seller
at the Closing are subject at Seller's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time;
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date;
(c) Deliveries. Buyer shall have made or stand willing to
make all the deliveries set forth in Section 8.3; and
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m.
on a date, to be set by Buyer on at least five (5) days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten (10) business days following the
date upon which the FCC Consent has become a Final Order, subject to the
satisfaction or waiver of all of the other conditions precedent to the holding
of the Closing. If Buyer fails to specify the date for the Closing pursuant to
the preceding sentence prior to the fifth day after the date upon which the FCC
Consent has become a Final Order, the Closing shall take place on the tenth
business day after the date upon which the FCC Consent has become a Final Order.
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(a) Closing Place. The Closing shall be held at the offices
of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer, free and clear of all claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances,
except for liens for current taxes not yet due and payable and obligations
assumed by Buyer pursuant to Section 2.5;
(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 its 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) Tax, Lien, and Judgment Searches. Results of a search
for tax, lien, and judgment filings in the Secretary of State's records of the
State of Florida, as well as the records of those counties in Florida in which
any of the Assets are located, such searches having been made no earlier than
fifteen days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all available files and records
used by Seller in connection with their operations;
(g) Accounts Receivable. A complete and accurate list of the
Stations' Accounts Receivable as of a date no more than five (5) business days
prior to the Closing
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Date, including, with respect to each of the Accounts Receivable, the amount
number, date of issuance, name and address of account debtor, aggregate amount,
and balance due;
(h) Opinions of Counsel. Opinions of Seller's counsel dated
as of the Closing Date, substantially in the form of Schedule 8.2(h) hereto;
and
(i) Employment Agreements. The Employment Agreements
referred to in Section 6.15, duly executed by Joel and Lee Day.
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 their counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.4;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts insofar as they relate to
the time on and after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by its 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 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;
and
(e) Employment Agreements. The Employment Agreements
referred to in Section 6.15, duly executed by Buyer.
SECTION 9 TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Stations abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Seller set
forth in this Agreement have not been satisfied or waived in writing by Seller;
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(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing;
(c) Upset Date. If the Closing shall not have occurred by
November 1, 1997; and
(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 thirty (30) days after Buyer received written notice of such breach from
Seller, and Seller shall have delivered to Buyer its termination notice no
later than thirty (30) days following the expiration of such 30-day cure
period.
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, other than the condition set forth in Section 7.1(h),
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
November 1, 1997;
(d) Interruption of Service. If any event shall have
occurred that (i) prevented signal transmission of any Station for a continuous
period of three days or (ii) caused any Station to operate at reduced power of
50 percent or more for a continuous period of fifteen days, and Buyer shall
have delivered to Seller its termination notice no later than thirty (30) days
following the end of such 3-day or 15-day period, as the case may be;
(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 audit described in
Section 6.5, within the 50-day period specified in Section 6.5, the cause
thereof shall not have been remedied within 30 days from the date that Seller
receives such notice from Buyer, and Buyer shall have delivered to Seller its
termination notice no later than thirty (30) days following the expiration of
such 30-day cure period;
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(f) Technical Deficiencies. Buyer shall have notified Seller
of material deficiencies in the operations or equipment of any Station, as
indicated in the engineering report described in Section 6.6, within the 50-
day period specified in Section 6.6, the cause thereof shall not have been
remedied within 30 days from the date that Seller receives such notice from
Buyer, and Buyer shall have delivered to Seller its termination notice no later
than thirty (30) days following the expiration of such 30-day cure period; and
(g) Breach. Without limiting Buyer's rights under the other
provisions of this Section 9.2, if Seller has failed to cure any material
breach of any of its representations, warranties, or covenants under this
Agreement within thirty (30) days after Seller received written notice of such
breach from Buyer, and Buyer shall have delivered to Seller its termination
notice no later than thirty (30) days following the expiration of such 30-day
cure period.
9.3 Rights on Termination. If this Agreement is terminated pursuant
to Section 9.1 or Section 9.2 and no party is in material breach of this
Agreement, the parties hereto shall not have any further liability to each
other with respect to the purchase and sale of the Assets. If this Agreement
is terminated by Seller due to Buyer's material breach of this Agreement, then
the payment to Seller of Three Hundred Fifty Thousand Dollars ($350,000)
pursuant to Section 9.4 below shall be liquidated damages and shall constitute
full payment and the exclusive remedy for any damages suffered by Seller by
reason of Buyer's material breach of this Agreement. Seller and Buyer agree in
advance that actual damages would be difficult to ascertain and that the amount
of Three Hundred Fifty Thousand Dollars ($350,000) 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; provided, however, that Buyer shall not be
permitted to recover damages against Seller in an amount in excess of the
Purchase Price.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the
sum of Three Hundred Fifty Thousand Dollars ($350,000) in accordance with the
Escrow Agreement. All such funds deposited with the Escrow Agent shall be held
and disbursed in accordance with the terms of the Escrow Agreement and the
following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer;
(b) If this Agreement is terminated pursuant to Section 9.1
or 9.2 and Buyer is not in material breach of this Agreement, all amounts held
by the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, shall be
disbursed to or at the direction of Buyer; and
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(c) If this Agreement is terminated by Seller due to Buyer's
material breach of this Agreement, then all amounts held by the Escrow Agent
pursuant to the Escrow Agreement shall be disbursed to or at the direction of
Seller as liquidated damages under Section 9.3 above and any 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 survive the Closing for a period
of eighteen (18) months, except that the agreements of Buyer and Seller set
forth in Section 6.4 shall continue in full force and effect whether or not the
Closing occurs and without regard to any period of time. Any investigations by
or on behalf of any party hereto shall not constitute a waiver as to
enforcement of any representation, warranty, or covenant contained in this
Agreement. No notice or information delivered by Seller shall affect Buyer's
right to rely on any representation or warranty made by Seller or relieve
Seller of any obligations under this Agreement as the result of a breach of any
of their representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby 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, other than losses,
liabilities or damages resulting from any breach that is waived by Buyer
pursuant to Sections 6.14 and 9.2(d), (e), (f) and (g) hereof;
(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 any Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date; and
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(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, other than losses,
liabilities or damages resulting from any breach that is waived by Seller
pursuant to Sections 6.14 and 9.1(d) hereof;
(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 any Station on and after the Closing; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim.
If the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five days after
written notice of such action, suit, or proceeding was given to Claimant;
provided, however, that the failure of the Claimant to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 10, except to the extent the Indemnifying Party is actually and
materially prejudiced by such failure to give 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 days to make
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such investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party and/or its authorized representatives the
information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of the
thirty-day period (or any mutually agreed upon extension thereof) to the
validity and amount of such claim, the Indemnifying Party shall immediately pay
to the Claimant the full amount of the claim. If the Claimant and the
Indemnifying Party do not agree within the thirty-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate remedy at law
or equity or under the arbitration provisions of this Agreement, as applicable;
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense; provided,
however, that the Claimant shall not consent to the entry of any judgment or
enter into any settlement unless Claimant obtains the prior written consent of
the Indemnifying Party (which consent shall not be unreasonably withheld). If
the Indemnifying Party does not elect to assume control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to such claim;
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible; and
(e) The indemnifications rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Limitations on Indemnification. Seller's and Buyer's obligations
to indemnify the other pursuant to this Section 10 shall be subject to the
following limitations:
(a) No indemnification shall be required to be made under
Section 10.2 or Section 10.3 until the aggregate amount of losses, liabilities,
damages or expenses incurred by Buyer or Seller, as the case may be, exceeds
$25,000, and then the indemnification shall be made by the Indemnifying Party
only to the extent of such excess over $25,000; and
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(b) No indemnification shall be required to be made under
Section 10.2 (a) or Section 10.3(a) if the written notice of any claim for
indemnification is received by the Indemnifying Party following the expiration
of the period specified in Section 10.1.
10.6 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, 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.
10.7 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Seller. Buyer and Seller shall
each pay one-half of the fees payable to the Escrow Agent and one-half of the
filing fee required in connection with the application for the FCC Consent.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives, Seller shall be responsible for all
fees or commissions payable to Media Venture Partners, 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 or the Escrow 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 in the State of Florida. 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
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American Arbitration Association in the State of Florida. 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. Seller acknowledges and agrees that the arbitrators' award
may include, among other things, the right of Buyer to obtain specific
performance of the terms of this Agreement pursuant to Section 10.5. Judgment
on the award, if it is not paid or otherwise satisfied 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 or (ii) an
action to enforce the award of the arbitration panel rendered in accordance
with this Section.
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: Joel Day, President
Key Chain, Inc.
93351 Overseas Highway
Tavernier, Florida 33070
With a copy to: Irwin M. Frost, Esq.
1101 Brickell Avenue, Suite 1400
Miami, Florida 33131
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications of the Keys, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 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.
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11.4 Benefit and Binding Effect. No party hereto may assign this
Agreement without the prior written consent of the other parties hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Seller's prior
approval in which event Buyer shall have no further obligation hereunder and
Buyer may assign its rights and interests hereunder to its lenders as
collateral security for Buyer's obligations to such lenders without seeking or
obtaining Seller's prior approval. Upon any permitted assignment by Buyer or
Seller in accordance with this Section 11.4, all references to"Buyer" herein
shall be deemed to be references to Buyer's assignee and all references to
"Seller" herein shall be deemed to be references to Seller's assignee, as the
case may be. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. No
assignment pursuant to the terms of this Section 11.4 shall excuse Buyer or
Seller from performing its obligations hereunder in the event its assignee
fails to perform such obligations. Except for any permitted assignee of Buyer
or Seller, this Agreement confers no rights of any kind upon any third party.
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
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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 Schedules. The Schedules hereto are incorporated herein by
reference and made a part hereof.
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 Press Release. No 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 parties; 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.
11.13 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
THE KEYS, INC.
By: /s/ James B. Bolock
-----------------------------------
Name: James B. Bolock
Title: President
KEY CHAIN, INC.
By: /s/ Joel B. Day
----------------------------------
Name: Joel B. Day
Title: President
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<PAGE> 1
EXHIBIT 10.144
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
KANSAS CITY-50, INC.
AND
KANSAS CITY YOUTH FOR CHRIST, INC.
FOR
TELEVISION STATION KYFC-TV
KANSAS CITY, MISSOURI
* * *
DECEMBER 10, 1996
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<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" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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 . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Environmental; Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.18 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Qualifications of Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5. OPERATION OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.9 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.12 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.13 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.15 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.16 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.17 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.6 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.7 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<PAGE> 4
<TABLE>
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<S> <C> <C>
6.8 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.9 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.10 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.11 Move . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.5 Certain Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.6 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.11 Press Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<PAGE> 5
LIST OF SCHEDULES
<TABLE>
<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 -- Insurance Matters
Schedule 3.12 -- Personnel
Schedule 6.8 -- Noncompetition Agreement
Schedule 6.11 -- Leased Premises
Schedule 8.2(f) -- Opinion of Seller's Counsel
Schedule 8.3(d) -- Opinion of Buyer's Counsel
Schedule 9.4 -- Escrow Agreement
</TABLE>
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<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 10th day of December,
1996, by and between Paxson Communications of Kansas City-50, Inc., a Florida
corporation ("Buyer"), and Kansas City Youth for Christ, Inc., a Kansas
corporation ("Seller").
R E C I T A L S
A. Seller is the licensee of television station KYFC-TV, Channel
50, Kansas City, Missouri (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 in the operation 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 in Schedule 3.7 as Contracts to be assumed by
Buyer upon its purchase of the Station, and (ii) any Contracts entered into by
Seller between the date of this Agreement and the Closing Date that Buyer
agrees in writing to assume.
"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> 7
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto), to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operation of
the Station, and (i) which are in effect on the date of this Agreement or (ii)
which are entered into by Seller between the date of this Agreement and the
Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the construction or operation of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used in
the construction, business and operation of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental
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<PAGE> 8
authorities to Seller in connection with the construction, business or
operation of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means the Leasehold Interests to be conveyed to Buyer
pursuant to Section 3.5 hereof.
"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 in
the construction, business or operation of the Station, including the
Transmission Tower used by the Station and is listed on Schedule 3.6 hereof
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
Seller's right, title and interest in and to the tangible and intangible assets
used in connection with the business or operation of the Station, together with
any additions thereto between the date of this Agreement and the Closing Date,
but excluding the assets described in Section 2.2, free and clear of any
claims, liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for liens for current
taxes not yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the operation of the Station; and
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<PAGE> 9
(g) All books and records relating to the business or
operation of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station but not including
books and records related to the fundraising necessary for the operation of the
Station and other financial statements regarding Seller.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Seller's cash or cash equivalents on hand as of the
Closing and all other cash in any of Seller's bank or savings accounts;
Accounts Receivable; any insurance policies, letters of credit, or other
similar items and cash surrender value in regard thereto; and any stocks,
bonds, certificates of deposit and similar investments;
(b) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements;
(c) The real property and building located at 4715
Rainbow Boulevard in Shawnee Mission, Kansas (the "Rainbow Property") and the
real property and certain identified property located at 6309 E. 56th Street,
Kansas City, Missouri, subject to the lease arrangement of Section 3.5 hereof;
(d) The call sign "KYFC"; and
(e) All property listed on Schedule 2.2 hereto (including
studio equipment).
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 SIXTEEN MILLION FOUR HUNDRED THOUSAND DOLLARS
($16,400,000), 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.
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<PAGE> 10
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Purchase
Price under Section 2.3(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to
the Purchase Price under Section 2.3(a), to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (ii)
shall be certified by Seller to be true and complete in all material respects
as of the date thereof.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date (the "Assumed 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 Station prior to the
Closing, (iv) any obligations or liabilities arising under capitalized leases
or other financing agreements which are not Assumed Contracts, (v) any
obligations or liabilities arising under agreements entered into other than in
the ordinary course of business which are not 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 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 Kansas. Seller has all requisite power and authority (i)
to own, lease, and use the Assets as now owned, leased,
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<PAGE> 11
and used, (ii) to conduct the business and operations of the Station as now
conducted, and (iii) to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Seller hereunder
and thereunder. Seller is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
construction or operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Seller have been duly authorized by all
necessary actions on the part of Seller. 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 Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; (iii) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Seller is a party or
by which Seller may be bound;(iv) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon any of the Assets; and (v) will not conflict with any provision
of the organizational documents of Seller.
3.4 Governmental Licenses. Schedule 3.4 includes a true and
complete list of the Licenses. Seller has delivered to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and Seller is the authorized
legal holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful construction and operation of the Station,
and none of the Licenses is subject to any restriction or condition that would
delay or adversely affect such construction and operation. The Licenses are in
full force and effect. Seller has no reason to believe that any of the Licenses
would not be extended or renewed by the FCC or other granting authority in the
ordinary course (except for an occupational permit which must be obtained by
Buyer from local authorities. The Station's city of license, as determined by
the FCC, is located within the Kansas City, Missouri Area of Dominant Influence
as defined by the 1991-1992 Area of Dominant Influence Market Guide published
by The Arbitron Co. and the Kansas City, Missouri Designated Market Area as
defined by
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<PAGE> 12
the 1994 United States Television Household Estimates published by Nielsen
Media Research.
3.5 Title to and Condition of Real Property. Seller will grant to
Buyer a leasehold interest in the Real Property set forth on Schedule 3.5
hereto for a period of fifty years at a nominal rental pursuant to a Lease
Agreement mutually acceptable to Buyer and Seller. Buyer shall pay one-half of
the property taxes on the Real Property where the leasehold interest is located
(currently $3,500). The building located on said Real Property is being
acquired by Buyer "AS IS WHERE IS" with all faults and Seller makes no
representations and warranties of any kind or nature with respect to the
building. 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 full legal and practical access to the Real Property.
All easements, rights-of-way, and real property licenses necessary for the
operation of the Station by Seller 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 items of Tangible Personal Property. Except as
described on Schedule 3.6, the Tangible Personal Property listed on Schedule
3.6 comprises all items of tangible personal property necessary to operate the
Station in accordance with the terms of the Licenses. Except as described in
Schedule 3.6, Seller owns and has good title to each item of Tangible Personal
Property, and none of the Tangible Personal Property owned by Seller is subject
to any security interest, mortgage, pledge, conditional sales agreement, or
other lien or encumbrance, except for liens for current taxes not yet due and
payable. Each item of Tangible Personal Property is available for immediate
use in the operation of the Station. All items of transmitting and
transmission equipment included in the Tangible Personal Property (i) have been
installed and maintained in a manner consistent with generally accepted
standards of good engineering practice, and (ii) will permit the Station to
operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state, and local
statutes, ordinances, rules, and regulations. Except as provided above, Seller
makes no representations and warranties of any kind regarding the condition of
the Tangible Personal Property. In addition, the parties recognize that Buyer
will not be operating the Station from the Rainbow Property but will be moving
the Tangible Personal Property located at the Rainbow Property within sixty
(60) days after the Closing Date to a different location and this property may
be damaged during such relocation and Seller shall have no responsibility for
such damage but will cooperate with Buyer's efforts to relocate the property.
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, and true and complete memoranda of all oral Contracts
(including any amendments and other modifications to such Contracts). Other
than the Contracts listed on Schedule 3.7, Seller requires no material
contract, lease, or other agreement to enable it to operate the Station in
accordance with the terms of the Licenses. All of the Contracts are in full
force and effect,
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and are valid, binding, and enforceable in accordance with their terms. To the
knowledge of Seller, there is not under any Contract any default by any party
thereto or any event that, after notice or lapse of time or both, could
constitute a default. Seller is not aware of any intention by any party to any
Contract (i) to terminate such contract or amend the terms thereof, (ii) to
refuse to renew the Contract upon expiration of its term, or (iii) to renew the
Contract upon expiration only on terms and conditions which are more onerous
than those now existing. Except for the need 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 material 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. Seller
specifically represents to Buyer that Seller does not meet the filing
requirements specified by the Hart-Scott-Rodino Antitrust Improvements Act of
1972, as amended ("HSR Act") and no HSR Act filing or approval is required to
consummate the transaction provided for in this Agreement.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles, all of which are valid and in good standing and uncontested. To
Seller's knowledge, Seller is not infringing upon or otherwise acting adversely
to any trademarks, trade names, service marks, service names, copyrights,
patents, patent applications, know-how, methods, or processes owned by any
other person or persons, and there is no claim or action pending, or to the
knowledge of Seller threatened, with respect thereto.
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 operation 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, reports, and
statements are substantially complete and correct as filed.
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3.12 Personnel.
(a) 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.
(b) There exists no action, suit or claim with respect to
any Employee Plan or Compensation Arrangement pending or, to the knowledge of
Seller, threatened against any of such plans or arrangements. Seller possesses
no knowledge of any facts which could give rise to any such action, suit or
claim.
(c) Schedule 3.12 also contains a true and complete list
of all employees whose primary duties involve the operation of the Station,
their job description, date of hire, salary and amount and date of last salary
increase.
(d) 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.
(e) 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. Seller will
hold Buyer harmless for any violation of Seller of laws, rules, and
regulations relating to the employment of labor, including those related to
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wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and Seller has
not received any notice alleging that it has failed to comply in any material
respect with any such laws, rules, or regulations. No controversies, disputes,
or proceedings are pending or, to the best of Seller's knowledge, threatened,
between Seller and any employee (singly or collectively) of the Station. No
labor union or other collective bargaining unit represents or claims to
represent any of the employees of the Station. To the best of Seller's
knowledge, there is no union campaign being conducted to represent any
employees of the Station or to solicit cards from employees to authorize a
union to request a National Labor Relations Board certification election with
respect to any employees at the Station.
3.13 Taxes. There are no governmental investigations or other
legal, administrative, or tax proceedings pursuant to which Seller is or could
be made liable for any taxes, penalties, interest, or other charges, the
liability for which could extend to Buyer as transferee of the Station, and no
event has occurred that could impose on Buyer any transferee liability for any
taxes, penalties, or interest due or to become due from Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against Seller with respect to its ownership or operation of the Station or the
Assets or the Station, nor does Seller know or have reason to be aware of any
basis for the same. In particular, but without limiting the generality of the
foregoing, there are no applications, except as disclosed on Schedule 3.4,
complaints or proceedings pending or, to the best of Seller's knowledge,
threatened (i) before the FCC relating to the business or operation of the
Station other than rule making proceedings which affect the television industry
generally, (ii) before any federal or state agency relating to the business or
operation of the Station involving charges of illegal discrimination under any
federal or state employment laws or regulations, or (iii) before any federal,
state, or local agency relating to the business or operation of the Station
involving zoning issues under any federal, state, or local zoning law, rule, or
regulation.
3.15 Environmental; Hazardous Materials.
(a) To Seller's knowledge, Seller has complied in all
material respects with all laws, rules, and regulations of all federal, state,
and local governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against Seller in connection with its
construction, ownership or operation of the Station alleging any failure to
comply with any such law, rule, or regulation.
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(b) To Seller's knowledge, Seller has no material
liability relating to its construction, ownership and operation of the Station
(and there is no basis related to the past or present operations, properties,
or facilities of Seller for any substantial present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
(c) To Seller's knowledge, Seller has no material
liability relating to its construction, ownership and operation of the Station
(and Seller has not handled or disposed of any substance, arranged for the
disposal of any substance, or owned or operated any property or facility in any
manner that could form the basis for any substantial present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to any statute) against Seller giving rise to
any such liability) for damage to any site, location, or body of water (surface
of subsurface) or for illness or personal injury.
(d) To Seller's knowledge, Seller has no material
liability relating to its construction, ownership and operation of the Station
(and there is no basis for any substantial present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against
Seller giving rise to any such liability) under any law, rule, or regulation of
any federal, state, or local government (or agency thereof) concerning employee
health and safety.
(e) To Seller's knowledge, Seller has no material
liability relating to its construction, ownership and operation of the Station
(and Seller has not exposed any employee to any substance or condition that
could form the basis for any substantial present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand (under the
common law or pursuant to statute) against Seller giving rise to any such
liability) for any illness or personal injury to any employee.
(f) In connection with its construction, ownership or
operation of the Station, to Seller's knowledge, Seller has obtained and been
in compliance in all material respects with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all federal, state, and local laws, rules, and regulations
(including all codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety,
worker health and safety, and pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or
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handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(g) To Seller's knowledge, no pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or waste has ever been
manufactured, buried, stored, spilled, leaked, discharged, emitted, or released
by Seller in connection with its construction, ownership and operation of the
Station or, to Seller's knowledge, by any other party on any Real Property in
violation of any environmental laws or which is likely to require any remedial
action with respect to said Real Property.
3.16 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all material, federal, state, and local laws,
rules, regulations, and ordinances applicable or relating to the ownership or
operation of the Station. Neither the ownership or use of the properties of
the Station nor the operation of the Station conflicts with the rights of any
other person or entity.
3.17 Transactions with Affiliates. Seller has not been involved in
any business arrangement or relationship relating to the Station with any
affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the construction or operation of the
Station. As used in this paragraph, "affiliate" has the meaning set forth in
Rule 12b-2 promulgated under the Securities and Exchange Act of 1934.
3.18 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
3.19 Conduct of Business in Ordinary Course. Since December 31,
1995, Seller has conducted the business and operations of the Station only in
the ordinary course and has not:
(a) 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 except that charitable contributions towards the operation of the
Station have declined;
(b) Made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor; or
(c) 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.
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3.20 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Missouri. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and the
Escrow Agreement and the documents contemplated hereby and thereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Buyer
have been duly authorized by all necessary corporate actions on the part of
Buyer. This Agreement and the Escrow Agreement have been duly executed and
delivered by Buyer and constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms
except as the enforceability of this Agreement and the Escrow Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for a
commission payable by Buyer to Patrick Communications Corporation.
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4.5 Full Disclosure. No representation or warranty made by Buyer
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
4.6 Qualifications of Buyer. 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.
SECTION 5. OPERATION OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall take all actions required to
operate the Station diligently in the ordinary course of business (except where
such conduct would conflict with the following covenants or with Seller's other
obligations under this Agreement), and in accordance with the other covenants
in this Section 5.
5.2 Contracts. Seller will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing. Prior to the
Closing Date, Seller shall deliver to Buyer a list of all Contracts entered
into between the date of this Agreement and the Closing Date, together with
copies of such Contracts.
5.3 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the construction or operation of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
5.4 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall be removed prior to the
Closing Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
5.5 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail
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to prosecute with due diligence any applications to the FCC or any other
governmental authority in connection with the construction or operation of the
Station.
5.6 Rights. Seller shall not waive any right relating to the
Station or any of the Assets.
5.7 No Inconsistent Action. Seller shall not intentionally take
any action that is inconsistent with its obligations under this Agreement that
is reasonably likely to hinder or delay the consummation of the transactions
contemplated by this Agreement.
5.8 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection, subject to appropriate confidentiality agreements. The
parties acknowledge and agree that Seller will not be obligated to provide
Buyer with a list of or any information related to the persons who have
contributed funds for Seller in the operation of the Station or Seller's
fundraising efforts.
5.9 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 reasonable 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. Except as provided in Section 6.3(b),
if any loss, damage, impairment, confiscation, or condemnation of or to any of
the Assets occurs, Seller shall repair, replace, or restore the Assets to their
prior condition as represented in this Agreement as soon thereafter as
possible, and Seller shall use the proceeds of any claim under any insurance
policy solely to repair, replace, or restore any of the Assets that are lost,
damaged, impaired, or destroyed.
5.10 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.11 Consents. Seller shall use reasonable commercial 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.
5.12 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
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5.13 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the operation of the
Station, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement.
5.14 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership, construction and operation of the Station.
5.15 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
5.16 Preservation of Business. Seller shall use its best efforts
to preserve the Station's present relationships with suppliers and others
having business relations with it, to the end that the business, operations,
and prospects of the Station shall be unimpaired at the Closing Date.
5.17 Personnel Recommendations. Buyer shall consider for
employment all personnel recommended by Seller.
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 fifteen (15) 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
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an extension of the effective period of the FCC Consent. No extension of the
FCC Consent shall limit the exercise by either party of her or its rights under
Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any
other event occurs which (A) causes the Station to cease broadcasting
operations for a period of three or more days or (B) prevents in any material
respect signal transmission by the Station in the normal and usual manner and
Seller fails to restore or replace the Assets so that normal and usual
transmission is resumed within seven days of the damage, destruction or other
event, Buyer, in its sole discretion, may (x) terminate this Agreement
forthwith without any further obligations hereunder upon written notice to
Seller, in which event all funds held by the Escrow Agent pursuant to the
Escrow Agreement, including all interest and other proceeds from the investment
of such funds, shall be immediately returned to Buyer, or (y) proceed to
consummate the transaction contemplated by this Agreement and complete the
restoration and replacement of the Assets after the Closing Date, in which
event Seller shall deliver to Buyer all insurance proceeds received in
connection with such damage, destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding
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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.
6.6 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of Missouri shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller or Buyer as the result of the failure of
Seller or Buyer to comply with the provisions of any bulk sales law applicable
to the transfer of the Assets as contemplated by this Agreement shall be borne
by Seller.
6.7 Access to Books and Records. Seller shall provide Buyer
access and the right to copy for a period of three years from the Closing Date
any books and records relating to the Assets that are not included in the
Assets. Buyer shall provide Seller access and the right to copy for a period
of three years from the Closing Date any books and records relating to the
Assets.
6.8 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.12 and $328,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein.
6.9 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 Real Property. 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.
6.10 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 Assets of the Station, Buyer shall so notify Seller as soon
as practicable.
6.11 Move. Within sixty (60) days of the Closing Date, Buyer shall
have removed all of the Tangible Personal Property from the Rainbow Property
and Seller shall provide all commercially reasonable assistance. Prior to
moving the Tangible Personal Property from the Rainbow Property, Buyer shall
lease the portion of the Rainbow Property devoted to air operations (the
"Leased Premises" as described in Schedule 6.11) pursuant to a Lease Agreement
to be executed by Seller and Buyer at the Closing and be provided ingress and
egress to the Leased Premises for a rent of $500 per week (or pro rata portion
thereof if less than a full week) payable on a weekly basis in advance until
all of the Tangible Personal Property is removed by Buyer from the Rainbow
Property. While Buyer is leasing the Leased Premises, Buyer shall maintain
property damage insurance on the Tangible Personal
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Property, workmen's compensation insurance for Buyer's employees and
general liability insurance (naming Seller as an additional named insured on
the general liability policy), and will provide Seller a certificate of
insurance showing the insurance required hereby is in existence. Buyer will be
solely responsible and liable for providing the employees to operate the
Station after the Closing and for the acts and omissions of its employees while
Buyer's employees are on the Leased Premises and the Rainbow Property and Buyer
shall provide routine maintenance and repair for the equipment leased. Buyer
will indemnify, hold harmless and defend Seller and its employees, officers,
directors and affiliates from and against any and all liabilities damages,
demands, claims, costs and expenses of every kind and nature arising directly
or indirectly from acts, actions and omissions by Buyer or its employees,
agents or invitees. While Buyer leasing the Leased Premises, Buyer will not
cause mail to be delivered to the Rainbow Property; provided however, Seller
will use reasonable commercial efforts to cause all phone calls to Buyer or its
employees to be directed to the appropriate person. Buyer will also reimburse
Seller for all out-of-pocket expenses incurred by Seller as a result of Buyer's
use of the Leased Premises (e.g., long distance telephone calls by Buyer's
employees). If Buyer is unable to remove all of the Tangible Personal Property
from the Rainbow Property within 60 days of the Closing Date, for reasons
beyond its control, Seller shall permit Buyer to continue to utilize the Leased
Premises, on the terms contained herein, for a reasonable period.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND
SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
her prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under 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.
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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 an adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending or threatened, the
effect of which could be to revoke, cancel, fail to renew, suspend, or modify
adversely any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
assets or properties of the Station, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of the
Station.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days 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
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which the FCC Consent becomes a Final Order, the Closing shall take place on
the tenth business day after the date upon which the FCC Consent becomes a
Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite
800, Washington, D.C. 20036, or any other place that is agreed upon by Buyer
and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, motor vehicle titles, assignments, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets in the name
of Buyer, free and clear of all claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever, except for liens for current taxes not yet due and payable;
(b) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an Officer of Seller,
certifying (1) that the representations and warranties of Seller contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date; and (2) that Seller has in all
material respects performed and complied with all of her obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Tax, Lien, and Judgment Searches. Results of a
search for tax, lien, and judgment filings in the Secretary of State's records
of the State of Missouri as well as the records of those counties in Missouri
in which any of the Assets are located, such searches having been made no
earlier than fifteen days prior to the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with the Station's construction or operation;
(f) Opinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(f)
hereto;
(g) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.8, duly executed on behalf of Seller;
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(h) Lenders Certificates. Such certificates and
confirmations to Buyer's lenders as Buyer may reasonably request in connection
with obtaining financing for the performance of its payment obligations
hereunder.
(i) Tower Site. A Lease (the "Lease") executed by Buyer
and Seller in form and substance satisfactory to the parties for the Real
Property (which shall include Buyer's obligation to pay one-half of the real
estate taxes). Written documentation, satisfactory to Buyer, that Buyer shall
have access to the Transmission Tower through exclusive easements and licenses
for a period of not less than fifty (50) years.
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) 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 6.8 duly executed by Buyer and the payment of
$328,000 to Seller thereunder.
(f) Lease. The Lease as executed by Buyer and Seller.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
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(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by November 1, 1997.
(d) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer has failed to cure any material
breach of any of its representations, warranties, or covenants under this
Agreement within fifteen days after Buyer received written notice of such
breach from Seller.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by November 1, 1997.
(d) Environmental Hazards. Buyer shall have notified
Seller of material environmental hazards or the material possibility of
environmental damages or clean-up costs, as indicated in the environmental
study described in Section 6.9, at least 30 days prior to the Closing Date, and
the cause thereof shall not have been remedied prior to the Closing Date, or if
Seller shall not have agreed to escrow an amount of money from the purchase
price reasonably sufficient to remedy such environmental problem following the
Closing Date.
(e) 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 6.10, at least 30
days prior to the Closing Date, and the cause thereof shall not have been
remedied prior to the Closing Date, or if Seller shall not have
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agreed to a purchase price reduction, reasonably satisfactory to Buyer, to
remedy the technical deficiency.
(f) Breach. Without limiting Buyer's rights under the
other provisions of this Section 9.2, if Seller has failed to cure any material
breach of any of her representations, warranties, or covenants under this
Agreement within fifteen days after Seller received written notice of such
breach from Buyer.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of this Agreement, the parties hereto shall not have any further liability to
each other with respect to the purchase and sale of the Assets. If this
Agreement is terminated by Seller due to Buyer's material breach of this
Agreement, then the payment to Seller of $810,000 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 $810,000 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; provided, however, in no event will
Buyer be entitled to require Seller to return or claim that Seller is obligated
or liable in any way to Buyer regarding the $300,000 paid by Buyer to M&M
Investments, L.L.C.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the
sum of $810,000 in accordance with the Escrow Agreement in the form of Schedule
9.4 hereof. All such funds deposited with the Escrow Agent shall be held and
disbursed in accordance with the terms of the Escrow Agreement and the
following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 or 9.2 and Buyer is not in material breach of this Agreement, all amounts
held by the Escrow Agent pursuant to the Escrow Agreement, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement, then $810,000 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.
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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; provided, however, that as to any representation or warranty
made by either the Buyer or Seller which the other party knows is not true as
of the Closing Date, such representation or warranty shall not survive the
Closing. Until the Closing, Buyer and Seller will immediately advise each
other, in a detailed written notice, of any fact or occurrence or any pending
or threatened occurrence of which any of them obtains knowledge and which (a)
(if existing and known at the date of the execution of this Agreement) would
have been required to be set forth or disclosed in or pursuant to this
Agreement or a Schedule hereto, (b) (if existing and known at any time prior to
or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make that performance materially more
difficult than in the absence of that fact or occurrence, or (c) (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied. 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. Seller hereby agrees to indemnify
and hold Buyer harmless against and with respect to, and shall reimburse Buyer
for:
(a) Subject to the proviso contained in the first
sentence of Section 10.1, any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting
from the failure of the parties to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the ownership, construction or operation of the Station prior to the
Closing, including any liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior the Closing Date.
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(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. Buyer hereby agrees to indemnify
and hold Seller harmless against and with respect to, and shall reimburse
Seller for:
(a) Subject to the proviso contained in the first
sentence of Section 10.1, 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
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Claimant may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Certain Limitations. Notwithstanding anything in this
Agreement to the contrary,
(a) neither party shall indemnify or otherwise be liable
to the other party for any breach of a representation or warranty, or for the
breach of any covenant contained in this Agreement, except to the extent the
losses, obligations, liabilities, costs and expenses of such party arising
therefrom exceed in the aggregate Thirty-Two Thousand Dollars ($32,000)
provided, however, that Buyer's obligation under the Assumed Liabilities shall
be applicable from the first dollar of liability;
(b) either party's liability to the other party with
respect to any claim for any breach of a representation or warranty, or for the
breach of any covenant contained in this Agreement is limited to Five Million
Dollars ($5,000,000), provided, further, that there is no limitation on
indemnification for third party claims.
10.6 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, 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
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action is brought by Buyer to enforce this Agreement, Seller shall waive the
defense that there is an adequate remedy at law.
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 her or its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives. 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 and any
agreement ancillary hereto 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 (including attorneys fees
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 10.6.
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
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forth in the records of the delivery service or on the return receipt, and (d)
addressed as follows:
If to Seller: Ronnie Metsker
President
Kansas City Youth for Christ, Inc.
4715 Rainbow Boulevard
Shawnee Mission, Kansas 66205
With a copy to: James P. Pryde, Esquire
Bryan Cave LLP
3500 One Kansas City Place
1200 Main Street
Kansas City, Missouri 64141-6914
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications of
Kansas City-50, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson,
A Professional Limited Liability Company
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Seller's prior
approval provided that Buyer remains obligated with respect to the assumption
of the Assumed Contracts and Article 10 hereof and Buyer may collaterally
assign its rights and interests hereunder to its lenders without seeking or
obtaining Seller's prior approval. Upon any permitted assignment by Buyer or
Seller in accordance with this Section 11.4, all references to"Buyer" herein
shall be deemed to be references to Buyer's assignee and all references to
"Seller" herein shall be deemed to be references to Seller's assignee, as the
case may be. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
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11.5 Further Assurances. The parties shall take any actions (other
than payment of monies) 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 DELAWARE (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; which consent will not be
unreasonably withheld or delayed (it being understood
- 30 -
<PAGE> 36
that Seller desires to send notice of this Agreement to its contributors as
soon as reasonably possible); provided, however, that nothing contained herein
shall prevent either party from promptly making all filings with governmental
authorities as may, in her or its judgement be required or advisable in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 31 -
<PAGE> 37
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
KANSAS CITY-50, INC.
By: /s/ William L. Watson
--------------------------------------
Name: William L. Watson
Title: Secretary
KANSAS CITY YOUTH FOR CHRIST, INC.
By: /s/ Ronnie Metsker
--------------------------------------
Name: Ronnie Metsker
Title: President
<PAGE> 1
EXHIBIT 10.145
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
BY AND AMONG
CHANNEL 64 OF SCRANTON, INC.,
PAXSON COMMUNICATIONS OF SCRANTON-64, INC.
AND
TED EHRHARDT D/B/A
EHRHARDT BROADCASTING
* * *
DECEMBER 11, 1996
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Terms Defined in this Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Clarifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2. THE INITIAL CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 The Initial Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Sale of Initial Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1 Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2 Tower Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3 Modification Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 Pro Forma FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.5 Assignment of Construction Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.6 Conduct Pending the Initial Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING THE INITIAL CLOSING . . . . . . . . . . . . . . . . 7
Section 4.1 Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY REGARDING THE INITIAL CLOSING . . . . . . . . 8
Section 5.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.4 Exchange Act; Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.6 Assets and Liabilities of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.7 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.8 Construction Permit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.9 Tower Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.11 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AT THE INITIAL CLOSING . . . . . . . . . . 10
Section 6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.3 Modification Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.4 Approvals for Tower Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.5 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.6 Tower Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.7 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.8 Construction Permit; Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.9 No Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND THE COMPANY AT THE INITIAL CLOSING . . . . . . 12
Section 7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.3 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.4 Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.2 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.3 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.4 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.7 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.8 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.9 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.10 Cable Carriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 9. THE OPTION AND THE SECOND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.1 Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.2 The Second Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.3 Sale of Option Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.4 Purchase Price for Option Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING THE SECOND CLOSING . . . . . . . . . . . . . . . . 17
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ARTICLE 11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND SELLER REGARDING THE SECOND CLOSING . . 18
Section 11.1 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11.2 Copyrights, Trademarks and Similar Rights . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11.3 Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11.4 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11.5 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . 19
Section 11.6 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.7 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.8 Public Inspection File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.10 Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11.11 Notices; Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11.12 Liabilities of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AT THE SECOND CLOSING . . . . . . . . . . . . . . . 21
Section 12.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12.3 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12.5 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 12.6 Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12.7 Time Brokerage Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12.8 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12.9 Tower Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 13. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND THE COMPANY AT THE SECOND CLOSING . . . . . . 23
Section 13.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.3 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.5 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.6 Time Brokerage Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 13.7 Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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ARTICLE 14. JOINT COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 14.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 14.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 14.3 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14.4 Station Operation and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 15. TRANSFER TAXES; FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 15.1 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 15.2 Filing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 15.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 16. ESCROW DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 16.1 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 17. RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 17.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 17.2 Postponement of the Second Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 17.3 Option to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 18. TERMINATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 18.1 Termination by the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 18.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 19. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 20. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 20.1 Seller's and the Company's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 20.2 Buyer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 20.3 Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 20.4 Assumption and Defense of Third-Party Action . . . . . . . . . . . . . . . . . . . . . . . 29
Section 20.5 Limitation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 21. OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21.1 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . 30
Section 21.2 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21.4 Benefit and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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Section 21.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 21.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 21.10 PCC Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXHIBITS AND SCHEDULES TO
STOCK PURCHASE AGREEMENT
EXHIBITS
EXHIBIT A -- Time Brokerage Agreement
EXHIBIT B -- Construction Agreement
EXHIBIT C -- Shareholders Agreement
EXHIBIT D -- Escrow Agreement
SCHEDULES
Schedule 5.6 -- Assets
Schedule 5.9 -- Transmitter Site
Schedule 6.7(f) -- Opinions of Counsel to Seller and the Company (Initial Closing)
Schedule 7.3(d) -- Opinion of Counsel to Buyer (Initial Closing)
Schedule 12.5(h) -- Opinions of Counsel to Seller and the Company (Second Closing)
Schedule 13.5(d) -- Opinion of Counsel to Buyer (Second Closing)
</TABLE>
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<PAGE> 7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of the
11th day of December, 1996, by and among TED H. EHRHARDT D/B/A EHRHARDT
BROADCASTING ("Seller"); CHANNEL 64 OF SCRANTON, INC., a Delaware corporation
(the "Company"); and PAXSON COMMUNICATIONS OF SCRANTON-64, INC., a Florida
corporation ("Buyer").
W I T N E S S E T H
WHEREAS, Seller is the holder of a construction permit, File No.
BPCT-870616KH ("Construction Permit"), issued by the Federal Communications
Commission ("FCC") for new television station WSWB-TV, Channel 64, Scranton,
Pennsylvania (the "Station");
WHEREAS, Seller has filed an application with the FCC, File No.
BMPCT-960417KM, requesting the modification of the Construction Permit (the
"Modification Application");
WHEREAS, subject to the pro forma assignment of the Construction
Permit from Seller to the Company, Seller intends to convey the Construction
Permit to the Company in exchange for all of the outstanding common stock of
the Company;
WHEREAS, Buyer desires to purchase from Seller, following the
acquisition of the Construction Permit by the Company, forty-nine percent (49%)
of the outstanding common stock of the Company, subject to the terms and
conditions set forth herein;
WHEREAS, Buyer desires to grant to Seller an option to require Buyer
to purchase the remaining fifty-one percent (51%) of the outstanding common
stock of the Company, and Seller desires to grant to Buyer an option to
purchase such stock, subject to the terms and conditions set forth herein; and
WHEREAS, in connection with the foregoing transactions, (a) Buyer,
Seller and the Company desire to enter into a Shareholders Agreement setting
forth, among other things, certain restrictions relating to the issuance and
sale of the capital stock of the Company, (b) Buyer and the Company desire to
enter into a Construction Agreement, pursuant to which Buyer agrees to provide
certain services in connection with the construction of the Station; and (c)
Buyer and the Company desire to enter into a Time Brokerage Agreement, pursuant
to which, upon completion of construction of the Station and commencement of
broadcast operations, Buyer shall provide programming for broadcast on the
Station, subject to the rules, regulations and policies of the FCC.
<PAGE> 8
NOW, THEREFORE, in consideration of these premises and the mutual
covenants, conditions and promises contained herein, and for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
Section 1.1 Terms Defined in this Section. The following terms,
as used in this Agreement, have the meanings set forth in this Section:
"Closings" means the collective reference to the Initial Closing and
the Second Closing.
"Common Stock" means all of the issued and outstanding shares of
capital stock of the Company, consisting of 1,000 shares of voting common
stock, par value $.01 per share.
"Communications Act" means the Communications Act of 1934, as amended,
the Telecommunications Act of 1996 and the rules and regulations promulgated
thereunder.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Construction
Permit to the Company and to transfer the Common Stock to Buyer or otherwise to
consummate the transactions contemplated by this Agreement.
"Construction Agreement" means the Construction Agreement to be
entered into by Buyer and the Company, substantially in the form of Exhibit B.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which the Company is a party or that are binding upon
the Company, and (a) that are in effect on the date of this Agreement or (b)
that are entered into by the Company between the date of this Agreement and the
Second Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement to be entered into among
Buyer, Seller, the Company and the Escrow Agent, substantially in the form of
Exhibit D.
"Escrow Deposit" means $300,000 in cash deposited by Buyer with the
Escrow Agent pursuant to the Escrow Agreement.
"FCC Consent" means action by the FCC granting its consent to the
transfer of control of the Company as contemplated by this Agreement.
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"FCC Licenses" means those licenses, permits, and authorizations
issued by the FCC in connection with the business and operations of the
Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Initial Closing" means the consummation of the purchase and sale of
the Initial Shares pursuant to this Agreement in accordance with the provisions
of Article 2.
"Initial Closing Date" means the date on which the Initial Closing
occurs, as determined pursuant to Section 2.1.
"Initial Shares" means 490 shares of the voting common stock, par
value $.01 per share, of the Company representing 49% of the issued and
outstanding shares of the capital stock of the Company.
"Initial Shares Purchase Price" has the meaning set forth in Section
2.3.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by the Company or under which the Company is licensed or franchised and that
are used or useful in the business and operations of the Station, together with
any additions thereto between the date of this Agreement and the Second Closing
Date.
"Licenses" means all licenses, permits, construction permits, and
other authorizations issued as of the date hereof by the FCC, the Federal
Aviation Administration, or any other federal, state, or local governmental
authorities for the construction or operation of the Station, together with any
additions thereto between the date of this Agreement and the Second Closing
Date.
"Option Price" shall have the meaning set forth in Section 9.5.
"Option Shares" means 510 shares of the voting common stock, par value
$.01 per share, of the Company representing 51% of the issued and outstanding
shares of the capital stock of the Company.
"Pro Forma FCC Consent" means the action by the FCC granting its
consent to the pro forma assignment of the Construction Permit from Seller to
the Company.
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"Real Property" means all interests in real property, including fee
estates, leaseholds and subleaseholds, purchase options, easements, licenses,
rights to access, and rights of way, and all buildings and other improvements
thereon, owned or held by the Company that are used or useful in the business
or operations of the Station, together with any additions thereto between the
date of this Agreement and the Second Closing Date.
"Second Closing" means the consummation of the purchase and sale of
the Option Shares pursuant to this Agreement in accordance with the provision
of Article 9.
"Second Closing Date" means the date on which the Second Closing
occurs, as determined pursuant to Section 9.3.
"Shareholders Agreement" means the Shareholders Agreement to be
entered into upon the Initial Closing among Buyer, Seller and the Company,
substantially in the form of Exhibit C.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property owned or held by
the Company that is used or useful in the conduct of the business or operations
of the Station, together with any additions thereto between the date of this
Agreement and the Second Closing Date.
"Taxes" (and, with correlative meaning, "Taxes" and "Taxable") means
all federal, state, local or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, license, excise, franchise,
capital, transfer, employment, withholding and other taxes and assessments,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties, and "Tax" means any one of
such Taxes.
"Tax Returns" means all federal, state, local and foreign income,
franchise, sales, use, occupation, property, excise, alternative or add-on
minimum, social security, employees' withholding, unemployment, disability,
transfer, capital stock and other tax returns and tax reports, and "Tax Return"
means any one of such Tax Returns.
"Time Brokerage Agreement" means the Time Brokerage Agreement to be
entered into by Buyer and the Company, substantially in the form of Exhibit A.
"Transaction Documents" means the Construction Agreement, Time
Brokerage Agreement and Shareholders Agreement.
Section 1.2 Clarifications. Words used herein, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender and any other number as the context requires. Use of the word
"including" herein shall be deemed and construed to mean "including but not
limited to." Except as specifically otherwise
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provided in this Agreement in a particular instance, a reference to a
Section, Exhibit or Schedule is a reference to a Section of this Agreement or a
Schedule or an Exhibit hereto, and the terms "hereof," "herein" and other like
terms refer to this Agreement as a whole, including the Schedules and Exhibits
hereto, and not solely to any particular part hereof.
ARTICLE 2. THE INITIAL CLOSING
Section 2.1 The Initial Closing. The Initial Closing shall
take place at 10:00 a.m., Washington, D.C. time, on a date to be set by Buyer
on no less than five (5) days' written notice to Seller, which date shall not
be sooner than the first business day after the date on which the Pro Forma FCC
Consent has been granted by the FCC and shall not be later than the tenth
business day after the date on which the Pro Forma FCC Consent has become a
Final Order, subject to the satisfaction of all other conditions precedent to
the holding of the Initial Closing. The Initial Closing shall take place at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or such other place as the parties shall mutually
agree. If Buyer fails to specify the date for Initial Closing prior to the
fifth business day after the date upon which the Pro Forma FCC Consent has
become a Final Order, the Initial Closing shall take place on the tenth
business day after the date upon which the Pro Forma FCC Consent has become a
Final Order.
Section 2.2 Sale of Initial Shares. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer
and deliver to Buyer on the Initial Closing Date, and Buyer agrees to purchase,
the Initial Shares, free and clear of any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances of
any nature whatsoever.
Section 2.3 Purchase Price. The purchase price for the
Initial Shares (the "Initial Shares Purchase Price") shall be $____________.
The Purchase Price shall be paid at the Initial Closing by Buyer to Seller, in
accordance with written instructions provided by Seller to Buyer no less than
two (2) business days prior to the Initial Closing Date, by wire transfer of
immediately available federal funds.
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING
Section 3.1 Organization of the Company. Seller shall cause
the Company to be duly qualified to conduct business in the State of
Pennsylvania.
Section 3.2 Tower Site. Prior to the Initial Closing, Seller
shall prepare and file with the FCC and any other federal, state or local
government authorities such applications, notices or other documents as may be
necessary or advisable to permit the construction and operation of the
Station's transmission facilities at the Tower Site (as described below).
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Section 3.3 Modification Application. Seller shall make such
additional filings with the FCC and continue to use its best efforts to cause
the FCC to grant the Modification Application as expeditiously as possible.
Section 3.4 Pro Forma FCC Consent. Seller and the Company shall
prepare and, within five (5) business days after the date of this Agreement,
file with the FCC an appropriate application for the Pro Forma FCC Consent.
Seller and the Company shall thereafter prosecute the application for the Pro
Forma FCC Consent with all diligence and otherwise use its best efforts to
obtain a grant of the application for the Pro Forma FCC Consent as
expeditiously as possible.
Section 3.5 Assignment of Construction Permit. Upon the grant
of the Pro Forma FCC Consent, Seller shall contribute the Construction Permit
to the Company in exchange for all of the shares of Common Stock not then owned
by Seller, pursuant to conveyancing documents in form and substance acceptable
to Buyer.
Section 3.6 Conduct Pending the Initial Closing. Between the
date hereof and the Initial Closing Date, unless Buyer shall otherwise consent
in writing, Seller and the Company covenant and agree:
(a) to perform all acts necessary to carry out
the transactions contemplated by this Agreement and not to: (i) sell, transfer
or encumber the Common Stock or the Construction Permit other than as
contemplated herein; (ii) perform or suffer any acts within their control that
are inconsistent with their representations, warranties, covenants and
agreements set forth herein and (iii) amend the Certificate of Incorporation or
Bylaws of the Company; and
(b) to notify Buyer promptly of (i) any adverse
development with respect to the Modification Application or the Pro Forma FCC
Consent or (ii) the commencement or threat of any claim; suit; action;
arbitration; legal, administrative or other proceeding; governmental
investigation; or tax audit against Seller or the Company or affecting the
Station; and
(c) to cooperate fully with Buyer in taking any
and all actions necessary or desirable for the consummation of the transactions
contemplated by this Agreement; and
(d) that the Company shall not create, incur,
assume or guarantee any indebtedness, obligation or liability.
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING THE INITIAL
CLOSING
As an inducement to Seller and the Company to enter into this
Agreement and consummate the transactions contemplated to occur upon the
Initial Closing, Buyer represents and warrants to Seller and the Company as
follows:
Section 4.1 Organization and Standing. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida and shall be, on or before the Initial Closing Date, duly
qualified to conduct business as a foreign corporation in the State of
Pennsylvania.
Section 4.2 Power and Authority. Buyer has full corporate
power and authority to enter into this Agreement and the other documents
contemplated hereby, and to perform and comply with the terms, covenants and
conditions to be performed or complied with by Buyer hereunder and thereunder.
This Agreement constitutes, and any other instrument contemplated hereby when
executed and delivered by Buyer at the Initial Closing, will constitute, the
legal, valid and binding obligations of Buyer, enforceable in accordance with
their terms, except as such enforceability may be affected by bankruptcy,
insolvency or similar laws and by court-applied equitable principles.
Section 4.3 Conflicts. The execution and delivery of this
Agreement and the instruments or documents to be delivered by Buyer pursuant to
this Agreement at the Initial Closing, the consummation of the transactions
contemplated by this Agreement at the Initial Closing, and compliance with the
terms, conditions and provisions of this Agreement at the Initial Closing by
Buyer, with or without the giving of notice or the passage of time, or both, do
not and will not: (i) contravene any provision of Buyer's Articles of
Incorporation or By-laws; (ii) conflict with or result in a breach of or
constitute a default under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other agreement or
instrument to which Buyer is a party or by which it or its assets may be bound
or affected, or any decree, judgment or order of any court or governmental
department, commission, board, agency or instrumentality, domestic or foreign,
or any applicable law, ordinance, rule or regulation, including but not limited
to the Communications Act; or (iii) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of Buyer's assets
or give to others any interests or rights therein.
Section 4.4 Investment. Buyer will acquire the Initial Shares
for its own account for investment and not with a present view to distribute or
resell the same.
Section 4.5 Disclosure. No representation or warranty by Buyer
in this Agreement, and no schedule, document, statement, certificate furnished
or to be furnished by Buyer to Seller or the Company pursuant hereto, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements or facts contained
herein or therein not misleading
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<PAGE> 14
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
REGARDING THE INITIAL CLOSING
As an inducement to Buyer to enter into this Agreement and consummate
the transactions contemplated to occur upon the Initial Closing, Seller and the
Company jointly and severally represent and warrant to Buyer as follows:
Section 5.1 Organization and Standing. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and shall be, on or before the Initial Closing,
duly qualified to conduct business in the State of Pennsylvania. Seller is an
individual and a resident of Pennsylvania. Seller has delivered to Buyer true
and complete copies of the Certificate of Incorporation and By-laws of the
Company.
Section 5.2 Power and Authority. Each of Seller and the
Company has full power and authority to enter into this Agreement and the other
documents contemplated hereby, and to perform and comply with the terms,
covenants and conditions to be performed or complied with by Seller or the
Company hereunder or thereunder. This Agreement constitutes, and any other
instrument contemplated hereby, when executed and delivered by Seller or the
Company at the Initial Closing, will constitute, the legal, valid and binding
obligations of Seller and the Company, enforceable in accordance with their
terms, except as such enforceability may be affected by bankruptcy, insolvency
or similar laws and by court-applied equitable principles.
Section 5.3 Conflicts. The execution and delivery of this
Agreement and the instruments or documents to be delivered by Seller or the
Company pursuant to this Agreement at the Initial Closing, the consummation of
the transactions contemplated by this Agreement at the Initial Closing, and
compliance with the terms, conditions and provisions of this Agreement at the
Initial Closing by Seller and the Company, with or without the giving of notice
or the passage of time, or both, do not and will not: (i) contravene any
provision of the Certificate of Incorporation or By-laws of the Company, (ii)
conflict with or result in a breach of or constitute a default under any of the
terms, conditions or provisions of any indenture, mortgage, loan or credit
agreement or any other agreement or instrument to which Seller or the Company
is a party or by which Seller or the Company or any of their respective assets
may be bound or affected, or any decree, judgment or order of any court or
governmental department, commission, board, agency or instrumentality, domestic
or foreign, or any applicable law, ordinance, rule or regulation, including but
not limited to the Communications Act; or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the assets of Seller or the Company or the Common Stock or give to others
any interests or rights therein.
Section 5.4 Exchange Act; Investment Company Act. No securities
of the Company are required to be registered under Section 12 of the
Securities and Exchange Act
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<PAGE> 15
of 1934, as amended. Neither Seller nor the Company is an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended.
Section 5.5 Capitalization. The Company's capital stock
consists solely of One Thousand (1,000) shares of duly authorized voting common
stock, with a par value of $.01 per share, of which One Hundred (100) shares
are issued and outstanding on the date hereof (the "Outstanding Stock"). The
Outstanding Stock is and, as of the Initial Closing, the remaining shares of
Common Stock will be, validly issued and outstanding, fully paid and
nonassessable. The Outstanding Stock constitutes on the date hereof all of the
issued and outstanding capital stock of the Company and on the Initial Closing
Date, the Common Stock will constitute all of the issued and outstanding
capital stock of the Company. There are no outstanding securities convertible
into or exchangeable for, and no outstanding options, warrants or other rights
to purchase or to subscribe for, any shares of capital stock or other
securities of the Company, other than as set forth herein. There are no
outstanding agreements, arrangements, commitments or understandings of any kind
affecting or relating to the voting, issuance, purchase, redemption, repurchase
or transfer of any of the capital stock of the Company, other than as set forth
herein or in the Shareholders Agreement. Except as provided herein, there are
no options, warrants, rights or any other agreement or instrument giving any
person any right under any circumstances to acquire any shares of capital stock
of the Company. Seller has good and valid marketable title to the Outstanding
Stock and the sole right to vote, sell, transfer and deliver the Outstanding
Stock and on the Closing Date, Seller will have good and marketable title to
the Common Stock and the sole right to vote, sell, transfer and deliver the
Common Stock. Except as contemplated by this Agreement, neither the Company
nor Seller has agreed with any person to sell, transfer or deliver the
Outstanding Stock or other capital stock of the Company. Upon the sale of the
Initial Shares to Buyer hereunder, Buyer shall have good and valid marketable
title thereto, free and clear of all liens, encumbrances, security interests
and restrictions of any kind and such Initial Shares shall represent 49% of the
issued and outstanding shares of the Company.
Section 5.6 Assets and Liabilities of the Company. As of the
Initial Closing Date, the Company shall own and have good and marketable title
to the assets and properties listed on Schedule 5.6, including, without
limitation, the Construction Permit, and shall have no debts, obligations or
liabilities of any kind whatsoever, whether accrued, contingent or otherwise,
except those arising under this Agreement, the Transaction Documents, the Tower
Lease and the Communications Act.
Section 5.7 Broker Neither Seller, the Company nor any person
acting on their behalf has incurred any liability for any finder's or broker's
fees or commissions in connection with the transactions contemplated by this
Agreement, except for such fees and commissions owed by Seller to Patrick
Communications Corporation, which fees and commissions shall be the sole
responsibility of Seller.
Section 5.8 Construction Permit. The Construction Permit has
been validly issued and on the date hereof, Seller is the authorized legal
holder thereof and on the Initial Closing
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Date, the Company will be the authorized legal holder thereof. The
Construction Permit is in full force and effect and is not subject to any
restriction or condition that would delay or adversely affect the construction
of the Station. Seller and the Company are in compliance in all material
respects with the Construction Permit and all laws, regulations, and rules,
including the Communications Act. Each of Seller and the Company have filed
all returns, reports and statements required to be filed in connection with the
Construction Permit.
Section 5.9 Tower Site. On the Initial Closing Date, Seller
shall have valid and marketable fee simple title to the real property described
on Schedule 5.9 hereto (the "Tower Site").
Section 5.10 Consents. Except for the Pro Forma FCC Consent,
no consent, approval, permit or authorization of, or filing with, any
governmental authority or other party is required to consummate the
transactions contemplated by this Agreement at or before the Initial Closing.
Section 5.11 Claims and Legal Actions. There is no claim, legal
action, suit, arbitration, counterclaim, governmental investigation or other
proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Seller, threatened against Seller or the Company.
Section 5.12 Disclosure. No representation or warranty by
Seller or the Company in this Agreement, and no schedule, document, statement,
certificate furnished or to be furnished by Seller or the Company to Buyer
pursuant hereto, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements or facts contained herein or therein not misleading.
ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AT THE
INITIAL CLOSING
The obligations of Buyer at the Initial Closing are subject to the
fulfillment prior to or at the Initial Closing of the following conditions (any
one or more of which may be waived in whole or in part by Buyer at Buyer's
option):
Section 6.1 Representations and Warranties. The representations
and warranties of Seller and the Company contained in this Agreement relating
to the Initial Closing shall be true and correct in all material respects on
and as of the Initial Closing Date, with the same force and effect as though
made on and as of such date.
Section 6.2 Covenants and Conditions. Seller and the Company
shall have performed in all material respects all of their respective
obligations and agreements and complied with all of their respective covenants
and conditions contained in this Agreement to be performed or complied with by
Seller and the Company on or before the Initial Closing Date.
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<PAGE> 17
Section 6.3 Modification Application. The FCC shall have
granted the Modification Application without any material adverse conditions and
such grant shall have become a Final Order.
Section 6.4 Approvals for Tower Site. Seller and the Company
shall have obtained all necessary governmental consents or approvals required
for the construction and operation of the Station at the Tower Site, and any
such construction shall have been conducted in accordance with the terms of such
consents or approvals and with any applicable laws, rules and regulations of any
governmental authority, including, without limitation, the FCC, any municipality
or the Federal Aviation Administration.
Section 6.5 Contribution. The Pro Forma FCC Consent shall have
been granted and shall have become a Final Order, and Seller shall have
contributed the Construction Permit to the Company in accordance with Section
3.5, free and clear of any claims, liabilities, security interests, mortgages,
liens, pledges, conditions, charges or encumbrances of any nature whatsoever.
Section 6.6 Tower Site. Seller shall have valid and marketable
fee simple title to the Tower Site and shall have agreed to make it available to
the Company for the operation of the Station.
Section 6.7 Deliveries. Seller and the Company shall have
delivered to Buyer the following, in form and substance reasonably satisfactory
to Buyer and Buyer's Counsel:
(a) Initial Shares. Certificates representing
the Initial Shares, which shall be either duly endorsed or accompanied by stock
powers duly executed in favor of Buyer.
(b) Certificate of Incorporation. A copy of the
Certificate of Incorporation of the Company, certified as of a date not earlier
than ten (10) days prior to the Initial Closing Date by the Secretary of State
of Delaware.
(c) Bylaws. A copy of the Bylaws of the Company,
certified as of the Initial Closing Date by the Secretary or an Assistant
Secretary of the Company.
(d) Resolutions. Copies of resolutions adopted
by the Board of Directors and shareholders of the Company, authorizing and
approving the execution and delivery of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, certified by the Secretary or an Assistant Secretary of the Company,
respectively, as being true and complete on the Initial Closing Date.
(e) Certificates. Certificates, dated as of the
Initial Closing Date, executed on behalf of Seller and the Company by Seller
and an officer of the Company, respectively, each certifying: (1) that the
representations and warranties of Seller and the Company
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<PAGE> 18
contained in this Agreement are true and complete in all material respects as of
the Initial Closing Date as though made on and as of that date; and (2) that
Seller and the Company have performed in all material respects all of their
respective obligations and agreements under this Agreement to be performed and
complied with by Seller and the Company on or before the Initial Closing Date.
(f) Opinions of Counsel. Opinions of Seller's
and the Company's counsel and communications counsel dated as of the Initial
Closing Date, substantially in the form of Schedule 6.7(f) hereto.
(g) Consents. A manually executed copy of any
instrument evidencing receipt of any Consent.
(h) Transaction Documents. Copies of the
Transaction Documents duly executed by Seller and the Company.
(i) Additional Instruments. Such additional
instruments and documents as may be required to consummate the transactions
contemplated hereby.
Section 6.8 Construction Permit; Adverse Proceedings. The
Company shall be the legal and valid holder of the Construction Permit and the
Construction Permit shall be in full force and effect without any modification
thereto other than as set forth in the Modification Application. Except for
proceedings relating to the television broadcast industry generally, there shall
not be any order, decree or judgment in effect or any lawsuit, claim, legal
action, proceeding or investigation pending or threatened before any court,
administrative agency or arbitrator which is reasonably likely to adversely
affect the construction, business, property, assets or condition (financial or
otherwise) of the Station or the Company or which seeks to enjoin or prohibit,
or otherwise questions the validity of, any action taken or to be taken pursuant
to or in connection with this Agreement.
Section 6.9 No Liabilities The Company shall have no debts,
obligations or liabilities of any kind whatsoever, whether accrued, contingent
or otherwise except for this Agreement, the Transaction Documents and the
Communications Act.
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND THE
COMPANY AT THE INITIAL CLOSING
The obligations of Seller and the Company at the Initial Closing are
subject to the fulfillment prior to or at the Initial Closing of the following
conditions (any one or more of which may be waived in whole or in part by
Seller and the Company at their option):
Section 7.1 Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement relating to the Initial
Closing shall be true and correct in
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all material respects on and as of the Initial Closing Date, with the same force
and effect as though made on and as of such date.
Section 7.2 Covenants and Conditions. Buyer shall have
performed in all material respects all of its obligations and agreements and
complied with all of its covenants and conditions contained in this Agreement to
be performed or complied with by Buyer on or before the Initial Closing Date.
Section 7.3 Deliveries. Buyer shall have delivered to Seller
and the Company the following in form and substance reasonably satisfactory to
Seller, the Company and their Counsel:
(a) Purchase Price. The Initial Shares Purchase
Price described in Section 2.3.
(b) Resolutions. Copies of resolutions adopted
by the Board of Directors of Buyer, authorizing and approving the execution of
this Agreement and the consummation of the transactions contemplated hereby,
certified by its Secretary as being true and correct on the Initial Closing
Date.
(c) Officer's Certificate. A certificate, dated
as of the Initial Closing Date, executed on behalf of Buyer by an officer of
Buyer, certifying (1) that the representations and warranties of Buyer
contained in this Agreement are true and complete in all material respects as
of the Initial Closing Date as though made on and as of that date, and (2) that
Buyer has performed in all material respects all of its obligations and
agreements under this Agreement to be performed and complied with by Buyer on
or before the Initial Closing Date.
(d) Opinion of Counsel. An opinion of Buyer's
counsel dated as of the Initial Closing Date, substantially in the form of
Schedule 7.3(d) hereto.
(e) Transaction Documents. Copies of the
Transaction Documents duly executed by Buyer.
(f) Additional Instruments. Such additional
instruments and documents as may be required to consummate the transactions
contemplated hereby.
Section 7.4 Adverse Proceedings. There shall not be any order,
decree or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
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ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION
Section 8.1 General. Following the date hereof and prior to
the Second Closing Date without Buyer's prior written consent: (i) neither the
Company nor Seller shall enter into any contracts or agreements creating any
security interests, mortgages, liens or encumbrances on the assets of the
Company or the Station; (ii) Seller shall not enter into any contract or
agreement creating any liens or security interests in any shares of capital
stock of the Company; (iii) the Company shall be operated in a prudent and
businesslike manner and in accordance with the other covenants in this Article
8; (iv) the Company shall not amend its Certificate of Incorporation or By-Laws;
and (v) neither Seller nor the Company shall take or permit, or agree to take or
permit, any action within Seller's or the Company's control that is inconsistent
with the proper performance of their obligations under this Agreement, including
but not limited to, the issuance or sale of any capital stock of the Company or
the granting to any person or entity, other than Buyer, an option or similar
right to purchase any of the Company's capital stock.
Section 8.2 FCC Consent.
(a) The conveyance of the Option Shares by Seller
to Buyer as contemplated by this Agreement is subject to the prior consent and
approval of the FCC.
(b) Seller and Buyer shall prepare and, within
five (5) business days after Seller's receipt of the Option Notice (as defined
below), shall file with the FCC an appropriate application for the FCC Consent.
Seller and Buyer shall thereafter prosecute the application for the FCC Consent
with all diligence and otherwise use their respective best efforts to obtain a
grant of the application for the FCC Consent as expeditiously as possible.
Each party agrees to comply with any condition imposed on it by the FCC
Consent, except that no party shall be required to comply with a condition if
(i) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by that party of any of its
representations, warranties, or covenants hereunder, and (ii) compliance with
the condition would have a material adverse effect upon it. Buyer and Seller
shall oppose any petitions to deny or other objections filed with respect to
the application for the FCC Consent and any requests for reconsideration or
judicial review of the FCC Consent.
(c) If the Second Closing shall not have occurred
for any reason within the original effective period of the FCC Consent and
neither party shall have terminated this Agreement under Article 18, the
parties shall jointly request one or more extensions of the effective period of
the FCC Consent. No extension of the effective period of the FCC Consent shall
limit the exercise by either party of its right to terminate the Agreement
under Article 18.
Section 8.3 Employee Benefit Plans. Except as may be consented
to in writing by Buyer, the Company will not adopt any employee benefit plans or
arrangements applicable to the employees of the Company, including, without
limitation, pension or thrift plans,
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individual or supplemental pension or accrued compensation arrangements,
incentive plans, or bonus and termination arrangements; provided, however, that
nothing herein shall prevent the Company from adopting reasonable policies on
vacation and sick leave for its employees or offering them participation in
employer-paid group health plans or any other benefits required by law.
Section 8.4 Labor Relations. Neither the Seller nor the
Company (i) will enter into any collective bargaining agreement with respect to
the Station; (ii) will enter into any written or oral contracts of employment;
(iii) will incur any fixed or contingent liabilities or obligations with respect
to any person employed at the Station; and (iv) will fail to comply in all
material respects with applicable laws, rules and regulations relating to the
employment of labor including, without limitation, those related to wages,
hours, collective bargaining, occupational safety, discrimination, and the
payment of social security and other payroll related taxes.
Section 8.5 Licenses. Neither the Seller nor the Company shall
cause, or fail to take any action necessary to prevent, (i) any License to
expire, be surrendered or modified; (ii) any governmental authority to institute
proceedings for the suspension, revocation, or adverse modification of any
License; and (iii) any governmental authority to dismiss or deny any pending
application concerning the construction or operation of the Station.
Section 8.6 Compliance with Laws. The Seller and the Company
shall construct and operate the Station in all material respects in accordance
with all applicable laws, rules and regulations and the terms of all Licenses.
Section 8.7 Notification. Seller and the Company shall give
Buyer prompt written notice of any material change in any of the information
contained in the representations and warranties of Seller and the Company set
forth in this Agreement or in the Schedules hereto.
Section 8.8 Preservation of Business. Seller and the Company
shall preserve the business and organization of the Station intact and use their
best efforts to keep available to the Station its employees and to preserve the
Station's relationships with suppliers, advertisers and others having business
relations with it, to the end that the business, operations, and prospects of
the Station shall be unimpaired at the Second Closing.
Section 8.9 Performance of Agreements. The Company and Seller
shall perform their respective obligations under this Agreement, Shareholders
Agreement, Time Brokerage Agreement, Construction Agreement, in each case in
accordance with the terms thereof.
Section 8.10 Cable Carriage. Consistent with the rules and
regulations of the FCC, the Company shall notify the cable operators within the
Scranton, Pennsylvania Designated Market Area of the Station's election to be
carried on a "must-carry" basis on such cable operators' cable television
systems. The Company shall use its best efforts to provide such notices on the
date that is sixty (60) days prior to commencing operations pursuant to
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program test authority as defined by FCC rules and regulations, but in no event
shall such notices be provided later than thirty (30) days after the
commencement of such operations.
ARTICLE 9. THE OPTION AND THE SECOND CLOSING
Section 9.1 Option.
(a) In consideration of Buyer's undertakings
herein and in the Transaction Documents, the receipt and sufficiency of which
are hereby acknowledged by Seller, Seller hereby grants to Buyer an exclusive
and irrevocable option to purchase from Seller the Option Shares (the
"Option"), free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever.
(b) Buyer may give written notice to Seller of
Buyer's intention to exercise the Option (the "Option Notice") at any time
during the ninety (90) day period beginning on the date the Station commences
operations pursuant to program test authority (the "Option Period"). In the
event that Buyer fails to give Seller the Option Notice prior to the end of the
Option Period, then the Option shall expire.
(c) Within five (5) business days of Seller's
receipt of the Option Notice, Seller and Buyer shall file with the FCC the
application for the FCC Consent and shall file such notices with, and obtain
such approvals of, any other governmental authorities that are required for the
acquisition by Buyer of the Option Shares and shall diligently and
expeditiously prosecute such filings.
Section 9.2 The Second Closing. The Second Closing shall take
place at 10:00 a.m., Washington, D.C. time, on a date to be set by Buyer on no
less than five (5) days' written notice to Seller, which date shall not be
sooner than the first business day after the date on which the FCC Consent is
granted and shall not be later than the tenth business day after the date on
which the FCC Consent has become a Final Order, subject to the satisfaction of
all other conditions precedent to the holding of the Second Closing. The Second
Closing shall take place at the offices of Dow, Lohnes & Albertson, 1200 New
Hampshire Avenue, N.W., Suite 800, Washington, D.C. 20036, or such other place
as the parties shall mutually agree. If Buyer fails to specify the date for
Second Closing prior to the fifth business day after the date upon which the FCC
Consent has become a Final Order, the Second Closing shall take place on the
tenth business day after the date upon which the FCC Consent has become a Final
Order.
Section 9.3 Sale of Option Shares. Subject to the terms and
conditions set forth in this Agreement, including exercise by Buyer of the
Option, Seller hereby agrees to sell, transfer and deliver to Buyer on the
Second Closing Date, and Buyer agrees to purchase, the Option Shares, free and
clear of any claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges or encumbrances of any nature whatsoever.
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Section 9.4 Purchase Price for Option Shares.
(a) The purchase price for the Option Interest
(the "Option Price") shall be the lesser of (i) an amount equal to the Fair
Market Value of the Company, as determined utilizing the procedures set forth
in subsection (b) hereof less the Purchase Price and (ii) $6,160,000 less the
Purchase Price. The Option Price shall be paid at the Second Closing by Buyer
or Buyer's designee to Seller by wire transfer of immediately available federal
funds or other means mutually satisfactory to Buyer and Seller in accordance
with written instructions provided by Seller to Buyer no less than two (2)
business days prior to the Second Closing Date.
(b) Fair Market Value of the Company shall be
determined by an appraisal, in accordance with the following provisions:
(1) The Fair Market Value of the Company shall be
equal to the appraised value of the assets of the Company as of the date of the
Option Notice exclusive of any broker's fee, less the amount of any outstanding
debt of the Company.
(2) The appraisal will be conducted in conformity
with standard appraisal techniques in use at the time of the appraisal,
applying the market and economic factors then relevant.
(3) The appraisal will be conducted by a
qualified appraiser with experience in the television broadcasting industry to
be agreed upon by Seller and Buyer; provided that, if the parties fail to agree
on an appraiser, any party may apply to the American Arbitration Association
for the appointment of an appraiser, who shall be a qualified appraiser with
experience in the television broadcasting industry.
(4) The value of the assets of the Company
arrived at by the appraiser shall, absent manifest error, be conclusive and
binding on the relevant parties.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING THE SECOND
CLOSING
All of the representations and warranties of Buyer set forth in
Article 4 hereof shall be true and correct in all material respects as of the
Second Closing Date, with the same force and effect as though made on and as of
the Second Closing Date, except as otherwise contemplated by the express terms
of this Agreement. For the purpose of this Article 10, each reference in
Article 4 hereof to the "Initial Closing," "Initial Shares" and the "Initial
Closing Date" shall be deemed to be a reference to the Second Closing, Option
Shares and the Second Closing Date, respectively.
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ARTICLE 11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND
SELLER REGARDING THE SECOND CLOSING
All of the representations and warranties of the Company and Seller
set forth in Article 5 hereof shall be true and correct in all material
respects as of the Second Closing Date, with the same force and effect as
though made on and as of the Second Closing Date, except as otherwise
contemplated by the express terms of this Agreement. For the purpose of this
Article 11, each reference in Article 5 hereof to the "Initial Closing" and the
"Initial Closing Date" shall be deemed to be a reference to the Second Closing
and the Second Closing Date, respectively, and each reference to the "Initial
Shares" shall be deemed to be a reference to the Option Shares. Each of Seller
and the Company further jointly and severally represent, warrant and covenant
to Buyer as follows:
Section 11.1 Contracts. Within ten (10) days after Seller
receives the Option Notice, Seller shall deliver to Buyer a true and complete
list and copies of the Contracts. The Contracts shall be valid and binding
agreements of the Company enforceable in accordance with their terms. The
Company shall have complied with the Contracts in all material respects, and
the Company shall not be in default under any of the Contracts.
Section 11.2 Copyrights, Trademarks and Similar Rights. Within
ten (10) days after Seller receives the Option Notice, Seller shall deliver to
Buyer a true and complete list and copies of all Intangibles.
Section 11.3 Governmental Authorizations. Within ten (10) days
after Seller receives the Option Notice, Seller shall deliver to Buyer a true
and complete list and copies of the Licenses. The Company shall be the
authorized legal holder of the Licenses. The Licenses shall comprise all of
the licenses, permits and other authorizations required from governmental and
regulatory authorities for the lawful conduct of the business and operations of
the Station in the manner and to the full extent they are conducted on the
Second Closing Date and for the lawful broadcasting by the Company from the
Tower Site as contemplated by the Construction Permit, as modified by the
Modification Application, and none of the Licenses shall be subject to any
restriction or condition which would limit the full operation of the Station.
The Licenses shall be in full force and effect, and the operation of the
Station shall be in accordance therewith. Seller has no knowledge of any
events or conditions relating to Seller or Seller's ownership and control of
the Company that could prevent the FCC from approving the transfer of control
of the Company to Buyer.
Section 11.4 Title to and Condition of Real Property. Within ten
(10) days after Seller receives the Option Notice, Seller shall deliver to
Buyer a true and complete description of all the Real Property and the
Company's interests therein. The Real Property shall comprise all real
property interests necessary to conduct the business and operations of the
Station as then conducted and for the lawful broadcasting by the Company from
the Tower Site as contemplated by the Construction Permit, as modified by the
Modification Application. The Company shall have good and marketable fee simple
title, insurable at
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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. All Real Property
(including the improvements thereon) (i) shall be in good condition and repair
consistent with its present use, (ii) shall be available for immediate use in
the conduct of the business and operations of the Station, and (iii) shall
comply with all applicable building or zoning codes and the regulations of any
governmental authority having jurisdiction.
Section 11.5 Title to and Condition of Tangible Personal Property.
Within ten (10) days after Seller receives the Option Notice, Seller shall
deliver to Buyer a true and complete list of all material items of Tangible
Personal Property. The Tangible Personal Property shall comprise all material
items of tangible personal property necessary to conduct the business and
operations of the Station as then conducted and for the lawful broadcasting by
the Company from the Tower Site as contemplated by the Construction Permit, as
modified by the Modification Application. The Company shall own and have good
title to each item of Tangible Personal Property, and none of the Tangible
Personal Property shall be subject to any security interest, mortgage, pledge,
conditional sales agreement, or other lien or encumbrance, except for liens for
current taxes not yet due and payable. All items of transmitting and studio
equipment included in the Tangible Personal Property (i) shall have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) shall permit the Station to operate in
accordance with the terms of the FCC Licenses and the rules and regulations of
the FCC, and with all other applicable federal, state, and local statutes,
ordinances, rules, and regulations.
Section 11.6 Compliance With Laws. The Company shall be in
compliance in all material respects with all laws, regulations and governmental
orders applicable to the ownership or use of its assets and the conduct of the
business and operations of the Station.
Section 11.7 Reports. All returns, reports and statements which
the Station is required to file with the FCC or with any other governmental
agency shall have been filed and shall be complete and correct in all material
respects.
Section 11.8 Public Inspection File. The Station's public
inspection file shall be located at the Station's main studio and shall
contain, in all material respects, the original or copies of all applications,
reports and other documents and records relating to the operation of the
Station that are required to be in such file under the rules and regulations of
the FCC.
Section 11.9 Taxes.
(a) The Company shall have filed all Tax Returns
and shall have paid all Taxes shown on such Tax Returns on any assessment
received by the Company, provided
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that the Company shall not be required to pay any Tax the validity of which is
being contested by the Company in good faith and pursuant to appropriate
proceedings;
(b) such reports and Tax Returns shall have been
prepared in accordance with applicable provisions of the Internal Revenue Code
of 1986, as amended, and the rules and regulations thereunder and with
applicable provisions of state laws, rules and regulations concerning taxation;
and
(c) the Company shall not have waived any statute
of limitations with respect to the payment of any taxes.
Section 11.10 Dividends and Redemptions. The Company shall not
have made at any time any declaration, set aside or payment of any dividend or
other distribution in respect of any shares of capital stock of the Company, or
any direct or indirect redemption, purchase or other acquisition of such stock.
Section 11.11 Notices; Condemnation.
(a) Neither the Company nor Seller shall have
received any written notice or order by any governmental or other public
authority, any insurance company that has issued a policy of insurance with
respect to the Station's assets or business, or any board of fire underwriters
or other body exercising similar functions that relates to material violations
of building, safety, fire or other ordinances or regulations by the Station or
requests the performance of any significant repairs, alterations or other work
to the assets of the Station; and
(b) there will not be any pending or threatened
condemnation, expropriation, eminent domain, zoning or similar proceeding
materially affecting all or any portion of the assets of the Station.
Section 11.12 Liabilities of the Company. The Company shall have
no liabilities or obligations of any sort whatsoever, except those arising
under the Licenses, those arising under this Agreement, the Tower Lease, the
Transaction Documents and those consented to in writing by Buyer.
Section 11.13 Disclosure. No representation or warranty by Seller
or the Company in this Agreement, and no schedule, document, statement,
certificate furnished or to be furnished to Buyer pursuant hereto, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained
herein or therein not misleading.
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ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AT THE SECOND
CLOSING
The obligations of Buyer under this Agreement at the Second Closing
are subject to the fulfillment prior to or at the Second Closing of the
following conditions (any one or more of which may be waived in whole or in
part by Buyer at Buyer's option):
Section 12.1 Representations and Warranties. The representations
and warranties of Seller and the Company contained in this Agreement relating
to the Second Closing shall be true and correct in all material respects on and
as of the Second Closing Date, with the same force and effect as though such
representations and warranties had been made on as of such date.
Section 12.2 Covenants and Conditions. Seller and the Company
shall have performed in all material respects all of their respective
obligations and agreements and complied with all of their respective covenants
and conditions contained in this Agreement to be performed or complied with by
Seller and the Company on or before the Second Closing Date.
Section 12.3 FCC Consent. The FCC Consent shall have been
granted and shall have become a Final Order.
Section 12.4 Consents. All material consents and approvals of
all other governmental authorities, bodies or agencies necessary for the
consummation of the transactions contemplated by this Agreement to occur at the
Second Closing, shall have been obtained, all without any conditions which
would be unduly burdensome on, or have a material adverse effect upon Buyer or
the Company.
Section 12.5 Deliveries. Seller and the Company shall have
delivered to Buyer the following, in form and substance reasonably satisfactory
to Buyer and Buyer's Counsel:
(a) Option Shares. Certificates representing the
Option Shares, which shall be either duly endorsed or accompanied by stock
powers duly executed in favor of Buyer.
(b) Certificate of Incorporation. A copy of the
Certificate of Incorporation of the Company, certified as of a date not earlier
than ten (10) days prior to the Second Closing Date by the Secretary of State
of Delaware.
(c) Bylaws. A copy of the Bylaws of the Company,
certified as of the Second Closing Date, by the Secretary or Assistant
Secretary of the Company.
(d) Resolutions. Copies of resolutions adopted
by the Board of Directors of both Seller and the Company, authorizing and
approving the execution and delivery of this Agreement and the Transaction
Documents and the consummation of the transactions
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contemplated hereby and thereby, certified by the Secretary or Assistant
Secretary of Seller and the Company, respectively, as being true and complete
on the Second Closing Date.
(e) Consents. A manually executed copy of any
instrument evidencing receipt of any Consent.
(f) Estoppel Certificates. Estoppel Certificates
of the lessors of all leasehold and subleasehold interests included in the Real
Property Interests.
(g) Certificates. Certificates, dated as of the
Second Closing Date, executed on behalf of Seller and the Company by Seller and
an officer of the Company, respectively, each certifying: (1) that the
representations and warranties of Seller and the Company contained in this
Agreement are true and complete in all material respects as of the Second
Closing Date as though made on and as of that date; and (2) that Seller and the
Company have performed in all material respects all of their respective
obligations and agreements in this Agreement to be performed and complied with
by Seller and the Company on or before the Second Closing Date.
(h) Opinions of Counsel. Opinions of Seller's
and the Company's counsel and communications counsel dated as of the Second
Closing Date, substantially in the form of Schedule 12.5(h) hereto.
(i) Additional Instruments. Such additional
instruments and documents as may be required to consummate the transactions
contemplated hereby.
Section 12.6 Adverse Proceedings. Except for proceedings
relating to the television broadcast industry generally, there shall not be any
order, decree or judgment in effect or any lawsuit, claim, legal action,
proceeding or investigation pending or threatened before any court,
administrative agency or arbitrator which is reasonably likely to adversely
affect the construction, business, property, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement.
Section 12.7 Time Brokerage Agreement. The Time Brokerage
Agreement shall be in full force and effect, and the Company shall have
complied in all material respects with its obligations thereunder.
Section 12.8 Adverse Change. Between the date of this Agreement
and the Second Closing Date, there shall have been no material adverse change
in the business, assets, properties, financial condition, or business prospects
of the Station, including any unrestored damage, destruction, or loss affecting
any assets that are material to the conduct of the business of the Station.
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Section 12.9 Tower Site. On or prior to the Second Closing Date,
Seller shall have conveyed to the Company valid and marketable fee simple title
to the Tower Site free and clear of any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances of
any nature whatsoever except for current taxes not yet due and payable pursuant
to a warranty deed in form reasonably satisfactory to Buyer and on the Second
Closing Date, the Company shall be the holder of valid and marketable fee
simple title to such Tower Site free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges or
encumbrances of any nature whatsoever except for current taxes not yet due and
payable.
ARTICLE 13. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND THE
COMPANY AT THE SECOND CLOSING
The obligations of Seller and the Company at the Second Closing under
this Agreement are subject to the fulfillment prior to or at the Second Closing
of the following conditions (any one or more of which may be waived in whole or
in part by Seller or the Company at their option):
Section 13.1 Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement relating to the Second
Closing shall be true and correct in all material respects on and as of the
Second Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of such date.
Section 13.2 Covenants and Conditions. Buyer shall have
performed in all material respects all of its obligations and agreements and
complied with all of its covenants and conditions contained in the Agreement to
be performed or completed with or before the Second Closing Date.
Section 13.3 FCC Consent. The FCC shall have granted the
FCC Consent.
Section 13.4 Consents. All material consents and approvals of
all other governmental authorities, bodies or agencies necessary for the
consummation of the transactions contemplated by this Agreement to occur at the
Second Closing, shall have been obtained, all without any conditions which
would be unduly burdensome on, or have a material adverse effect upon Seller.
Section 13.5 Deliveries. Buyer shall have delivered the
following, in form and substance reasonably satisfactory to Seller, the Company
and their Counsel:
(a) Option Price. The Option Price described in
Section 9.5; and
(b) Resolutions. Copies of resolutions adopted
by the Board of Directors of Buyer, authorizing and approving the execution of
this Agreement and the consummation
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of the transactions contemplated hereby, certified by its Secretary as being
true and correct on the Second Closing Date.
(c) Officer's Certificate. A certificate, dated
as of the Second Closing Date, executed on behalf of Buyer by 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 Second Closing Date as though made on and as of that date, and (2) that
Buyer has performed in all material respects all of its obligations and
agreements in this Agreement to be performed and complied with by Buyer on or
prior to the Second Closing Date.
(d) Opinion of Counsel. An opinion of Buyer's
counsel dated as of the Second Closing Date, substantially in the form of
Schedule 13.5(d) hereto.
Section 13.6 Time Brokerage Agreement. The Time Brokerage
Agreement shall be in full force and effect, and Buyer shall have complied in
all material respects with its obligations thereunder.
Section 13.7 Adverse Proceedings. There shall not be any order,
decree or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
ARTICLE 14. JOINT COVENANTS
Section 14.1 Confidentiality. Buyer, on the one hand, and
Seller and the Company, on the other hand, shall each keep confidential all
confidential information obtained by it with respect to the other in connection
with this Agreement (except for such disclosure to attorneys, bankers,
underwriters, and investors, as may be appropriate in the furtherance of the
transactions contemplated by this Agreement or as may be required by law,
including by the securities laws or the rules and regulations of any security
exchange), and if the transactions contemplated hereby are not consummated for
any reason, each shall, to the extent reasonably possible, return to the other,
without retaining a copy thereof, any confidential schedules, documents or
other written information obtained from the other in connection with this
Agreement and the transactions contemplated hereby.
Section 14.2 Cooperation. Buyer, Seller and the Company shall
cooperate fully with each other and their respective counsels and accountants
in connection with any actions required to be taken as part of their
obligations under this Agreement, and the parties will use their commercially
reasonable efforts to consummate the transactions contemplated hereby and to
fulfill their obligations hereunder. No party shall take any action that is
inconsistent with its obligations under this Agreement, that would render any
of its representations or warranties herein untrue or incomplete or that could
hinder or delay the
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consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing, and except as otherwise expressed in this
Agreement, Buyer shall have no obligation (a) to expend funds to obtain any of
the Consents or (b) to agree to any adverse change in any License or Contract
in order to obtain a Consent required with respect thereto.
Section 14.3 Governmental Consents. If any governmental consent
required for the consummation of the transactions contemplated hereby or the
satisfaction of any condition contained herein includes any condition, the
party upon which such condition is imposed shall use its best efforts to comply
therewith before the respective Closing to which such consent relates;
provided, however, that no party hereto shall be required to comply with any
condition that would be unduly burdensome or would have a material adverse
effect upon such party.
Section 14.4 Station Operation and Contracts. Buyer and Seller
specifically acknowledge that, as of the Initial Closing Date, the Station will
not have commenced broadcast operations. Seller and the Company shall
cooperate and use their respective best efforts to complete construction of the
Station and commence broadcast operations at the Station as expeditiously as
possible. Seller and the Company shall file such applications with the FCC and
other governmental authorities as are necessary to enable the Station to
operate in compliance with FCC and other applicable rules and regulations.
ARTICLE 15. TRANSFER TAXES; FEES AND EXPENSES
Section 15.1 Transfer Taxes. Buyer and Seller shall each pay
one-half of all transfer and documentary taxes or fees incurred in connection
with the transfer of the Initial Shares and Option Shares; provided, however,
that Seller shall be responsible for the payment of any federal, state or local
income tax applicable to Seller or the Company in connection with the
transaction contemplated by this Agreement.
Section 15.2 Filing Fees. Buyer and Seller shall each pay
one-half of all FCC filing fees and any other filing fee imposed by any other
governmental authority in connection with the transactions contemplated hereby.
Section 15.3 Expenses. Seller and the Company shall be solely
responsible for all costs and expenses incurred in connection with the
negotiation, preparation and performance of and compliance with this Agreement.
In connection with the FCC application for the transfer of the Option Shares to
Buyer at the Second Closing, Seller shall be responsible for the payment of any
costs or expenses that are incurred as a result of the filing of an objection
to such FCC application based upon the qualifications of Seller or the Company,
or the acts or omissions of Seller or the Company with respect to the
acquisition or construction of the Station, and Buyer shall be responsible for
the payment of any costs or expenses that are incurred as a result of the
filing of an objection to such FCC application based upon the qualifications of
Buyer or the acts or omissions of Buyer with respect to the acquisition or
construction of the Station. Seller shall have paid Patrick Communications
Corporation on or
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before the Second Closing Date the broker's fees and commissions payable by
Seller in connection with the transactions contemplated by this Agreement.
ARTICLE 16. ESCROW DEPOSIT
Section 16.1 Escrow Deposit. Simultaneously with the execution
and delivery of this Agreement, Buyer has deposited the Escrow Deposit with the
Escrow Agent in accordance with an Escrow Agreement. All funds and documents
deposited with or otherwise held by the Escrow Agent shall be held and
disbursed in accordance with the terms of the Escrow Agreement and the
following provisions:
(a) At the Second Closing, Buyer, Seller and the
Company shall jointly instruct the Escrow Agent to disburse all funds held by
the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to
Article 18 and Buyer is not in material breach of this Agreement, Buyer, Seller
and the Company shall jointly instruct the Escrow Agent to disburse all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, to or at the direction of Buyer.
(c) If this Agreement is terminated by Buyer due
to Seller's material breach of this Agreement, then Buyer, Seller and the
Company shall jointly instruct the Escrow Agent to disburse the Escrow Deposit
to or at the direction of Buyer, and to disburse all other funds held by the
Escrow Agent pursuant to the Escrow Agreement, including any interest or other
proceeds from the investment of funds held by the Escrow Agent, to or at the
direction of Buyer.
(d) If this Agreement is terminated by Seller due
to Buyer's material breach of this Agreement, then the payment to Seller of the
Escrow Deposit pursuant to this Section shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered by
Seller by reason of Buyer's material breach of this Agreement. Seller and
Buyer agree in advance that actual damages would be difficult to ascertain and
that the amount of the Escrow Deposit is a fair and equitable amount to
compensate Seller for Buyer's material breach of this Agreement.
ARTICLE 17. RISK OF LOSS
Section 17.1 Risk of Loss. The risk of any loss, damage or
impairment, confiscation or condemnation of any of the assets of Seller or the
Company from any cause whatsoever shall be borne by Seller. In the event of
any such loss, damage or impairment, confiscation or condemnation, the proceeds
of, or any claim for any loss payable under, any insurance policy, judgment or
award with respect thereto shall be applied to repair, replace
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or restore such assets to their prior condition as soon as possible after such
loss, impairment, condemnation or confiscation.
Section 17.2 Postponement of the Second Closing Date. If any
damage or destruction of the Company's assets occurs and such assets cannot be
restored or replaced on or before the Second Closing Date, the Second Closing
Date shall be postponed, the exact date and time of such postponed closing date
to be such date and time within the effective period of the FCC Consent as
shall be as agreed to by Seller, Buyer and the Company. If such assets cannot
be restored or replaced within the effective period of the FCC Consent, the
parties shall join in requesting an extension of the effective period of such
consent for a period not to exceed an additional one hundred eighty (180) days
from the date of FCC Consent.
Section 17.3 Option to Terminate. In the event of any damage or
destruction of the assets, if such assets have not been restored or replaced
within the effective period of the FCC Consent as extended, Buyer may, at its
option, proceed to close this Agreement and complete the restoration and
replacement of such damaged assets after the Second Closing Date, in which
event Seller shall deliver to Buyer all insurance proceeds payable to it or the
Company and received in connection with such damage or destruction of the
assets without limitation as to the costs and expenses arising in connection
with such restoration and replacement.
ARTICLE 18. TERMINATION RIGHTS
Section 18.1 Termination by the Parties. This Agreement may be
terminated by either Buyer, on the one hand, or Seller and the Company, on the
other hand, if not then in material default, upon written notice to the other
upon the occurrence of any of the following:
(a) If the purchase of the Initial Shares and
Option Shares by Buyer pursuant to this Agreement shall not have occurred on or
prior to June 1, 1998;
(b) If the other party defaults in the observance
or in the due and timely performance of any of its material covenants or
agreements contained herein and such default has not been cured within fifteen
(15) days after notice by that party not in default;
(c) If on the date of either of the Closings, any
of the conditions precedent to the obligations of a party set forth in this
Agreement as to that Closing have not been satisfied or waived by the other
party and such condition shall remain unsatisfied ten (10) days after notice
thereof by the other party;
(d) If there shall be in effect on the date of
either of the Closings any final judgment, decree or order that would prevent
or make unlawful the actions to be taken at such Closing; or
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<PAGE> 34
(e) Following the expiration of the Option
Period, if Buyer has not delivered to Seller an Option Notice indicating its
intention to exercise the Option.
(f) If the Agreement is terminated pursuant to
Subsection (e) hereof, Buyer agrees to sell, transfer and deliver to Seller the
Initial Shares, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever, on the tenth (10th) business day following such termination (the
"Repurchase Closing Date"). The purchase price for the Initial Shares payable
by Seller to Buyer (the "Repurchase Price") shall be the Purchase Price paid by
Buyer to Seller at the Initial Closing. In addition, on the Repurchase Closing
Date, Seller shall purchase from Buyer the Station's equipment then being
leased to the Company by Buyer for a cash price equal to fifty (50%) percent of
Buyer's cost to purchase the equipment.
Section 18.2 Termination by Buyer. This Agreement may be
terminated by Buyer, if not then in material default, upon written notice to
Seller and the Company, if the FCC denies the Modification Application or the
application for the Pro Forma FCC Consent.
ARTICLE 19. SPECIFIC PERFORMANCE
Seller and the Company agree that the Initial Shares and the Option
Shares are unique and valuable properties such that Buyer shall be entitled to
sue for specific performance of the terms of this Agreement in the event of a
breach by Seller or the Company with respect to either the Initial Closing or
the Second Closing, in which case Seller and the Company shall waive the
defense that there is an adequate remedy at law.
ARTICLE 20. INDEMNIFICATION
Section 20.1 Seller's and the Company's Indemnification. Seller
and the Company shall jointly and severally indemnify, defend and hold Buyer
harmless from and against any and all loss, cost, liability, damage and expense
(including legal and other expenses incident thereto) of every kind, nature or
description, arising out of: (a) the breach of any representation or warranty
of Seller or the Company set forth in this Agreement or in any schedule or
certificate delivered to Buyer pursuant hereto; (b) the breach of any of their
covenants or other agreements contained in or arising out of this Agreement or
the transactions contemplated hereby; or (c) the ownership of the Initial
Shares prior to the Initial Closing, and the conduct of the business and
operations of the Station and the ownership of the Option Shares prior to the
Second Closing, including, but not limited to, any liability, judgment or
damages against the Company or Seller, their officers, directors, employees or
agents, as a result of litigation involving the Company, Seller or the
operation of the Station prior to each of the Closings. Buyer shall have the
right to enforce its indemnification rights hereunder against either Seller or
the Company at its option. Following the Initial Closing, Seller shall not
have any right of contribution against the Company for any indemnification
payment made by Seller hereunder and Seller hereby waives any such right that
it may have.
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Section 20.2 Buyer's Indemnification. Buyer shall indemnify,
defend and hold Seller and the Company harmless from and against any and all
loss, cost, liability, damage and expense (including legal and other expenses
incident thereto) of every kind, nature or description, arising out of: (i)
the breach of any representation or warranty of Buyer set forth in this
Agreement (including the Schedules hereto); (ii) the ownership or operation of
the Station after the Second Closing, or (iii) the breach of any of its other
agreements contained in or arising out of this Agreement or the transactions
contemplated hereby.
Section 20.3 Notice of Claim. Buyer, on the one hand, and
Seller and the Company, on the other hand, upon discovery of the breach of any
of the representations, warranties and covenants of the other under this
Agreement, shall give to the other prompt written notice of the discovery of
such breach. If any action, suit or proceeding shall be commenced against, or
any claim or demand be asserted against Buyer, Seller or the Company, as the
case may be, in respect of which such party proposes to seek indemnification
from the other under this Article 20, then such party (hereinafter the
"Claimant") shall notify the party from whom indemnification is sought
(hereinafter the "Indemnifying Party") to that effect in writing with
reasonable promptness and in any event, if such claim arises out of a claim by
a person or entity other than the Claimant, then within fifteen (15) days after
written notice of such claim was given to the Claimant.
Section 20.4 Assumption and Defense of Third-Party Action. If
any claim hereunder arises of out a claim against the Claimant by a third
party, the Indemnifying Party shall have the right, at its own expense, to
participate in or assume control of the defense of such claim, and the Claimant
shall fully cooperate with the Indemnifying Party subject to reimbursement for
actual out-of-pocket expenses incurred as the result of a request by the
Indemnifying Party. If the Indemnifying Party elects to assume control of the
defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If a claim
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third-party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim. In no event shall the Indemnifying
Party have the right to agree to a settlement which is binding upon Claimant
without Claimant's prior consent which shall not be unreasonably withheld.
Section 20.5 Limitation Period. No party shall be entitled to
indemnification hereunder with respect to the breach of any representation,
warranty or covenant contained herein unless such claim for indemnification is
asserted in writing to the party from whom indemnification is sought within six
(6) months after the Second Closing, except that any claim for indemnification
related to a claim by a third party, including claims by the Internal Revenue
Service against the Company or Seller, shall be made within the statute of
limitations period applicable to such third-party claim.
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<PAGE> 36
ARTICLE 21. OTHER PROVISIONS
Section 21.1 Survival of Representations, Warranties and
Covenants. The representations, warranties, covenants, indemnities and
agreements contained herein are and will be deemed and construed to be
continuing representations, warranties, covenants, indemnities and agreements
and will survive the respective Closings as to which breach or claim is
asserted until the termination of the limitation period set forth in Section
20.5 hereof. Any investigations by or on behalf of any party hereto prior to
or after the Closings shall not constitute a waiver as to enforcement of any
representation, warranty, covenant or agreement contained herein.
Section 21.2 Press Releases. Buyer, Seller and the Company shall
jointly prepare, and determine the timing of, any press release or other
announcement relating to the transactions contemplated by the Agreement. No
party will issue any press release or make any other public announcement
relating to the transactions contemplated by the Agreement without the prior
consent of the other parties, except that any party may make any disclosure
required to be made by it under applicable law (including the federal
securities laws) or by this Agreement if it determines in good faith that it is
appropriate to do so and provided further that it gives prior notice of any
such disclosure to the other party hereto.
Section 21.3 Further Assurances. At and after each of the
Closings, Buyer, Seller and the Company will, without further consideration,
execute and deliver such further instruments and documents and do such other
acts and things as the other parties may reasonably request in order to effect
or confirm the transactions contemplated by this Agreement.
Section 21.4 Benefit and Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. No party hereto may assign, transfer,
encumber or otherwise convey its interest under this Agreement without the
prior written consent of the other parties hereto; provided, however, that
Buyer may assign its rights and interests under this Agreement to its lenders
as collateral security for Buyer's obligations to such lenders.
Section 21.5 Entire Agreement. This Agreement and the schedules
attached hereto embody the entire agreement and understanding of the parties
and supersedes any and all prior agreements, arrangements and understandings
relating to matters provided for herein. No amendment, waiver of compliance
with any provision or condition hereof, or consent pursuant to this Agreement
will be effective unless evidenced by an instrument in writing signed by the
party against whom enforcement of any waiver, amendment, extension or discharge
is sought.
Section 21.6 Headings. The headings are for convenience only
and will not control or affect the meaning or construction of the provisions of
this Agreement.
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<PAGE> 37
Section 21.7 Governing Law. The construction and performance of
this Agreement will be governed by the laws of the State of Delaware (except
for the choice of law provisions thereof).
Section 21.8 Notices. All notices, demands, and requests
required or permitted to be given under the provisions of this Agreement shall
be (a) in writing, (b) delivered by personal delivery, or sent by commercial
delivery service or registered or certified mail, return receipt requested, (c)
deemed to have been given on the date of personal delivery or the date set
forth in the records of the delivery service or on the return receipt, and (d)
addressed as follows:
To Buyer: Paxson Communications of Scranton-64, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
With a copy (which shall not John R. Feore, Jr., Esq.
constitute notice) to: Dow, Lohnes & Albertson
A Professional Limited Liability Company
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
To Company and Seller: Ehrhardt Broadcasting
310 Lansdowne Ave.
Clarks Summit, Pennsylvania 18411
Attention: Ted H. Ehrhardt, Jr.
With a copy (which shall not Lawrence M. Miller, Esq.
constitute notice) to: Schwartz, Woods & Miller
1350 Connecticut Avenue, N.W.
Suite 300
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
21.8.
Section 21.9 Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signature on each counterpart were
upon the same instrument.
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<PAGE> 38
Section 21.10 PCC Guaranty. In consideration of the execution and
delivery of this Agreement by Seller and the Company and their agreement to
perform the transactions contemplated hereby, Paxson Communications
Corporation, a Florida corporation ("PCC"), hereby guarantees Buyer's full,
complete and timely performance of and compliance with all of its covenants,
agreements and obligations set forth herein and in the Construction and Lease
Agreement and Time Brokerage Agreement. PCC agrees that no formal change,
amendment, modification or waiver of any term or condition hereof or thereof,
no extension in whole or in part of the time for the performance by Buyer of
any of its obligations hereunder or thereunder, and no settlement, compromise,
release, surrender, modification or impairment of, or exercise or failure to
exercise any claim, right or remedy of any kind or nature in connection
herewith or therewith, shall affect, impair or discharge, 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 or the Construction and Lease
Agreement or Time Brokerage Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement as of the date first above written.
CHANNEL 64 OF SCRANTON, INC.
By: /s/ Ted Ehrhardt
-----------------------------------
Name:
Title:
TED EHRHARDT D/B/A
EHRHARDT BROADCASTING
By: /s/ Ted Ehrhardt
------------------------------------
PAXSON COMMUNICATIONS OF
SCRANTON-64, INC.
By: /s/ William L. Watson
-----------------------------------
Name: William L. Watson
Title: Secretary
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<PAGE> 1
EXHIBIT 10.146
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
AND
PARAMOUNT STATIONS GROUP, INC.
FOR
TELEVISION STATION WTVX(TV),
FT. PIERCE, FLORIDA
FEBRUARY 19, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Credit Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"HSR Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Paxson Credit Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Permitted Liens" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) The Purchase Price; Payoff Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Manner of Determining Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Assets; Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Employees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 Buyer Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.6 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.13 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.7 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.9 WTVX Broadcast Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(f) No Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(g) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(i) Whitehead Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) No Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Whitehead Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Closing Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Transfer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Licenses, Contracts, Business Records, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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(g) Evidence of Debt Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Assumption Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Mutual Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(f) Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(g) Assignee Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(h) Termination of Whitehead Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Mutual Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Whitehead Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(g) Termination of Whitehead Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Escrow Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . 26
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.3 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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11.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.7 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.9 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.11 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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LIST OF SCHEDULES
WTVX-TV
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Schedule 2.2 -- Excluded Property
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Assumed Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Insurance Policies
Schedule 3.12 -- Employee Matters
Schedule 3.14 -- Claims and Legal Actions
Schedule 3.15 -- Environmental Matters
Schedule 8.2(f) -- Form of Opinion of Seller's Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of February 19, 1997, by
and between Paxson Communications of Ft. Pierce-34, Inc., a Florida corporation
("Seller") and Paramount Stations Group, Inc., a Delaware corporation
("Buyer").
RECITALS
A. Seller is a party to an Option Agreement dated as of December
29, 1995 with Whitehead Media, Inc. ("Whitehead") and Whitehead Media of
Florida, Inc. ("Whitehead-Florida"), as amended by letter dated June 18, 1996
from Paxson Communications Corporation to Whitehead, Whitehead-Florida and
certain other affiliates thereof and by First Amendment to Option Agreement
dated as of December 31, 1996 with Whitehead, Whitehead-Florida and Whitehead
Broadcasting of Florida, Inc. ("Whitehead-Broadcasting") (such Option
Agreement, as amended, shall be referred to herein as the "Option Agreement"),
pursuant to which Whitehead-Florida and Whitehead-Broadcasting (collectively,
the "Whitehead Companies") have granted to Seller an exclusive and irrevocable
option (the "Option") to acquire substantially all of the assets of Television
Station WTVX-TV, Ft. Pierce, Florida (the "Station").
B. Seller has given notice to the Whitehead Companies of its
exercise of the Option. Pursuant to the Option Agreement, Seller intends to
enter into an Asset Purchase Agreement (the "Whitehead Purchase Agreement")
with the Whitehead Companies as soon as possible after the date hereof pursuant
to which the Whitehead Companies will sell to Seller substantially all of the
assets of the Station.
C. Immediately following and subject to the closing of the
transactions contemplated by the Whitehead Purchase Agreement (the "Whitehead
Closing") and subject to the conditions set forth in Section 7 hereof, Seller
will sell, and Buyer will buy, all of the assets (other than the Excluded
Assets) that are owned, leased or licensed by Seller (the "Paxson Assets") and
the Whitehead Companies which are acquired by Seller pursuant to the Whitehead
Purchase Agreement (the "Whitehead Assets") and which are used or useful in the
business and 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:
<PAGE> 9
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section, it being understood, however, that the
definitions set forth below give effect where appropriate as of the date hereof
and as of the Closing Date to the consummation of the Whitehead Closing so as
to include within their scope, the Paxson Assets and the Whitehead Assets.
"Accounts Receivable" means the rights of Seller as of the Closing
Date to payment for the sale of advertising time and other goods and services
by Seller with respect to the Station which have accrued prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1 and 2.2.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) all Contracts entered into by Seller in the ordinary course of business
after the date hereof which comply with the provisions of Section 5.3 hereof;
and (iii) any other Contracts entered into by Seller between the date of this
Agreement and the Closing Date that Buyer agrees in writing to assume.
"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
in accordance herewith 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.
"Credit Agreement" means the Credit Agreement dated as of December 29,
1995 among the Whitehead Companies and their affiliates, as Borrowers, the
lenders party thereto, as Lenders, CIBC Inc., as Documentation Agent, and
Banque Paribas, as Administrative
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<PAGE> 10
Agent, as amended by First Amendment to Credit Agreement, dated as of December
31, 1996, among the Whitehead Companies and their affiliates, the Lenders and
Banque Paribas, as Agent, as further amended, supplemented or otherwise
modified from time to time.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services, (b) all obligations of such Person as lessee under
capitalized leases, (c) all Debt of others referred to in clauses (a) and (b)
above or clause (d) below guaranteed directly or indirectly in any manner by
such Person and (d) all Debt referred to in clauses (a) and (b) above of
another Person secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any lien on property or
assets owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.
"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, and the rules and regulations thereunder.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local government authorities to Seller in connection with the conduct
of the business or operations of the
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<PAGE> 11
Station, together with any additions thereto between the date of this Agreement
and the Closing Date.
"Paxson Credit Agreement" means the Amended and Restated Credit
Agreement dated as of November 19, 1996 by and among Paxson Communications
Corporation, the lenders parties thereto and Union Bank of California, N.A., as
agent.
"Permitted Liens" means liens for taxes not yet due and payable and
easements and other restrictions on real estate existing as of the date hereof
which do not individually or in the aggregate materially affect the value or
use or transferability of such real estate.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, or any
governmental entity.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property, leaseholds and subleaseholds,
purchase options, easements, licenses, rights to access, and rights of way, and
all buildings and other improvements thereon, owned, leased or licensed by
Seller 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, but excluding any Excluded Assets.
"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, leased or licensed
by Seller and which is used or useful in the conduct of the business or
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date, but excluding any Tangible Personal
Property consumed in the ordinary course of business between the date hereof
and the Closing Date and any Excluded Assets.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
assign and deliver to Buyer on the Closing Date, and Buyer agrees to purchase
and accept, all of the Assets and property interests owned, leased or licensed
by Seller or in which Seller has a property interest which are used or useful
in connection with the conduct of the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date, but excluding the assets described in Section 2.2, free and clear
of any claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges, or encumbrances of any nature whatsoever (except for
Permitted Liens), including, without limitation, the following:
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<PAGE> 12
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill of
the Station, if any;
(f) All proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station, which belong to
Seller and are within its possession and control;
(g) All choses in action of Seller relating to
the Station that are assignable to Buyer; and
(h) All records required by the FCC to be kept by
the Station and copies of all other books and records of Seller which relate to
the business or operations of the Station (exclusive of corporate, financial
and accounting records), including executed copies of the Assumed Contracts.
2.2 Excluded Assets. The Assets shall exclude the following
assets (the "Excluded Assets").
(a) Seller's cash on hand as of the Closing and
all other cash in any of Seller's bank or savings accounts; any insurance
policies, letters of credit, or other similar items and cash surrender value in
regard thereto; and any stocks, bonds, certificates of deposit and similar
securities or other investments;
(b) All corporate and accounting records of
Seller and copies of all other books and records relating to the business and
operations of the Station;
(c) All equipment and studio space listed on
Schedule 2.2 hereto and any other property listed on Schedule 2.2 hereto; and
(d) All Accounts Receivable.
2.3 Purchase Price.
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<PAGE> 13
(a) The Purchase Price; Payoff Amount. The
purchase price for the Assets shall be paid in cash at the Closing and shall be
equal to $34,250,000 adjusted as provided in Section 2.3(b) (as adjusted, the
"Purchase Price"). At Closing, the parties hereto shall cause the Deposit (as
defined below), including any interest earned thereon, to be paid to Seller and
such Deposit and interest to the extent paid to Seller shall be applied as a
credit in favor of Buyer against the Purchase Price.
The Purchase Price for the Assets shall be allocated among the Assets
in accordance with an appraisal to be performed by Bond & Pecaro which
allocation shall be used by the parties hereto in connection with the
preparation and filing of the Internal Revenue Service Form 8594 to be filed by
the parties hereto as required by Section 1060 of the Internal Revenue Code of
1986, as amended. Each party hereto shall not take a position on any tax
return or before any tax authority that is in any way inconsistent with the
allocation on such Form 8594. Buyer shall pay for the cost of the appraisal of
the Station.
(b) Prorations. The Purchase Price shall be
increased or decreased as required to effectuate the proration of expenses of
the Station as of 11:59 p.m. local time, on the day prior to the Closing Date.
All expenses arising from the operation of the Station, including business and
license fees, utility charges, real and personal property taxes and assessments
incurred 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 which shall be
governed by Section 11.1 hereof), prepaid time sales agreements 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 liabilities
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 2.4.
(c) 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 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 the Seller (i) 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 and (ii) for the expenses
of the Station relating to the period prior to the Closing to the extent Buyer
receives a credit in
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its favor with respect thereto under Section 2.3(b). Buyer shall not assume
any other obligations or liabilities of Seller, including, without limitation,
(i) any obligations or liabilities under any Contract not included in the
Assumed Contracts, (ii) any obligations or liabilities under the Assumed
Contracts relating to the period prior to the Closing Date, (iii) any claims or
pending litigation or proceedings relating to the operation of the Station
prior to the Closing, (iv) any obligations or liabilities arising under
agreements entered into other than in the ordinary course of business except to
the extent such Contract is included among the Assumed Contracts, (v) any
obligation to any employee of the Station for severance benefits, vacation
time, or sick leave accrued prior to the Closing Date relating to any employee
of Seller who is not employed or offered employment by Buyer within the 90-day
adjustment period, or (vi) except as otherwise assumed pursuant to the terms of
this Agreement, 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
Notwithstanding the fact that the Whitehead Closing has not occurred,
Seller represents and warrants to Buyer as set forth below as if the Whitehead
Closing had occurred as of the date hereof:
3.1 Organization, Standing and Authority. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of
Delaware. Seller has all requisite power and authority (i) to own, lease, and
use the Assets as now owned, leased, and used, (ii) to conduct the business
operations of the Station as now conducted, and (iii) to execute and deliver
this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Seller hereunder and thereunder. Seller is not a participant of any
joint venture or partnership with any 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 corporate actions on the part of Seller. This Agreement has
been duly executed and delivered by Seller and constitutes the legal, valid,
and binding obligation of Seller, enforceable against it in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery and performance by
Seller of this Agreement and the documents contemplated hereby (with or without
the giving of notice, the lapse of time,
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or both): (i) do not require the consent of any third party which is a party
to any agreement with 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 in a proceeding involving Seller, the Station or the Assets;
(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,
the Station or the Assets may be bound; (iv) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon any of the Assets; and (v) will not conflict with any
provision of Seller's Certificate of Incorporation or By-laws.
3.4 Governmental Licenses. Except as set forth on Schedule 3.4,
(i) Schedule 3.4 includes a true and complete list of the Licenses and lists
pending applications affecting the Licenses; (ii) Seller has delivered to Buyer
true and complete copies of the Licenses listed on such Schedule (including any
amendment and other modifications thereto), (iii) the material Licenses listed
on such Schedule have been validly issued, and Seller is the authorized legal
holder thereof, (iv) the Licenses listed on Schedule 3.4 comprise all of the
material licenses, permits, and other authorizations required from any
governmental or regulatory authority for the lawful conduct of the business and
operations of the Station in the manner and to the full extent they are now
conducted, (v) none of the material Licenses listed on such Schedule is subject
to any restriction or condition that would limit the full operation of the
Station as now operated, (vi) the material Licenses listed on such Schedule are
in full force and effect, and the conduct of the business and operations of the
Station is in material accordance therewith, and (vii) Seller has no reason to
believe that any of the material Licenses listed on such Schedule would not be
renewed by the FCC or other granting authority in the ordinary course.
3.5 Assets; Title to and Condition of Real Property. The Assets
and the Excluded Assets constitute all of the assets, whether tangible or
intangible, necessary for the continued operation of the Station as currently
conducted and upon transfer to Buyer pursuant to the terms hereof, Buyer will
acquire the Assets free and clear of all liens, claims or encumbrances
whatsoever other than Permitted Liens.
Schedule 3.5 contains a complete and accurate description of all the
Real Property and Seller's interests therein (including legal description,
owner, and use). The Real Property listed on Schedule 3.5 and any real
property interests included among the Excluded Assets comprise all real
property interests necessary to conduct the business and operations of the
Station as now conducted. Seller has good, marketable and insurable fee simple
or leasehold interests in all the Real Property subject to Permitted Liens and
any liens granted pursuant to the Credit Agreement and the Paxson Credit
Agreement. Except as set forth in Schedule 3.5, there are no parties in
possession of any portion of the Real Property other than Seller,
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whether as lessees or tenants at will. There are no material structural,
electrical, mechanical, plumbing, air conditioning, heating or other material
defects in the buildings located on the Real Property and the roofs of said
buildings are free from leaks and in good condition, normal wear and tear
excepted. Seller has full legal and practical access to the Real Property.
All easements, rights-of-way, and real property licenses relating to the Real
Property have been properly recorded in the appropriate public recording
offices. Seller will cooperate with Buyer and provide such assistance as Buyer
may reasonably request in connection with Buyer's efforts to obtain on or
before Closing, at Buyer's election and expense, a policy of title insurance
and a current survey with respect to the Real Property, including, without
limitation, using its best efforts to cause all lease agreements relating to
the Real Property to be 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 and the Excluded Assets
comprise all material items of tangible personal property necessary to conduct
the business and operations of the Station as now conducted exclusive of motor
vehicles. Except as described in Schedule 3.6, Seller owns and has good and
marketable title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except Permitted Liens and any liens granted pursuant to the Credit Agreement
and the Paxson Credit Agreement. To the best of Seller's knowledge, Schedule
3.6 lists all of the financing statements filed against Seller and the
Whitehead Companies under the Credit Agreement and the Paxson Credit Agreement.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Assumed Contracts except contracts with advertisers for the sale of advertising
time on the Station for cash at prevailing rates and which may be canceled by
the Station without penalty on not more than ninety days' notice. Seller has
delivered to Buyer true and complete copies of all written Assumed Contracts,
true and complete memoranda of all oral Assumed Contracts (including any
amendments and other modifications to such Assumed Contracts), and a schedule
summarizing in reasonable detail Seller's obligations under trade and barter
agreements relating to the Station. All of the Assumed Contracts are in full
force and effect, and are valid, binding, and enforceable in accordance with
their terms and there is not, to the best of Seller's knowledge, 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. 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.
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3.8 Consents. Except for the FCC Consent provided in Section 6.1,
the other Consents described in Schedule 3.3 and the notification requirements
of the HSR Act, no consent, approval, permit, or authorization of, or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) to consummate this Agreement and the
transactions contemplated hereby, (ii) to permit Seller to assign or transfer
the Assets to Buyer, or (iii) to enable Buyer to conduct the business and
operations of the Station in essentially the same manner as such business and
operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and as of the date hereof, uncontested. Seller has
delivered to Buyer copies of all documents establishing or evidencing all
intangibles.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.10 are in full
force and effect.
3.11 Reports. Except as set forth in Schedule 3.4, all material
returns, reports, and statements that the Station is currently required to file
with the FCC or place in its Public File or file with any other governmental
agency have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction over Seller and the Station have
been complied with in all material respects and all of such returns, reports,
and statements are substantially complete and correct as filed.
3.12 Personnel.
(a) Employees and Compensation. Schedule 3.12 contains a
true and complete list of all employees of the Station, their job description,
date of hire, salary and amount and date of last salary increase. Schedule
3.12 also contains a true and complete list as of the date of this Agreement of
all employee benefit plans or arrangements applicable to the employees of the
Station and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick leave, disability and termination arrangements or policies,
including workers' compensation policies, and a description of all fixed or
contingent liabilities or obligations of Seller with respect to any person now
or formerly employed at the Station or any person now or formerly retained as
an independent contractor at the Station.
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(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.
(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. 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, and except as set
forth on Schedules 3.4 and 3.14, there is no claim, legal action, counterclaim,
nor any order, decree or judgment, in progress or pending, or to the knowledge
of Seller threatened, against or relating to Seller with respect to its
ownership or operation of the Station or otherwise relating to the Assets or
the business or operations of the Station, nor does Seller know or have reason
to be aware of any basis for the same. In particular, but without limiting the
generality of the foregoing, and except as forth on Schedules 3.4 and 3.14,
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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3.15 Environmental Matters.
(a) Except as set forth in Schedule 3.15, 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 as
of the date hereof, no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or commenced against
Seller in connection with its ownership of the Assets or 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, except as set
forth in Schedule 3.15, Seller has no liability relating to its ownership of
the Assets or 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, except as set
forth in Schedule 3.15, Seller has no liability relating to its ownership of
the Assets or 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, except as set
forth in Schedule 3.15, Seller has no liability relating to its ownership of
the Assets or 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) Except as set forth in Schedule 3.15, in connection
with its ownership of the Assets or its ownership or operation of the Station,
Seller has obtained and been in material compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions,
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and charges thereunder) relating to public health and safety, worker health and
safety, and pollution or protection of the environment, including laws relating
to emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
(f) To the best of Seller's knowledge, all properties and
equipment used in the business of the Station are and have been free of
asbestos and asbestos-related products, PCB's, dioxins, and Extremely Hazardous
Substances (as defined in Section 302 of the Emergency Planning and Community
Right-to-Know Act).
(g) To the best of Seller's knowledge, no pollutant,
contaminant, or chemical, industrial, hazardous, or toxic material or waste has
ever been manufactured, buried, stored, spilled, leaked, discharged, emitted,
or released by Seller in connection with its ownership and operation of the
Station or, to the best of Seller's knowledge, after due investigation, by any
other party on any Real Property.
3.16 Compliance with Laws. Except as set forth on Schedule 3.4,
Seller has complied in all material respects with the Licenses and all federal,
state, and local laws, rules, regulations, and ordinances applicable or
relating to the ownership and operation of the Station. Neither the ownership
or use of the properties of the Station nor the conduct of the business or
operations of the Station conflicts in any material respects with the rights of
any other person or entity.
3.17 Full Disclosure. The representations and warranties of Seller
contained in this Agreement and in the schedules hereto do not contain when
taken as a whole any untrue statement of a material fact or omit to state when
taken as a whole a material fact necessary to make the statements made therein
not misleading in light of the circumstances when made and as of the time
given; provided, that this representation shall not cover any representations
in Section 3.18 which shall be given only in accordance with the terms thereof.
3.18 Financial Statements. The unaudited balance sheet of Seller
together with the fixed asset list of the Whitehead Companies each as at
December 31, 1996, and the related unaudited statement of income including
operating cash flow of the Station for the fiscal year then ended, copies of
which have been furnished to Buyer, fairly present (subject only to normal
year-end audit adjustments in the ordinary course and the absence of notes) the
financial condition of the Station as at such date and the results of the
operations of the Station for the period ended on such date, all in accordance
with generally accepted
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accounting principles, and since December 31, 1996, there has been no material
adverse change in the Tangible Personal Property or the FCC Licenses.
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. Buyer has all requisite power and authority to execute and
deliver this Agreement and the documents contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of any third party
which is party to any agreement with Buyer; (ii) will not conflict with the
Certificate of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
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 Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire the Assets or
operate the Station.
4.4 Buyer Qualifications. Except solely as a result of the
overlap of the Grade A and Grade B Contours of the Station with the Grade A and
Grade B Contours of television station WBFS (the "Overlap"), 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 amended, and the
rules, regulations and policies of the FCC. Based solely on facts known to
Buyer as of the date hereof, except for the Overlap, Buyer knows of no fact
that would, under existing law and the existing rules, regulations, policies
and procedures of the FCC
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disqualify Buyer as assignee of the FCC Licenses or as the owner and operator
of the Station.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally.
(a) Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station in accordance
with the Time Brokerage Agreement (the "Time Brokerage Agreement") dated as of
September 22, 1994 by and between Whitehead Media, Inc. and Seller (by
assignment from Paxson Communications Corp.), as amended by amendments dated as
of April 19, 1995 and December 29, 1995 and as assigned to Whitehead-Florida as
of December 31, 1996, 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.
(b) Without the prior written consent of Buyer, Seller
shall not cancel or terminate the Whitehead Purchase Agreement or consent to or
accept any cancellation or termination thereof, amend or otherwise modify the
Whitehead Purchase Agreement or give any consent, waiver or approval
thereunder, waive any default under or any breach of the Whitehead Purchase
Agreement, agree in any manner to any other amendment, modification or change
of any term or condition of the Whitehead Purchase Agreement or take any other
action in connection with the Whitehead Purchase Agreement that would in the
case of any of the foregoing, impair, in any material respect, the value of the
Assets or the benefit to be received by Buyer under the transactions hereunder
as if the Whitehead Closing had occurred on the date hereof. Both prior to and
subsequent to the Whitehead Closing, Seller shall at its discretion either
strictly enforce each of the covenants, agreements, and other obligations of
the Whitehead Companies under the Whitehead Purchase Agreement or take such
actions that would cause Buyer to receive the benefits that it would have
received had Seller enforced each of the covenants, agreements and obligations
under the Whitehead Purchase Agreement. In the event of any default or any
breach by any Whitehead Company of any of its pre-closing covenants, agreements
or other obligations under the Whitehead Purchase Agreement, then Seller shall
be liable to Buyer under this Agreement as if Seller was the party in such
default or breach; provided, however, that Seller shall not be liable to Buyer
under this Agreement if Seller takes such action required to put Buyer in the
same position as if there had been no breach or default of the Whitehead
Purchase Agreement.
5.2 Contracts. Seller will not enter into any contract or
commitment which is not terminable without penalty on 30-days notice relating
to the Station or the Assets, or amend or terminate any Assumed Contract except
pursuant to the expiration provisions thereof in the ordinary course (or waive
any material right thereunder), or incur any obligation
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(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing, except for cash
time sales agreements made in the ordinary course of business and other
contracts or commitments involving less than $5,000 individually and $25,000 in
the aggregate. Prior to the Closing Date, Seller shall deliver to Buyer a list
of all Contracts entered into between the date of this Agreement and the
Closing Date, together with copies of such Contracts.
5.3 Disposition of Assets. Seller shall not sell, assign, lease,
distribute, dividend or otherwise transfer or dispose of any of the Paxson
Assets and following the Whitehead Closing, the Whitehead 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 Paxson Assets and following the
Whitehead Closing, the Whitehead Assets, except for (i) liens which shall be
removed prior to the Closing Date and (ii) Permitted Liens.
5.5 Licenses. Seller shall not cause or permit following the
Whitehead Closing, by any act or failure to act, any of the Licenses issued by
the FCC to expire or to be revoked, suspended, or modified, or take any action
that could cause the FCC or any other governmental authority to institute
proceedings for the suspension, revocation, or adverse modification of any of
the Licenses. Seller shall not fail to prosecute with due diligence any
applications to any governmental authority in connection with the operation of
the Station.
5.6 Rights. Seller shall not (a)(i) cancel or terminate any
Assumed Contract or consent to or accept any cancellation or termination
thereof except pursuant to the termination provision thereof in the ordinary
course, (ii) amend, modify or change in any manner any term or condition of any
Assumed Contract or give any material consent, waiver or approval thereunder or
(iii) waive any default under or any breach of any term or condition of any
Assumed Contract or (b) take any other action in connection with any Assumed
Contract that would impair in any material respects the value of the interest
or rights of Seller thereunder or that would impair in any material respects
the rights or interests of Buyer. This covenant shall only apply following the
Whitehead Closing to the Assumed Contracts included among the Whitehead Assets.
5.7 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access during normal business hours to the Assets and to all other
properties, equipment, books, records, Contracts, and documents relating to the
Station for the purpose of audit and inspection and will furnish or cause to be
furnished to Buyer or its authorized representatives all information with
respect to the affairs and business of the Station that Buyer may reasonably
request (including any operations reports produced with respect to the affairs
and business of the Station).
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5.8 Insurance. Seller shall maintain substantially the same
insurance coverage provided by the existing insurance policies on the Paxson
Assets and following the Whitehead Closing, the Whitehead Assets.
5.9 Consents. Seller shall use its commercially reasonable
efforts to obtain the Consents, without any material 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
each Real Property lease such estoppel certificates and consents to the
assignment of the lessee's interest under each such lease as Buyer's lenders
may request. If Seller is unable to obtain any Consent to the assignment of a
Contract or License, Seller will use its commercially reasonable efforts to
provide Buyer with rights and benefits of the affected Contract or License.
5.10 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.11 Notification. Seller shall promptly notify Buyer in writing
of any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 of this Agreement.
5.12 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to its
operation of the Station under the Time Brokerage Agreement.
5.13 Debt. Seller shall not create, incur, assume or suffer to
exist any Debt other than Debt outstanding under the Paxson Credit Agreement
and unsecured Debt aggregating not more than $100,000 at any one time
outstanding.
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.
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(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) days of written notice by Seller to Buyer of the
execution of the Whitehead Purchase Agreement. The parties shall prosecute the
application with all reasonable diligence and otherwise use their reasonable
commercial 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) (i) compliance with the condition would have a material adverse effect
upon it or (ii) compliance would require divestiture of any other assets.
Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent, provided, however, that the parties shall continue
to have all rights available to them pursuant to Section 9 hereof. If the
Closing shall not have occurred for any reason within the original effective
period of the FCC Consent, and neither party shall have terminated this
Agreement under Section 9, the parties shall jointly request an extension of
the effective period of the FCC Consent. No extension of the FCC Consent shall
limit the exercise by either party of its rights under Section 9.
6.2 HSR Act. If required by applicable law, each party hereto
agrees to cooperate and make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby within 20 days after the execution of the Whitehead Purchase Agreement
and to supply promptly any additional information and documentary material that
may be requested pursuant to the HSR Act after appropriate negotiation with the
Department of Justice or the Federal Trade Commission of the scope of such
request. Any filing fees incurred in connection with the HSR filings of Seller
and Buyer shall be borne equally by Seller and Buyer; provided, that under no
circumstances shall Seller be required to pay for half of more than one HSR
filing fee as a result of an assignment by Buyer to a permitted assignee
hereunder.
6.3 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 Whitehead-Florida until the
Closing.
6.4 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
6.5 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
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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, (ii) to agree to any material adverse
change in any License or Assumed Contract to obtain a Consent required with
respect thereto or (iii) to divest itself of any assets; 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 four (4) years from the Closing
Date any books and records relating to the Assets but not included in the
Assets. Buyer shall provide Seller access and the right to copy for a period
of four (4) years from the Closing Date any books and records relating to the
Assets that are included in the Assets.
6.7 Broker. Except for Alex Brown & Sons, Incorporated whose fees
and expenses are payable by Seller, each of Buyer and Seller represents and
warrants that neither it nor any person or entity acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
6.8 Confidentiality. Each of Buyer and Seller agrees to use its
commercially reasonable efforts to keep confidential (except for disclosure
requirements of federal or state securities laws and securities markets along
with such disclosure to attorneys, bankers, underwriters, investors and other
Persons as may be appropriate in the furtherance of the transactions
contemplated hereby) all information of a material, non-public nature
(collectively, the "Confidential Information") obtained by such party from the
other party hereto in connection with the transactions contemplated hereby, and
in the event that such transactions are not consummated, each party hereto will
return to the other party hereto, or destroy, all documents and other materials
obtained from the other party in connection herewith. The term "Confidential
Information" shall be deemed not to include information which (i) is or becomes
generally available to the public or the television industry other than as a
result of a disclosure, in violation of this Agreement, by either party hereto
or its directors, officers, employees, agents and representatives or any other
person who directly or indirectly receives such information from such party,
(ii) becomes available to either party hereto on a non-confidential basis from
a source which, to such party's knowledge, is entitled to disclose it to such
party, (iii) was known to either party hereto prior to its disclosure to such
party by the other party hereto, or (iv) is developed by either party without
the benefit of Confidential Information.
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6.9 WTVX Broadcast Services. Seller agrees to keep in full force
and effect the letter agreement dated as of November 18, 1996 between Seller
and Paxson Communications of West Palm Beach-25, Inc. relating to WTVX
Broadcast Services and at Closing, such agreement shall be assigned by Seller
to Buyer as an Assumed Contract.
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 (i) that are qualified as
to materiality, shall be true and correct and (ii) that are not qualified as to
materiality, shall be true and correct in all material respects, in each case
as though made on and as of the Closing Date except to the extent made
expressly as of a specified date.
(b) Covenants and Conditions. All of the obligations,
covenants and agreements of Seller set forth in this Agreement to be performed
or complied with on or prior to the Closing Date (i) that are qualified as to
materiality, shall have been performed or complied with and (ii) that are not
qualified as to materiality, shall have been performed or complied within in
all material respects, in each case on or prior to the Closing Date.
(c) Consents. All Consents indicated as Material
Consents on Schedule 3.3 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 and Seller shall have complied
with any conditions imposed on it by the FCC Consent.
(e) Governmental Authorizations. Seller shall be the
holder of all material Licenses and there shall not have been any modification
of any License that could have a material adverse effect on the Station or the
conduct of its business and operations. No proceeding shall be pending the
effect of which could be to revoke, cancel, fail to renew, suspend, or modify
adversely any material License.
(f) No Order. There shall be no order, writ, judgment,
injunction, decree, or award (an "Order") entered or issued by any United
States federal, state or local
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governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body, in existence which restrains
or is likely to render it impossible or unlawful to consummate the transactions
contemplated by this Agreement, except to the extent such Order was caused by
or resulted from any action or omission of Buyer, Buyer consented to the
entering into or the issuing of such Order or such Order constitutes a breach
of a representation or warranty made by Buyer in this Agreement.
(g) HSR Act. Any waiting period (any extension thereof)
under the HSR Act, if any, applicable to the sale and purchase of the Assets
contemplated hereby shall have expired or shall have been terminated.
(h) Deliveries. Seller shall have made all the
deliveries to Buyer set forth in Section 8.2.
(i) Whitehead Closing. The Whitehead Closing shall have
occurred.
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 (i) that are qualified as
to materiality, shall be true and correct and (ii) that are not qualified as to
materiality, shall be true and correct in all material respects, in each case
as though made on and as of the Closing Date except to the extent made
expressly as of a specified date.
(b) Covenants and Conditions. All of the obligations,
covenants and agreements of Buyer set forth in this Agreement to be performed
or complied with on or prior to the Closing Date (i) that are qualified as to
materiality, shall have been performed or complied with and (ii) that are not
qualified as to materiality, shall have been performed or complied with in all
material respects in each case on or prior to the Closing Date.
(c) Deliveries. Buyer shall have made 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) No Order. There shall be no Order entered or issued
by any United States federal, state or local governmental, regulatory or
administrative authority, agency or
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commission or any court, tribunal, or judicial or arbitral body in existence
which restrains or is likely to render it impossible or unlawful to consummate
the transactions contemplated by this Agreement, except to the extent such
Order was caused by or resulted from any action or omission of Seller, Seller
consented to the entering into or the issuing of such Order or such Order
constitutes a breach of a representation or warranty made by Seller in this
Agreement.
(f) HSR Act. Any waiting period (and any extension
thereof) under the HSR Act, if any, applicable to the sale and purchase of the
Assets contemplated hereby shall have expired or shall have been terminated.
(g) Whitehead Closing. The Whitehead Closing shall have
occurred.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. Subject to the satisfaction or waiver
of all conditions to the obligations of the parties set forth in Section 7, the
Closing shall take place at 10:00 a.m. on a date to be agreed upon by Buyer and
Seller, that is (1) not earlier than the fifth 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. If Buyer and Seller fail
to agree upon the date for Closing pursuant to the preceding sentence prior to
the fifth business day after the date upon which the FCC Consent becomes a
Final Order, the Closing shall take place on the tenth business day after the
date upon which the FCC Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Ave., N.W., Suite 800,
Washington, D.C. 20036, or such other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Subject to the provisions of
this Agreement, duly executed bills of sale, assignments, limited warranty
deeds 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) Intentionally Omitted.
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(c) Consents. An executed copy of any instrument
evidencing receipt of any Material Consent and to the extent available after
the use of commercially reasonable efforts by Seller, any other Consents.
(d) Certificates.
(i) A certificate, dated as of the Closing Date,
executed by Seller certifying that:
(A) the representations and warranties
of Seller set forth in this Agreement (1) that are qualified as to materiality,
are true and correct and (2) that are not qualified as to materiality, are true
and correct in all material respects, in each case as though made on and as of
the Closing Date except to the extent made expressly as of a specified date;
and
(B) the obligations, covenants and
agreements of Seller set forth in this Agreement to be performed or complied
with on or prior to the Closing Date (1) that are qualified as to materiality,
have been performed or complied with and (2) that are not qualified as to
materiality, have been performed or complied with in all material respects, in
each case on or prior to the Closing Date.
(ii) such additional certificates and
confirmations to Buyer's lenders as Buyer may reasonably request.
(d) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses and Assumed Contracts.
(e) Opinions of Counsel. Opinions of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(f)
hereto.
(f) Evidence of Debt Repayment. Copies of any and all
deeds of release, pay-off letters, Uniform Commercial Code Form UCC-3
termination statements and similar documents and instruments reasonably
requested by Buyer in order to evidence the release of any and all liens,
security interests and encumbrances on the Assets, including, without
limitation, in favor of the lenders under the Credit Agreement securing the
Whitehead Companies' obligations under the Credit Agreement; provided that the
effectiveness of such releases and termination statements may be conditioned
upon receipt of the payoff amounts by such lenders.
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.
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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 arising on or
after the Closing Date to the extent required hereunder.
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed by Buyer certifying that:
(i) the representations and warranties of Buyer
set forth in this Agreement (A) that are qualified as to materiality, are true
and correct and (B) that are not qualified as to materiality, are true and
correct in all material respects, in each case as though made on and as of the
Closing Date except to the extent made expressly as of a specified date; and
(ii) the obligations, covenants and agreements of
Buyer set forth in this Agreement to be performed or complied with on or prior
to the Closing Date (A) that are qualified as to materiality, have been
performed or complied with and (B) that are not qualified as to materiality,
have been performed or complied with in all material respects, in each case on
or prior to the Closing Date.
(d) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Assets abandoned, if Seller is not then
in material default, upon written notice to Buyer, upon the occurrence of any
of the following:
(a) Mutual Consent. Upon the mutual written consent of
Seller and Buyer.
(b) Upset Date. If the Closing shall not have occurred
prior to February 1, 1998.
(c) 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.
(d) 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 be satisfied or waived in writing
by Seller.
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(e) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer has failed to cure any material
breach of any of its representations, warranties or covenants under this
Agreement within fifteen days after Buyer received written notice of such
breach from Seller.
(f) Assignment If, on or before the deadline
specified in Section 6.1 for filing the application for FCC Consent, Buyer has
not assigned its rights and interests hereunder to a Buyer Assignee (as defined
in Section 11.3), the Buyer Assignee has not assumed Buyer's obligations
hereunder or Seller has not received the application for FCC Consent completed
and executed by the Buyer Assignee.
(g) Assignee Representations. If the
representations in Section 4.4 as they apply to the Buyer Assignee (it being
understood that the Overlap exceptions set forth in Section 4.4 shall not apply
to the Buyer Assignee) are materially inaccurate and, as a result of such
inaccuracy, the grant of the FCC Consent would reasonably be expected to be
materially delayed.
(h) Termination of Whitehead Purchase Agreement. Upon
termination of the Whitehead Purchase Agreement for any reason.
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) Mutual Consent. Upon the mutual written consent of
Buyer and Seller.
(b) Upset Date. If the Closing shall not have occurred
prior to February 1, 1998.
(c) 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.
(d) 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.
(e) Breach. Without limiting Buyer's rights under the
other provisions of this Section 9.2, if Seller fails 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.
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(f) Whitehead Purchase Agreement. Upon ten days' written
notice to Seller, if Seller and the Whitehead Companies shall not have entered
into the Whitehead Purchase Agreement on or before the date that is 60 days
following the date hereof.
(g) Termination of Whitehead Purchase Agreement. Upon
termination of the Whitehead Purchase Agreement for any reason.
9.3 Rights on Termination. In the event of the termination of
this Agreement as provided in Section 9.1 or 9.2, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto, except (a) as set forth in Section 10, (b) nothing herein shall relieve
either party from liability for any breach hereof or failure to perform
hereunder and (c) as set forth in Section 9.4.
9.4 Escrow Deposit. Buyer has deposited with First Union National
Bank of Florida (the "Escrow Agent") the sum of Two Million Five Hundred
Thousand Dollars ($2,500,000) (the "Deposit") in accordance with an Escrow
Agreement among Buyer, Seller and the Escrow Agent (the "Escrow Agreement").
The Deposit, together with any interest on or other proceeds from the
investment thereof, shall be held and disbursed by the Escrow Agent 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 on or other proceeds
from the investment of the Deposit, shall be disbursed to or at the direction
of Buyer;
(b) If this Agreement is terminated pursuant to Section
9.1 (other than pursuant to Section 9.1(e), (f) or (g)) 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 on or other proceeds
from the investment of the Deposit, shall be disbursed to or at the direction
of Buyer; and
(c) If this Agreement is terminated by Seller pursuant to
Section 9.1(e), (f) or (g), then the Deposit shall be disbursed by the Escrow
Agent to or at the direction of Seller as liquidated damages and any interest
on or other proceeds from the investment of the Deposit shall be disbursed by
the Escrow Agent to or at the direction of Buyer. If this Agreement is
terminated by Seller as provided in the preceding sentence, the payment to
Seller of the Deposit shall constitute full payment and the exclusive remedy
for any damages suffered by Seller. Seller and Buyer agree in advance that
actual damages would be difficult to ascertain and that the amount of the
Deposit is a fair and equitable amount to reimburse Seller for damages
sustained due to Buyer's material breach of this Agreement or the circumstances
described in Section 9.1(f) and (g).
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SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Survival. The representations, warranties, covenants and
agreements of Seller and Buyer contained in or made pursuant to this Agreement
or in any certificate, document or instrument furnished pursuant hereto or in
connection herewith shall survive in full force and effect until the first
anniversary of the Closing Date regardless of any investigation by the parties;
except that any covenant required to be performed by its terms after the
Closing Date shall survive for the period required to perform such covenant
pursuant to the terms of this Agreement.
10.2 Indemnification by Seller. Subject to Section 10.1, 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, schedule, document, or instrument delivered to Buyer under this
Agreement.
(b) Any and all obligations of Seller or the Whitehead
Companies not assumed by Buyer pursuant to this Agreement, including, without
limitation, any liabilities arising at any time under any Contract not included
in the Assumed Contracts.
(c) Any and all losses, liabilities, or damages
contingent or otherwise resulting from the operation or ownership of the
Station by Seller or the Whitehead Companies 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. Subject to Section 10.1, 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.
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(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages
contingent or otherwise, resulting from the operation 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 as soon as
practicable after written notice of such action, suit, or proceeding was given
to Claimant; provided, however, that the failure to provide such notice shall
not release the Indemnifying Party from any of its obligations under this
Section 10 except to the extent the Indemnifying Party is materially prejudiced
by such failure.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/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.
(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
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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 anything in this Agreement to the
contrary, neither party shall indemnify or otherwise be liable to the other
party for any breach of a representation or warranty, or for breach of any
covenant in this Agreement except to the extent the losses, obligations,
liabilities, costs and expenses of such party arising therefrom exceed in the
aggregate Ten Thousand Dollars ($10,000). The provisions of the foregoing
sentence shall not apply to liabilities assumed by either party pursuant to the
adjustments and prorations set forth in Section 2.3.
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, as its sole and exclusive
remedy, to obtain specific performance of the terms of this Agreement. If any
action is brought by Buyer to enforce this Agreement, Seller shall waive the
defense that there is an adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Buyer and Seller shall each pay one-half
of 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
and of the fee payable to the FCC in connection with the filing of the
application for the FCC Consent. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection with
the authorization, preparation, execution, and performance of this Agreement,
including all fees
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and expenses of counsel, accountants, agents, and representatives, and each
party shall be responsible for all fees or commissions payable to any finder,
broker, advisor, or similar person retained by or on behalf of such party.
11.2 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:
To Seller: Paxson Communications of Ft. Pierce-34, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Mr. Lowell W. Paxson, Chairman
Telecopy: 561-655-9424
Telephone: 561-659-4122
with copies to: Paxson Communications of Ft. Pierce-34, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Anthony L. Morrison, Esq.
Telecopy: 561-655-9424
Telephone: 561-659-4122
and John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Ave., N.W.
Suite 800
Washington, D.C. 20036
Telephone: 202-776-2786
Telecopy: 202-776-2222
To Buyer: Anthony Cassara, President
Paramount Stations Group, Inc.
5555 Melrose Avenue
Hollywood, CA 90038
Telephone: (213) 956-8101
Facsimile: (213) 862-1061
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<PAGE> 38
with a copy to: General Counsel
Viacom International Inc.
1515 Broadway
New York, New York 10036
Telephone: (212) 258-6450
Facsimile: (212) 258-6099
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2.
11.3 Benefit and Binding Effect.
(a) This Agreement shall not be assigned by operation or law
or otherwise, except that Buyer may assign all or any of its rights and
obligations hereunder to any Person; provided, however, that (i) Buyer shall
remain liable hereunder and Seller shall have the same rights hereunder against
Buyer as if such assignment had not occurred and (ii) upon any breach or
default of the terms of this Agreement by such Person, Seller shall have the
right at its option to bring an action directly against Buyer irrespective of
whether any action has been brought against such Person. Nothing contained in
the foregoing proviso shall limit Seller's rights against any Person to whom
Buyer has assigned any of its obligations hereunder. From and after the
effectiveness of any assignment by Buyer permitted under this Section 11.3, (A)
such assignee shall become a "Buyer Assignee" hereunder and (B) any reference
to "Buyer" in this Agreement shall be deemed to be a reference to such Buyer
Assignee. Upon an assignment by Buyer to a Buyer Assignee of its rights and
interests hereunder in accordance with this Section 11.3, such Buyer Assignee
shall be deemed to have made to Seller, effective as of the date of such
assignment, each of the representations and warranties of Buyer set forth in
Section 4, provided, however, that the Overlap exceptions set forth in Section
4.4 shall not apply to the Buyer Assignee.
(b) If (i) Buyer shall make payment to Seller of all or
any part of the obligations of the Buyer Assignee under this Agreement and (ii)
all of such obligations of such Buyer Assignee shall be paid in full in cash,
Seller shall, at the Buyer's request and expense, execute and deliver to the
Buyer appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Buyer of
an interest in the obligations of such Buyer Assignee under this Agreement
resulting from such payment by the Buyer.
11.4 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement or 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.
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<PAGE> 39
11.5 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). ALL ACTIONS AND PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN A
FLORIDA STATE COURT OR A FEDERAL COURT SITTING IN THE COUNTY OF PALM BEACH,
FLORIDA, AND THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING AND IRREVOCABLY
WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH
ACTION OR PROCEEDING.
11.6 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.7 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.8 Entire Agreement. This Agreement and the schedules hereto and
thereto, 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 and thereof. This Agreement supersedes all prior negotiations between
the parties and cannot be amended, supplemented, or changed except by an
agreement in writing that makes specific reference to this Agreement and which
is signed by the party against which enforcement of any such amendment,
supplement, or modification is sought.
11.9 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.9.
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<PAGE> 40
11.10 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
11.11 Press Releases. Seller and Buyer shall jointly prepare and
determine the timing of, any press release, or other announcement to the public
or the news media relating to the execution of this Agreement. Neither party
hereto will issue any press release or make any other public announcement
relating to the transactions contemplated by this Agreement without the prior
consent of the other party hereto, except that either party may make any
disclosure required to be made by it under applicable law (including federal or
state securities laws and securities exchange regulations) if it determines in
good faith that it is appropriate to do so and gives prior notice to the other
party hereto.
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<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PARAMOUNT STATIONS GROUP, INC.
By: /s/ Tony Cassara
----------------------------------
Name: Tony Cassara
Title: President
PAXSON COMMUNICATIONS OF FT. PIERCE-34,
INC.
By: /s/ Lowell W. Paxson
-----------------------------------
Name: Lowell W. Paxson
Title: Chairman & CEO
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<PAGE> 1
EXHIBIT 10.147
PROMISSORY NOTE
$15,000,000 February 12, 1997
ROBERTS BROADCASTING OF HARTFORD, L.L.C., a Delaware limited liability
company (the "Maker"), for value received, hereby promises to pay to the order
of PAXSON COMMUNICATIONS OF NEW LONDON-26, INC., a Florida corporation
("Payee") or its designee, on the terms set forth herein, the principal amount
of $15,000,000, together with interest thereon as provided herein, on or before
February 12, 2004.
1. Repayment of Loan. The principal amount of this Note shall be
payable in 84 consecutive equal monthly installments on the last day of each
calendar month, beginning on the first such date following the first
anniversary of execution of this Note, except that the entire unpaid principal
amount of this Note, together with all unpaid interest, shall become
immediately due and payable upon Maker's entering into an agreement to sell the
Station (as defined below).
2. Interest. The principal amount outstanding under this Note
shall bear interest at a rate per annum of LIBOR plus 3.5%. Interest shall be
calculated on the basis of a year of 360 days and the actual number of days
elapsed during the period for which such interest is payable. Interest shall
begin to accrue on the outstanding principal amount of this Note on the date
hereof and shall be payable monthly on the last day of each calendar month
beginning on the first such date following the execution of the Note. 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 18% from the due date thereof until paid in full.
3. Prepayment. The Maker may prepay this 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 $10,000 or an integral multiple thereof. Each prepayment on this
Note shall be applied to installments of principal payable on this Note in the
inverse order of maturity.
4. Payment on Non-Business Days. Whenever any payment to be made
under this 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 under this
Note.
5. Security. This Note is secured by a Security Agreement and a
Pledge Agreement which are dated as of February 12, 1997 (collectively, the
"Collateral Documents").
<PAGE> 2
6. Place and Manner of Payment. All payments of principal and
interest on this Note shall be by credit in Federal Reserve or other
immediately available funds to such account as may be designated in writing by
the Payee, or if no such account has been designated, by check duly mailed to
601 Clearwater Park Road, West Palm Beach, Florida 33401.
7. Representations and Warranties of Maker.
The Maker hereby represents and warrants as follows:
(a) The Maker is a limited liability company duly
organized, 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
Connecticut and has all requisite power and authority, corporate or otherwise,
to conduct its business, to own its properties and to execute, deliver and to
perform all of its obligations under this Note and the Collateral Documents.
(b) The execution, delivery and performance by the Maker
of this Note and the Collateral Documents have been duly authorized by all
necessary limited liability company 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 Maker or (B) any provision of the charter or by-laws of
the Maker; or (ii) result in a breach of or constitute a default under any
agreement or instrument to which the Maker 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 Maker's properties or assets other than
as contemplated by the Collateral Documents.
(c) No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department or agency, except for filing with the Federal Communications
Commission (the "FCC"), is or will be necessary to the valid execution,
delivery and performance by the Maker of this Note and the Collateral
Documents.
(d) This Note and the Collateral Documents have been
executed and delivered by duly authorized officers of the Maker and the Members
(as defined below) and constitute legal, valid and binding obligations of the
Maker and the Members enforceable in accordance with their respective terms.
8. Affirmative Covenants. So long as this Note shall remain
unpaid, the Maker hereby covenants and agrees that it will, unless the Payee
shall otherwise consent in writing:
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<PAGE> 3
(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 Maker; provided that this covenant shall not require the payment of any
of the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of the Maker in
accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
existence, rights, franchises and privileges in the jurisdiction of its
organization.
(c) Maintenance of Properties. Maintain and preserve all
of its properties necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority.
(e) Maintenance of Insurance. Maintain with responsible
and reputable insurance companies policies on all of its properties and
covering such risks, including public liability and workers' compensation, and
in such amounts as are usually carried by companies engaged in similar
businesses and owning similar properties as the Maker and promptly upon
execution thereof provide to the Payee copies of all such policies and any
riders or amendments thereto. The policies of insurance required hereunder
shall name the Payee as additional loss payee or additional insured, as
applicable, and shall provide that the Payee 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. Operate its business
in the ordinary course.
(g) Perfection of Liens. Do all things requested by the
Payee to preserve and perfect the liens and security interests of the Payee
arising pursuant to the Collateral Documents.
(h) FCC Approval. If counsel to the Payee reasonably
determines that the consent of the FCC is required in connection with the
execution, delivery and performance of this Note or any Collateral Document,
then the Maker, at its sole cost and expense, agrees to use its best efforts to
secure such consent and to cooperate with the Payee in any action commenced by
the Payee to secure such consent.
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<PAGE> 4
9. Negative Covenants. So long as this Note shall
remain unpaid the Maker hereby covenants that it will not, without the Payee'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 this Note; and (ii) indebtedness
(other than for borrowed money) incurred in the ordinary course of business not
to exceed $50,000 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 acquired, excluding, however, from
the operation of this covenant:
(i) any security interest or lien
created pursuant to the Collateral Documents;
(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 any of its assets other than in the ordinary
course of business and in exchange for collateral of like value in which the
Payee shall have a security interest.
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<PAGE> 5
(d) Merger. Enter into any consolidation or merger with,
or into any acquisition of all or substantially all of the properties or assets
of any person or entity.
(e) Transfer or Issuance of Shares. Permit the issuance
or transfer of any ownership interest of the Maker, or any options, warrants,
convertible securities or other rights to purchase ownership interests in the
Maker. The preceding sentence shall not apply to (i) transfers to the Payee;
(ii) transfers resulting from the death of the Members; and (iii) transfers
effected by the Members with the prior written consent of the Payee (which
shall not be unreasonably withheld), solely for estate planning purposes of the
Members.
(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 its assets to a
jurisdiction in which no financing statement on Form UCC-1 has been filed by
the Payee with respect to such assets.
(h) Distributions or Dividends. Declare or make,
directly or indirectly, any payment, dividend or distribution on, or incur any
liability for the purchase, acquisition, redemption or retirement of, any
ownership of the Maker (other than any dividend or similar distribution payable
only in ownership of the Maker), except that the Maker may declare one annual
dividend per year with the prior written consent of the Payee.
(i) Transactions with Affiliates. Enter into any
transaction or agreement with any Member or other affiliate of the Maker.
(j) Contracts. Enter into any contract or commitment
except for contracts involving aggregate payments of more than Twenty Five
Thousand Dollars ($25,000) and contracts which can be terminated without
penalty on thirty (30) days' notice or less, or amend or terminate any material
contract (or waive any substantial right thereunder).
(k) Adverse Change. Suffer any material adverse change
in the business, assets, properties, prospects or condition (financial or
otherwise) of the Maker or Television Station WTWS(TV), New London, Connecticut
(the "Station"), or any damage, destruction or loss affecting any assets used
or useful in the conduct of the business of the Maker.
(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
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<PAGE> 6
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 Maker.
(m) Cancellation of Debts. Cancel any debts owed or
claims held by the Maker.
(n) Write-Down. Suffer any significant write-down of the
value of any assets or any significant write-off as uncollectible of any
accounts receivable except as required by generally accepted accounting
principles to present accurate financial information on the Maker.
10. Reporting Requirements. So long as this Note shall remain
unpaid the Maker shall, unless the Payee shall otherwise consent in writing,
furnish to the Payee:
(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 Paragraph 11) of which the Maker has knowledge, the
statement of the President of the Maker setting forth details of such Event of
Default and the action which the Maker proposes to take with respect thereto.
(b) Financial Statements. Quarterly financial statements
within thirty (30) days after the end of each fiscal quarter in form acceptable
to the Payee; and within ninety (90) days after the end of each fiscal year of
the Maker, a copy of the audited financial statements for such year for the
Maker, including therein a balance sheet of the Maker as of the end of such
fiscal year, statements of income and expense of the Maker for such fiscal
year, and a statement of cash flow of the Maker for such fiscal year, in each
case prepared by an independent public accountant of recognized standing
acceptable to the Payee, except that the Payee may waive the audit requirement
and accept a review of the Maker's financial records.
(c) Notice of Litigation. Promptly give written notice
of all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against the Maker in
which the claim involved is $5,000 or more.
(d) Budget. An annual budget within thirty (30) days of
the beginning of each fiscal year of the Maker. Such budget shall be
satisfactory in form to the Payee.
(e) Other Information. Such other information respecting
the business, properties, operations or the condition, financial or otherwise,
of the Maker or the Station as the Payee may from time to time reasonably
request.
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<PAGE> 7
11. Events of Default. Under this Note, an Event of Default shall
be any of the following:
(a) The Maker shall fail to pay any installment of
principal or interest on this Note, or any other obligation to the Payee when
due whether at the due date thereof or by acceleration or otherwise, and such
default shall remain unremedied for a period of five (5) days after notice
thereof shall have been given to the Maker; or
(b) The security interest or lien of the Payee in any
material portion of the collateral covered by the Collateral Documents shall at
any time not constitute a legal, valid and enforceable security interest or
lien; or
(c) Any representation or warranty made by the Maker
herein or in the Collateral Documents or by the Members in the Pledge Agreement
shall prove to have been incorrect in any material respect when made; or
(d) The Maker shall fail to perform or observe any other
term, covenant or agreement contained in this Note or in any Collateral
Document or the Members 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 Maker by the Payee; or
(e) The Maker or the Members shall fail to pay any
indebtedness for borrowed money owing by the Maker or the Members or any
interest or premium thereon, when due, whether such indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand
or otherwise, or the Maker or the Members 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 Maker or the Members 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) (i) The Maker or the Members shall fail to pay its or
his debts as they mature in the ordinary course of business; (ii) the Maker or
the Members shall file a petition commencing a voluntary case concerning it or
him under any Chapter of Title 7 or 11 of the United States Code; (iii) the
Maker or the Members shall apply for or consent to the appointment of any
receiver, trustee, custodian or similar officer for it or him or for all or any
substantial part of its or his property; (iv) such receiver, trustee, custodian
or similar officer shall be appointed without the application or consent of the
Maker or the Members and such appointment shall continue undischarged for a
period of thirty (30) days; (v) an involuntary case is commenced against the
Maker or the Members under any Chapter of the aforementioned Title 7 or 11 and
an order for relief under such Title 7 or 11 is entered
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<PAGE> 8
or the petition commencing the case is controverted but is not dismissed within
thirty (30) days after the commencement of the case; (vi) the Maker or the
Members 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 or him under the laws of any jurisdiction; (vii) any such proceeding
shall be instituted against the Maker or the Members and shall remain
undismissed for a period of thirty (30) days; or (viii) the Maker or the
Members shall take any action for the purpose of effectuating the foregoing; or
(g) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Maker or the Members; or
(h) There shall be an irrevocable and unappealable denial
or revocation of the construction permit or the broadcast license for the
Station.
12. Effect of Event of Default. Should any Event of Default
occur, the Payee may at its option by written notice to the Maker declare the
entire unpaid principal amount of this Note, together with all unpaid interest
and all other amounts payable under this Note and every other obligation of the
Maker to the Payee, immediately due and payable, whereupon this Note and all
such obligations shall become and be forthwith due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Maker, anything contained in this 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 paragraph 11(f),
all the obligations of the Maker under this Note shall become immediately due
and payable as of the date of any such Event of Default regardless of the cause
of such Event of Default and without any notice to the Maker required from the
Payee. The Payee shall have, in addition to all other rights and remedies
allowed by law, the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of Florida and, without limiting the
generality of the foregoing, the rights and remedies provided for in the
Collateral Documents, which provisions are hereby incorporated by reference.
13. Miscellaneous
(a) No Waiver; Cumulative Remedies. No failure or delay
on the part of the Payee 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.
(b) Amendments. No amendment, modification, termination
or waiver of any provision of this Note or any Collateral Document nor consent
to any departure by the Maker therefrom, shall in any event be effective unless
in writing,
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<PAGE> 9
signed by the Payee and then only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Maker in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances.
(c) Conflicts. In the event of any conflict or
inconsistency between any provision of this Note and any provision of any
Collateral Document, the provisions of this Note shall control.
(d) Address for Notices. All notices and other
communications under this Note shall be in writing and shall be served by
personal service or by mailing a copy thereof by reputable overnight courier or
by registered or certified mail, return receipt requested, to the applicable
party at the addresses indicated below:
If to the Maker:
Roberts Broadcasting of Hartford, L.L.C.
1408 N. Kingshighway Blvd.
St. Louis, Missouri 63113
If to the Payee:
Paxson Communications of New London-26, Inc.
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.
(e) Expenses. The Maker agrees to pay on demand all
costs and expenses incurred by the Payee in the enforcement of this Note or any
Collateral Document, including, without limitation, the reasonable fees and
expenses of any attorney to whom this 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 Maker 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 or under any Collateral Document.
(f) Binding Effect; Assignment. This Note shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of the Maker, the Payee and their respective successors and assigns,
except that the Maker
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<PAGE> 10
shall not have the right to assign any rights or obligations hereunder without
the prior written consent of the Payee.
(g) Governing Law. This Note and the Collateral
Documents shall be governed by, and construed in accordance with, the laws of
the State of Florida with the exception of its conflicts of laws provisions;
provided that the effect of any recordation shall be determined by the State
thereof. The parties agree to the exclusive jurisdiction and venue of the
state and federal district courts for the district including West Palm Beach,
Florida.
(h) Severability of Provisions. Any provision of this
Note and the Collateral Documents 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.
(i) Headings. Article and Section headings in this Note
are included for convenience of reference only and shall not constitute a part
of this Note for any other purpose.
(j) Rights Affected by Extensions. The rights of the
Payee and its assigns shall not be impaired by any indulgence, release,
renewal, extension or modification which the Payee 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
Maker or any endorser, guarantee, or surety.
(k) Survival of Representations and Warranties. All
representations and warranties made in this Note and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Note 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 Maker to the Payee hereunder have been paid in full.
(l) Attorneys' Fees. If any litigation arises between the
parties in connection with the transactions contemplated by this Note, the
prevailing party shall be entitled to recover reasonable attorneys' fees in
addition to all other damages and remedies.
(m) Further Assurances. From time to time, the Maker
shall execute and deliver to the Payee such additional documents as the Payee
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 Payee hereunder or thereunder.
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<PAGE> 11
(n) Indemnification. The Maker hereby indemnifies and
holds harmless the Payee 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 Note, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that the Maker
shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulted solely
from the gross negligence or willful misconduct of such Indemnified Person.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 11 -
<PAGE> 12
IN WITNESS WHEREOF, the Maker has executed this Note as of the
date first above written.
WITNESS: ROBERTS BROADCASTING OF
HARTFORD, L.L.C.
/s/ Michael V. Roberts By: /s/ Steven C. Roberts
- -------------------------------- ----------------------------------
Steven C. Roberts
Member
PAY TO THE ORDER OF BEARER.
PAXSON COMMUNICATIONS OF NEW LONDON-26, INC.
By: /s/ William L. Watson
-------------------------------
Secretary
<PAGE> 1
EXHIBIT 10.147.1
- --------------------------------------------------------------------------------
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
ROBERTS BROADCASTING OF
HARTFORD, L.L.C.
AND
PAXSON COMMUNICATIONS OF
NEW LONDON-26, INC.
FOR
TELEVISION STATION WTWS(TV)
NEW LONDON, CONNECTICUT
* * *
FEBRUARY 12, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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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 Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Licensee Control of Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Programmer Compliance with Copyright Act . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Children's Television Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Payola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Cooperation on Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.8 Staffing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Programmer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Licensee's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Time Brokerage Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Confidential Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Political Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
6.2 Termination Requirements and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
- ii -
<PAGE> 4
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 12th day of February 1997, by and
between ROBERTS BROADCASTING OF HARTFORD, L.L.C., a Delaware limited liability
company, (the "Licensee") and PAXSON COMMUNICATIONS OF NEW LONDON-26, INC., a
Florida corporation (the "Programmer").
WHEREAS, Licensee owns and operates Television Station WTWS(TV), New
London (the "Station") pursuant to authorizations issued by the Federal
Communications Commission ("FCC").
WHEREAS, Programmer is involved in television station ownership and
operation.
WHEREAS, the Licensee wishes to retain Programmer to provide
programming for the Station that is in conformity with Station policies and
procedures and FCC policies for time brokerage arrangements.
WHEREAS, Programmer and Licensee agree to cooperate to make this Time
Brokerage Agreement work to the benefit of the public and both parties and as
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Licensee and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
1.2 Effective Date; Term. The effective date of this Agreement
shall be the date of this Agreement. It shall continue in force for an initial
term of five years from that date unless otherwise extended or terminated as
set forth below.
1.3 Scope. During the term of this Agreement and any renewal
thereof, Licensee shall make available to Programmer broadcast time upon the
Station as set forth in this Agreement. Programmer shall deliver such
programming, at its expense, to the Station's transmitter facilities or other
authorized remote control points as reasonably designated by Licensee. Subject
to Licensee's reasonable approval, as set forth in this Agreement,
<PAGE> 5
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Programmer shall provide programming of Programmer's selection complete with
commercial matter, news, public service announcements and other suitable
programming to the Licensee up to one hundred sixty-two hours per week.
Notwithstanding the foregoing, the Licensee may designate such additional time
as it may require without any adjustment of the monthly consideration to be
paid to Licensee under Section 1.5 for the broadcast of programming necessary
for the Station to broadcast news, public affairs, children's, religious and
non-entertainment programming as required by the FCC. All program time not
reserved by or designated for Licensee shall be available for use by Programmer
and no other party.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional term of five
years upon notice by either the Licensee or the Programmer to the other party.
1.5 Consideration. As consideration for the air time made
available hereunder Programmer shall make payments to Licensee as set forth in
Attachment I.
1.6 Licensee Operation of 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 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
operating costs of the Station, including but not limited to maintenance of the
studio and transmitting facility and costs of electricity, except that
Programmer shall be responsible for the costs of its programming as provided in
Sections 1.8 and 2.3 hereof. Licensee shall employ at its expense management
level and other employees consisting of a Station Manager and such operational
and other personnel as outlined in the budget previously provided to
Programmer, who will direct the day-to-day operations of the Station, and who
will report to and be accountable to the Licensee. Licensee shall be
responsible for the salaries, taxes, insurance and related costs for all
personnel employed by the Station and shall maintain insurance satisfactory to
Programmer covering the Station's transmission facilities. During the term of
the Agreement and any renewal hereof, Programmer agrees to perform, without
charge, routine monitoring of the Station's transmitter performance and tower
lighting by remote control, if and when requested by Licensee.
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 operation of the Station,
and such licenses,
<PAGE> 6
- 3 -
permits and authorizations are and will be in full force and effect throughout
the term of this Agreement. There is not now pending, or to Licensee's best
knowledge, threatened, any action by the FCC or by any other party to revoke,
cancel, suspend, refuse to renew or modify adversely any of such licenses,
permits or authorizations. Licensee is not in material violation of any
statute, ordinance, rule, regulation, policy, order or decree of any federal,
state or local entity, court or authority having jurisdiction over it or the
Station, which would have an adverse effect upon the Licensee, the Station or
upon Licensee's ability to perform this Agreement. Licensee shall not take any
action or omit to take any action which would have an adverse impact upon the
Licensee, the Station or upon Licensee's ability to perform this Agreement.
All reports and applications required to be filed with the FCC or any other
governmental body have been, and during the course of the term of this
Agreement or any renewal thereof, will be filed in a timely and complete
manner. During the term of this Agreement and any renewal thereof, Licensee
shall not dispose of, transfer, assign or pledge any of Licensee's assets and
properties except with the prior written consent of the Programmer, if such
action would adversely affect Licensee's performance hereunder or the business
and operations of Licensee or the Station permitted hereby.
(b) Licensee shall pay, in a timely fashion, all of the
expenses incurred in operating the Station including salaries and benefits of
its employees, lease payments, utilities, taxes, programming expenses, debt
service, etc., as set forth in Attachment II (except those for which a good
faith dispute has been raised with the vendor or taxing authority), and shall
provide Programmer with a certificate of such timely payment within thirty (30)
days of the end of each month. In the event that Licensee shall fail to timely
make the payments called for by Attachment II hereof, Programmer may, upon 10
days notice to Licensee, make such payments directly to the vendor, lender,
etc., and such direct payment shall be in lieu of any reimbursement called for
by this subsection.
1.8 Programmer Responsibility. Programmer shall be solely
responsible for any expenses incurred in the origination and/or delivery of
programming from any remote location and for any publicity or promotional
expenses incurred by Programmer, including, without limitation, ASCAP and BMI
music license fees for all programming provided by Programmer. Such payments
by Programmer shall be in addition to any other payments to be made by
Programmer under this Agreement.
1.9 Contracts. Programmer will enter into no third-party
contracts, leases or agreements which will bind Licensee in any way except with
Licensee's prior written approval.
<PAGE> 7
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SECTION 2. STATION OBLIGATIONS 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 London,
Connecticut the Station's service area and the educational and informational
needs of children. From time to time the Licensee shall air specific
programming on issues of importance to the local community and educational and
informational programming for children. Nothing in this Agreement shall
abrogate the unrestricted authority of the Licensee to discharge its
obligations to the public and to comply with the Act and the rules and policies
of the FCC.
2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Station, Licensee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the good faith judgment of Licensee, is
of greater local or national public importance. Licensee shall also coordinate
with Programmer the Station's hourly station identification and any other
announcements required to be aired by FCC rules. Licensee shall continue to
maintain a main studio, as that term is defined by the FCC, within the
Station's principal community contour, shall maintain its local public
inspection file in accordance with FCC rules, regulations and policies, and
shall prepare and place in such inspection file or files in a timely manner all
material required by Section 73.3526 of the FCC's Rules, including without
limitation the Station's quarterly issues and program lists; information
concerning the broadcast of children's educational and informational
programming; and documentation of compliance with commercial limits applicable
to certain children's television programming. Programmer shall, upon request
by Licensee, provide Licensee with such information concerning Programmer's
programs and advertising as is necessary to assist Licensee in the preparation
of such information. Licensee shall also maintain the station logs, receive
and respond to telephone inquiries, and control and oversee any remote control
point which may be established for the Station.
2.3 Responsibility for Employees and Expenses. Programmer shall
employ and be solely responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming (including,
but not limited to, salespeople, technical staff, traffic personnel, board
operators and programming staff). Licensee will provide and be responsible for
the Station personnel necessary for the broadcast transmission of its own
programs (including, without limitation, the Station's Station Manager and such
operational and other personnel as may be necessary or appropriate), and will
be responsible for the salaries, taxes, benefits, insurance and related costs
for all the Licensee's employees used in the broadcast transmission of its
programs and necessary to other aspects of Station
<PAGE> 8
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operation. Whenever on the Station's premises, all personnel shall be
subject to the overall supervision of Licensee's Station Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment III hereto and which
may be amended in a reasonable manner from time to time by Licensee upon notice
to Programmer. Programmer agrees and covenants to comply in all material
respects with the Policy Statement, to all rules and regulations of the FCC,
and to all changes subsequently made by Licensee or the FCC. Programmer shall
furnish or cause to be furnished the artistic personnel and material for the
programs as provided by this Agreement and all programs shall be prepared and
presented in conformity with the rules, regulations and policies of the FCC and
with the Policy Statement set forth in Attachment III hereto. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulations and policies and shall be produced in
accordance with quality standards established by Programmer. If 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 liability to Programmer. Licensee will
use reasonable efforts to provide such written notice to Programmer prior to
the suspension or cancellation of such program.
3.2 Licensee Control of Programming. Programmer recognizes that
the Licensee has full authority to control the operation of the Station. The
parties agree that Licensee's authority includes but is not limited to the
right to reject or refuse such portions of the Programmer's programming which
Licensee believes to be unsatisfactory, unsuitable or 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.
3.3 Programmer Compliance with Copyright Act. Programmer
represents and warrants to Licensee that Programmer has full authority to
broadcast its programming on the Station, and that Programmer shall not
broadcast any material in violation of the Copyright Act. All music supplied
by Programmer 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 ASCAP, BMI and SESAC licenses as necessary. The right to use the
programming and to authorize its use in any manner shall be and remain vested
in Programmer.
<PAGE> 9
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3.4 Sales. Programmer shall retain any revenues received from any
network or program supplier with respect to affiliation or use of programming
by Programmer, any retransmission consent revenues and all revenues from the
sale of advertising time within the programming it provides to the Licensee.
Programmer shall be responsible for payment of the commissions due to any
national sales representative engaged by it for the purpose of selling national
advertising which is carried during the programming it provides to Licensee.
Unless otherwise agreed between the parties, Licensee shall retain all revenues
from the sale of Station's advertising during the hours each week in which the
Licensee airs its own programming pursuant to Section 1.3 hereof.
3.5 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.
3.6 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees to annually, or more frequently at the request
of the Licensee, execute and provide Licensee with a Payola Affidavit from each
of its employees involved with the Station substantially in the form attached
hereto as Attachment IV.
3.7 Cooperation on Programming. Programmer and Licensee mutually
acknowledge their interest in ensuring that the Station serves the needs and
interests of viewers in New London 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 London and the surrounding
area and address those issues in its public service programming. Programmer,
in cooperation with Licensee, will endeavor to ensure that programming
responsive to the needs and interests of the community of license and
surrounding area is broadcast, in compliance with applicable FCC requirements.
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
<PAGE> 10
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assist Licensee in the satisfaction of its public service programming
obligations. Licensee shall also evaluate the local need for children's
educational and informational programming and shall inform Programmer of its
conclusions in that regard. Licensee, in cooperation with Programmer, will
ensure that educational and informational programming for children is broadcast
over the Station in compliance with applicable FCC requirements. Programmer
shall also provide Licensee upon request such other information necessary to
enable Licensee to prepare records and reports required by the Commission or
other local, state or federal government entities.
3.8 Staffing Requirements. Licensee will be in full compliance
with the main studio staff requirements as specified by the FCC.
SECTION 4. INDEMNIFICATION
4.1 Programmer's Indemnification. Programmer shall indemnify and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) Programmer's breach of any
representation, warranty, covenant or agreement contained in this Agreement, or
(ii) any action taken by Programmer or its employees and agents with respect to
the Station, or any failure by Programmer or its employees and agents to take
any action with respect to the Station, including, without limitation, Damages
relating to violations of the Act or any rule, regulation or policy of the FCC,
slander, defamation or other claims relating to programming provided by
Programmer and Programmer's broadcast and sale of advertising time on the
Station.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, costs,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Licensee's operations and broadcasts to the extent
permitted by law and any action taken by the Licensee or its employees and
agents with respect to the Station, or any failure by Licensee or its employees
and agents to take any action with respect to the Station.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled
to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 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
<PAGE> 11
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the Licensee and counsel for the Programmer shall jointly defend the Agreement
and the parties' performance thereunder throughout all FCC proceedings at the
sole expense of the Programmer. If portions of this Agreement do not receive
the approval of the FCC Staff, then the parties shall reform the Agreement as
necessary to satisfy the FCC Staff's concerns or, at Programmer's option and
expense, seek reversal of the Staff's decision and approval from the full
Commission or a court of law.
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. In addition to other remedies available at law
or equity, this Agreement may be terminated as set forth below by either
Licensee or Programmer by
<PAGE> 12
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written notice to the other if the party seeking to terminate is not then in
material default or breach hereof, upon the occurrence of any of the following:
(a) 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) the other party is in material breach of its
obligations hereunder and has failed to cure such breach within thirty (30)
days of notice from the non-breaching party;
(c) the mutual consent of both parties;
(d) there has been a material change in FCC rules,
policies or precedent that would cause this Agreement to be in violation
thereof and such change is in effect and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Buyer and Seller, to remove and/or eliminate the
violation; or
(e) by either party upon nine months written notice to
the other party.
6.2 Termination Requirements and Procedures.
(a) Programmer may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Licensee an amount equal to six times the
monthly compensation due for the month preceding the notice of termination by
Programmer pursuant to Attachment I.
(b) Licensee may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Programmer Liquidated Damages, calculated
in accordance with Attachment V.
(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 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.
<PAGE> 13
- 10 -
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast,
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee, or for power reductions necessitated for
maintenance of the Station or for maintenance of other stations located on the
tower from which the Station will be broadcasting, shall not constitute a
breach of this Agreement and Licensee will not be liable to Programmer for
reimbursement or reduction of the consideration owed to Licensee.
6.4 Other Agreements. During the term of this Agreement or any
renewal hereof, Licensee will not enter into any other agreement with any third
party that would conflict with or result in a material breach of this Agreement
by Licensee.
SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) Neither this Agreement nor any of the rights,
interests or obligations of either party hereunder shall be assigned,
encumbered, hypothecated or otherwise transferred without the prior written
consent of the other party, such consent not to be unreasonably withheld.
Notwithstanding the foregoing, Licensee and Programmer shall have the right to
collaterally assign its rights and interests hereunder to their respective
senior lenders.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) Each party hereto agrees to enter into such
agreements and confirmations as the other party's senior lenders may reasonably
require: (i) to acknowledge and confirm any collateral assignment of this
Agreement to such senior lenders; (ii) to provide for simultaneous notice and
reasonable cure rights, which rights must be exercised within 30 days after the
30-day period specified in Section 6.1(b) hereof, to such senior lenders of any
default by Programmer or Licensee under this Agreement; (iii) to provide
simultaneous notice and reasonable cure rights, which rights must be exercised
within 30 days after the expiration of the 30-day period specified in Section
6.1(b) hereof, to such senior lenders prior to any election or action by
Licensee or Programmer to terminate or cancel this Agreement pursuant to
Section 6.1(b) and, if requested by such senior lenders, to enter into a new
Agreement on the same terms and conditions as this Agreement with such senior
lenders or their nominee, successor or purchaser who (x) possesses all
requisite
<PAGE> 14
- 11 -
qualifications to hold FCC licenses, (y) has not had an authorization
issued by the FCC revoked or an application for license renewal denied by the
FCC, and in the case of a request by Programmer's senior lenders, (z) possesses
the financial capacity to perform Programmer's obligations hereunder ("Lenders'
Assignee"); (iv) in the event that such senior lenders shall be entitled to
foreclose or otherwise acquire Programmer's or Licensee's interest in this
Agreement, or if such senior lenders (or their nominee, successor or purchaser
who qualifies as a "Lenders' Assignee") shall have elected to enter into a new
Agreement, on the same terms and conditions as this Agreement, with Licensee or
Programmer, to enable such senior lenders to acquire Programmer's or Licensee's
interest in this Agreement or assign such interest to any purchaser or assignee
of such senior lenders who qualifies as a "Lenders' Assignee", or require
Licensee to enter into a new Agreement, on the same terms and conditions as
this Agreement, directly with any purchaser or assignee of such senior lenders
who qualifies as a "Lenders' Assignee"; and (v) provide for such other
assurances as such senior lenders shall reasonably request in connection with
the exercise of their rights under this paragraph 7.1(c).
7.2 Call Letters. Upon request of Programmer, subject to the
consent of the Licensee, Licensee shall apply to the FCC for authority to
change the call letters of the Station (with the consent of the FCC) to such
call letters that Programmer shall reasonably designate. Licensee must
coordinate with Programmer any proposed changes to the call letters of the
Station before taking any action to change such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement and the Attachments hereto
embodies the entire agreement and understanding of the parties relating to the
operation of the Station. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement will be
effective unless evidenced by an instrument in writing signed by the parties.
7.5 Taxes. Licensee and Programmer shall each pay its own ad
valorem taxes, if any, which may be assessed on such party's respective
personal property for the periods that such items are owned by such party.
Programmer shall pay all taxes, if any, to which the consideration specified in
Section 1.5 herein is subject, provided that Licensee is responsible for
payment of its own income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
<PAGE> 15
- 12 -
7.7 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the
FCC. The construction and performance of the Agreement will be governed by the
laws of the State of Florida.
7.8 Notices. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) sent by telecopy (with receipt personally confirmed by
telephone), delivered by personal delivery, or sent by commercial delivery
service or certified mail, return receipt requested, (iii) deemed to have been
given on the date telecopied with receipt confirmed, the date of personal
delivery, or the date set forth in the records of the delivery service or on
the return receipt, and (iv) addressed as follows:
To Programmer: Paxson Communications of New London-26, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 655-9424
Telephone: (407) 659-4122
To Licensee: Roberts Broadcasting of Hartford, L.L.C.
1408 N. Kingshighway Boulevard
St. Louis, MO 63113
Telecopy: (314) 367-0174
Telephone: (314) 367-0090
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 7.8.
7.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
In the event that the FCC alters or modifies its rules or policies in a fashion
which would raise substantial and material question as to the validity of any
provision of this Agreement, the parties hereto shall negotiate in good faith
to revise any such provision of this Agreement with a view toward assuring
compliance with all then existing FCC rules and policies which may be
applicable, while attempting to preserve, as closely as possible, the intent of
the parties as embodied in the provision of this Agreement which is to be so
modified.
<PAGE> 16
- 13 -
7.10 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves
shall be settled by arbitration in Miami, Florida by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designed shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn
faithfully and fairly to hear and examine the matters in controversy and to
make a just award according to the best of his or her understanding. The
arbitration hearing shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association. The written
decision of a majority of the arbitrators shall be final and binding on
Licensee and Programmer. The costs and expenses of the arbitration proceeding
shall be assessed between Licensee and Programmer in a manner to be decided by
a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not
paid within thirty days, may be entered in any court having jurisdiction over
the matter. No action at law or in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Licensee or
Programmer against the other except: (i) an action to compel arbitration
pursuant to this Section; or (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section.
7.11 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Licensee and the Programmer.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
LICENSEE: ROBERTS BROADCASTING
OF HARTFORD, L.L.C.
By: /s/ Steven C. Roberts
------------------------------------
Steven C. Roberts
Member
PROGRAMMER: PAXSON COMMUNICATIONS
OF NEW LONDON-26, INC.
By: /s/ William L. Watson
-------------------------------------
William L. Watson
Secretary
<PAGE> 1
EXHIBIT 10.147.2
AMENDMENT TO
ASSET PURCHASE AGREEMENT
This Amendment to Asset Purchase Agreement ("Amendment") is entered
into as of the 16th day of December, 1996 by and among ROBERTS BROADCASTING OF
HARTFORD, L.L.C., a Delaware limited liability company (the "Buyer"); PAXSON
COMMUNICATIONS OF NEW LONDON-26, INC., a Florida corporation ("PC-26"), PAXSON
NEW LONDON LICENSE, INC., a Florida corporation ("PC-License") ("PC-26 and
PC-License are collectively referred to herein as "Seller").
W I T N E S S E T H:
WHEREAS, Buyer and Seller are parties to that certain Asset Purchase
Agreement dated as of July 1, 1996 (the "Purchase Agreement");
WHEREAS, in order to address certain concerns raised by the FCC, the
parties wish to amend the Purchase Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the receipt and sufficiency of which are hereby acknowledged. The
parties hereto agree as follows:
1. Amendment. The Purchase Agreement is hereby amended as
follows:
(a) Section 2.3(a) of the Purchase Agreement is deleted and the
following new Section 2.3(a) is substituted therefor:
2.3 Purchase Price.
(a) Purchase Price. The Purchase Price for the Assets shall be
Fifteen Million Dollars ($15,000,000) (the "Purchase Price").
(b) Section 2.4 of the Purchase Agreement is deleted and the
following new Section 2.4 is substituted therefor:
2.4 Payment of Purchase Price. The Purchase Price shall
be paid by Buyer to Seller as follows: At the
Closing, Buyer shall pay to Seller a Promissory Note
in the sum of Fifteen Million Dollars ($15,000,000),
adjusted as provided above in the form of Schedule
2.4(a) hereof, which shall be secured by a Security
Agreement and Pledge Agreement in the form
respectively of Schedules 2.4(b) and 2.4(c) hereof.
<PAGE> 2
(c) Section 6.9 of the Purchase Agreement is deleted and the
following new Section 6.9 is substituted therefor:
6.9 Sale of Station. Buyer agrees that during the two
(2) years following the Closing, if a company
controlled by a qualified minority group (as defined
in Section 309(i) of the Communications Act) makes an
offer to purchase the Station, Buyer shall enter into
an Asset Purchase Agreement with this minority group
entity providing for the sale of the Station for a
purchase price of at least Fifteen Million Two
Hundred Thousand Dollars ($15,200,000), provided that
the holder of the Promissory Note agrees to the
assignment of the Promissory Note by Buyer to the
minority group entity purchasing the Station.
(d) Sections 8.2(h) and 8.3(f) of the Purchase Agreement are
deleted.
2. Miscellaneous.
(a.) Other Provisions. Except where inconsistent
with the express terms of this Amendment, all provisions of the Purchase
Agreement as originally entered into shall remain in full force and effect.
(b.) Governing Law. This Amendment shall be governed,
construed, and enforced in accordance with the laws of the State of Delaware
(without regard to the choice of law provisions thereof).
(c.) Rules of Construction. The rules of construction set
forth in the Purchase Agreement shall apply to this Amendment.
(d.) Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.
(e.) 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 Amendment.
- 2 -
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to Asset Purchase Agreement the day and year first above written.
ROBERTS BROADCASTING OF HARTFORD, L.L.C.
By:
----------------------------------
Name:
Title:
PAXSON NEW LONDON LICENSE, INC.
By:
----------------------------------
Name:
Title:
PAXSON COMMUNICATIONS OF NEW LONDON-26,
INC.
By:
-----------------------------------
Name:
Title:
- 3 -
<PAGE> 1
EXHIBIT 10.148
AMENDED AND RESTATED
PROMISSORY NOTE
$3,000,000.00 April 16, 1996
FOR VALUE RECEIVED, the undersigned, OCEAN STATE TELEVISION, L.L.C., a
Delaware limited liability company with its address at 449 Barlow's Landing
Road, Pocassett, Massachusetts 02559 (the "Maker"), promises to pay to the
order of PAXSON COMMUNICATIONS OF PROVIDENCE-69, INC., a Florida corporation
with its address at 601 Clearwater Park Road, West Palm Beach, Florida 33401
(the "Payee"), or its designee, in the manner set forth below, the principal
sum of up to Three Million Dollars ($3,000,000.00), or, if less, the unpaid
principal amount of all Loans (as defined in the Loan Agreement referred to
below) made by Payee to Maker, together with interest thereon as provided
herein. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement.
This Note is an amendment and restatement of the Promissory Note dated
April 16, 1996, in the principal amount of $3,000,000.00 (the "Original Note")
payable by Offshore Broadcasting Corporation (the "Former Maker") to the Payee
and is not a replacement, substitution or repayment thereof. The indebtedness
under the Original Note remains in full force and effect as amended hereby.
The Former Maker has assigned its rights and interests under the Original Note
to the Maker, and the Maker has assumed all obligations of the Former Maker
under the Note.
1. The holder of this Note is authorized to endorse the
date and amount of each Loan disbursement pursuant to Section 1.1 of the Loan
Agreement dated as of April 16, 1996, between Maker and Payee (the "Loan
Agreement"), and each payment of principal and/or interest with respect thereto
on Schedule A annexed hereto and made a part hereof, but the failure of the
holder of this Note to make such endorsement shall not affect the rights of the
Payee or the obligations of the Maker under this Note, the Loan Agreement and
any documents executed in connection therewith or under applicable law.
2. The principal balance of and all interest on the Loan
shall be due and payable as provided in Sections 1.3 and 1.4 of the Loan
Agreement.
3. This Note evidences indebtedness of the Maker to the
Payee arising under the Loan Agreement, to which reference is hereby made for a
statement of the rights of the Payee and the duties and obligations of the
Maker in relation thereto. Neither this reference to the Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Maker to pay the principal of or interest on this Note when
due.
4. In the event any installment of principal or interest
on this Note is not paid when due, whether such installment comes due by
acceleration or otherwise, such installment shall bear interest equal to the
lower of the highest rate permitted by law or 18% per annum from and after the
due date thereof until paid in full.
<PAGE> 2
5. The payment of this Note is secured by an Amended
Security Agreement and an Amended and Restated Pledge Agreement, as more fully
identified in the Loan Agreement.
6. Payment upon this Note shall be made by check or
checks payable to the Payee at 601 Clearwater Park Road, West Palm Beach,
Florida 33401, or such other place as the Payee or a subsequent holder of this
Note shall designate to the Maker in writing, in lawful money of the United
States of America.
7. This Note may be prepaid by the Maker, in whole or in
part, at any time without premium or penalty. Each prepayment on this Note
shall be applied to installments of principal payable on this Note in the
inverse order of maturity.
8. The Maker hereby waives any defenses based upon, and
specifically assents to, any and all extensions and postponements of the time
of payment and all other indulgences or forbearances which may be granted to
any party liable hereon by the Payee or any subsequent holder of this Note.
9. The Maker hereby waives presentment, demand for
payment, notice of protest, notice of non-payment, protest, and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
10. No delay or omission on the part of the Payee or any
subsequent holder of this Note in exercising any right hereunder shall operate
as a waiver of such right or of any other right of the Payee or such holder,
nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or any other right on any other occasion.
11. No single or partial exercise by the Payee or any
subsequent holder hereof of any power hereunder shall preclude any other or
future exercise thereof or the exercise of any other power.
12. If any Event of Default shall occur, the Payee shall
be under no further obligation to make any Loan or advances of any Loan under
the Loan Agreement and the Payee may at its option by written notice to the
Maker declare the entire unpaid principal amount of this Note, together with
all unpaid interest and all other amounts payable under the Loan Agreement and
every other obligation of the Maker to the Payee, immediately due and payable,
whereupon this Note and all such obligations shall become and be forthwith due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are, except as expressly provided in the Loan Agreement, hereby
expressly waived by the Maker; provided, however, that in the case of an Event
of Default under Section 7.1(g) of the Loan Agreement, all of the obligations
of the Borrower under the Loan Agreement and this Note shall become immediately
due and payable as of the date of any such Event of Default regardless of the
cause of such Event of Default and without any notice to the Maker
<PAGE> 3
required from the Payee. The Payee shall have, in addition to all other rights
and remedies allowed by law, the rights and remedies of a secured party under
the Uniform Commercial Code and, without limiting the generality of the
foregoing, the rights and remedies provided for in the Loan Agreement, any
Mortgage or Leasehold Mortgage, the Amended Security Agreement or the Amended
and Restated Pledge Agreement.
13. The Maker shall pay on demand of the Payee or any
subsequent holder of this Note all reasonable costs of collection, including
reasonable attorneys' fees incurred by the Payee or such holder in enforcing
collection of this Note on default. However, if any litigation arises between
the parties in connection with this Note, the prevailing party shall be
entitled to recover reasonable attorneys' fees in addition to all other damages
and remedies.
14. No provision of this Note shall be modified except by
a written instrument executed by the Maker and by the Payee or a subsequent
holder hereof expressly referring to this Note and to the provision modified.
15. This Note and the provisions hereof are to be binding
on the assigns or successors of the Maker and shall be enforceable in
accordance with the laws of the State of Florida (without regard to the
conflicts of law provisions thereof).
16. The provisions of this Note are hereby declared to be
severable and if any such provision or the application of any such provision to
any person or in any circumstances shall be held to be invalid or
unconstitutional, such invalidity or unconstitutionality shall not be construed
to affect the validity or constitutionality of any of the remaining provisions
as applied to such person, or in circumstances other than those as to which it
is held invalid.
[SEAL] OCEAN STATE TELEVISION, L.L.C.
By: /s/ James B. Bocock
------------------------------
James B. Bocock
Chief Executive Officer
Pay to the order of bearer.
PAXSON COMMUNICATIONS OF
PROVIDENCE-69, INC.
By: /s/ William L. Watson
---------------------------------
William L. Watson
Secretary
<PAGE> 4
SCHEDULE A
<TABLE>
<CAPTION>
Date Amount of Loan Amount Repaid Unpaid Balance Notation Made By
<S> <C> <C> <C> <C>
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
_____ ______________ _____________ ______________ ________________
</TABLE>
<PAGE> 1
EXHIBIT 10.149
SECOND AMENDMENT TO STOCK PURCHASE AND OPTION AGREEMENT
THIS SECOND AMENDMENT TO STOCK PURCHASE AND OPTION AGREEMENT (the
"Second Amendment") is made and entered into as of September 27, 1996 by and
among PAXSON COMMUNICATIONS OF BATTLE CREEK-43, INC., a Florida corporation
("Buyer"); WESTERN MICHIGAN CHRISTIAN BROADCASTING, INC., a Michigan corporation
("WMCB"); WESTERN MICHIGAN FAMILY BROADCASTING, INC., a Michigan corporation
("WMFB"); HORIZON BROADCASTING CORPORATION, a Delaware corporation ("Newco");
and WILLIAM B. POPJES ("Shareholder").
RECITALS
A. The Buyer, WMCB, WMFB, Newco and Shareholder are parties to a Stock
Purchase and Option Agreement dated as of December 15, 1995, as amended February
13, 1996 (the "Agreement"), providing, among other things, Buyer with an option
to purchase from Newco, and Shareholder certain shares of Newco.
B. The Buyer, Newco and Shareholder have agreed to modify the option
rights of Buyer so that Buyer shall have the option to purchase all of
Shareholder's stock in Newco.
C. Capitalized terms used herein and not otherwise defined shall have
the meanings given such terms in the Agreement.
AGREEMENTS
In consideration of the foregoing Recitals and of the agreements
contained herein, the parties, intending to be legally bound, agree as follows:
1. Amendments.
(a) Section 1 of the Agreement is hereby amended by adding the
following new definitions:
""Second Amendment" shall mean that certain Second Amendment
to Stock Purchase and Option Agreement, dated as of September 27, 1996,
by and among Buyer, WMCB, WMFB, Newco and Shareholder.
"Second Amendment Note" shall mean that certain Promissory
Note dated September 27, 1996, issued by Shareholder to Buyer in the
principal amount of $250,000 and substantially in the form of Exhibit A
to the Second Amendment."
(b) Section 9.1(a) of the Agreement is amended to read as
follows:
<PAGE> 2
-2-
"(a) Shareholder hereby grants to Buyer an exclusive and irrevocable
option to purchase from Shareholder all, but not less than all, of the
510,000 shares of the Outstanding Stock held by Shareholder and".
(c) Section 9.4 of the Agreement is amended to delete the existing
Section 9.4 and substitute the following:
Section 9.4 Option Price. Buyer shall purchase the Option Shares for a
purchase price of $1,885,992.36, payable as follows: (a) Buyer shall
pay to Shareholder the amount of $1,500,000, less (i) the aggregate
principal amount plus interest thereon owed by Shareholder under the
terms of the Second Amendment Note without giving effect to any
set-off, defenses, claims, or any other such like claim by Shareholder
purporting to reduce such aggregate principal amount (other than cash
payments made to payee in accordance with the terms thereof) and (ii)
any amounts which Buyer shall pay to holders of claims set forth on
Schedules 5.5A or 5.5B of the Agreement, such payment to Shareholder to
be made in accordance with the written instructions provided by
Shareholder to Buyer no less than two (2) business days prior to the
Second Closing Date by wire transfer of immediately available federal
funds or other means mutually satisfactory to Buyer and Shareholder,
and (b) Buyer shall forgive indebtedness of Newco to Buyer in the
aggregate amount of Three Hundred Eighty-Five Thousand Nine Hundred
Ninety-Two Dollars and Thirty-Six Cents ($385,992.36).
2. Purchase Price Advance. In reliance upon Shareholders'
representations and warranties and covenants contained herein and in
consideration of the amendment of the terms and conditions of Section 9.4 of the
Agreement, Buyer hereby agrees to advance to Shareholder the sum of $250,000
in the form of a loan evidence by the Second Amendment Note, the aggregate
principal of such advance together with interest thereon shall be
credited to the purchase price payable by Buyer to Shareholder in respect of the
Option Shares on the Second Closing Date. Buyer covenants and agrees that the
sum advanced to Buyer under the Second Amendment Note shall be immediately
applied by Shareholder to pay any outstanding claims identified under Schedules
5.5A or 5.5B of the Agreement, with any remainder to be applied as Shareholder
may direct. In furtherance of the foregoing, Shareholder hereby requests that
the advance of funds under the Second Amendment Note be made to the escrow
account of Shareholder's attorney, Varnum, Riddering, Schmidt & Howlett, and
hereby agrees to irrevocably instruct Shareholder's attorney to disburse such
funds to such claim holders, with the remainder to be advanced as Shareholder
may direct. Such disbursements to be made by Shareholder's attorney shall be
made in the amounts and to such parties as detailed in a letter (the "Advance
Disbursement Letter"), in form and substance satisfactory to Buyer, from
Shareholder's attorney to Buyer. Shareholder hereby represents and warrants to
Buyer that upon the disbursements from the escrow account of Shareholder's
attorney as contemplated hereunder, as detailed in the Advance Disbursement
<PAGE> 3
- 3 -
Letter, all of the claims identified under Schedules 5.5A or 5.5B the Agreement
shall be satisfied in full.
3. Release. Each of Shareholder, WMCB and WMFB (collectively, the
"Shareholder Parties") on the one hand and, subject to the conditions set forth
below, Buyer on the other hand, hereby, jointly and severely, completely release
and discharge each other from any and all claims, charges, actions and causes of
action, of any kind or nature, which the Shareholder Parties, individually or
collectively, on the one hand or Buyer, on the other hand, once had or now have
arising out of the Agreement, or any of the documents entered into in connection
with the transactions contemplated therein; provided, however, that nothing
herein shall be deemed to release or terminate the Shareholder Parties'
obligations under the Agreement or any other documents entered in connection
therewith, including, without limitation, representations and warranties
required to be true as of the Second Closing Date, it being understood that all
of such obligations continue and remain in full force and effect.
Notwithstanding the foregoing, each of the Shareholder Parties, including
without limitation Shareholder, acknowledge and agree that in the event of (i)
any breach by any Shareholder Party of its representations and warranties
contained herein, (ii) any breach by any Shareholder Party of any of the
covenants and agreements contained in the Agreement and each of the other
agreements entered into in connection with the transactions contemplated under
the Agreement, including the Loan Agreement and the Construction Agreement
(collectively, the "Transaction Documents"), or (iii) any action by any
Shareholder Party which is inconsistent with the express or implied terms and
conditions of the Transaction Documents, the release given by Buyer to the
Shareholder Parties shall be automatically rescinded and of no force and effect
for any purpose whatsoever.
4. Closing Escrow Agreement. As a condition to the effectiveness of
this Amendment, the Buyer, the Shareholder Parties and the Closing Escrow Agent
(as identified therein) shall enter into the Closing Escrow Agreement annexed as
Exhibit B hereto and the Shareholder Parties shall cause the documents set forth
in Schedules A and B to the Closing Escrow Agreement (collectively, the "Escrow
Documents") to be delivered to the Closing Escrow Agent, such documents to be
released by the Closing Escrow Agent from time to time in accordance with the
terms thereof. The Shareholder Parties, including, without limitation,
Shareholder, hereby acknowledge and agree that the release of such documents and
the consummation of the transactions contemplated under the Agreement are an
integral part of the consideration offered to the Buyer by the Shareholder
Parties, including, without limitation, the Shareholder, in connection with
Buyer's agreement to amend the Option Price as provided herein, and extend
credit to the Shareholder under the Second Amendment Note, and each of the
Shareholder Parties hereby acknowledges and agrees that the damages for any
breach of such obligation shall not be adequately addressed by money damages.
Accordingly each of the Shareholder Parties, including, without limitation, the
Shareholder, agree that Buyer shall be entitled to sue for specific performance
of the terms of this Second Amendment, the Agreement and the Closing Escrow
<PAGE> 4
- 4 -
Agreement in the event of a breach by Shareholder or any of the other
Shareholder Parties of the terms of this Second Amendment, the Agreement or the
Closing Escrow Agreement or with respect to the Shareholder Parties' continued
cooperation in the construction of the Station and the release to Buyer of the
Escrow Documents from the possession of the Closing Escrow Agent, in which case
each of the Shareholder Parties, including, Shareholder, shall waive the defense
that there is an adequate remedy at law. Nothing contained in this Second
Amendment shall be deemed to limit the Shareholder Parties or Buyer's
obligations, express or implied, under Section 14.2 of the Agreement or under
any of the other Transaction Documents to cooperate and take such actions
required by any of them in connection with the consummation of the transactions
contemplated under the Transaction Documents.
5. Representation and Warranties. Except as amended hereby, the terms,
provisions, conditions and agreements of the Agreement are hereby ratified and
confirmed and shall remain in full force and effect. Each and every
representation and warranty of the Shareholder Parties in the Agreement, the
Loan Agreement and each of the other documents executed in connection therewith
or herewith is hereby confirmed and ratified in all material respects and such
representations and warranties shall be deemed to have been made and undertaken
as of the date of this Second Amendment as well as at the time they were made
and undertaken, except to the extent modified hereby.
6. Counterparts. This Second Amendment may be executed in as many
counterparts as may be convenient and shall become binding when (i) each party
hereto has executed at least one counterpart; (ii) each of the Shareholder
Parties shall have executed and delivered the Closing Escrow Agreement and the
Escrow Documents, in suitable form in the opinion of Buyer, as contemplated
under Section 3 of this Second Amendment, to the Closing Escrow Agent; (iii)
each of the Shareholder and the other Shareholder Parties shall have executed
and delivered to Buyer the Second Amendment Note; (iv) Buyer shall have received
a letter from Shareholder's attorney, as contemplated under Section 2 of this
Amendment, in form and substance satisfactory to Buyer; and (v) Buyer shall have
advanced to Shareholder the stated principal amount set forth under the Second
Amendment Note.
7. Governing Law. This Second Amendment shall be a contract made under
and governed by the laws of the State of Florida, without regard to the
conflicts of law provisions thereof.
8. Binding Effect. This Second Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
9. Reference to Agreement. Except as amended hereby, the Agreement
shall remain in full force and effect and is hereby ratified and confirmed in
all respects. On and after the effectiveness of the amendment to the Agreement
accomplished hereby, each reference in the
<PAGE> 5
-5-
Agreement to "this Agreement", "hereunder", "hereof" "herein" or words
of like import, and each reference to the Agreement in any other agreement,
document or instrument executed and delivered pursuant to the Agreement, shall
be deemed a reference to the Agreement, as amended hereby.
10. No Other Modification. Except as expressly provided in this Second
Amendment, all of the terms and conditions of the Agreement remain unchanged and
in full force and effect.
<PAGE> 6
- 6 -
IN WITNESS WHEREOF, the parties have executed this Second Amendment as
of the date FIRST above written.
PAXSON COMMUNICATIONS OF BATTLE
CREEK-43, INC.
By: /s/
-------------------------------
HORIZON BROADCASTING CORPORATION
By:
-------------------------------
WESTERN MICHIGAN CHRISTIAN
BROADCASTING, INC.
By:
-------------------------------
WESTERN MICHIGAN FAMILY
BROADCASTING, INC.
By:
-------------------------------
----------------------------------
WILLIAM B. POPJES
<PAGE> 1
EXHIBIT 10.150
- --------------------------------------------------------------------------------
PARTNERSHIP INTEREST PURCHASE AGREEMENT
BY AND AMONG
DP MEDIA, INC.
ROBERTS BROADCASTING, L.L.C.
AND
ROBERTS BROADCASTING COMPANY
OF RALEIGH-DURHAM, L.P.
* * *
FEBRUARY 14, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
1.1 Terms Defined in this Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
1.2 Terms Defined Elsewhere in this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
1.3 Clarifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
SECTION 2. AT CLOSING; PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
2.1 Agreements to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
2.2 Assets and Liabilities at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
2.4 Allocation; Closing of the Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . - 8 -
3.1 Organization and Authority of the Company and Seller . . . . . . . . . . . . . . . . . . . . - 8 -
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
3.3 Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
3.4 Absence of Conflicting Agreements; Consents . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
3.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
3.6 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
3.7 Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
3.8 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
3.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
3.10 Intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
3.11 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
3.12 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
3.13 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
3.15 Bank Accounts; Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
3.17 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
3.18 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
3.19 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
3.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
3.21 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
3.22 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
3.23 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
3.24 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
3.25 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
</TABLE>
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<TABLE>
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
4.3 Absence of Conflicting Agreements and Required Consents . . . . . . . . . . . . . . . . . . - 18 -
4.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
4.5 Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
4.6 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
4.7 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
4.8 Funds at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
SECTION 5. OPERATION OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
5.1 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
5.3 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
5.4 Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
5.5 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.6 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.8 Indebtedness and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.9 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.10 Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.11 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
5.12 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
5.13 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
5.14 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
5.15 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
5.16 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
5.17 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
5.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
6.2 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
6.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
6.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
6.5 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
6.6 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
6.7 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
6.8 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
6.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
9.3 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
9.4 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
9.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
9.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . - 31 -
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -
10.5 Certain Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
11.3 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
11.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
11.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
11.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
11.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
11.8 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
11.9 Press Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
11.12 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
11.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
11.14 Incorporation of Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
</TABLE>
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<PAGE> 5
LIST OF SCHEDULES
<TABLE>
<S> <C> <C>
Schedule 2.2(a) -- Liabilities at Closing
Schedule 3.4 -- Consents
Schedule 3.5 -- Licenses
Schedule 3.6 -- Real Property
Schedule 3.7 -- Leased Real Property
Schedule 3.8 -- Tangible Personal Property
Schedule 3.9 -- Contracts
Schedule 3.10 -- Intangibles
Schedule 3.11 -- Liens
Schedule 3.12 -- Financial Matters
Schedule 3.14 -- Tax Matters
Schedule 3.15 -- Bank Accounts
Schedule 3.16 -- Insurance
Schedule 3.18 -- Employee Matters
Schedule 3.19 -- Litigation
Schedule 3.22 -- Conduct of Business
Schedule 5.11 -- Certain Cable Systems
Schedule 8.2(k) -- Seller's Opinions of Counsel
Schedule 8.3(d) -- Buyer's Opinion of Counsel
</TABLE>
- iv -
<PAGE> 6
PARTNERSHIP INTEREST PURCHASE AGREEMENT
This PARTNERSHIP INTEREST PURCHASE AGREEMENT is made as of February ___,
1997, by and among DP MEDIA, INC., a Florida corporation ("BUYER"), and ROBERTS
BROADCASTING, L.L.C., a Delaware limited liability company ("SELLER"); and
ROBERTS BROADCASTING COMPANY OF RALEIGH-DURHAM, L.P., a Delaware limited
partnership (the "COMPANY").
R E C I T A L S:
A. Seller owns all the general partnership interests of the Company,
which owns and operates television station WRMY(TV), Rocky Mount, North
Carolina (the "Station"), pursuant to licenses issued by the Federal
Communications Commission.
B. Seller desires to sell its entire general partnership interests
in the Company and Buyer desires to buy all such partnership interests, for the
price and on the terms and conditions hereinafter set forth.
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, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1 Terms Defined in this Section. The following terms, as
used in this Agreement, have the meanings set forth in this Section:
"ACCOUNTS RECEIVABLE" means all accounts receivable of Seller or the
Company accrued in the ordinary course of business with respect to the Station
as of the Closing Date.
"ACQUIRED INTEREST" shall mean (i) the entire sixty percent (60%)
general partner interest in the Company owned by Seller and being acquired by
Buyer pursuant to the transactions contemplated by this Agreement, (ii) the
interest in the assets of the Company represented by such general partnership
interest, (iii) the rights to allocations of profits, income, gains, losses,
deductions and credits and distributions of cash and property, and (iv) the
rights and obligations of being a general partner in the Company arising on or
after the date hereof as such interests, rights and obligations are more fully
described in the partnership agreement of the Company.
<PAGE> 7
"AFFILIATE" means (a) any Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with another Person, or (b) an officer or director of an affiliate
within the meaning of (a) above.
"ASSETS" means the assets to be owned or held by the Company as of the
Closing, as specified in Section 2.2(a).
"CLOSING" means the consummation of the purchase and sale of the
Interests pursuant to this Agreement in accordance with the provisions of
Section 8.
"CLOSING DATE" means the date on which the Closing occurs, as determined
pursuant to Section 8.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CONSENTS" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Interests to
Buyer or otherwise to consummate the transactions contemplated by this
Agreement.
"CONTRACTS" means all contracts, leases, non-governmental licenses,
mortgages, notes, other instruments relating to the borrowing of money,
guarantees, indemnities, offset or barter agreements, and other agreements
(including leases for personal or real property and employment agreements),
written or oral (including any amendments and other modifications thereto) to
which the Company is a party or that are binding upon the Company or that
relate to or affect the Assets or the business or operations of the Station,
and (a) that are in effect on the date of this Agreement or (b) that comply
with Section 5.1 hereof.
"EFFECTIVE TIME" means 12:01 a.m., local Rocky Mount time, on the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means First Union National Bank of Florida.
"ESCROW AGREEMENT" means the Escrow Agreement to be entered into among
Buyer, Seller, and the Escrow Agent in accordance with Section 9.3.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
transfer of control of the Company and the FCC Licenses as contemplated by this
Agreement.
- 2 -
<PAGE> 8
"FCC LICENSES" means those licenses, permits, construction permits and
other authorizations issued by the FCC to the Company or Seller in connection
with the business and operations of the Station.
"FINAL ORDER" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"GAAP" means generally accepted accounting principles consistently
applied.
"INTANGIBLES" means all copyrights, trademarks, trade names, service
marks, service names, licenses (other than the Licenses), patents, permits,
jingles, proprietary information, technical information and data, machinery and
equipment warranties, and other similar intangible property rights and
interests (and any goodwill associated with any of the foregoing) applied for,
issued to, or owned by the Company or under which the Company is licensed or
franchised and that are used or useful in the business and operations of the
Station, together with any additions thereto between the date of this Agreement
and the Closing Date.
"INTERESTS" means, collectively, all of the general partnership
interests of the Company.
"LICENSES" means the FCC Licenses and all licenses, permits,
construction permits, and other authorizations issued by the Federal Aviation
Administration, or any other federal, state, or local governmental authorities
to the Company or Seller, currently in effect and used 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.
"LIEN" means any mortgage, pledge, security interest, charge, claim or
other encumbrance.
"LOAN DOCUMENTS" means the Loan Agreement dated as of October 31, 1995,
between PCC and the Company, as amended by the Amendment to Loan Agreement
dated as of January 19, 1996, pursuant to which, among other things, Paxson-47
(as defined below) was substituted for PCC as the lender in such Loan
Agreement, and each promissory note, security agreement, pledge agreement, deed
of trust, financing statement and other documents executed and delivered
pursuant to the terms of such Loan Agreement.
"MATERIAL CONTRACT" means any Contract except for any Contract (i) the
obligations under which will be fully performed by the Company prior to
Closing; or (ii) which was entered into in the ordinary course of business and
does not involve a commitment in excess of $2,500 or have a term in excess of
one year.
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"OPTION AGREEMENT" means the Option Agreement dated as of October 31,
1995, by and among Paxson-47, the Company and Roberts-Co (as defined below), as
amended by the Amendment to Option Agreement dated as of January 15, 1996, by
and among Paxson-47, the Company, Roberts-Co, Steven C. Roberts and Michael V.
Roberts.
"PAXSON-47" means Paxson Communications of Raleigh Durham-47, Inc.,
a Florida corporation.
"PCC" means Paxson Communications Corporation, a Delaware corporation.
"PERSON" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"REAL PROPERTY" means all real property, and all buildings and other
improvements thereon, (i) owned or leased by the Company or (ii) held by the
Company and used or useful in the business or operations of the Station.
"REAL PROPERTY INTERESTS" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, (i) owned or leased by the Company or (ii) held by
the Company and 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.
"ROBERTS-CO" means Roberts Broadcasting Company of North Carolina,
a Delaware corporation.
"STATION" means television station WRMY(TV), Rocky Mount, North
Carolina.
"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property (i) owned or
leased by the Company or (ii) held by the Company and used or useful in the
business or operations of the Station, including the Station transmitters,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"TAXES" means any and all federal, state, local, foreign or other
income, gross receipts, profits, occupation, environmental, severance, property
(including in lieu of taxes), production, sales, use, license, excise,
franchise, capital, transfer, employment, workers' compensation, social
security, payroll, withholding and other taxes government fees, charges and
assessments, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.
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<PAGE> 10
"TAX RETURNS" means all federal, state, local and foreign income,
franchise, sales, use, occupation, property, excise, alternative or add-on
minimum, social security, employees' withholding, unemployment, disability,
transfer, capital stock and other tax returns and tax reports.
"TIME BROKERAGE AGREEMENT" means the Time Brokerage Agreement dated as
of October 31, 1995, between the Company and Paxson-47, as amended by the
Amendment to Time Brokerage Agreement dated as of January 19, 1996, among
Paxson-47, the Company and Roberts-Co.
1.2 Terms Defined Elsewhere in this Agreement. For
purposes of this Agreement, the following terms have the meanings set forth in
the sections indicated:
Term Section
---- -------
Buyer Preamble
Claimant Section 10.4(a)
Company Preamble
Employees Section 3.18(a)
Escrow Deposit Section 9.3
Financial Statements Section 3.12
Indemnifying Party Section 10.4(a)
Purchase Price Section 2.3
Seller Preamble
1.3 Clarifications. Words used herein, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender and any other number as the context requires. Use of
the word "including" herein shall be deemed and construed to mean "including
but not limited to." Except as specifically otherwise provided in this
Agreement in a particular instance, a reference to a Section, Exhibit or
Schedule is a reference to a Section of this Agreement or an Exhibit or
Schedule hereto, and the terms "hereof," "herein" and other like terms refer to
this Agreement as a whole, including the Exhibits and Schedules hereto, and not
solely to any particular part hereof.
SECTION 2. AT CLOSING; PURCHASE PRICE.
2.1 Agreements 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, the
Acquired Interest, free and clear of any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges, or encumbrances of
any nature whatsoever.
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<PAGE> 11
2.2 Assets and Liabilities at Closing.
(a) Assets of the Company at Closing.
The Assets owned by the Company at the Closing, all of which shall be free and
clear of any claims, liabilities, liens, security interests, mortgages,
charges, pledges, conditions, or encumbrances of any nature whatsoever (other
than liens for current taxes not yet due and payable and liens securing
obligations under the Loan Documents), shall include the following:
(1) The Tangible Personal
Property;
(2) The Real Property Interests;
(3) The Licenses;
(4) The Contracts identified
in Schedule 2.2(a);
(5) The Intangibles and all
intangible assets of the Company relating to the Station that are not
specifically included within the Intangibles, including the goodwill of the
Station, if any;
(6) All of the Company's
insurance policies and claims thereunder, 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;
(7) All choses in action,
claims, deposits, prepayments, prepaid assets, refunds, rights of recovery,
rights of setoff, rights of recoupment and attorney-client work product and
other legal privileges of the Company;
(8) All books and records of
the Station, including executed copies of the Contracts identified in Schedule
2.2(a), all records required by the FCC to be kept by the Station, and all
ledgers, files, creative materials, advertising and promotional materials,
studies, reports and other printed or written materials of the Company; and
(9) All Accounts Receivable
arising on or prior to the Closing Date.
(b) Assets Not Included at Closing. Notwithstanding any
provision in this Agreement to the contrary, the Company's cash and cash
equivalents on hand as of the Closing and collective bargaining agreements
shall not be included in the Assets at Closing.
(c) Liabilities of the Company at Closing.
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<PAGE> 12
(1) At the Closing, the Company shall
not have any liabilities or obligations other than the following liabilities and
obligations, none of which shall be past due or otherwise in default:
(A) liabilities and
obligations arising under the terms of (and not as a result of any default
under) the following Contracts: (i) Contracts listed on Schedule 2.2(a), (ii)
Contracts entered into in the ordinary course of business prior to the date of
this Agreement with advertisers for the sale of program or advertising time on
the Station or production services for cash at rates consistent with past
practices and which may be cancelled by the Station without penalty on not more
than 30 days' notice, and (iii) Contracts entered into by the Company between
the date of this Agreement and the Closing Date in compliance with Section 5.1;
(B) liabilities for taxes
that are not yet due and payable; and
(C) liens granted to
Paxson-47 pursuant to the Loan Documents.
(2) Without limiting the generality
of Section 2.2(c)(1), the liabilities and obligations of the Company at Closing
shall not include, and Seller shall retain all liability in respect of, (i) any
obligations or liabilities under any Contract not described in Section
2.2(c)(1)(A), (ii) any credit agreements, note purchase agreements, indentures,
capital leases or other obligation for money owed other than the Loan Documents,
and (iii) any agreements entered into other than in the ordinary course of
business of the Station.
2.3 Purchase Price.
(a) The purchase price for the Interests
(the "PURCHASE PRICE") shall be Four Million One Hundred Fifty Thousand Dollars
($4,150,000), and shall be paid by Buyer to Seller, adjusted as provided in
subsection (b) below, by federal wire transfer of same-day funds pursuant to
wire instructions which shall be delivered by Seller to Buyer at least two
business days prior to the Closing Date.
(b) 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 that are not reimbursable under the
Time Brokerage Agreement, including business and license fees, utility charges,
real and personal property taxes and assessments levied against the Interests,
property and equipment rentals, applicable copyright or other fees, sales and
service charges, taxes (except for taxes arising from the transfer of the
Interests 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
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<PAGE> 13
remain solely liable with respect to, any Contracts not listed on Schedule
2.2(a) and any other obligation or liability retained by Seller pursuant to
Section 2.2(c)(2).
(c) 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) business days
before the Closing Date a preliminary settlement statement which shall set
forth Seller's good faith estimate of all adjustments to the Purchase Price
under Section 2.3(b). The preliminary settlement statement (i) shall contain
all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(b), to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (ii)
shall be certified by Seller to be true and complete in all material respects
as of the date thereof.
2.4 Allocation; Closing of the Books. Upon transfer of
the Acquired Interest, the distributive share of all items of income, gain,
loss, deduction or credit associated with the Acquired Interest for the
Company's current tax year shall be allocated between Seller and Buyer
according to the interim closing of the books method. The date for closing the
books shall be the Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
COMPANY.
Seller and the Company jointly and severally represent and warrant to
Buyer as follows:
3.1 Organization and Authority of the Company and Seller.
(a) The Company is a limited partnership
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. The Company has the requisite partnership power, authority
and qualifications to own, lease, and operate its properties, to carry on its
business in the places where such properties are now owned, leased, or operated
and such business is now conducted, and to execute, deliver and perform this
Agreement and the documents contemplated hereby according to their respective
terms. Seller has delivered to Buyer true and complete copies of the
Certificate of Limited Partnership and Limited Partnership Agreement of the
Company, each as in effect through the date hereof. The Company does not
directly or indirectly own, of record or beneficially, or have the right or
obligation to acquire, any outstanding securities or other interest in any
corporation, partnership, joint venture or other entity.
(b) Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has the requisite power, authority and
qualifications to own, lease, and operate its properties, to carry on its
business
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<PAGE> 14
in the places where such properties are now owned, leased, or operated and such
business is now conducted, and to execute, deliver and perform this Agreement
and the documents contemplated hereby according to their respective terms.
Seller has delivered to Buyer true and complete copies of Seller's Certificate
of Formation and Seller's Limited Liability Company Agreement, each as in
effect through the date hereof. Seller does not directly or indirectly own, of
record or beneficially, or have the right or obligation to acquire, any
outstanding securities or other interest in any corporation, partnership, joint
venture or other entity other than the Acquired Interest.
(c) Seller owns, and the Acquired Interest
constitutes, one hundred percent of the general partnership interest in the
Company, which general partnership interest constitutes sixty percent of all
partnership interests in the Company. Roberts Broadcasting Company of North
Carolina, a Delaware corporation, owns one hundred percent of the limited
partnership interests of the Company, which limited partnership interest
constitutes forty percent of all partnership interests in the Company.
3.2 Authorization and Binding Obligation. The
execution, delivery and performance of this Agreement by Seller and the Company
have been duly authorized by all necessary action on the part of Seller and the
Company. This Agreement has been duly executed and delivered by Seller and the
Company and constitutes the legal, valid, and binding obligation of each of
them, enforceable against each of them in accordance with its terms except as
the enforceability of this Agreement may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally and by judicial
discretion in the enforcement of equitable remedies.
3.3 Interests. There are no outstanding options,
conversion rights, warrants, or other rights in existence to acquire from
Seller or the Company any Interests or any portion thereof. The Interests
represent all of the general partnership interests of the Company. Except as
provided in the Loan Documents, there are no voting trust agreements or other
contracts, agreements, or arrangements restricting voting or distribution
rights or transferability with respect to the Interests. Except for liens
granted to Paxson-47 pursuant to the Loan Documents, Seller owns the Interests
free and clear of any claims, liabilities, liens, security interests,
mortgages, charges, pledges, conditions, or encumbrances of any nature
whatsoever.
3.4 Absence of Conflicting Agreements; Consents. Subject
to obtaining the Consents listed on Schedule 3.4, the execution, delivery and
performance by Seller of this Agreement and the documents contemplated hereby
(with or without the giving of notice, the lapse of time, or both): (a) do not
require the consent of any third party; (b) will not conflict with any
provision of the Certificate of Limited Partnership or Limited Partnership
Agreement of the Company or the Certificate of Formation or the Limited
Liability Company Agreement of Seller; (c) will not conflict with, result in a
breach of, or constitute a default under any applicable law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; and (d) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
result in the creation or
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<PAGE> 15
imposition of any Lien upon any property of the Seller (including any of the
Assets) pursuant to, or accelerate or permit the acceleration of any
performance required by the terms of, any Contract. Except for the FCC Consent
provided for in Section 6.1 and the other Consents described in Schedule 3.4,
no consent, approval, permit, or authorization of, or declaration to, or filing
with any governmental or regulatory authority or any other third party is
required (a) to consummate this Agreement and the transactions contemplated
hereby, or (b) to permit Seller to assign or transfer the Interests to Buyer.
3.5 Licenses. Schedule 3.5 includes a true and complete
list of the Licenses. Seller has made available to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and the Company is the
authorized legal holder of the Licenses. The Licenses listed on Schedule 3.5
comprise all of the licenses, permits, and other authorizations required from
any governmental or regulatory authority for the lawful conduct of the business
and operations of the Station in the manner and to the full extent they are now
conducted. The Licenses are valid and in full force and effect, and the
conduct of the business and operations of the Station is in accordance in all
material respects therewith. Seller has no reason to believe that, under
existing law, rules, regulations, policies, and procedures of the FCC, any of
the Licenses would not be renewed by the FCC or other granting authority in the
ordinary course. The city of license of the Station, as determined by the FCC,
is located within the Raleigh-Durham, North Carolina, Area of Dominant
Influence as defined by the 1991-1992 Area of Dominant Influence Market Guide
published by The Arbitron Co. and the Raleigh-Durham, North Carolina,
Designated Market Area as defined by the 1996 United States Television
Household Estimates published by Nielsen Media Research. Prior to October 1,
1996, the Station made a valid election of must carry with respect to each
cable system identified on Schedule 3.5, and, except as described on Schedule
3.5, no cable system identified on Schedule 3.5 has advised Seller or the
Company of any signal quality or copyright indemnity or other prerequisite to
cable carriage of the signal of the Station, and, except as described on
Schedule 3.5, no cable system identified on Schedule 3.5 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.
3.6 Real Property. Schedule 3.6 contains a true and
complete description of all Real Property and all Real Property Interests. The
Real Property Interests listed on Schedule 3.6 comprise all interests in real
property necessary to conduct the business and operations of the Station as now
conducted. Except as described on Schedule 3.6, the Company has good, record
and marketable fee simple title to all of the Real Property and good title to
all of the Real Property Interests, in each case free and clear of all liens,
mortgages, pledges, covenants, easements, restrictions, encroachments, leases,
charges, and other claims and encumbrances, except for liens for current taxes
not yet due and payable and liens granted to Paxson-47 pursuant to the Loan
Documents. Seller has delivered to Buyer true and complete copies of all deeds
pertaining to the Real Property. With respect to each leasehold or
subleasehold interest included in the Real Property Interests, so long as the
Company fulfills its obligations under the lease therefor, the Company has
enforceable rights to nondisturbance and quiet
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<PAGE> 16
enjoyment against its lessor or sublessor. The Company has full legal and
practical access to all of the Real Property. All towers, guy anchors, and
buildings and other improvements included in the Assets are located entirely on
the Real Property listed in Schedule 3.6. All Real Property (including the
improvements thereon) (a) is in good condition and repair consistent with its
present use, (b) is available for immediate use in the conduct of the business
and operations of the Station, and (c) complies in all material respects with
all applicable building or zoning codes and the regulations of any governmental
authority having jurisdiction. All easements, rights-of-way and licenses
included in the Real Property have been properly recorded in the appropriate
public recording office.
3.7 Leased Real Property. All of the real property
leased by the Company or Seller as tenant or lessee is identified on Schedule
3.7 (collectively referred to herein as the "Leased Real Property").
(i) Leases. All of the leases of any of the Leased Real
Property (collectively, the "Leases") are as set forth on Schedule 3.7. The
copies of the Leases set forth in Schedule 3.7 are true and complete copies of
each of the Leases. The information with respect to each of the Leases set
forth in Schedule 3.7 is true and complete in all material respects.
(ii) Real Property Taxes. Except as set forth in Schedule 3.7,
neither Seller nor the Company has received any notice of any pending or
threatened reassessment of all or any portion of any of the Leased Real
Property.
3.8 Tangible Personal Property. Schedule 3.8 lists all
items of Tangible Personal Property which are material to the operation of the
Company. The Tangible Personal Property listed on Schedule 3.8 comprises all
material items of tangible personal property necessary to conduct the business
and operations of the Station as now conducted and in accordance with
applicable law. Except as described in Schedule 3.8, the Company owns and has
good title to each item of Tangible Personal Property owned by it and none of
the Tangible Personal Property owned by the Company is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens for current taxes not yet due and payable and
liens granted to Paxson-47 pursuant to the Loan Documents. With allowance for
normal repairs, maintenance, wear, and obsolescence, each item of Tangible
Personal Property is in good operating condition and repair, and 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
(a) have been maintained in a manner consistent with generally accepted
standards of good engineering practice, and (b) will permit the Station and all
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.
3.9 Contracts. Schedule 3.9 is a true and complete list
of all Contracts except contracts with advertisers for production or the sale
of advertising time on the Station for cash at rates consistent with past
practices and that may be canceled by the Company without penalty on not more
than thirty days' notice. Seller has delivered to Buyer true and complete
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<PAGE> 17
copies of all written Contracts, true and complete descriptions of all oral
Contracts (including any amendments and other modifications to such Contracts).
Schedule 3.9 also includes a schedule setting forth the obligations and credits
of the Company under trade and barter agreements relating to the Station.
Other than the Contracts listed on Schedule 3.9, the Company does not require
any contract, lease, or other agreement to enable it to carry on its business
in all material respects as now conducted. All of the Contracts are in full
force and effect and are valid, binding, and enforceable against all of the
parties thereto in accordance with their terms. There is not under any
Contract any default by any party thereto or any event that, after notice or
lapse of time or both, could constitute a default. Except as disclosed on
Schedule 3.9, other than in the ordinary course of business, neither Seller nor
the Company is aware of any intention by any party to any Contract (a) to
terminate such contract or amend the terms thereof, (b) to refuse to renew the
Contract upon expiration of its term, or (c) to renew the Contract upon
expiration only on terms and conditions that are different than those now
existing. Except for the need to obtain the Consents listed on Schedule 3.4,
the purchase and sale of the Interests in accordance with this Agreement will
not affect the validity, enforceability, or continuation of any of the
Contracts.
3.10 Intangibles. Schedule 3.10 is a true and complete
list of all Intangibles (exclusive of Licenses listed in Schedule 3.5) that are
required to conduct the business and operations of the Station as now
conducted, all of which are valid and in good standing and uncontested. Seller
has made available to Buyer copies of all documents establishing or evidencing
the Intangibles listed on Schedule 3.10.
3.11 Title to Properties. Except as disclosed in
Schedule 3.11, the Company has good and marketable title to all of its
properties and assets subject to no mortgages, pledges, liens, security
interests, encumbrances, or other charges or rights of others of any kind or
nature, except for liens for current taxes not yet due and payable and liens
granted to Paxson-47 pursuant to the Loan Documents.
3.12 Financial Statements. Seller has furnished Buyer
with true and complete copies of unaudited compiled financial statements of the
Company containing a balance sheet and a statement of income, but omitting
disclosures in the statement of cash flows required by GAAP, as at and for the
fiscal year ended December 31, 1996 (collectively, the "FINANCIAL STATEMENTS").
The Financial Statements have been prepared from the books and records of the
Company and maintained throughout the periods indicated, accurately reflect in
all material respects the books, records, and accounts of the Company (which
books, records, and accounts are true and complete), and present fairly the
financial condition of the Company as at their respective dates and the results
of operations for the periods then ended. None of the Financial Statements
understates in any material respect the true costs and expenses of conducting
the business or operations of the Station as currently conducted by the
Company.
3.13 Undisclosed Liabilities. The Company has no debt,
liability or obligation, whether accrued, absolute, contingent or otherwise,
including any liability or obligation on account of taxes or any governmental
charges, penalty, interest or fines, except: (i) those liabilities
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<PAGE> 18
reflected in the Financial Statements; or (ii) liabilities incurred in the
ordinary course of business (other than contingent liabilities) since December
31, 1996, none of which has a material adverse effect on the financial
condition of the Company.
3.14 Taxes. Except as set forth in Schedule 3.14:
(a) From the date of its formation, the
Company has been classified as and qualified as a partnership for federal,
state and local income tax purposes for all taxable periods ending on or before
the Closing Date, and no taxing authority has raised any issue concerning such
classification.
(b) All Tax Returns that are required to
be filed by or with respect to the Company have been timely filed, such returns
were prepared in the manner required by applicable laws and are true and
complete in all material respects, and Seller has delivered to Buyer true and
complete copies of all of the Tax Returns of the Company. The Company has
timely paid all Taxes imposed on or incurred by the Company.
(c) All Taxes for which the Company is
liable that are due and payable or required to be withheld on or before the
Closing Date without regard to any extensions (other than such Taxes that are
being contested or protested in good faith by appropriate proceedings and for
which a reserve or other appropriate provision as required in conformity with
GAAP has been made in the financial statements of the Company), whether or not
arising under the Tax Returns referred to in subsection (a), have been or will
be paid or withheld in full on or before the Closing Date. The Financial
Statements reflect an adequate reserve for all material unpaid Taxes payable by
the Company for all taxable periods and portions thereof through the date of
such statements.
3.15 Bank Accounts; Powers of Attorney. Schedule 3.15
contains a true and complete list of all accounts or deposits of the Company
with banks or other financial institutions, safe deposit boxes of the Company,
persons authorized to sign or otherwise act with respect thereto as of the date
hereof, and powers of attorney for the Company. No change in such accounts or
deposits, safe deposit boxes or persons authorized to sign will be made prior
to the Closing.
3.16 Insurance. Schedule 3.16 is a true and complete
list of all insurance policies of any kind owned or held by the Company or
Seller in connection with the Station. All policies of insurance listed in
Schedule 3.16 are in full force and effect.
3.17 Reports. All returns, reports, and statements that
the Station is currently required to file with the FCC or Federal Aviation
Administration have been filed, and all reporting requirements of the FCC and
Federal Aviation Administration have been complied with in all material
respects. The Company has timely paid to the FCC all annual regulatory fees
payable with respect to the FCC Licenses.
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<PAGE> 19
3.18 Personnel.
(a) Employees and Compensation. Schedule
3.18 contains a true and complete list of all employees of the Company and all
persons retained as independent contractors by the Company (collectively, the
"EMPLOYEES") and a description of all compensation arrangements affecting them.
The Company has no employee benefit plans or arrangements applicable to the
Employees which are subject to ERISA.
(b) Labor Relations. Except as set forth
in Schedule 3.18, the Company is not a party to or subject to any written or
oral employment agreement with any Employee. The Company 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 it has not received any notice
alleging that it has failed to comply with any such laws, rules, or
regulations. No controversies, disputes, or proceedings are pending or, to the
knowledge of Seller, threatened, between the Company and any Employee (singly
or collectively). No labor union or other collective bargaining unit
represents or claims to represent any of the employees of the Company. To the
knowledge of Seller, there is no union campaign being conducted to represent
any Employees or to solicit cards from any Employees to authorize a union to
request a National Labor Relations Board certification election with respect to
any Employees.
3.19 Claims and Legal Actions. Except as disclosed on
Schedule 3.19 and except for any FCC rulemaking proceedings generally affecting
the television broadcasting industry and not particular to the Company, there
is no claim, legal action, counterclaim, suit, arbitration, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or to the knowledge of Seller or the Company threatened,
against or relating to the Company, the Assets, the business or operations of
the Station or the transactions contemplated by this Agreement, nor does Seller
or the Company 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 knowledge of Seller or the
Company, threatened (a) before the FCC relating to the business or operations
of the Station other than rule making proceedings that affect the television
industry generally, (b) before any federal or state agency relating to the
Company involving charges of illegal discrimination under any federal or state
employment laws or regulations, or (c) before any federal, state, or local
agency relating to the Company involving zoning issues under any federal,
state, or local zoning law, rule, or regulation.
3.20 Environmental Matters.
(a) To the best knowledge of Seller and
the Company after due inquiry, the Company has complied 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,
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claim, demand, or notice has been filed or commenced against the Company
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best knowledge of Seller and
the Company after due inquiry, the Company has no liability (and there is no
reasonable basis related to the Company's past or present operations,
properties, or facilities for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against the Company
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 knowledge of Seller and
the Company after due inquiry, the Company has no liability (and the Company
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 reasonably be expected to 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 the Company
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 knowledge of Seller and
the Company after due inquiry, the Company has no liability (and there is no
reasonable basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against the Company giving
rise to any such liability) under the Occupational Safety and Health Act, as
amended, or under any other law, rule, or regulation of any federal, state, or
local government (or agency thereof) concerning employee health and safety.
(e) To the best knowledge of Seller and
the Company after due inquiry, the Company has no liability (and the Company
has not exposed any employee to any substance or condition that could
reasonably be expected to 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 the Company giving rise
to any such liability) for any illness or personal injury to any employee.
(f) To the best knowledge of Seller and
the Company after due inquiry, the Company has obtained and been in material
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations that are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables that are contained in, all federal,
state, and local laws, rules, and regulations relating to public health and
safety, worker health and safety, and pollution or protection of the
environment.
(g) All properties and equipment of the
Company are and have been free of asbestos and asbestos-related products,
PCB's, methylene chloride, trichloroethylene, 1, 2-
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trans-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances (as defined in Section 302 of the Emergency Planning and Community
Right-to-Know Act).
(h) 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 the Company on any Real Property. To the best knowledge of Seller and the
Company after due inquiry, no pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released on any Real Property.
3.21 Compliance with Laws. The Company and Seller have
complied in all material respects with the Licenses and all federal, state and
local laws, rules, regulations and ordinances.
3.22 Conduct of Business in Ordinary Course. Since
January 19, 1996, the Company has conducted its business and operations only in
the ordinary course and, except as disclosed in Schedule 3.22, has not:
(a) suffered any material adverse change
in the business, assets, properties, financial condition or business prospects
of the Station;
(b) made any material increase in
compensation to become payable to any of its employees, or any bonus payment
made or promised to any of its employees or changed any other material term of
employment of any of its employees, or any material change in personnel
policies, employee benefits, or other compensation arrangements affecting its
employees;
(c) made any sale, assignment, lease, or
other transfer of assets other than in the ordinary course of business with
suitable replacements being obtained therefor;
(d) canceled any debts owed to or claims
held by the Company, except in the ordinary course of business;
(e) made any changes in any method of the
Company's accounting practice;
(f) suffered any material write-down of
the value of any Assets;
(g) made any distribution or payment in
respect of, nor effected any subdivision, consolidation, redemption,
reclassification, purchase or other recapitalization of, the partnership
interests of the Company, nor accelerated, terminated, modified or cancelled
any agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses) relating to the Company or the Station, nor has
any other party to any such agreement, contract, lease or license committed any
such act;
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<PAGE> 22
(h) experienced any material damage,
destruction or loss (whether or not covered by insurance) to its property;
(i) made any loan to or entered into any
other transaction with any of the officers or employees of the Company outside
the ordinary course of business;
(j) failed to make any capital or other
expenditure in connection with the normal maintenance, repair and replacement
of the assets and properties used in the operation of the Company and the
Station in accordance with past custom and practice;
(k) permitted to be imposed any material
Lien upon any of the assets or properties, tangible or intangible, of the
Company or the Station; or
(l) declared or authorized any of the
foregoing.
3.23 Transactions with Affiliates. Except as disclosed
in the Financial Statements, the Company has not been involved in any business
arrangement or relationship with any Affiliate of the Company, and no Affiliate
of the Company owns any property or right, tangible or intangible, that is used
or useful in the business or operations of the Station.
3.24 Broker. Neither Seller nor the Company nor any
Person acting on their behalf has any liability for any finders' or brokers'
fees or commissions in connection with the transactions contemplated by this
Agreement.
3.25 Full Disclosure. No representation or warranty made
by Seller or the Company in this Agreement or in any certificate, document, or
other instrument furnished or to be furnished by Seller or the Company pursuant
to this Agreement contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact that is required to make
any statement made herein or therein not misleading.
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 has the requisite corporate power and
authority to execute, deliver, and perform this Agreement and the documents
contemplated hereby according to their respective terms and to own the
Interests.
4.2 Authorization and Binding Obligation. The
execution, delivery and performance of this Agreement by Buyer have been duly
authorized by all necessary action on the part of Buyer. This Agreement has
been duly executed and delivered by Buyer and constitutes a legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
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<PAGE> 23
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 and Required
Consents. Subject to the receipt of 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): (a) do not
require the consent of any third party; (b) will not conflict with the Articles
of Incorporation or By-laws of Buyer; (c) will not conflict with, result in a
breach of, or constitute a default under, any applicable law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; and (d) 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.
4.4 Brokers. Neither Buyer nor any Person or entity
acting on its behalf has any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
4.5 Investment Purpose. Buyer is acquiring the
Interests for investment for its own account and not with a view to the sale or
distribution of any part thereof. Buyer has no present intention of selling,
granting participation in, or otherwise distributing the Interests (not
including collateral assignments or pledges of the Interests for financing
purposes).
4.6 Qualifications. To Buyer's and Seller's knowledge,
Buyer is legally qualified under the Communications Act and FCC rules,
regulations and policies to acquire control of the Station.
4.7 Full Disclosure. No representation or warranty made
by Buyer in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant to this Agreement contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact that is required to make any statement made herein or
therein not misleading.
4.8 Funds at Closing. Buyer has commitments for and
shall have available at the Closing funds sufficient to meet its obligation
pursuant to Section 2.3 hereof to pay Seller the Purchase Price.
SECTION 5. OPERATION OF THE STATION PRIOR TO CLOSING.
Seller covenants and agrees that, between the date hereof and the
Closing Date, the Company will conduct its business in the ordinary course in
accordance with past practices (except where such conduct would conflict with
the following covenants or with other
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<PAGE> 24
obligations of Seller or the Company under this Agreement), will use its
reasonable best efforts to take all actions and to do all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement (including satisfying the closing conditions set
forth in Section 7) and, except as contemplated by this Agreement or with the
prior written consent of Buyer, the Company will act in accordance with the
following:
5.1 Contracts. (a) The Company will not renew, extend,
amend or terminate any Material Contract (or waive any material right
thereunder) or enter into any contract or commitment or incur any obligation
(including obligations relating to the borrowing of money (other than pursuant
to the Loan Documents) or the guaranteeing of indebtedness and obligations
arising from the amendment of any existing Contract, regardless of whether such
Contract is a Material Contract) that will be binding on the Company after
Closing, except for (a) cash time sales agreements made in the ordinary course
of business at rates consistent with the Company's past practices and that are
cancelable by the Station without penalty on not more than 30-days' written
notice, and (b) other contracts entered into in the ordinary course of business
consistent with the Company's past practices that do not involve consideration,
in the aggregate, in excess of $15,000 measured at 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 and shall make available
to Buyer copies of such Contracts.
(b) Seller will not commit or omit to take any act that will
cause a termination of or material breach or default under any Material
Contract.
5.2 Compensation. Except in the ordinary course of
business or as required by law, Seller shall not, and shall cause the Company
not to, (i) enter into, become subject to or amend or modify any existing
employment, labor, union, or professional service Contract not terminable at
will, or any bonus, pension, insurance, profit sharing, incentive, deferred
compensation, severance pay, retirement, hospitalization, employee benefit, or
other similar plan or (ii) increase the compensation, bonuses, or other
benefits payable or to be payable to any Employee or person employed in
connection with the conduct of the business or operations of the Station,
except in accordance with past practices as described on Schedule 3.17.
5.3 Encumbrances. The Company will not create, assume,
or permit to exist any Lien affecting any of its assets or the Assets, except
for those disclosed in Schedule 3.11 and liens for current taxes not yet due
and payable.
5.4 Dispositions. The Company will not sell, assign,
lease, or otherwise transfer or dispose of any of its assets or the Assets
except where no longer used in the business or operations of the Station (in
which case the sale proceeds in respect of such assets shall be held for the
benefit of Buyer) or in connection with the acquisition of replacement property
of equivalent kind and value.
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<PAGE> 25
5.5 Mergers. The Company will not reorganize, liquidate
or merge or consolidate with any other entity or agree to do any of the
foregoing.
5.6 Access to Information. Seller will give to Buyer
and its counsel, accountants, engineers, and other authorized representatives
full access at all reasonable times to the Station and all books, records, and
documents of the Company, and will furnish or cause to be furnished to Buyer
and its authorized representatives all information relating to the Company that
they reasonably request (including any financial reports and operations reports
produced with respect to the Station). Without limiting the generality of the
foregoing, Seller shall give Buyer and its counsel, accountants and other
authorized representatives full access at all reasonable times to the Company's
financial records and the Company'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.
5.7 Insurance. The Company shall maintain in full force
and effect policies of insurance of the same type, character, and coverage as
the policies currently carried with respect to the business, operations, and
assets of the Company.
5.8 Indebtedness and Obligations. The Company shall not
increase the amount of indebtedness owed to Paxson-47 pursuant to the Loan
Documents as of the date hereof or incur any other indebtedness for borrowed
money. The Company shall pay all of its obligations (including, without
limitation, under the Loan Documents) as they become due so that all such
obligations shall be current as of the Closing Date.
5.9 Amendments. The Company shall not amend, change, or
modify its Certificate of Limited Partnership or Limited Partnership Agreement
or any organizational or governing documents relating thereto.
5.10 Interests. Seller shall not, nor shall it agree to,
(a) sell or otherwise dispose of any of the Interests; (b) permit the Company
to acquire (through redemption or otherwise) any of the Interests; (c) grant
any options, warrants, or other rights to acquire any of the Interests; or (d)
permit the Company to issue, sell or otherwise dispose of any options, bonds,
notes, other securities or any other interests in the Company (including any
limited partnership interests).
5.11 Licenses. Neither Seller nor the Company shall
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 reasonably
be expected to cause the FCC or any other governmental authority to institute
proceedings for the suspension, revocation, non-renewal or material adverse
modification of any of the Licenses. Seller and the Company shall prosecute
with due diligence any applications to any governmental authority necessary for
the operation or
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<PAGE> 26
modification of the Station. Seller and the Company shall not cause, by any
act or failure to act, any cable system located in the Area of Dominant
Influence of the Station to refuse to carry the Station's signal. Seller and
the Company shall cooperate with Buyer and use its best efforts to cause the
cable systems listed on Schedule 5.11 to carry the Station's signal as soon as
practicable but in no event later than the Closing Date.
5.12 No Inconsistent Action. Neither Seller nor the
Company shall take any action that is inconsistent with its obligations under
this Agreement in any material respect or that could reasonably be expected to
hinder or delay the consummation of the transactions contemplated by this
Agreement. Neither Seller, the Company, nor any of their respective
representatives or agents shall, directly or indirectly, solicit, initiate, or
participate in any way in discussions or negotiations with, or provide any
confidential information to, any Person (other than Buyer or any Affiliate of
Buyer and its representatives and agents) concerning any possible disposition
of the Station, the sale of any material assets of the Station, or any similar
transaction. Seller will notify Buyer promptly if any Person makes any
proposal, offer, inquiry or contact with respect to any of the foregoing.
5.13 Maintenance of Assets. The Company shall maintain
all of the Assets in good condition (ordinary wear and tear excepted),
consistent with their overall condition on the date of this Agreement, and use,
operate and maintain all of the Assets in a reasonable manner. The Company
shall maintain inventories of spare parts and expendable supplies at levels
consistent with past practices. If any insured or indemnified loss, damage,
impairment, confiscation, or condemnation of or to any of the Assets occurs,
the Company shall repair, replace, or restore the Assets to their prior
condition as represented in this Agreement as soon thereafter as possible, and
the Company shall use the proceeds of any claim under any property damage
insurance policy or other recovery solely to repair, replace, or restore any of
the Assets that are lost, damaged, impaired, or destroyed.
5.14 Consents. Seller and the Company shall use their
respective best efforts to obtain all Consents and the estoppel certificates
described in Section 8.2(i), without any change in the terms or conditions of
any Contract or License. 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 and the Company shall cooperate with Buyer and use their best
efforts to obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's lenders may request.
5.15 Books and Records. The Company shall maintain its
books and records in accordance with past practices.
5.16 Notification. Seller and the Company shall promptly
notify Buyer in writing of any unusual or material developments with respect to
the business or operations of the Company or the ability of Seller or the
Company to consummate the transactions contemplated by this Agreement and of
any material change in any of the information
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<PAGE> 27
contained in the representations and warranties contained in Section 3 of this
Agreement. No such notice will be deemed to have amended the Schedules to this
Agreement, to have qualified the representations and warranties contained
herein or to have cured any misrepresentation or breach of warranty that
otherwise might have existed hereunder by reason of such development.
5.17 Financial Information. Seller and the Company shall
furnish to Buyer such financial information concerning the business and
operations of the Station (including information on payables and receivables)
as Buyer may reasonably request.
5.18 Compliance with Laws. The Company shall comply in
all material respects with the Licenses and all federal, state and local laws,
rules, regulations and ordinances.
5.19 Preservation of Business. Subject to the Time
Brokerage Agreement, the Company shall use its best efforts to preserve the
business and organization of the Station and to keep available to the Station
its Employees and to preserve the audience of the Station and the Station's
present relationships with suppliers, advertisers, and others having business
relations with them, to the end that the business, operations, and prospects of
the Station shall be preserved at the Closing Date.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.
6.1 FCC Consent.
(a) The sale of the Interests as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC.
(b) Seller and Buyer shall prepare and
within seven (7) business days after the date of this Agreement shall file with
the FCC appropriate applications for FCC Consent. The parties shall thereafter
prosecute the applications with all reasonable diligence and otherwise use
their respective best efforts to obtain grants 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 (i) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by that
party of any of its representations, warranties, or covenants hereunder, and
(ii) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any petitions to deny or other objections
filed with respect to the applications for the FCC Consent and any requests for
reconsideration or judicial review of the FCC Consent.
(c) If the Closing shall not have occurred
for any reason within the original effective period of the FCC Consent, and
neither Seller nor Buyer 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 effective period of the FCC Consent shall
limit the exercise by either party of its right to terminate the Agreement
under Section 9.
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<PAGE> 28
6.2 Risk of Loss.
(a) The risk of any loss, damage,
impairment, confiscation, or condemnation of the assets of the Company from any
cause whatsoever shall be borne by Seller at all times prior to the Closing.
In the event of such loss or damage prior to the Closing Date, Seller shall use
reasonable commercial efforts to restore, replace or repair the damaged Assets
in accordance with Seller's past practices at Seller's sole cost and expense.
In the event such loss or damage shall not be restored, replaced, or repaired
as of the Closing Date, Buyer shall proceed with the Closing and receive at
Closing a reduction of the Purchase Price in an amount which, net of any
insurance proceeds paid by Seller to Buyer, or the value of any rights to
receive insurance proceeds which are assigned by Seller to Buyer, is sufficient
to pay for such restoration, replacement or repair. In the event that any such
loss or damage shall not be restored, replaced or repaired as of the Closing
Date, Seller may defer the Closing Date until such restorations, replacements
or repairs are made, so long as such restorations, replacements or repairs are
made within thirty (30) days after the date the Closing would have occurred in
the absence of such loss or damage.
(b) If any damage or destruction of the
Assets or any other event occurs which (i) causes the Station to cease
broadcasting operations for a period of three or more days or (ii) prevents in
any material respect signal transmission by the Station in the ordinary course
and Seller fails to restore or replace the Assets so that normal and usual
transmission is resumed within seven days of the damage, destruction or other
event, Buyer, in its sole discretion, may (x) terminate this Agreement
forthwith without any further obligations hereunder upon written notice to
Seller, in which event all funds held by the Escrow Agent pursuant to the
Escrow Agreement, including all interest and other proceeds from the investment
of such funds, shall be immediately returned to Buyer, or (y) proceed to
consummate the transaction contemplated by this Agreement and complete the
restoration and replacement of the Assets after the Closing Date, in which
event Seller shall deliver to Buyer all insurance proceeds received in
connection with such damage, destruction or other event.
6.3 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, 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 and documents obtained by such party from the other
party in connection with the transactions contemplated by this Agreement.
6.4 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. Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their commercially reasonable efforts to
consummate the transaction contemplated hereby and to fulfill their obligations
under this Agreement.
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<PAGE> 29
6.5 Control of the Station. Prior to Closing, Buyer
shall not, directly or indirectly, control, supervise, or direct, or attempt to
control, supervise or direct the operations of the Station; such operations,
including complete control and supervision of all of the Station's programs,
Employees, and policies, shall be the sole responsibility of Seller and the
Company.
6.6 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.
6.7 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 study discloses any material
deficiencies in the operations or equipment of the Station, Buyer shall so
notify Seller as soon as practicable.
6.8 Appraisal. Buyer and Seller agree to allocate the
Purchase Price for tax and recording purposes in accordance with an appraisal
to be conducted by a mutually acceptable appraisal firm paid for by Buyer with
experience in the valuation and appraisal of television station assets.
6.9 Public Announcements. Seller and Buyer shall
consult with each other before making any further public statements with
respect to this Agreement or the transactions contemplated herein and shall not
issue any such press release or make any such public statement without the
prior written consent of the other party, which shall not be unreasonably
withheld, conditioned or delayed; provided, however, that a party may, without
the prior consultation with or written consent of the other party, issue such
press release or make such public statement as may be required by Law or any
listing agreement with a national securities exchange to which Seller or Buyer
(or any affiliate of Seller or Buyer) is a party if it has used all reasonable
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.
7.1 Conditions to Obligations of Buyer. All obligations
of Buyer at the Closing hereunder are subject 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 and the Company 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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<PAGE> 30
(b) Covenants and Conditions. Seller and
the Company shall have performed and complied in all material respects with all
covenants, agreements, and conditions required by this Agreement to be
performed or complied with by them prior to or on the Closing Date.
(c) Consents. All Consents shall have
been obtained and delivered to Buyer (other than any Consent required under any
Contract listed on Schedule 3.9 that is not a Material Contract) without any
adverse change in the terms or conditions of any Contract or any License.
(d) Governmental Authorizations. The
Company shall be the holder of the FCC Licenses and there shall not have been
any modification of any License that could have an adverse effect on the
Licenses or the Station or the conduct of its business and operations. No
proceeding shall be pending or threatened the effect of which could be to
revoke, cancel, fail to renew, suspend, or modify adversely any FCC License.
(e) Deliveries. Seller shall have made or
stand willing to make all the deliveries to Buyer described in Section 8.2.
(f) Adverse Change. Between the date of
this Agreement and the Closing Date, there shall have been no material adverse
change in the Assets as a result of actions taken or omitted by the Company.
(g) Release from Lender. Buyer shall
have paid the balance due or have assumed all of the obligations owed to
Paxson-47 pursuant to the Loan Documents. In addition, Buyer shall have
obtained from Paxson-47 any and all documentation required to release Seller,
the Company and Roberts-Co. from any liability under the terms of the Loan
Documents.
(h) Time Brokerage Agreement. The Time
Brokerage Agreement shall be in full force and effect, and the Company shall
have complied in all material respects with its obligations thereunder.
(i) 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 and the Company
shall have complied with any conditions imposed on them by the FCC Consent, and
the FCC Consent shall have become a Final Order.
(j) Seller Affidavit. Seller shall have
delivered an affidavit to Buyer, dated as of the Closing Date, that is
satisfactory to the Buyer and which satisfies the requirements of Treasury
Regulation Section 1.1445-2(b).
(k) Legal Proceedings. No court or
quasi-judicial or administrative agency of competent jurisdiction shall have
issued any injunction, judgment, order, decree, ruling or
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<PAGE> 31
charge, and there shall not be any law, statute or other legal restraint which
would prevent or prohibit consummation of any of the transactions contemplated
by this Agreement.
7.2 Conditions to Obligations of Seller. All
obligations of Seller at the Closing hereunder 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 described in Section 8.3.
(d) FCC Consent. The FCC Consent shall
have been granted without the imposition on Seller or the Company of any
conditions that need not be complied with by Seller or the Company 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.
(1) Except as provided below
in this Section 8.1(a) or as otherwise agreed to in writing by Buyer and
Seller, the Closing shall take place at 10:00 a.m. on a date, to be set by
Buyer on at least five days' written notice to Seller, which shall be not
earlier than the first business day after the FCC Consent is granted and not
later than ten business days following the date upon which the FCC Consent has
become a Final Order.
(2) Except as provided below
in this Section 8.1(a), if Buyer fails to specify the date for Closing pursuant
to the preceding sentence prior to the fifth business day after the date upon
which the FCC Consent has become a Final Order, the Closing shall take place on
the tenth business day after the date upon which the FCC Consent has become a
Final Order.
(b) Closing Place. The Closing shall be
held at the offices of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire
Avenue, N.W., Suite 800, Washington, D.C., 20036 or any other place that is
agreed upon by Buyer and Seller.
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<PAGE> 32
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) Interests. Certificates representing
all of the Interests, accompanied by partnership interest powers duly executed
in favor of Buyer;
(b) Resignations. Written resignations,
effective on the Closing Date, of all of the officers of the Company, if any;
(c) Partnership Certificate. A copy of
the Certificate of Limited Partnership of the Company, certified as of a date
not earlier than ten days prior to the Closing Date by the Secretary of State
of Delaware;
(d) Partnership Agreement. A copy of the
Limited Partnership Agreement of the Company certified, as of the Closing Date,
by the Secretary of Seller;
(e) Resolutions. Copies of resolutions
adopted by the Seller and the Company, authorizing and approving the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, certified by a member of the Company and the
Secretary of Seller, respectively, as being true and complete on the Closing
Date;
(f) Partnership, Financial, Tax and
Business Records. All partnership records (including minute books), and
financial, tax and business records of the Company copies of which may be
retained by Seller;
(g) Licenses, Contracts, Business Records,
Etc. Originals of all Licenses, including any modifications and amendments
thereto, and all applications, reports, technical information and engineering
studies relating to the Station and all files required to be maintained by the
FCC, all Contracts, and other operational data or other information maintained
by the Company in the ordinary course;
(h) Consents. Original manually executed
instruments evidencing Consents necessary to effect valid assignments to Buyer
of all of the Material Contracts and any other consents Seller shall have been
able to obtain;
(i) Estoppel Certificates. If so
requested by Buyer, estoppel certificates of the lessors of all leasehold and
subleasehold interests included in the Real Property Interests satisfactory to
Buyer in all material respects;
(j) Officer's Certificate. A certificate,
dated as of the Closing Date, executed on behalf of Seller and the Company by a
member of the Company and the Secretary of Seller certifying: (1) that the
representations and warranties of Seller and the Company contained in this
Agreement are true and complete in all material respects as of the Closing
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<PAGE> 33
Date as though made on and as of that date; and (2) that Seller and the Company
have in all material respects performed and complied with all of their
obligations, covenants, and agreements in this Agreement to be performed and
complied with on or prior to the Closing Date;
(k) Opinions of Counsel. Opinions of
Seller's and the Company's counsel and communications counsel dated as of the
Closing Date, in such form as the parties shall agree;
(l) Lenders' Certificates. Such
certificates and confirmations to Buyer's lenders as Buyer may reasonably
request in connection with obtaining financing for the performance of its
payment obligations hereunder;
(m) Other Documents. Such other documents
to be delivered by Seller hereunder as are reasonably necessary for Buyer,
Seller and the Company to effectuate and document the transactions contemplated
hereby.
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) Closing Payments. The Purchase Price
described in Section 2.3(a);
(b) Resolutions. Copies of resolutions
adopted by the Board of Directors of Buyer, authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby, certified by its Secretary as being true and correct on
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 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.
SECTION 9. TERMINATION.
9.1 Termination by Seller. This Agreement may be
terminated by Seller and the purchase and sale of the Interests abandoned, if
Seller is not then in material default under this Agreement, upon written notice
to Buyer, upon the occurrence of any of the following:
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<PAGE> 34
(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 has not been satisfied or
waived in writing by Seller.
(b) Upset Date. If the Closing shall not
have occurred on or prior to February 1, 1998.
(c) Breach. Without limiting Seller's
rights under the other provisions of this Section 9.1, if Buyer has failed to
cure any material breach of any of its representations, warranties or covenants
under this Agreement within fifteen days after Buyer receives 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 Interests abandoned, if
Buyer is not then in material default under this Agreement, 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 has not been satisfied or
waived in writing by Buyer.
(b) Upset Date. If the Closing shall not
have occurred on or prior to February 1, 1998.
(c) Interruption of Service. In the event
that Buyer has given written notice to Seller in accordance with Section 6.2(b)
hereof.
(d) 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 receives written notice
of such breach from Buyer.
(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 6.6, within 30 days prior to the
Closing Date, and the cause thereof shall not have been remedied by Seller or
the Company 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 6.7,
within 30 days prior to the Closing Date, and the cause thereof shall not have
been remedied by Seller or the Company prior to the Closing Date.
(g) Other Agreements. Without limiting
Buyer's rights under the other provisions of this Section 9.2, if the Company
shall have terminated the Time Brokerage
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<PAGE> 35
Agreement or failed to perform in any material respect its obligations
thereunder, or if an Event of Default (as defined in the Loan Agreement
included in the Loan Documents) shall have occurred or if Roberts-Co shall have
failed to perform in any material respect its obligations under the Option
Agreement.
9.3 Escrow Deposit. Simultaneously with the execution
and delivery of this Agreement, Buyer has deposited with the Escrow Agent One
Hundred Thousand Dollars ($100,000) (the "ESCROW DEPOSIT") in accordance with
an Escrow Agreement among Buyer, Seller and the Escrow Agent. All funds and
documents deposited with or otherwise held by the Escrow Agent shall be held
and disbursed in accordance with the terms of the Escrow Agreement and the
following provisions:
(a) At the Closing, Buyer and Seller shall
jointly instruct the Escrow Agent to disburse all funds and documents held by
the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, to or at
the direction of Buyer.
(b) If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and Buyer is not in material breach of
this Agreement, Buyer and Seller shall jointly instruct the Escrow Agent to
disburse all funds and documents held by the Escrow Agent pursuant to the
Escrow Agreement, including any interest or other proceeds from the investment
of funds held by the Escrow Agent, to or at the direction of Buyer.
(c) If this Agreement is terminated by
Seller due to Buyer's material breach of this Agreement, then Buyer and Seller
shall jointly instruct the Escrow Agent to disburse the Escrow Deposit to or at
the direction of Seller, and to disburse all other funds held by the Escrow
Agent pursuant to the Escrow Agreement, including any interest or other
proceeds from the investment of funds held by the Escrow Agent, to or at the
direction of Buyer.
9.4 Rights on Termination. If this Agreement is
terminated by Seller and Section 9.3(c) applies, then the payment to Seller
pursuant to Section 9.3(c) shall be liquidated damages and shall constitute
full payment and the exclusive remedy for any damages suffered by Seller by
reason of Buyer's breach of this Agreement. Seller and Buyer agree in advance
that actual damages would be difficult to ascertain and that the amount of the
payment to be made to Seller pursuant to Section 9.3(c) is a fair and equitable
amount to reimburse Seller and the Company for damages sustained due to Buyer's
material breach of this Agreement. If this Agreement is terminated by Buyer
pursuant to Section 9.2 or otherwise due to Seller's or the Company's material
breach of any provision of this Agreement, Buyer shall have all rights and
remedies available at law or equity. In the event this Agreement is terminated
as provided in this Section 9, this Agreement shall be deemed null, void and of
no further force or effect, and the parties hereto shall be released from all
future obligations hereunder with respect to the Stations affected by such
termination; provided, however, that the obligations of Buyer and Seller as
provided in Sections 6.3, 9.3, 9.4 and 9.6 shall survive such termination.
- 30 -
<PAGE> 36
9.5 Specific Performance. The parties recognize that if
Seller or the Company 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, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller and the Company shall waive the defense that
there is an adequate remedy at law.
9.6 Attorneys' Fees. In the event of a default by
either party that results in a lawsuit or other proceeding for any remedy
available under this Agreement, the prevailing party shall be entitled to
reimbursement from the other party of its reasonable legal fees and expenses
(whether incurred in arbitration, at trial, or on appeal).
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES.
10.1 Survival. Without prejudice to representations and
warranties in other agreements delivered hereunder, all representations and
warranties of Buyer, Seller and the Company herein and all covenants of Buyer,
Seller and the Company herein with respect to periods prior to Closing shall be
deemed continuing representations, warranties and covenants, and shall survive
the Closing for a period of six months following the Closing Date. 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 either party shall
affect the other party's right to rely on any representation, warranty, or
covenant made by such party or relieve such party of any obligations under this
Agreement as the result of a breach of any of its representations and
warranties.
10.2 Indemnification by Seller. After the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, but subject to Section 10.5, Seller hereby
agrees to indemnify and hold Buyer, its Affiliates, and their respective
stockholders, officers, directors, employees and agents harmless against and
with respect to, and shall reimburse Buyer, provided, however, that Seller will
not have any obligation to indemnify the Buyer from and against any of the
following except to the extent the Buyer has suffered losses which, in the
aggregate, exceed $25,000, for:
(a) any and all losses, expenses,
liabilities, or damages resulting from, arising out of or caused by any untrue
representation, breach of warranty, or nonfulfillment of any covenant by Seller
contained herein or in any certificate, document, or instrument delivered to
Buyer hereunder;
(b) any and all losses, liabilities, or
damages resulting from any liability or obligation of the Company in existence
as of the Closing and not permitted by Section 2.2(a);
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<PAGE> 37
(c) any and all losses, liabilities, or
damages, contingent or otherwise, resulting from the operation or ownership of
the Station prior to the Closing Date, including any liabilities arising under
the Licenses or the Contracts identified in Schedule 2.2(a) which relate to
events occurring prior to the Closing Date;
(d) (i) all Taxes imposed on or incurred
by the Seller, and (ii) all Taxes imposed on or incurred by the Company for
taxable periods ending on or before the Closing Date. Taxes for a taxable
period that does not end on or before the Closing Date shall be allocated on a
daily basis to the pre- and post-Closing Date periods as if such taxable period
consisted of two periods, the first ending on the Closing Date and the second
commencing on the day after the Closing Date. Seller shall be responsible for
and shall indemnify the Buyer and the Company against Taxes allocated to the
pre-Closing Date period; and
(e) any and all out-of-pocket costs and
expenses, including reasonable legal fees and expenses, incident to any action,
suit, proceeding, claim, demand, assessment, or judgment incident to the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the
Closing, Buyer hereby agrees to indemnify and hold Seller harmless against and
with respect to, and shall reimburse Seller, provided, however, that Buyer will
not have any obligation to indemnify Seller from and against any of the
following except to the extent the Seller has suffered losses which, in the
aggregate, exceed $25,000, 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 herein or in any certificate,
document, or instrument delivered to Seller hereunder; and
(b) any and all losses, liabilities, or
damages, contingent or otherwise, resulting from the operation or ownership of
the Station on and after the Closing.; and
(c) any and all out-of-pocket costs and
expenses, including reasonable legal fees and expenses, incident to any action,
suit, proceeding, claim, demand, assessment, or judgment incident to the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification
(the "CLAIMANT") shall promptly give notice to the party from which
indemnification is claimed (the "INDEMNIFYING PARTY") of any claim, whether
between the parties or brought by a third party, specifying in reasonable
detail the factual basis for the claim. If the claim relates to an action,
suit, or proceeding filed by a third party against Claimant, such notice shall
be given by Claimant within five business days after written notice of such
action, suit, or proceeding was given to Claimant.
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<PAGE> 38
(b) With respect to claims solely between
the parties, following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the
Indemnifying Party and its authorized representatives the information relied
upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of the thirty-day period
(or any mutually agreed upon extension thereof) to the validity and amount of
such claim, the Indemnifying Party shall immediately pay to the Claimant the
full amount of the claim. If the Claimant and the Indemnifying Party do not
agree within the thirty-day period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate remedy at law or equity 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
in good faith 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 Section 10.2 and Section 10.3 shall extend to the partners, officers,
employees, and representatives of any Claimant although for the purpose of the
procedures set forth in this Section 10.4, any indemnification claims by such
parties shall be made by and through the Claimant.
10.5 Certain Limitations. Notwithstanding anything in
this Agreement to the contrary, neither party shall indemnify or otherwise be
liable to the other party with respect to any claim for any breach of a
representation or warranty, or for the breach of any covenant contained in
Section 5 of this Agreement, unless notice of the claim is given within six
months after the Closing Date.
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<PAGE> 39
SECTION 11. MISCELLANEOUS.
11.1 Fees and Expenses. Seller shall pay any filing fees,
transfer taxes, document stamps, or other charges levied by any governmental
entity on account of the transfer of the Interests from Seller to Buyer. Buyer
and Seller shall each pay one-half of any filing fees charged by the FCC in
connection with obtaining the FCC Consent. Except as otherwise provided in
this Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement, including all fees and expenses of counsel, accountants, agents, and
representatives, and each party shall be responsible for all fees or
commissions payable to any finder, broker, advisor, or similar Person retained
by or on behalf of such party.
11.2 Notices. All notices, demands, and requests
required or permitted to be given under the provisions of this Agreement shall
be in writing and shall be addressed as follows:
If to Buyer: DP Media, Inc.
500 Australian Avenue South
Suite 501
West Palm Beach, FL 33401
Attention: Mr. Devon Paxson
with copies (which shall not Skadden, Arps, Slate, Meagher & Flom
constitute notice) to: 1440 New York Avenue, NW
Washington, DC 20005
Attention: John C. Quale, Esq.
If to Seller or the Company: Roberts Broadcasting, L.L.C.
1408 N. Kingshighway Blvd.
Suite 300
St. Louis, MO 63113
Attention: Messrs. Michael
and Steven Roberts
with a copy (which shall not Armstrong, Teasdale, Schlafly & Davis
constitute notice) to: One Metropolitan Square, Suite 2600
St. Louis, Missouri 63102-2740
Attention: Joseph S. von Kaenel
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2. A notice mailed by registered or certified mail, postage prepaid and
return receipt requested, shall be deemed to have been duly delivered and
received on the date of receipt shown on the return receipt.
11.3 Benefit and Binding Effect. No party hereto may
assign this Agreement without the prior written consent of the other parties
hereto, except that Buyer may assign its rights
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<PAGE> 40
under this Agreement, in whole or in part, without the consent of Seller or the
Company to any Person which it controls, and Buyer may collaterally assign its
rights and obligations hereunder to its lenders without obtaining the consent
of Seller or the Company. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
11.4 Further Assurances. The parties shall take any
actions and execute any other documents that may be necessary or desirable to
the implementation and consummation of this Agreement or in order to fully
effectuate the purposes, terms and conditions of this Agreement (including,
without limitation, executing, delivering and filing or causing to be executed,
delivered and filed such further documents and instruments and obtaining such
consents (including governmental approvals), as may be necessary or reasonably
requested in connection with the consummation of the transactions contemplated
hereby). In case at any time after the Closing Date any further action is
necessary to carry out the purposes of this Agreement, including, without
limitation, the securing of consents of third parties, each party hereto shall
use its best efforts to take all such necessary action.
11.5 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).
11.6 Headings. The headings herein are included for ease
of reference only and shall not control or affect the meaning or construction
of the provisions of this Agreement.
11.7 Entire Agreement. This Agreement, the schedules,
hereto, and all documents, certificates, and other documents to be delivered by
the parties pursuant hereto, collectively represent the entire understanding
and agreement between Buyer and Seller with respect to the subject matter of
this Agreement. This Agreement supersedes all prior negotiations among the
parties, including, without limitation, the letter of intent dated January 2,
1997, among the parties hereto, and cannot be amended, supplemented, or changed
except by an agreement in writing that makes specific reference to this
Agreement and that is signed by the party against which enforcement of any such
amendment, supplement, or modification is sought. The parties hereto
acknowledge that no representations or warranties have been made with respect
to matters relating to the transactions contemplated by this Agreement other
than as expressly set forth in this Agreement.
11.8 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any obligation, representation, warranty, covenant, agreement, or condition
herein may be waived by the party entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits
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<PAGE> 41
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 11.8. No delay or failure on the part of any
party hereto in exercising any right, power or privilege under this Agreement
or under any other instrument or document given in connection with or pursuant
to this Agreement shall impair any such right, power or privilege or be
construed as a waiver of any default or any acquiescence therein. No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege, or the exercise of any
other right, power or privilege.
11.9 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.
11.10 Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signature on each counterpart were
upon the same instrument.
11.11 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
11.12 No Third-Party Beneficiaries. This Agreement will
not confer any rights or remedies upon any Person other than Seller, the
Company and Buyer and their respective successors and permitted assigns.
11.13 Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent and no rule of strict construction will be applied against any party.
The use of the word "including" in this Agreement means "including without
limitation" and is intended by the parties to be by way of example rather than
limitation.
11.14 Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 42
IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of Buyer, Seller and the Company as of the date first
written above.
DP MEDIA, INC.
By: /s/ Devon Paxson
--------------------------------
Devon Paxson
Title:
ROBERTS BROADCASTING, L.L.C.
By: /s/ Michael V. Roberts
---------------------------------
Michael V. Roberts, Member
By: /s/ Steven C. Roberts
----------------------------------
Steven C. Roberts, Member
ROBERTS BROADCASTING, L.P.
By: /s/ Michael V. Roberts
---------------------------------
Michael V. Roberts, Member
By: /s/ Steven C. Roberts
----------------------------------
Steven C. Roberts, Member
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<PAGE> 1
EXHIBIT 10.151
- --------------------------------------------------------------------------------
OPTION PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
RALEIGH DURHAM-47, INC.
AND
DP MEDIA, INC.
* * *
FEBRUARY 14, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
OPTION PURCHASE AGREEMENT
This OPTION PURCHASE AGREEMENT is made as of February __, 1997, by and
between Paxson Communications of Raleigh Durham-47, Inc., a Florida corporation
("Seller"), and DP Media, Inc., a Florida corporation ("Buyer").
RECITALS
A. Seller, Roberts Broadcasting Company of North Carolina
("Roberts"), and Roberts Broadcasting Company of Raleigh-Durham, L.P. (the
"Company") are parties to an Option Agreement dated October 31, 1995, as
amended by that Amendment to Option Agreement dated as of January 19, 1996 (as
amended, the "Option Agreement"), pursuant to which Roberts granted to Seller
an exclusive and irrevocable option (the "Option") to purchase all of the
limited partnership interests held by Roberts in the Company.
B. Buyer and Seller have agreed that Seller shall convey to Buyer
the Option on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the above and of the mutual
promises and covenants contained herein, and other good and valuable
consideration, the parties, intending to be legally bound, agree as follows:
1. Assignment of Option. Seller hereby grants, sells, assigns
and transfers to Buyer all of its right, title and interest to the Option set
forth in the Option Agreement, subject to the terms and conditions hereof.
2. Acceptance. Buyer hereby accepts the assignment of all of
Seller's right, title and interest to the Option set forth in the Option
Agreement and hereby agrees to assume all of Seller's obligations thereunder,
subject to the terms and conditions hereof.
3. Purchase Price. In consideration for the assignment by Seller
of its right, title and interest to the Option set forth in the Option
Agreement, Buyer shall pay Seller $1,500,000 (the "Purchase Price") upon the
Closing described in Section 3.1 of the Option Agreement. On the date hereof,
Seller has provided to Buyer its firm commitment to lend to Buyer up to
$10,000,000 (the "Loan") to be used by Buyer to pay, among other things, the
Purchase Price. Buyer shall pay the Purchase Price upon the Closing by the
delivery of Buyer's promissory note evidencing the Loan.
4. Unwind. The assignment by Seller of its right, title and
interest in and to the Option set forth in the Option Agreement to Buyer shall
be automatically rescinded, all right, title and interest of Seller in and to
the Option set forth in the Option Agreement shall be automatically returned to
Seller, and this Agreement shall be automatically terminated if the Partnership
Interest Purchase Agreement dated as of the date hereof by and among Buyer,
Roberts Broadcasting, L.L.C. and the Company is terminated for any reason
whatsoever.
<PAGE> 3
- 2 -
5. Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer as follows:
(a) Organization, Standing, Authority, Ownership. Seller
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Florida and has the requisite corporate power and
authority to execute, deliver, and perform this Agreement in accordance with
its terms.
(b) Authorization and Binding Obligation. The execution,
delivery and performance of this Agreement by Seller have been duly authorized
by all necessary corporate action on the part of Seller. This Agreement has
been duly executed and delivered by Seller and constitutes a legal, valid, and
binding obligation of Seller, enforceable against Seller in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
(c) Absence of Conflicting Agreements. Subject to the
receipt of the consent of Seller's lenders, the execution, delivery and
performance by Seller 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 By-laws of Seller; (iii) will not conflict with,
result in a breach of, or constitute a default under, any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; and (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license or permit to which
Seller is a party or by which Seller may be bound.
(d) Ownership of the Option. Seller is the lawful owner
of the Option free and clear of all liens, security interests, claims or
encumbrances of any nature whatsoever, other than liens granted by Seller to
its lenders, and has the right under the Option Agreement to transfer the
Option to Buyer. The Option Agreement is in full force and effect.
(e) Litigation. There are no claims, disputes, actions,
proceedings, suits, arbitrations or investigations pending or to Seller's
knowledge, threatened, relating to the Option or the Option Agreement.
<PAGE> 4
- 3 -
6. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Seller as follows:
(a) Organization, Standing Authority and Ownership.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida and has the requisite corporate power
and authority to execute, deliver, and perform this Agreement in accordance
with its terms.
(b) Authorization and Binding Obligation. The execution,
delivery and performance of this Agreement by Buyer have been duly authorized
by all necessary corporate action on the part of Buyer. This Agreement has
been duly executed and delivered by Buyer and constitutes a legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
(c) Absence of Conflicting Agreements. The execution,
delivery and performance by Buyer of this Agreement (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
By-laws of Buyer; (iii) will not conflict with, result in a breach of, or
constitute a default under, any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in 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.
7. Miscellaneous.
(a) Attorneys' Fees. In the event either party files a
lawsuit or institutes other formal proceedings (including arbitration) for any
remedy available under this Agreement, the prevailing party shall be entitled
to be reimbursed by the other party for all reasonable expenses incurred
hereby, including reasonable attorneys fees.
(b) Fees and Expenses. Except as provided in Subsection
(a) of this Section, each party shall pay its own expenses incurred in
connection with the authorization, preparation, execution and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents
and representatives. Each party shall be responsible for all fees or
commissions payable to any other finder, broker, advisor, or similar person
retained by or on behalf of such party.
<PAGE> 5
- 4 -
(c) Notices. All notices, demands, and requests required
or permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Buyer: Devon Paxson
DP Media, Inc.
500 Australian Avenue South
Suite 501
West Palm Beach, FL 33401
With a copy to: John C. Quale, Esq.
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue, NW
Washington, DC 20005
If to Seller: Lowell W. Paxson, Chairman
Paxson Communications of
Raleigh Durham-47, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
6(c).
(d) Benefit and Binding Effect. Neither party hereto may
assign this Agreement without the prior written consent of the other party
hereto; provided, that Buyer may assign this Agreement to any entity controlled
by Buyer. Subject to the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(e) 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.
<PAGE> 6
- 5 -
(f) 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).
(g) 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.
(h) 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.
(i) Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof. This Agreement supersedes all prior and
contemporaneous 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.
(j) 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.
(k) Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signature on each counterpart were
upon the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
PAXSON COMMUNICATIONS OF
RALEIGH DURHAM-47, INC.
By:
------------------------------------
Name:
Title:
DP MEDIA, INC.
By:
------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.152
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT is entered into as of this 13th day of
February, 1996, by and among Channel 43 of Battle Creek, Inc., a Florida
corporation ("Channel 43"), Western Michigan Christian Broadcasting, Inc., a
Michigan corporation ("WMCB"), Western Michigan Family Broadcasting, Inc., a
Michigan corporation ("WMFB"), Horizon Broadcasting Corporation, a Delaware
corporation ("Horizon"), William B. Popjes, an individual ("Popjes"), and
Paxson Communications of Battle Creek-43, Inc., a Florida corporation
("Paxson-43")
RECITALS
A. WHEREAS, Channel 43, WMCB, WMFB, Horizon and Popjes have
entered into a Stock Purchase and Option Agreement dated as of December 15,
1995 (the "Stock Purchase Agreement"), pursuant to which Horizon and Popjes
have agreed to sell, and Channel 43 has agreed to purchase, a portion of the
capital stock of Horizon;
B. WHEREAS, Channel 43, WMCB and Horizon have entered into a Time
Brokerage Agreement dated as of December 15, 1995 (the "Time Brokerage
Agreement"), pursuant to which, upon completion of construction of television
station WJUE(TV), Battle Creek, Michigan (the "Station"), Channel 43 shall
provide programming for the Station in accordance with FCC policies for such
agreements;
C. WHEREAS, Channel 43, WMCB and Horizon have entered into a
Construction Agreement dated as of December 15, 1995 (the "Construction
Agreement"), pursuant to which Channel 43 has agreed to provide certain
services to WMCB and Horizon in connection with the construction of the
Station;
D. WHEREAS, Channel 43, WMCB and Horizon have entered into a
Lease Agreement dated as of December 15, 1995 (the "Lease Agreement"), pursuant
to which Channel 43 has agreed to lease to WMCB and Horizon certain assets used
or useful in the business or operations of the Station; and
E. WHEREAS, Channel 43 and Horizon have entered into a Loan
Agreement dated as of December 15, 1995 (the "Loan Agreement"), pursuant to
which Channel 43 has agreed to loan Horizon up to Two Hundred Eighty Thousand
Dollars ($280,000) to be used for certain expenses relating to the construction
and operation of the Station;
<PAGE> 2
-2-
F. WHEREAS, the parties to this Amendment Agreement have agreed
that Paxson-43, a wholly-owned subsidiary of Paxson Communications Television
Inc., a Florida corporation, which, in turn, is a wholly-owned subsidiary of
Paxson Communications Corporation, a Delaware corporation, shall replace
Channel 43 in all respects under the Stock Purchase Agreement, Time Brokerage
Agreement, Construction Agreement, Lease Agreement and Loan Agreement
(collectively, the "Agreements").
AGREEMENTS
In consideration of the foregoing Recitals and of the agreements
contained herein and in the Agreements, the parties hereto, intending to be
legally bound, agree as follows:
Section 1. Amendments to Stock Purchase Agreement
A. The Preamble to the Stock Purchase Agreement is
hereby amended to delete the references therein to "Channel 43 of Battle Creek,
Inc." and "Channel 43" and to replace them with references to "Paxson
Communications of Battle Creek-43, Inc." and "Paxson-43", respectively. As a
result of this amendment, Paxson-43 shall in all respects become the "Buyer"
under the Stock Purchase Agreement, and Channel 43 of Battle Creek, Inc. shall
in all respects cease to be a party to the Stock Purchase Agreement.
B. Section 21.8 of the Stock Purchase Agreement is
hereby amended to delete the address set forth therein for the Buyer and to
replace it with the following:
Lowell W. Paxson
Paxson Communications of Battle Creek-43, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Section 2. Amendments to Loan Agreement
A. The Preamble to the Loan Agreement is hereby amended
to delete the references therein to "Channel 43 of Battle Creek, Inc." and
"Channel 43" and to replace them with references to "Paxson Communications of
Battle Creek-43, Inc." and "Paxson-43", respectively. As a result of this
amendment, Paxson-43 shall in all respects become the "Lender" under the Loan
Agreement, and Channel 43 of Battle Creek, Inc. shall in all respects cease to
be a party to the Loan Agreement.
<PAGE> 3
-3-
B. Section 8.4 of the Loan Agreement is hereby amended
to delete the address set forth therein for the Lender and to replace it with
the following:
Lowell W. Paxson
Paxson Communications of Battle Creek-43, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
C. The Preamble to the Loan Agreement is hereby amended
by deleting in the third line thereof the address "14444 66th Street North,
Clearwater, Florida 34624" and replacing it with the following: "601 Clearwater
Park Road, West Palm Beach, FL 33401".
D. The second line of the second recital of the Loan
Agreement is hereby amended by deleting therefrom the words "and the sole
shareholder of Lender".
Section 3. Amendments to Time Brokerage Agreement
A. The Preamble to the Time Brokerage Agreement is
hereby amended to delete the references therein to "Channel 43 of Battle Creek,
Inc." and "Channel 43" and to replace them with references to "Paxson
Communications of Battle Creek-43, Inc." and "Paxson-43", respectively. As a
result of this amendment, Paxson-43 shall in all respects become the
"Programmer" under the Time Brokerage Agreement, and Channel 43 of Battle
Creek, Inc. shall cease to be a party under the Time Brokerage Agreement.
B. Section 7.8 of the Time Brokerage Agreement is hereby
amended to delete the address set forth therein for the Programmer and replace
it with the following:
Lowell W. Paxson
Paxson Communications of Battle Creek-43, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
<PAGE> 4
-4-
Section 4. Amendments to Construction Agreement
A. The Preamble to the Construction Agreement is hereby
amended to delete the references therein to "Channel 43 of Battle Creek, Inc."
and "Channel 43" and to replace them with references to "Paxson Communications
of Battle Creek-43, Inc." and "Paxson-43", respectively. As a result of this
amendment, Paxson-43 shall in all respects become the "Contractor" under the
Construction Agreement, and Channel 43 of Battle Creek, Inc. shall cease to be
party under the Construction Agreement.
B. Section 11(D) of the Construction Agreement is hereby
amended to delete the address set forth therein for the Contractor and to
replace it with the following:
Lowell W. Paxson
Paxson Communications of Battle Creek-43, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Section 5. Amendments to Lease Agreement
A. The Preamble to the Lease Agreement is hereby amended
to delete the references therein to "Channel 43 of Battle Creek, Inc." and
"Channel 43" and to replace them with references to "Paxson Communications of
Battle Creek-43, Inc." and "Paxson-43", respectively. As a result of this
amendment, Paxson-43 shall in all respects become the "Lessor" under the Lease
Agreement, and Channel 43 of Battle Creek, Inc. shall cease to be a party to
the Lease Agreement.
B. Section 16.1 of the Lease Agreement is hereby amended
to delete the address set forth therein for the Lessor and replace it with the
following:
Lowell W. Paxson
Paxson Communications of Battle Creek-43, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Section 6. Counterparts. This Amendment Agreement may be
executed in as many counterparts as may be convenient and shall become binding
when each party hereto has executed at least one counterpart.
Section 7. Governing Law. This Amendment Agreement shall be a
contract made under and governed by the laws of the State of Florida, without
regard to the conflicts of law provisions thereof.
<PAGE> 5
-5-
Section 8. Binding Effect. This Amendment Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 6
-6-
IN WITNESS WHEREOF, the undersigned have executed this Amendment
Agreement as of the date first above written.
CHANNEL 43 OF BATTLE CREEK, INC.
By: /s/ James L. West
-------------------------------------
James L. West
President
WESTERN MICHIGAN CHRISTIAN
BROADCASTING, INC.
By: /s/ William B. Popjes
--------------------------------------
William B. Popjes
President
WESTERN MICHIGAN FAMILY
BROADCASTING, INC.
By: /s/ William B. Popjes
--------------------------------------
William B. Popjes
President
HORIZON BROADCASTING CORPORATION
By: /s/ William B. Popjes
--------------------------------------
William B. Popjes
President
/s/ William B. Popjes
----------------------------------------
WILLIAM B. POPJES
PAXSON COMMUNICATIONS OF
BATTLE CREEK-43, INC.
By: /s/ William L. Watson
-----------------------------------------
William L. Watson
Secretary
<PAGE> 1
EXHIBIT 10.153
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND AMONG
PAXSON COMMUNICATIONS OF DETROIT-31, INC.,
PAXSON COMMUNICATIONS CORPORATION,
BLACKSTAR COMMUNICATIONS, INC.,
BLACKSTAR COMMUNICATIONS OF MICHIGAN, INC.
AND
BLACKSTAR OF ANN ARBOR, INC.
FOR
TELEVISION STATION WBSX(TV)
ANN ARBOR, MICHIGAN
AND
LOW POWER TELEVISION STATION W48AV
DETROIT, MICHIGAN
* * *
MARCH 13, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"HSR Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
- i -
<PAGE> 3
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3.13 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5. OPERATIONS OF THE STATIONS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.15 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.17 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.18 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.20 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Control of the Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Noncompetition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 HSR Act Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Deliveries by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1 Termination by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . 29
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Indemnification by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.7 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 Guaranty of PCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.14 Guaranty of Blackstar Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
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<PAGE> 6
LIST OF SCHEDULES
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Schedule 2.2 -- Excluded Property
Schedule 3.3 -- Consents
Schedule 3.4(a) -- Licenses
Schedule 3.4(b) -- Must Carry Matters
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Financial Matters
Schedule 3.11 -- Insurance Policies
Schedule 3.13 -- Employee Matters
Schedule 3.15 -- Claims
Schedule 3.19 -- Affiliate Transactions
Schedule 4.5 -- Qualifications
Schedule 6.12 -- Form of Noncompetition Agreement
Schedule 8.2(f) -- Form of Opinion of Sellers' Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
</TABLE>
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<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 13th day of March,
1997, by and among Paxson Communications of Detroit-31, Inc., a Florida
corporation ("Buyer"); Paxson Communications Corporation, a Delaware
corporation ("PCC"); Blackstar Communications, Inc., a Delaware corporation
("Blackstar Communications"); Blackstar Communications of Michigan, Inc., a
Delaware corporation ("Blackstar Michigan"); and Blackstar of Ann Arbor, Inc.,
a Delaware corporation ("Blackstar Ann Arbor"; Blackstar Michigan and Blackstar
Ann Arbor are referred to herein individually as a "Seller" and collectively as
the "Sellers").
R E C I T A L S
A. Sellers own and operate television station WBSX(TV), Channel
31, Ann Arbor, Michigan (the "Station") and low power television station W48AV,
Detroit, Michigan (the "LPTV Station") that rebroadcasts the signal of the
Station (the Station and the LPTV Station are referred to collectively as the
"Stations") pursuant to licenses issued by the Federal Communications
Commission ("FCC").
B. Sellers desire to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the business or
operations of the Stations, 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 Sellers, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means all accounts receivable of Sellers with
respect to the Stations.
"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
<PAGE> 8
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purchase of the Stations, (ii) any Contracts entered into by Sellers 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 Sellers 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 either Seller is a party or which are binding
upon either 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 either 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 either 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.
"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
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interests (and any goodwill associated with any of the foregoing) applied for,
issued to, or owned by either Seller or under which either 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.
"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 either Seller in connection with
the conduct of the business or operations of the Stations, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, 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 Stations,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Stations, together
with any additions thereto between the date of this Agreement and the Closing
Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, each Seller hereby agrees to sell,
transfer, and deliver to Buyer on the Closing Date, and Buyer agrees to
purchase, all of the tangible and intangible assets used or useful in
connection with the conduct of the business or operations of the Stations,
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;
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(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of each
Seller relating to the Stations that are not specifically included within the
Intangibles, including the goodwill of the Stations, if any;
(f) All of each Seller's proprietary information,
technical information and data, machinery and equipment warranties, maps,
computer discs and tapes, plans, diagrams, blueprints, and schematics,
including filings with the FCC relating to the business and operation of the
Stations;
(g) All choses in action of either Seller relating to the
Stations, other than any claims made or to be made by either Seller in the
litigation described in Schedule 3.15; and
(h) All books and records relating to the business or
operations of the Stations, including executed copies of the Assumed Contracts,
and all records maintained by Sellers pursuant to the rules and regulations of
the FCC.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Each Seller's cash on hand as of the Closing and all
other cash in any of each 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 either Seller is required
by law to retain and that pertain to such Seller's corporate organization;
(c) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements;
(d) The Accounts Receivable as of 11:59 p.m., Detroit
time, on the day prior to the Closing Date; and
(e) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of John E. Oxendine and Ed Parker set forth in the Noncompetition
Agreements referred to in Section 6.13 shall be Thirty Five Million Dollars
($35,000,000) adjusted as provided below:
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(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 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, 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 Sellers
in accordance with the principle that Sellers 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 Sellers 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.
(1) Any adjustments will, insofar as feasible, be
determined and paid on the Closing Date in accordance with the following
procedures: Sellers shall prepare and deliver to Buyer not later than five (5)
days before the Closing Date a preliminary settlement statement which shall set
forth Sellers' 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 Sellers to be true and complete in all material respects
as of the date thereof.
(2) Final settlement and payment of any
adjustments by the appropriate party shall occur no later than ninety (90) days
after the Closing Date, or upon such other date as the parties shall mutually
agree, in accordance with the following procedures: Buyer shall prepare and
deliver to Sellers no later than sixty (60) days following the Closing Date a
final settlement statement which shall set forth Buyer's good faith estimate of
the adjustment to the Purchase Price under Section 2.3(a). The final settlement
statement (i) shall contain all information reasonably necessary to determine
the adjustments to the Purchase Price under Section 2.3(a) and such other
information as may be reasonably requested by Sellers, and (ii) shall be
certified by Buyer to be true and complete in all material respects as of the
date thereof. Buyer and Sellers shall use good faith efforts to resolve any
disputes involving the determination of the Purchase Price.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Sellers and John E. Oxendine and Ed Parker at Closing
by wire transfer of same-
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day funds pursuant to wire instructions which shall be delivered by Sellers 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 Sellers under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Stations on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of either 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 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 either 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 Stations 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 either Seller prior to the Closing, and all such
obligations and liabilities shall remain and be the obligations and liabilities
solely of Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 Organization, Standing, and Authority. Each Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and is duly qualified to conduct business in, and
is in good standing under, the laws of the State of Michigan. Each Seller has
all requisite power and authority (i) to own, lease, and use the Assets as now
owned, leased, and used, (ii) to conduct the business and operations of the
Stations as now conducted, and (iii) to execute and deliver this Agreement and
the documents contemplated hereby and thereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with
by such Seller hereunder and thereunder. Neither Seller is a participant in
any joint venture or partnership with any other person or entity with respect
to any part of the operations of the Stations or any of the Assets.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by each Seller have been duly
authorized by all necessary actions on the part of each Seller and its
shareholders. This Agreement has been duly executed and delivered by each
Seller and constitutes the legal, valid, and binding obligations
<PAGE> 13
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of each 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
FCC Consent provided for in Section 6.1, the other Consents listed on Schedule
3.3 and any filing required under the HSR Act, the execution, delivery, and
performance of this 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 either 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 either Seller is a party or by which either 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(a) includes a true and
complete list of the Licenses. Sellers have delivered to Buyer true and
complete copies of all material Licenses (including any amendments and other
modifications thereto). The Licenses have been validly issued, and Blackstar
Ann Arbor is the authorized legal holder thereof. The Licenses listed on
Schedule 3.4(a) comprise all of the licenses, permits, and other authorizations
required from any governmental or regulatory authority for the lawful conduct
of the business and operations of the Stations in the manner and to the full
extent they are now conducted, except for such licenses, permits and other
authorizations the failure of which to obtain could not reasonably be expected
to have a material adverse effect on the conduct of the business or operations
of the Station, and none of the Licenses is subject to any restriction or
condition that would limit the full operation of the Stations as now operated.
The Licenses are in full force and effect, and the conduct of the business and
operations of the Stations is in accordance therewith. Sellers have no reason
to believe that any of the Licenses would not be renewed by the FCC or other
granting authority in the ordinary course. Except as specified on Schedule
3.4(b), Sellers have delivered written requests for must carry with respect to
each cable system identified in Schedule 3.4(b) and, except as identified on
Schedule 3.4(b), no cable system has advised Sellers of any signal quality or
copyright indemnity or other prerequisite to cable carriage of the Stations'
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. Except in connection with the Channel
Carriage Agreement with Continental Cablevision described
<PAGE> 14
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in Schedule 3.4(b), the Sellers have by default elected must-carry for the
Stations in the Lansing ADI.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Sellers' interests therein (including, to the extent available, street address,
legal description, owner, and use and the location of all improvements
thereon). The Real Property listed on Schedule 3.5 comprises all real property
interests necessary to conduct the business and operations of the Stations as
now conducted. None of the Real Property consists of fee estates. With
respect to each leasehold or subleasehold interest included in the Real
Property being conveyed under this Agreement, so long as Sellers fulfill their
obligations under the lease therefor, Sellers have enforceable rights to
nondisturbance and quiet enjoyment, and no third party holds any interest in
the leased premises with the right to foreclose upon Sellers' leasehold or
subleasehold interest. All towers, guy anchors, and buildings and other
improvements included in the Assets are located entirely on the Real Property
listed in Schedule 3.5. All Real Property (including the improvements thereon)
(i) is in good condition and repair consistent with its present use, (ii) is
available for immediate use in the conduct of the business and operations of
the Stations, and (iii) complies with all applicable building or zoning codes
and the regulations of any governmental authority having jurisdiction. Sellers
have full legal and practical access to the Real Property.
3.6 Title to and Condition of Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.6 comprises all material items
of tangible personal property necessary to conduct the business and operations
of the Stations as now conducted. Except as described in Schedule 3.6, Sellers
own and have good title to each item of Tangible Personal Property, and none of
the Tangible Personal Property owned by Sellers is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens for current taxes not yet due and payable. Each
item of Tangible Personal Property is available for immediate use in the
business and operations of the Stations. All items of transmitting and studio
equipment included in the Tangible Personal Property (i) have been maintained
in a manner consistent with generally accepted standards of good engineering
practice, and (ii) will permit the Stations and any auxiliary broadcast
facilities related to the Stations 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 Stations for cash at prevailing rates and which have not been prepaid and
which may be canceled by the Stations without penalty on not more than thirty
days' notice. Schedule 3.7 includes true and complete copies of all written
Contracts, true and complete memoranda of all oral Contracts
<PAGE> 15
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(including any amendments and other modifications to such Contracts), and a
schedule summarizing Sellers' obligations under trade and barter agreements
relating to the Stations. Other than the Contracts listed on Schedule 3.7 and
cash programming contracts, neither Seller requires any 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. Sellers are 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, Sellers have
full legal power and authority to assign their rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and such assignment will
not affect the validity, enforceability, or continuation of any of the Assumed
Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1, the other Consents described in Schedule 3.3, and any filing required
under the HSR Act, no consent, approval, permit, or authorization of, or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) to consummate this Agreement and the
transactions contemplated hereby, (ii) to permit each Seller to assign or
transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the business
and operations of the Stations in essentially the same manner as such business
and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Sellers have delivered to Buyer copies
of all documents establishing or evidencing all Intangibles. To the best of
Sellers' knowledge, neither Seller is 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 Sellers threatened, with respect thereto. The Intangibles
listed on Schedule 3.9 comprise all intangible property interests necessary to
conduct the business and operations of the Stations as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of financial statements of Sellers, including balance sheets,
statements of operations and a statement of operating cash flow for the period
ending November 30, 1996 (collectively, the "Financial Statements"). The
Financial Statements have been prepared from the books and records of Sellers,
have been prepared in accordance with generally accepted accounting principles
consistently applied and maintained throughout the periods indicated,
accurately reflect the books, records, and accounts of the Stations (which
books, records, and accounts
<PAGE> 16
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are complete and correct), are complete and correct in all material respects,
and present fairly the financial condition of the Stations as at their
respective dates and the results of operations for the periods then ended.
None of the Financial Statements understates the true costs and expenses of
conducting the business or operations of the Stations, fails to disclose any
material contingent liabilities, or inflates the revenues of the Stations.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Sellers that insure any part of the Assets or the
business of the Stations. All policies of insurance listed in Schedule 3.11
are in full force and effect. The insurance policies listed in Schedule 3.11
are adequate in amount with respect to, and for the full value (subject to
customary deductibles) of, the Assets, and insure the Assets and the business
of the Stations against all customary and foreseeable risks. During the past
three years, no insurance policy of Sellers on the Assets or the Stations has
been canceled by the insurer and no application of Sellers for insurance has
been rejected by any insurer.
3.12 Reports. All material returns, reports, and statements
required to be filed by the Stations with the FCC or with any other
governmental agency during the three-year period ending on the date hereof have
been filed, and, during such period, all reporting requirements of the FCC and
other governmental authorities having jurisdiction over each Seller and the
Stations have been complied with in all material respects. All of such
returns, reports, and statements are substantially complete and correct as
filed. Sellers have timely paid to the FCC all annual regulatory fees payable
with respect to the FCC Licenses.
3.13 Personnel.
(a) All of Sellers' Employee Plans and Compensation
Arrangements are listed in Schedule 3.13, and complete and accurate copies of
any such written Employee Plans and Compensation Arrangements (or related
insurance policies) have been furnished to Buyer, along with copies of any
employee handbooks or similar documents describing such Employee Plans and
Compensation Arrangements. Descriptions of any unwritten Employee Plans or
Compensation Arrangements also are provided in Schedule 3.13. Schedule 3.13
also contains a true and complete list of all employees of the Stations, title,
date of hire, salary and amount and date of last salary increase.
(b) Each Employee Plan and Compensation Arrangement has
been administered in all material respects 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. Sellers are 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 them 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
<PAGE> 17
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the best knowledge of Sellers, threatened against any of such plans or
arrangements, and Sellers possess no knowledge of any facts which could give
rise to any such action, suit or claim.
(c) Sellers do not contribute to and are not required to
contribute to any Multi-employer Plan with respect to the employees of the
Stations, and neither Sellers nor any other trade or business under common
control with Sellers (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 3.13, neither Sellers
nor any other trade or business under common control with Sellers (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
Sellers at the Stations.
(e) Except as described in Schedule 3.13, with respect to
each Employee Plan and, to the extent applicable, each Compensation
Arrangement: (i) each Employee Plan that is intended to be tax-qualified, and
each amendment thereto, is the subject of a favorable determination letter, and
no plan amendment that is not the subject of a favorable determination letter
would affect the validity of an Employee Plan's letter; (ii) no prohibited
transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject either 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 Sellers 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 Sellers or any entity related to
Sellers (under the terms of Section 414(b), (c), (m) or (o) of the Code)
contributes or to which Sellers or any entity related to Sellers (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 Stations; (ii) "Code" shall mean the Internal Revenue Code of
1986, as amended, any successor thereto and any regulations promulgated
thereunder; (iii) "Compensation Arrangement" shall mean any plan or
compensation arrangement other than an Employee Plan, whether written or
unwritten, which provides to employees, former employees, officers, directors
and shareholders of Sellers or any entity related to Sellers (under the terms
of Section 414(b), (c), (m) or (o) of the Code) employed or previously employed
at the Stations any compensation or other
<PAGE> 18
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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
Sellers or any entity related to Sellers (under the terms of Section 414(b) or
(c) of the Code) contributes or is required to contribute.
(g) Neither Seller is a party to or subject to any
collective bargaining agreements with respect to the Stations. Neither Seller
has any written or oral contracts of employment with any employee of the
Stations, other than those listed in Schedule 3.7. Each 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 neither Seller has 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 Sellers' knowledge, threatened, between Sellers
and any employee (singly or collectively) of the Stations. No labor union or
other collective bargaining unit represents or claims to represent any of the
employees of the Stations. To the best of Sellers' knowledge, there is no
union campaign being conducted to represent any employees of the Stations or to
solicit cards from employees to authorize a union to request a National Labor
Relations Board certification election with respect to any employees at the
Stations.
3.14 Taxes. Sellers have 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 have paid or caused to be paid all
taxes shown on those returns or on any tax assessment received by Sellers to
the extent that such taxes have become due, or has set aside on their books
adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no legal,
administrative, or tax proceedings or, to the best of Sellers' knowledge,
governmental investigations, pursuant to which either Seller is or could be
made liable for any taxes, penalties, interest, or other charges, the liability
for which could extend to Buyer as transferee of the business of the Stations,
and no event has occurred that could impose on Buyer any transferee liability
for any taxes, penalties, or interest due or to become due from either Seller.
3.15 Claims and Legal Actions. Except as disclosed on Schedule
3.15 and except for any FCC rulemaking proceedings generally affecting the
broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative, or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Sellers threatened, against or relating to either Seller with
<PAGE> 19
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respect to the ownership or operation of the Stations or otherwise relating to
the Assets or the business or operations of the Stations, nor do Sellers know
or have reason to be aware of any basis for the same. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or proceedings pending or, to the best of Sellers' knowledge,
threatened (i) before the FCC relating to the business or operations of the
Stations 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 Stations involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Stations involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.16 Environmental Matters.
(a) To the best of Sellers' knowledge, Sellers have
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 either Seller in
connection with its ownership or operation of the Stations alleging any failure
to comply with any such law, rule, or regulation.
(b) To the best of Sellers' knowledge, Sellers have no
liability relating to their ownership and operation of the Stations (and there
is no basis related to the past or present operations, properties, or
facilities of Sellers for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against Sellers
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 Sellers' knowledge, Sellers have no
liability relating to their ownership and operation of the Stations (and
Sellers have 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 Sellers 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 Sellers' knowledge, Sellers have no
liability relating to their ownership and operation of the Stations (and there
is no basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against
<PAGE> 20
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Sellers 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 Sellers' knowledge, Sellers have no
liability relating to their ownership and operation of the Stations (and
Sellers have 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 Sellers giving rise to any such liability) for any
illness or personal injury to any employee.
(f) In connection with their ownership or operation of
the Stations, Sellers have 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 have 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.
(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 Sellers in
connection with their ownership and operation of the Stations or, to the best
of Sellers' knowledge, by any other party on any Real Property.
3.17 Compliance with Laws. Sellers have 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. To the best of Sellers' knowledge, 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.
3.18 Conduct of Business in Ordinary Course. Since November 30,
1996, Sellers have conducted the business and operations of the Stations only
in the ordinary course and has not:
<PAGE> 21
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(a) Suffered any material adverse change in the business,
assets, or properties of the Stations, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Stations;
(b) Made any material increase in compensation payable or
to become payable to any of the employees of the Stations, or any bonus payment
made or promised to any employee of the Stations, or any material change in
personnel policies, employee benefits, or other compensation arrangements
affecting the employees of the Stations;
(c) Made any sale, assignment, lease, or other transfer
of any of the Stations' properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by either
Seller with respect to the Stations, except in the normal and usual course of
business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Stations; or
(f) Transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Stations.
3.19 Transactions with Affiliates. Except as set forth on Schedule
3.19, neither Seller has been involved in any business arrangement or
relationship relating to the Stations with any affiliate of either Seller, and
no affiliate of either Seller owns any property or right, tangible or
intangible, which is used in the business of the Stations. As used in this
paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Sellers'
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 Sellers to Southcoast Capital Corp.
3.21 Full Disclosure. No representation or warranty made by
Sellers in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Sellers 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.
<PAGE> 22
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers 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 Michigan. Buyer has all requisite power
and authority to execute and deliver this 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 by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents and making any filing required under the HSR Act, the execution,
delivery, and performance by Buyer of this Agreement and the documents
contemplated hereby and thereby (with or without the giving of notice, the
lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with the Articles of Incorporation or Bylaws of Buyer;
(iii) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, injunction, decree, rule, regulation, or
ruling of any court or governmental instrumentality; or (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Buyer is a party or by which Buyer may be bound, such that Buyer could
not acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Qualifications. Except as set forth on Schedule 4.5, Buyer is
legally, financially and otherwise qualified to be the licensee of, acquire,
own and operate the Stations under the Communications Act of 1934, as now in
effect, and the rules, regulations and published policies of the FCC, as now in
effect. Between the date hereof and the Closing Date, Buyer shall (a) not take
or fail to take any action that could reasonably be
<PAGE> 23
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expected to cause the foregoing representation and warranty to be untrue and
(b) comply with the covenant set forth in Schedule 4.5.
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 STATIONS PRIOR TO CLOSING
5.1 Generally. Sellers agree that, between the date of this
Agreement and the Closing Date, Sellers shall operate the Stations diligently
in the ordinary course of business in accordance with their past practices
(except where such conduct would conflict with the following covenants or with
Sellers' other obligations under this Agreement), and in accordance with the
other covenants in this Section 5.
5.2 Compensation. Sellers shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Stations,
except in accordance with past practices.
5.3 Contracts. Neither Seller will 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, except for cash
time sales agreements made in the ordinary course of business. Prior to the
Closing Date, Sellers 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. Neither Seller shall 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 Stations or in
connection with the acquisition of replacement property of equivalent kind and
value.
5.5 Encumbrances. Neither Seller shall 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.
<PAGE> 24
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5.6 Licenses. Neither Seller shall 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. Sellers shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the operation of the Stations.
5.7 Rights. Neither Seller shall waive any right relating to the
Stations or any of the Assets. Neither Seller shall 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 Stations' signal.
5.8 No Inconsistent Action. Neither Seller shall 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. Sellers shall give Buyer and its
counsel, accountants, engineers, appraisers and other authorized
representatives reasonable access to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Stations
for the purpose of audit and inspection, including inspections incident to the
environmental study described in Section 6.5, the engineering study described
in Section 6.6 and the appraisal described in Section 6.11, and will furnish or
cause to be furnished to Buyer or its authorized representatives all
information with respect to the affairs and business of the Stations that Buyer
may reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Stations). Without
limiting the generality of the foregoing, Sellers shall give Buyer and its
counsel, accountants and other authorized representatives reasonable access to
Sellers' financial records and Sellers' 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. Each 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. Sellers 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, Sellers shall repair, replace, or restore the Assets to their
prior condition as represented in this Agreement as soon thereafter as
possible, and Sellers shall use the proceeds of any claim
<PAGE> 25
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under any insurance policy solely to repair, replace, or restore any of the
Assets that are lost, damaged, impaired, or destroyed.
5.11 Insurance. Sellers shall maintain the existing insurance
policies on the Stations and the Assets.
5.12 Consents. Sellers shall obtain the Consents designated on
Schedule 3.3 as "Material Consents" and shall use commercially reasonable
efforts to obtain each other Consent 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 Stations than those
pertaining under the Contract or License as in effect on the date of this
Agreement. Sellers 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, Sellers shall
cooperate with Buyer and use 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. Sellers shall maintain the books and
records relating to the Stations in accordance with past practices.
5.14 Notification. Sellers shall promptly notify Buyer in writing
of any material change in any of the information contained in Sellers'
representations and warranties contained in Section 3 of this Agreement.
5.15 Financial Information. Sellers shall furnish to Buyer within
thirty days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a
statement of operating cash flow for the month just ended and such other
financial information (including information on payables and receivables) as
Buyer may reasonably request. All financial information delivered by Sellers
to Buyer pursuant to this Section shall be prepared from the books and records
of Sellers in accordance with generally accepted accounting principles
consistently applied, shall accurately reflect the books, records, and accounts
of the Stations, shall be complete and correct in all material respects, and
shall present fairly the financial condition of the Stations as at their
respective dates and the results of operations for the periods then ended.
5.16 Compliance with Laws. Sellers shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Stations.
5.17 Financing Leases. Sellers will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain
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good title to the Assets leased by either 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. Sellers shall not make any material changes in
the broadcast hours or in the percentages of types of programming broadcast by
the Stations, or make any other material change in the Stations' programming
policies, except such changes as in the good faith judgment of the Sellers are
required by the public interest.
5.19 Preservation of Business. Sellers shall use their best
efforts to preserve the business and organization of the Stations and use their
best efforts to keep available to the Stations their present employees and to
preserve the audience of the Stations and the Stations' present relationships
with suppliers, advertisers, and others having business relations with them, to
the end that the business, operations, and prospects of the Stations shall be
unimpaired at the Closing Date. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Stations shall
be maintained.
5.20 Personnel Recommendations. Sellers shall promptly notify
Buyer as personnel vacancies occur at the Stations 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) Sellers and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within thirty (30) days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their 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 Sellers 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
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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 Sellers 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 Sellers at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any
other event occurs which (i) causes the Station to cease broadcasting
operations for a period of seven or more days or (ii) prevents in any material
respect signal transmission by the Station in the normal and usual manner and
Sellers fail to restore or replace the Assets so that the Station's normal and
usual transmission is resumed in all material respects 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 Sellers, 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 Sellers shall
deliver to Buyer all insurance proceeds received in connection with such
damage, destruction or other event. In the event Buyer fails to notify Sellers
of its election to terminate this Agreement pursuant to this Section 6.3(b) and
Section 9.2(d) within 10 days following the end of the periods specified in
clause (i) or clause (ii) of this Section 6.3(b), as the case may be, Buyer
shall be deemed to have elected to consummate the transaction contemplated by
this Agreement in accordance with clause (y) of this Section 6.3(b).
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
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of the properties of the Stations, and such survey shall be completed within 45
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 Sellers no later than 55 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
Stations and to prepare a report on the Stations' 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 45 days from the date hereof. If the survey discloses any
material deficiencies in the operations or equipment of the Stations, Buyer
shall so notify Sellers no later than 55 days from the date hereof.
6.7 Cooperation. Buyer and Sellers 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 Sellers 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 Michigan shall be complied with by Sellers. Any loss, liability,
obligation, or cost suffered by Sellers or Buyer as the result of the failure
of Sellers 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 Sellers.
6.9 Sales Tax Filings. Sellers shall continue to file Michigan
sales tax returns with respect to the Stations in accordance with Sellers' past
practices and shall concurrently deliver copies of all such returns to Buyer.
6.10 Access to Books and Records. Sellers 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 Sellers 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 Sellers agree to allocate $1,000,000 of
the Purchase Price to the value of the Assets used or useful in the operation
of the LPTV Station. Buyer and Sellers further agree to allocate the Purchase
Price for tax and recording purposes in
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accordance with an appraisal (the "Appraisal") to be conducted by an appraisal
firm selected and paid for by Buyer with experience in the valuation and
appraisal of television Stations assets. Buyer shall deliver a copy of the
Appraisal to Sellers on or before the date that is 90 days following the
Closing Date.
6.12 Noncompetition Agreements. At Closing, Buyer shall enter into
separate Noncompetition Agreements in the form of Schedule 6.12 with John E.
Oxendine and Ed Parker and $500,000 of the Purchase Price shall be allocated to
the covenants set forth therein on the Closing Date.
6.13 HSR Act Filing. Sellers and Buyer agree to (a) file, or cause
to be filed, with the U.S. Department of Justice ("DOJ") and Federal Trade
Commission ("FTC") all filings, if any, which are required in connection with
the transactions contemplated hereby under the HSR Act within ten (10) business
days of the date of this Agreement; (b) submit to the other party, prior to
filing, their respective HSR Act filings to be made hereunder, and to discuss
with the other any comments the reviewing party may have; (c) cooperate with
each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents in such party's
possession that may be reasonably required in connection with such filings; (d)
promptly file, after any request by the FTC or DOJ and appropriate negotiation
with the FTC or DOJ of the scope of such request, any information or documents
requested by the FTC or DOJ; and (e) furnish each other with any correspondence
from or to, and notify each other of any other communications with, the FTC or
DOJ which relates to the transactions contemplated hereunder, and to the extent
practicable, to permit each other to participate in any conferences with the
FTC or DOJ.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
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 Sellers 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. Sellers 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 designated on Schedule 3.3 as
"Material Consents" shall have been obtained and delivered to Buyer without any
adverse change in the
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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, Sellers 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. Sellers shall be the
holder of all Licenses and, other than as a result of any decision or order
issued in connection with (i) Turner Broadcasting System, Inc. v. FCC (No.
93-44), and any subsequent court or FCC proceeding relating to such case
("Turner v. FCC") or (ii) 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 Stations or the conduct of their business and operations.
Other than the proceedings involved in Turner v. FCC or the ATV Rulemaking, no
proceeding shall be pending or threatened the effect of which could be to
revoke, cancel, fail to renew, suspend, or modify in any materially adverse
respect any FCC License.
(f) Deliveries. Sellers 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
Tangible Personal Property, including any materially adverse damage,
destruction, or loss affecting the Tangible Personal Property.
(h) HSR Act. The waiting period under the HSR Act shall
have expired without unresolved action by the DOJ or the FTC to prevent the
Closing.
(i) SKTV Consent. SKTV, Inc. shall have (x) granted its
consent to the transactions contemplated by this Agreement and (y) irrevocably
waived any right or interest it has or may have in or with respect to the
Assets or the business or operations of the Stations, and the Affiliation
Agreement between Sellers and Home Shopping Club, Inc. shall have been
terminated, in each case pursuant to an agreement or agreements in form and
substance reasonably acceptable to Buyer (the "SKTV Consent").
7.2 Conditions to Obligations of Sellers. All obligations of
Sellers at the Closing are subject at Sellers' option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
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(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Sellers of any conditions that need not be complied
with by Sellers under Section 6.1 hereof, and Buyer shall have complied with
any conditions imposed on it by the FCC Consent.
(e) HSR Act. The waiting period under the HSR Act shall
have expired without unresolved action by the DOJ or the FTC to prevent the
Closing.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. Subject to the satisfaction or waiver
of all other conditions precedent to the holding of the Closing, the Closing
shall take place at 10:00 a.m. on the first business day that is 60 days
following the date the FCC Consent is granted (the "Initial Scheduled Closing
Date"); provided, however, in the event the Initial Scheduled Closing Date is
prior to October 3, 1997, the Closing shall occur on October 3, 1997; provided
further that Buyer shall have the right, in its sole discretion, to postpone
the Closing upon written notice to Sellers until the first business day that is
60 days following the date the FCC Consent becomes a Final Order if the FCC
Consent will not become a Final Order on or before the Initial Scheduled
Closing Date; and provided further that Buyer shall have no right or option to
postpone the Closing beyond March 1, 1998.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Sellers.
8.2 Deliveries by Sellers. Prior to or on the Closing Date,
Sellers shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
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(a) Transfer Documents. Duly executed motor vehicle
titles, assignments, and other transfer documents which shall be sufficient to
vest good and marketable title to the Assets in the name of Buyer, free and
clear of all claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges or encumbrances, except for liens for current
taxes not yet due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold interests included in the Real Property if and to the
extent Sellers obtain such estoppel certificates in accordance with Section
5.12;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent obtained by Sellers pursuant to Section 5.12;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Sellers by an officer of Sellers,
certifying (1) that the representations and warranties of Sellers 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 Sellers have in all
material respects performed and complied with all of their 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
Sellers in connection with their operations;
(f) Opinion of Counsel. An Opinion of Sellers' counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(f)
hereto;
(g) Noncompetition Agreements. The Noncompetition
Agreements in the form of Schedule 6.12, duly executed on behalf of John E.
Oxendine and Ed Parker; and
(h) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders executed by Sellers 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 Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.3;
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(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Sellers' obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date and arise out of events
related to Buyer's ownership of the Assets or its operation of the Stations 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 Agreements. The Noncompetition
Agreements in the form of Schedule 6.12 duly executed by Buyer and the payment
of Three Hundred Thirty Five Thousand Dollars to John E. Oxendine and One
Hundred Sixty Five Thousand Dollars to Ed Parker.
SECTION 9. TERMINATION
9.1 Termination by Sellers. This Agreement may be terminated by
Sellers and the purchase and sale of the Stations abandoned, if Sellers are 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 Sellers
set forth in this Agreement have not been satisfied or waived in writing by
Sellers.
(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, and any such judgment, decree or
order is not the result of any action or omission by Sellers.
(c) Upset Date. If the Closing shall not have occurred
by March 1, 1998.
(d) Breach. Without limiting Sellers' 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 thirty days after Buyer received written
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notice of such breach from Sellers or if Buyer has failed to comply with its
covenant under Schedule 4.5 on or before March 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 Sellers, 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, and any such judgment, decree or
order is not the result of any action or omission by Buyer.
(c) Upset Date. If the Closing shall not have occurred
by March 1, 1998.
(d) Interruption of Service. If any damage or
destruction of the Assets or any other event occurs that causes the Station to
cease broadcasting operations or prevents signal transmission by the Station in
the normal and usual manner, in each case for the periods specified in Section
6.3(b).
(e) Environmental Hazards. Buyer shall have notified
Sellers 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 the period specified in Section 6.5, and
the cause thereof shall not have been remedied within 30 days from the date
such notice is received by Sellers.
(f) Technical Deficiencies. Buyer shall have notified
Sellers of material deficiencies in the operations or equipment of the
Stations, as indicated in the engineering study described in Section 6.6,
within the period specified in Section 6.6, and the cause thereof shall not
have been remedied within 30 days from the date such notice is received by
Sellers.
(g) Breach. Without limiting Buyer's rights under the
other provisions of this Section 9.2, if Sellers have failed to cure any
material breach of any of their representations, warranties or covenants under
this Agreement within thirty days after Sellers received written notice of such
breach from Buyer.
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(h) SKTV Consent. If Sellers shall have failed to
deliver the SKTV Consent to Buyer on or before the date the application for FCC
Consent is filed with the FCC.
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 Sellers due to Buyer's material breach of this
Agreement, then Sellers shall have all rights or remedies available at law or
equity. If this Agreement is terminated by Buyer due to Sellers' material
breach of this Agreement, Buyer shall have all rights and remedies available at
law or equity.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Sellers shall affect Buyer's right to rely on any representation or warranty
made by Sellers or relieve Sellers of any obligations under this Agreement as
the result of a breach of any of their representations and warranties.
10.2 Indemnification by Sellers. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Sellers 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 Sellers contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Sellers 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.
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(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Stations prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all losses, liabilities or damages resulting
from the facts or circumstances alleged or to be alleged in the litigation
relating to the LPTV Station described in Schedule 3.15.
(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.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Sellers or
any information Sellers may have, Buyer hereby agrees to indemnify and hold
Sellers harmless against and with respect to, and shall reimburse Sellers 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 Sellers under this Agreement.
(b) Any and all obligations of Sellers assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Stations on and after the Closing.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding
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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
received by Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty- day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Limitations on Indemnification. Sellers' and Buyer's
obligations to indemnify the other pursuant to this Section 10 shall be subject
to the following limitations:
(a) No indemnification shall be required to be made under
Section 10.2 or Section 10.3 until the aggregate amount of losses, liabilities,
damages or expenses incurred
<PAGE> 38
- 32 -
by Buyer or Sellers, as the case may be, exceeds $25,000, and then the
indemnification shall be made by the Indemnifying Party only to the extent of
such excess over $25,000; and
(b) No indemnification shall be required to be made under
Section 10.2 (a) or Section 10.3(a) if the written notice of any claim for
indemnification is received by the Indemnifying Party following the expiration
of the period specified in Section 10.1; provided, however, (i) that the
expiration of the period specified in Section 10.1 shall not affect the
validity of any claim made prior to such expiration and (ii) Sellers'
obligation to indemnify Buyer under Section 10.2(e) shall survive without
respect to any time limitation.
10.6 Specific Performance. The parties recognize that if Sellers
breach this Agreement and refuse to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Sellers shall waive the defense that there is an
adequate remedy at law.
10.7 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Sellers
to Buyer pursuant to this Agreement shall be paid by Sellers. Buyer and
Sellers shall each pay one-half of all filing fees required by the FTC under
the HSR Act, 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. Sellers shall pay at the
Closing all brokerage fees and commissions payable to Southcoast Capital Corp.,
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 Sellers 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
<PAGE> 39
- 33 -
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 Sellers and Buyer. The costs and expenses of the
arbitration proceeding shall be assessed between Sellers 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 Sellers 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 Sellers: Blackstar Communications of Michigan, Inc.
Blackstar of Ann Arbor, Inc.
1211 Connecticut Avenue, N.W., Suite 509
Washington, D.C. 20036
Attention: Mr. John E. Oxendine
Telephone: (202) 496-9280
With a copy to: Alan C. Campbell, Esquire
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Avenue, N.W., Suite 200
Washington, D.C. 20036
Telephone: (202) 728-0400
If to Buyer: Paxson Communications of Detroit-31, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Mr. Lowell W. Paxson
Telephone: (561) 659-4122
<PAGE> 40
- 34 -
With a copy to: John R. Feore, Jr., Esquire
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036
Telephone: (202) 776-2786
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Sellers' 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 Sellers' prior approval. Upon any
permitted assignment by Buyer or Sellers 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 "Sellers" herein shall be deemed to be
references to Sellers' 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
Sellers, 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.
<PAGE> 41
- 35 -
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 Sellers with respect to the subject matter hereof. This
Agreement supersedes the letter of intent dated February 21, 1997, between
Paxson Communications Corporation and Blackstar Communications, Inc. and 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.
11.13 Guaranty of PCC.
(a) In consideration of the execution and delivery of
this Agreement by Sellers, PCC agrees as follows:
(1) PCC hereby guarantees the complete and timely
performance in all material respects of each and every obligation of Buyer
under this Agreement. If any default shall be made by Buyer in such
performance, then PCC will itself perform or cause to be performed such
obligation upon receipt of notice from Sellers specifying in summary form the
default.
<PAGE> 42
- 36 -
(2) PCC waives presentment, protest, demand, or
action or delinquency in respect of any of the obligations of Buyer under this
Agreement. PCC waives all notices of nonperformance, notices of protest,
notices of dishonor, and notices of acceptance of this guaranty.
(3) This guaranty shall be deemed a continuing
guaranty, and the above consents and waivers of PCC shall remain in full force
and effect until the satisfaction in full of all obligations of Buyer under
this Agreement.
11.14 Guaranty of Blackstar Communications.
(a) In consideration of the execution and delivery of
this Agreement by Buyer, Blackstar Communications agrees as follows:
(1) Blackstar Communications hereby guarantees
the complete and timely performance of Sellers' indemnification obligations set
forth in Section 10.2(e) and, to the extent applicable to Section 10.2(e), in
Section 10.2(f) of this Agreement. If any default shall be made by Sellers in
such performance, then Blackstar Communications will itself perform or cause to
be performed such obligation upon receipt of notice from Buyer specifying in
summary form the default.
(2) Blackstar Communications waives presentment,
protest, demand, or action or delinquency in respect of the obligations of
Sellers under such Sections. Blackstar Communications waives all notices of
nonperformance, notices of protest, notices of dishonor, and notices of
acceptance of this guaranty.
(3) This guaranty shall be deemed a continuing
guaranty, and the above consents and waivers of Blackstar Communications shall
remain in full force and effect until the satisfaction in full of Sellers'
obligations under such Section.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 43
- 37 -
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 PAXSON COMMUNICATIONS CORPORATION
DETROIT-31, INC. HEREBY JOINS IN THE EXECUTION OF THE
FOREGOING ASSET PURCHASE AGREEMENT TO
AGREE TO THE PROVISIONS OF
SECTION 11.13.
By: /s/ Lowell W. Paxon
-------------------------------
Name: Lowell W. Paxson PAXSON COMMUNICATIONS
Title: Chairman CORPORATION
BLACKSTAR COMMUNICATIONS OF By: /s/ Lowell W. Paxson
MICHIGAN, INC. ----------------------------------
Name: Lowell W. Paxson
Title: Chairman
By: /s/ John E. Oxendine
---------------------------- BLACKSTAR COMMUNICATIONS, INC.
Name: John E. Oxendined HEREBY JOINS IN THE EXECUTION OF THE
Title: Chairman FOREGOING ASSET PURCHASE AGREEMENT TO
AGREE TO THE PROVISIONS OF
SECTION 11.14.
BLACKSTAR OF ANN ARBOR, INC.
BLACKSTAR COMMUNICATIONS, INC.
By: /s/ John E. Oxendine By: /s/ John E. Oxendine
----------------------------- -----------------------------------
Name: John E. Oxendine Name: John E. Oxendine
Title: Chairman Title: Chairman
<PAGE> 1
EXHIBIT 10.154
ASSET PURCHASE AGREEMENT
DATED AS OF MARCH 25, 1997
BY AND AMONG
PAXSON COMMUNICATIONS OF WEST PALM BEACH-25, INC.,
PAXSON WEST PALM BEACH LICENSE, INC.,
AND
THE HEARST CORPORATION
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
SECTION 1 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-------------------
1.1 Terms Defined in this Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------------------------
1.2 Terms Defined Elsewhere in this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------------------------------
SECTION 2 PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------------------
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------------
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------------
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------------------------------
2.6 Liabilities Not Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------------
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------------------------------
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------------------
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------------------------
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------------------
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------
3.5 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------
3.6 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------
3.7 Entire Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------
3.8 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------
3.9 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------
3.10 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------
3.11 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------
3.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
---------
3.13 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------
3.14 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------------
3.15 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
---------
3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-----
3.17 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------
3.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------------
3.19 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------------
3.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
3.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------------------------
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------------------------
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------------------
4.4 Buyer Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
SECTION 5 OPERATIONS OF WPBF PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------------------------
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------
5.6 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------
5.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------
5.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------
5.9 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------
5.10 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
5.11 Advice as to Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------------------
5.12 FCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------------------
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------
6.2 HSR Act Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------
6.3 Control of WPBF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------
6.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
6.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---------------
6.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-----------
6.7 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
---------------------------
6.8 Disclaimer of Further Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------------------------------------
6.9 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------------------
6.10 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT CLOSING . . . . . . . . . . . . . . . . . 25
---------------------------------------------------------
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------------------------
7.2 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------------------------
SECTION 8 CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------------
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------
8.2 Deliveries by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------------
SECTION 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------
9.1 Termination by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------------
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------
9.3 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------------------------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
9.4 Payment of Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------------------------
9.5 Buyer's Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------------------------
9.6 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . 30
-----------------------------------------------------------------------------
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------------------------
10.2 Indemnification by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--------------------------
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
------------------------
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-----------------------------
10.5 Certain Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-------------------
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------
11.3 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
--------------------------
11.5 Further Assurances; Reasonable Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------------------------------
11.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----------------
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------
11.10 Waiver of Compliance; Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------------------
11.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------
</TABLE>
<PAGE> 5
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of March 20, 1997, by and
among Paxson Communications of West Palm Beach-25, Inc., a Florida corporation
("Owner"), Paxson West Palm Beach License, Inc., a Florida corporation
("Licensee"), and The Hearst Corporation, a Delaware corporation ("Buyer").
PRELIMINARY STATEMENT
Each of Owner and Licensee is a wholly-owned, direct or indirect,
subsidiary of Paxson Communications Corporation, a Delaware corporation
("PCC"). Owner and Licensee own and operate television station WPBF-TV,
Tequesta, Florida ("WPBF"), pursuant to licenses issued by the Federal
Communications Commission. Owner and Licensee (collectively, "Sellers," and
each, individually, a "Seller") desire to sell, and Buyer wishes to buy,
substantially all the assets of Owner and Licensee that are used in the
business and operations of WPBF 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 Sellers, intending to be
bound legally, agree as follows:
SECTION 1 CERTAIN DEFINITIONS.
1.1 Terms Defined in this Section. The following terms, as used in
this Agreement, have the meanings set forth in this Section:
"Accounts Receivable" means the rights of either Seller as of 11:59 pm
on the day prior to the Closing Date to payment for the sale by WPBF of
advertising time and other goods and services prior to the Closing Date.
"Affiliate," with respect to any Person, means any other Person,
directly or indirectly, controlling, controlled by, or under common control
with such Person.
"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 (a) all Contracts listed on Schedule 3.8,
(b) Contracts in existence as of the date of this Agreement that are not
required to be listed on Schedule 3.8, and (c) Contracts entered into by either
Seller between the date of this Agreement and the Closing Date in compliance
with Section 5.2.
<PAGE> 6
"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.
"Communications Act" means the Communications Act of 1934, as amended.
"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,
including written consents to the assignment of the Assumed Contracts.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements, commitments, or arrangements (including leases for
personal or real property and employment agreements), written or oral
(including any amendments and other modifications thereto) to which either
Seller is a party or which are binding upon either Seller and that relate to or
affect the Assets or the business or operations of WPBF, and (a) that are in
effect on the date of this Agreement or (b) that are entered into by either
Seller between the date of this Agreement and the Closing Date.
"Effective Time" means 12:01 a.m., Eastern time, on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action or actions by the FCC granting its consent,
to the extent required, to the assignment of all the FCC Licenses to Buyer as
contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to either Seller
in connection with the business or operations of WPBF.
"Final Order" means an action by the FCC (including action by the FCC
staff pursuant to delegated authority) 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.
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<PAGE> 7
"Intangibles" means (i) all copyrights, trademarks, trade names,
service marks, service names, call signs and letters, licenses, authorizations,
patents, permits, jingles, slogans, logos, proprietary information, technical
information and data, machinery and equipment and software warranties, and
other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing), and applications therefor, owned by,
issued to, or held by either Seller and used or useful in the business and
operations of WPBF, together with any additions thereto between the date of
this Agreement and the Closing Date, and (ii) all programs and programming
materials owned by either Seller and used in the business and operations of
WPBF, whether recorded on tape or any other media or intended for live
performance, and whether completed or in production, and all related common law
and statutory copyrights owned by Sellers and used in the business and/or
operations of WPBF, together with any additions thereto between the date of
this Agreement and the Closing Date.
"Licenses" means all licenses, permits, construction permits,
registrations, and other authorizations issued by the FCC, the FAA, or any
other federal, state, or local governmental authorities to either Seller, used
in connection with the conduct of the business and/or operations of WPBF and
all applications therefor, together with any renewals, extensions,
modifications, and/or additions thereto between the date of this Agreement and
the Closing Date.
"Material Contracts" means those Assumed Contracts that are designated
on Schedule 3.8 as "Material Contracts."
"Permitted Liens" means (a) liens for current taxes not yet due and
payable, (b) landlord's liens and liens for property taxes not delinquent, (c)
statutory liens that were created in the ordinary course of business, (d)
leased interests in property owned by others and leased interests in property
leased to others as listed on Schedule 3.5, (e) restrictions set forth in, or
rights granted to governmental authorities as set forth in, applicable law, (f)
zoning, building, or similar restrictions, easements, rights-of-way,
reservations of rights, or other restrictions or encumbrances relating to or
affecting property, (g) easements, exceptions, and restrictions that are
disclosed on Schedule 3.5, and (h) other easements, covenants, and restrictions
of record that affect any Real Property Interest and would not result in a
material adverse change in the business or operations of WPBF or the ability of
Sellers to satisfy their obligations hereunder.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, governmental entity, or other entity or organization.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property, and all buildings, fixtures,
and other improvements thereon, including towers, satellite dishes and antennae
to the extent the foregoing are considered real property, whether or not owned
or held by either Seller, used in the business and/or operations of WPBF.
-3-
<PAGE> 8
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings,
and other improvements thereon, including towers, satellite dishes and antennae
to the extent the foregoing are considered real property, which are owned by,
issued to, or held by either Seller and used in the business or operations of
WPBF, 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, fixtures, transmitters, antennae, leasehold improvements,
office equipment, materials and supplies, plant, inventory, video libraries and
archives, spare parts, and other tangible personal property of every kind and
description, wherever located, owned, issued to, or held by either Seller that
is used in the conduct of the business and/or operations of WPBF, together with
any additions, improvements and replacements thereto between the date of this
Agreement and the Closing Date.
"Taxes" means all taxes, charges, fees, levies, or other assessments
imposed by any federal, state, local, or foreign taxing authority, whether
disputed or not, including income, capital, estimated, excise, property, sales,
transfer, withholding, employment, payroll, and franchise taxes and any
interest, penalties, or additions attributable to or imposed on or with respect
to such assessments.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Benefit Plan Section 3.15(b)
Claimant Section 10.4(a)
Collection Period Section 6.9(a)
DOJ Section 6.2
Employees Section 3.15(a)
Estimated Purchase Price Section 2.4(a)
Event of Loss Section 6.4(b)
Financial Statements Section 3.11
FTC Section 6.2
Indemnifying Party Section 10.4(a)
Losses Section 10.2
Purchase Price Allocation Section 2.3(c)
</TABLE>
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<PAGE> 9
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 (including the representations and warranties made
and relied upon hereunder), Sellers hereby agree to sell, transfer, convey,
assign, and deliver to Buyer on the Closing Date, and Buyer agrees to purchase,
all of each Seller's right, title and interest as of the Closing Date in all of
the tangible and intangible assets used or useful in connection with the
conduct of the business and/or operations of WPBF of every type and
description, wherever located, whether or not reflected on the books and
records of Sellers, 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, liens, security
interests, mortgages, pledges, encumbrances, or restrictions (except for
Permitted Liens), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles;
(f) All proprietary information, technical information and
data, machinery and equipment warranties, maps, computer discs and tapes,
plans, diagrams, blueprints, and schematics, including filings with the FCC
relating to the business and/or operation of WPBF;
(g) All claims or causes of action of either Seller relating
to WPBF to the extent they relate to the period after the Effective Time; and
(h) All books and records, including files, books of account,
computer programs, tapes, electronic data processing software, customer lists,
and other records relating to the Assets or the business or operations of WPBF,
including copies of the Assumed Contracts, and FCC logs and other records
required by the FCC as of the Closing Date to be maintained at WPBF and/or on
file with the FCC;
(i) All insurance proceeds arising out of or related to
damage, destruction, or loss of any property or asset used in the business and
operations of WPBF on the date of this Agreement to the extent of any damage or
destruction that remains unrepaired, or to the extent any destroyed property or
asset that remains unreplaced, at the Closing Date;
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<PAGE> 10
(j) All security deposits under any Assumed Contract to the
extent a credit was made in favor of Sellers as a result of such security
deposits in making prorations pursuant to Section 2.3(a);
(k) To the extent not included in (a) through (h) above, all
orders and agreements now existing, or entered into in the ordinary course of
business between the date of this Agreement and the Closing Date, for the sale
of advertising time on WPBF except for those which on the Closing Date have
already been filled or have expired;
(l) To the extent not included in (a) through (h) above, all
prepaid expenses as of the Closing Date to the extent a credit was made in
favor of Sellers as a result of such prepaid expenses in making prorations
pursuant to Section 2.3(a);
(m) To the extent not included in (a) through (h) above, all
programs, program rights, program licenses, and programming materials and
elements of whatever form or nature owned by either Seller as of the date of
this Agreement and used in connection with the business or operations of WPBF,
whether recorded on film, tape or any other medium or intended for live
performance, television broadcast, or other medium and whether completed or in
production (such as outlines, scripts or otherwise), and all related common-law
and statutory copyrights owned by, issued to, or held by either Seller and used
in connection with the business or operations of WPBF, together with all such
programs, materials, elements, and copyrights acquired by either Seller in
connection with the business or operations of WPBF between the date of this
Agreement and the Closing Date, but excluding those rights and/or materials
consumed or expired between the date of this Agreement and the Closing Date;
(n) To the extent not included in (a) through (h) above, and
to the extent transferable, all of Sellers' rights under manufacturers' and
vendors' warranties relating to the Assets and, if said rights are not
assignable to Buyer, the Sellers agree to enforce such rights to Buyer's
benefit at Buyer's sole expense; and
(o) All of each Seller's goodwill in, and going concern value
of, WPBF.
2.2 Excluded Assets. The Assets shall exclude the following:
(a) Each Seller's cash and cash equivalents on hand as of the
Closing and any of either Seller's interest in its bank or savings accounts and
any stocks, bonds, certificates of deposit and similar investments;
(b) All Accounts Receivable;
(c) Any insurance policies, promissory notes, amounts due to
either Seller from employees, bonds, letters of credit, certificates of
deposit, or other similar items, and any cash surrender value in regard
thereto;
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<PAGE> 11
(d) Any pension, profit-sharing, or employee benefit plans;
(e) All tax returns and supporting materials, all original
financial statements and supporting materials, all of Sellers' corporate minute
books and other books and records related to internal corporate matters and
financial relationships with Sellers' lenders and Affiliates, all books and
records that either Seller is required by law to retain, and all records of
either Seller relating to the sale of the Assets;
(f) Any interest in and to any refunds of Taxes for periods
prior to the Closing Date;
(g) Any assets and properties of either Seller that are
disposed of prior to the Closing Date in compliance with this Agreement;
(h) Deposits and prepaid expenses for which Sellers do not
receive a credit under Section 2.3 and deposits under utility and similar
agreements to the extent not reflected in the adjustments made pursuant to
Section 2.3;
(i) Any claim or cause of action by either Seller relating to
the period before the Effective Time;
(j) Any collective bargaining agreements; and
(k) All assets described on Schedule 2.2.
2.3 Purchase Price. The Purchase Price for the Assets shall be
Eighty-Five Million Dollars ($85,000,000.00), adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of revenues and expenses.
All revenues and expenses arising from the operations of WPBF, including
revenues and expenses arising under Assumed Contracts, tower rental (and
related fees, commissions, and tower management expenses), 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), employee compensation with
respect to Employees who are hired by Buyer (including wages and salaries, but
excluding, unless Buyer and Sellers otherwise agree, accrued sick leave,
severance pay, and earned vacation time), security deposits, and similar
prepaid and deferred items, shall be prorated between Buyer and Sellers in
accordance with the principle that Sellers shall receive all revenues and be
responsible for all expenses, costs, and liabilities allocable to the
operations of WPBF for the period prior to the Effective Time, and Buyer shall
receive all revenues and be responsible for
-7-
<PAGE> 12
all expenses, costs, and obligations allocable to the operations of WPBF for
the period after the Effective Time, subject to the following:
(1) There shall be no adjustment for, and Sellers
shall remain solely liable with respect to, liabilities and obligations under
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.
(2) There shall be no adjustment for any difference
between the value of the goods or services to be received by Sellers as of the
Closing Date under trade or barter agreements relating to WPBF and the value of
any advertising time remaining to be run by Sellers as of the Closing Date
under trade or barter agreements relating to WPBF. Notwithstanding the
foregoing, an adjustment and proration shall be made in favor of Buyer to the
extent that the amount of any advertising time remaining to be run by WPBF
under trade or barter agreements as of the Closing Date exceeds the value of
the goods or services to be received by WPBF as of the Closing Date by more
than $60,000.
(3) Payments due under film or programming license
agreements for the month in which the Closing occurs shall be prorated based on
the number of days in such month before the Closing Date and the number of days
in such month on and after the Closing Date.
(4) There shall be no proration for, and Sellers
shall remain solely liable for, accrued sick leave, severance pay, or earned
vacation time of the Employees accrued or earned prior to the Closing Date.
Sellers shall be responsible for the payment of all compensation and
commissions owed to WPBF employees up to the Effective Time. Buyer may, as of
the Effective Time, employ those employees as Buyer may elect on terms and
conditions determined by Buyer, and Buyer shall be responsible for the payment
of all compensation and commissions payable to WPBF employees retained by Buyer
after the Effective Time.
(5) There shall be no proration of music license
fees. Sellers are responsible for filing and paying all music license fees
(ASCAP, BMI, SESAC, etc.) due and payable as of the Effective Time, and Buyer
is responsible for filing and paying all such fees after the Effective Time.
(b) Manner of Determining Adjustments. The Purchase Price,
taking into account the adjustments and prorations pursuant to Section 2.3(a),
will be determined finally in accordance with the following procedures:
(1) Sellers shall prepare and deliver to Buyer not
later than five (5) business days before the Closing Date a preliminary
settlement statement which shall set forth Sellers' good faith estimate of the
adjustments to the Purchase Price under Section 2.3(a). The preliminary
settlement statement 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
-8-
<PAGE> 13
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and shall
be certified by Sellers to be Sellers' good faith estimate as of the date
thereof.
(2) As promptly as practical after the Closing, but
in any event not later than sixty days after the Closing Date, Buyer will
deliver to Sellers a statement setting forth Buyer's determination of the
Purchase Price and the calculation thereof pursuant to Section 2.3(a). Buyer's
statement shall contain all information reasonably necessary to determine the
adjustments to the Purchase Price under Section 2.3(a), and such other
information as may be reasonably requested by either Seller, and shall be
certified by Buyer to be true and complete as of the date thereof. If Sellers
dispute the amount of the Purchase Price determined by Buyer, they shall
deliver to Buyer within thirty days after their receipt of Buyer's statement a
statement setting forth their determination and calculation of the amount of
the Purchase Price. If Sellers notify Buyer of their acceptance of Buyer's
statement, or if Sellers fail to deliver its statement within the thirty-day
period specified in the preceding sentence, Buyer's determination of the
Purchase Price shall be conclusive and binding on the parties as of the last
day of the thirty-day period.
(3) Buyer and Sellers shall use good faith efforts
to resolve any dispute involving the determination of the Purchase Price. If
the parties are unable to resolve the dispute within fifteen days following the
delivery of Sellers' statement pursuant to Section 2.3(b)(2), Buyer and Seller
shall jointly designate an independent certified public accountant, who shall
be knowledgeable and experienced in the operation of television broadcasting
stations, to resolve the dispute. If the parties are unable to agree on the
designation of an independent certified public accountant, the selection of the
accountant to resolve the dispute shall be submitted to arbitration in
accordance with Section 11.3. The accountant's resolution of the dispute shall
be final and binding on the parties, and a judgment may be entered thereon in
any court of competent jurisdiction. Any fees of this accountant shall be
split equally between the parties.
(c) Allocation of Purchase Price. The Purchase Price shall
be allocated among the Assets purchased by Buyer from each Seller for all
purposes (including Tax and financial accounting purposes) in the manner set
forth in a schedule to be agreed to by Buyer and Sellers on or prior to the
Closing Date; provided, however, that the agreement of Buyer and Sellers as to
such allocation shall not be a condition to any party's obligations at the
Closing. Such allocation of the Purchase Price (the "Purchase Price
Allocation") shall be consistent with Section 1060 of the Internal Revenue
Code. Each of the parties to this Agreement agrees not to take a position on
any Tax return, before any governmental agency charged with the collection of
any Tax, or in any judicial proceeding that is in any way inconsistent with the
Purchase Price Allocation and to cooperate with each other party in timely
filing Forms 8594 with the Internal Revenue Service that are consistent with
the Purchase Price Allocation; provided, however, that nothing herein shall
prevent Buyer and any permitted assignee of Buyer that is a "qualified
intermediary," as provided in Section 11.4, from applying the allocation
provisions of Section 1031 of the Internal Revenue Code and the Treasury
Regulations promulgated thereunder to a transfer of Assets from the "qualified
intermediary" to Buyer as provided in Section 11.4.
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<PAGE> 14
2.4 Payment of Purchase Price. The Purchase Price shall be paid by
Buyer to Sellers as follows:
(a) Payment of Estimated Purchase Price At Closing. The sum
of Eighty-Five Million Dollars ($85,000,000.00), adjusted by the estimated
adjustments pursuant to Section 2.3(a) as set forth in Sellers' preliminary
settlement statement pursuant to Section 2.3(b)(1), is referred to as the
"Estimated Purchase Price." At the Closing, Buyer shall pay or cause to be
paid to or for the account of Sellers the Estimated Purchase Price by federal
wire transfer of same-day funds pursuant to wire instructions which shall be
delivered by Sellers to Buyer at least two business days prior to the Closing
Date.
(b) Payments to Reflect Adjustments.
(1) If the Purchase Price as finally determined
pursuant to Section 2.3(b) exceeds the Estimated Purchase Price, Buyer shall
pay to Sellers, in immediately available funds within five business days after
the date on which the Purchase Price is determined pursuant to Section 2.3(b),
the difference between the Purchase Price and the Estimated Purchase Price.
(2) If the Purchase Price as finally determined
pursuant to Section 2.3(b) is less than the Estimated Purchase Price, Sellers
shall pay to Buyer, in immediately available funds within five business days
after the date on which the Purchase Price is determined pursuant to Section
2.3(b), the difference between the Purchase Price and the Estimated Purchase
Price.
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 either Seller under the Licenses and the Assumed
Contracts to the extent that either (a) the obligations and liabilities relate
to the time after the Effective Time or (b) the Purchase Price was reduced
pursuant to Section 2.3(a) as a result of the proration of such obligations and
liabilities.
2.6
Liabilities Not Assumed. Any provision of this Agreement to the
contrary notwithstanding (and without implication that Buyer is assuming any
liability not expressly excluded and, where applicable, without implication
that any of the following have been included in the liabilities described in
Section 2.5), except for the liabilities described in Section 2.5, Buyer shall
not assume by virtue of this Agreement or the transactions contemplated hereby
and, shall have no liability for, any obligations or liabilities of the Sellers
of any kind, character, or description whatsoever, including without limitation
the following liabilities:
(a) any of Sellers' obligations hereunder;
(b) any liabilities relating to any of the Excluded Assets,
or any obligations or liabilities under any Contract not included in the
Assumed Contracts;
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<PAGE> 15
(c) any obligations or liabilities under the Assumed
Contracts relating to the period prior to the Effective Time except insofar as
the Purchase Price was reduced pursuant to Section 2.3(a) as a result of the
proration of such obligations and liabilities;
(d) any liability arising from, or in connection with, the
conduct of the business and operations of WPBF or the Assets prior to the
Closing Date except insofar as the Purchase Price was reduced pursuant to
Section 2.3(a) as a result of the proration of such obligations and
liabilities;
(e) any intercompany liabilities or any liabilities by either
Seller to any of their respective shareholders, directors or officers or to any
Affiliate of either Seller or of any of their respective shareholders,
directors or officers or any liabilities relating to the capital stock of
either Seller;
(f) any liabilities to or with respect to Sellers' employees,
whether or not any such employee is offered employment by Buyer after the
Closing Date, relating in any way to such employee's employment with Sellers
prior to the Closing Date (including deferred compensation liabilities and
obligations for severance benefits, vacation time, or sick leave accrued prior
the Closing Date);
(g) any liability in respect of any past, present, or future
litigation, action, suit, proceeding or arbitration arising out of or relating
to the ownership or operation of the Assets or the business and operations of
WPBF prior to the Closing Date (whether asserted or commenced before or after
the Closing Date);
(h) any liabilities with respect to or arising from
indebtedness for borrowed money incurred or accrued before the Closing Date;
(i) without limitation by the specific enumeration of the
foregoing, any liabilities not expressly assumed by Buyer pursuant to the
provisions of Section 2.5; and
(j) any liabilities of Sellers for Taxes relating to periods
prior to the Effective Time.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each Seller jointly and severally represents and warrants to Buyer
as follows:
3.1 Organization, Standing, and Authority. Each Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. Each Seller has all requisite corporate power
and authority (a) to own, lease, and use the Assets as now owned, leased, and
used by it, (b) to conduct the business and operations of WPBF as now conducted
by it, and (c) to execute and deliver this Agreement and the documents
contemplated hereby, and to
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<PAGE> 16
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by such Seller hereunder and thereunder. Each
Seller is duly qualified to transact business in each jurisdiction in which the
nature of its business makes such qualification necessary except where failure
to so qualify would not have a material adverse effect on the business or
operations of WPBF.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by each Seller have been duly authorized by
all necessary corporate actions on the part of such Seller. This Agreement has
been duly executed and delivered by each Seller and constitutes the legal,
valid, and binding obligation of each 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
governmental Consents provided for in Section 6.1 and Section 6.2 and the other
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): (a) do not require the consent
of any third party (including any governmental or regulatory authority); (b)
will not conflict with any provision of the Articles of Incorporation or
By-Laws, as amended and/or restated, of either Seller; (c) will not violate or
result in a breach of, or contravene any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (d) will not violate, conflict with, or result in a material
breach of any terms of, constitute grounds for termination of, constitute a
default under, or result in the acceleration of any performance required by the
terms of, any mortgage, indenture, lease, contract, agreement, instrument,
license, or permit to which either Seller is a party or by which either Seller
or any of the Assets may be bound legally or affected; and (e) will not create
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
or other security interest upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 is a true and complete list
as of the date of this Agreement of all FCC Licenses, all Licenses issued by
the FAA, and all other material Licenses. Each License listed on Schedule 3.4
has been validly issued, and the Seller designated as such on Schedule 3.4 is
the authorized legal holder thereof. The Licenses listed on Schedule 3.4 are
in full force and effect, and the conduct of the business and operations of
WPBF is in accordance therewith in all material respects. Schedule 3.4 also
sets forth a true and complete list of any and all pending applications filed
with the FCC by either Seller relating to WPBF, true and complete copies of
which have been delivered to Buyer or made available for inspection by Buyer.
The FCC Licenses include all of the licenses and authorizations required under
the Communications Act and the current rules and regulations of the FCC in
connection with the conduct of the business and operations of WPBF. None of
the Licenses listed on Schedule 3.4 is subject to any restriction or condition
which would limit in any material respect the business or operation of WPBF as
now conducted. There is not, as of the date of this Agreement, pending, or to
the knowledge of either Seller threatened, any action or proceeding by or
before the FCC to revoke,
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cancel, rescind or modify (including a reduction in coverage area) any of the
FCC Licenses (other than proceedings to amend FCC rules of general
applicability) or refuse to renew the FCC Licenses, and there is not as of the
date of this Agreement issued or outstanding, or to the knowledge of either
Seller pending or threatened, by or before the FCC, any order to show cause,
notice of violation, notice of apparent liability, or notice of forfeiture or
material complaint against either Seller with respect to WPBF, other than
regularly scheduled license renewal proceedings. There are no unsatisfied
notices of violation or notices of apparent liability to monetary forfeiture
issued by the FCC to Sellers with respect to WPBF or its operations. To
Sellers' knowledge, there exist no facts, conditions or events relating to
Sellers or WPBF that would cause the denial of an application or consent from
the FCC with respect to the assignment of the FCC Licenses as provided in this
Agreement. As of the date of this Agreement, there is no proceeding pending
or, to Sellers' knowledge, threatened, seeking the revocation or limitation of
any Licenses other than FCC Licenses.
3.5 Real Property. Schedule 3.5 contains a complete and accurate
description of all the Real Property and Sellers' interests therein (including
street address (where known), legal description (where known), owner, and
Sellers' use thereof). The Real Property listed on Schedule 3.5 comprises all
Real Property Interests used to conduct the business and operations of WPBF as
now conducted. Except as set forth on Schedule 3.5, Seller has good and
marketable fee simple title to all fee estates included in the Real Property
Interests and good title to all other Real Property Interests, in each case
free and clear of all liens, security interests, mortgages, pledges,
encumbrances, or restrictions, except for Permitted Liens. All guy wires, guy
anchors, satellite dishes, associated transmission equipment, transmitter
buildings, main studio buildings, associated parking lots, and other buildings
and other improvements included in the Assets are all located entirely on and
within the boundaries of the Real Property listed in Schedule 3.5. As of the
date hereof, all Real Property (including the improvements thereon) is
available for immediate use in the conduct of the business and operations of
WPBF and complies in all material respects with all applicable building or
zoning codes and the regulations of any government authority having
jurisdiction, except to the extent the current use, while permitted,
constitutes a "nonconforming use" under current zoning or land use regulations.
Sellers have full and unfettered legal access to all of the Real Property
listed on Schedule 3.5. Sellers have delivered or made available to Buyer true
and complete copies of all deeds and other instruments evidencing Real Property
Interests. Except for that portion of the Real Property and Real Property
Interests subject to leases where either Seller is lessor or sublessor (as
identified on Schedule 3.5), such Seller is in possession of the Real Property.
As of the date of this Agreement, there are no pending or, to the knowledge of
Sellers, threatened condemnation or appropriation proceedings against any of
the Real Property or the Real Property Interests.
3.6 Tangible Personal Property. Schedule 3.6 lists all material
items of Tangible Personal Property. Except as described in Schedule 3.6, the
Seller designated as such on Schedule 3.6 owns and has good title to each item
of Tangible Personal Property and none of the Tangible Personal Property is
subject to any liens, security interests, mortgages, pledges, encumbrances, or
restrictions, except for Permitted Liens. All items of transmitting and studio
equipment
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<PAGE> 18
included in the Tangible Personal Property are sufficient to permit WPBF, and
any unit auxiliaries thereto, to operate, and WPBF is operating, in all
material respects, in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC (other than FCC engineering specifications).
3.7 Entire Business. The Assets together with the Excluded Assets
constitute all of the assets, rights, and properties of Sellers used or useful
in the business and operations of WPBF as currently conducted.
3.8 Contracts. Schedule 3.8 is a true and complete list as of the
date of this Agreement of all Contracts except contracts with advertisers for
production or sale of advertising time on WPBF for cash at rates consistent
with Sellers' past practices that may be canceled by a Seller without penalty
on not more than ninety days' notice. Seller has delivered or made available
to Buyer true and complete copies of all written Assumed Contracts and accurate
descriptions of all oral Assumed Contracts listed on Schedule 3.8. All of the
Assumed Contracts are in full force and effect and are valid and binding
agreements of either or both Sellers enforceable in accordance with their
terms. Sellers are not in default in any material respect under any of the
Assumed Contracts, nor does any condition exist that with the notice or lapse
of time or both would constitute such a default. Except for the need to obtain
the Consents listed on Schedule 3.3, each 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.
3.9 Consents. Except for the governmental Consents provided for in
Section 6.1 and Section 6.2 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 to consummate this Agreement and the transactions contemplated hereby,
or to permit Sellers to assign or transfer the Assets to Buyer.
3.10 Intangibles. Schedule 3.10 is a true and complete list as of the
date of this Agreement of all material Intangibles (exclusive of Licenses
listed in Schedule 3.4), all of which are valid and subsisting. Other than
with respect to matters generally affecting the television broadcasting
industry and not particular to either Seller, neither Seller is aware of or has
received any notice or demand alleging that it is infringing upon or otherwise
acting adversely to any trademarks, trade names, service marks, service names,
copyrights, patents, patent applications, trade secrets, know-how, methods, or
processes owned or licensed by any other Person, nor is either Seller aware
that any other Person is infringing upon or acting adversely to any of the
Intangibles or any rights of Sellers therein.
3.11 Financial Statements. Sellers have furnished Buyer with true and
complete copies of a balance sheet and income statement of Sellers with respect
to WPBF as at December 31, 1995 and for the year then ended and true and
complete copies of a balance sheet and income statement of Sellers with respect
to WPBF as at December 31, 1996 and for the twelve-month period then
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<PAGE> 19
ended (collectively, the "Financial Statements"). The Financial Statements
have been prepared from the books and records of Sellers, have been prepared in
accordance with generally accepted accounting principles consistently applied
and maintained throughout the periods indicated and present fairly, in all
material respects, the financial condition of WPBF as at their respective dates
and the results of operations for the periods then ended. As of December 31,
1996, there was no material direct or indirect indebtedness, liability, claim,
loss, damage, deficiency, obligation, or responsibility, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent, or otherwise, relating to the Assets, of a kind required
by generally accepted accounting principles to be set forth on a financial
statement that was not adequately reflected or reserved against on the
Financial Statements as at December 31, 1996 in the manner required by
generally accepted accounting principles.
3.12 Insurance. Schedule 3.12 is a true and complete list as of the
date of this Agreement of all insurance policies and binders of Sellers that
insure any part of the Assets, Employees, or the business and/or operations of
WPBF. All policies of insurance and binders listed in Schedule 3.12 are in
full force and effect and no notice of cancellation or non-renewal has been
received with respect to any such policy or binder. The Sellers are not in
default with respect to any material provision contained in any such policy or
binder and there are no outstanding unpaid claims related to WPBF as to which
the carrier has disclaimed liability.
3.13 Reports. All returns, reports, and statements that either Seller
was required to file with the FCC or FAA with respect to the business or
operations of WPBF have been filed, and Sellers have complied with all
reporting requirements of the FCC and FAA relating to WPBF in all material
respects. All of such returns, reports, and statements, as filed, satisfy all
applicable legal requirements in all material respects.
3.14 Absence of Certain Changes. Except as set forth on Schedule
3.14, since December 31, 1996, (i) there has been no material adverse change in
the assets or properties of WPBF, and (ii) Sellers have conducted the business
and operations of WPBF only in the ordinary course consistent with past
practice.
3.15 Personnel.
(a) Employees and Compensation. Schedule 3.15 contains a
true and complete list as of the date of this Agreement of all employees of
either Seller engaged in the business and operations of WPBF (collectively, the
"Employees") and a description of all compensation arrangements affecting them.
Except as set forth on Schedule 3.8, neither Seller has any contracts of
employment (other than contracts of employment at will which may be terminated
with or without cause) with any employee engaged in the business and operations
of WPBF (including independent contractors).
(b) Benefit Plans. Except as set forth on Schedule 3.15,
Sellers do not maintain with respect to the Employees, and are not required
with respect to the Employees to make
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contributions to, any "employee benefit plan" (within the meaning of Section
3(3) of ERISA), including, without limitation, any pension, welfare, or savings
plan or arrangement, or any employee stock purchase or stock option, severance,
vacation or holiday pay, sick leave, performance, bonus, incentive, or
insurance plan or arrangement (each, a "Benefit Plan") and related trust
agreements. Sellers have made available to Buyer copies of any Benefit Plan
which relates to or covers any of the Employees and related trust agreements as
in effect on the date hereof.
(c) Multiemployer Plans. Neither Seller has at any time been
a participant in any "multiemployer pension plan," as defined in Section 3(37)
of ERISA, that covers any Employee.
(d) Labor Relations. Each Seller is in compliance 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 neither Seller has received any
notice alleging that it has failed to comply with any such laws, rules, or
regulations. Except as disclosed on Schedule 3.17, no controversies, disputes,
or proceedings are pending or, to either Seller's knowledge, threatened,
between either Seller and any Employee. No labor union or other collective
bargaining unit represents or, to Sellers' knowledge, claims to represent any
of the employees of WPBF. To Sellers' 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 WPBF.
3.16 Taxes. There are no legal, administrative, or tax proceedings
pursuant to which either Seller is or could be made liable for any Taxes, the
liability for which could extend to Buyer as transferee of the Assets, and no
event has occurred that could impose on Buyer any transferee liability for any
Taxes due from either Seller.
3.17 Claims and Legal Actions. Except as disclosed on Schedule 3.17
and except for any FCC rulemaking proceedings generally affecting the
television broadcasting industry and not particular to either Seller, as of the
date of this Agreement, there is no claim, legal action, counterclaim, suit,
arbitration, or other legal, administrative, or tax proceeding, nor any order,
decree, or judgment, in progress or pending, or to the knowledge of either
Seller threatened, against or relating to either Seller with respect to the
Assets or the business or operations of WPBF (including any of the foregoing
arising under any federal, state, or local laws, rules, or regulations relating
in any way to RF radiation, protection of or pollution to the environment,
protection of human health, or occupational safety and health), which
individually or in the aggregate could be expected to create a material adverse
change in the business or operations of WPBF or impair or hinder the ability of
either Seller to perform its obligations under this Agreement.
3.18 Compliance with Laws. Sellers have complied and are in
compliance with the Licenses and all federal, state, and local laws, rules,
regulations, ordinances, judgments, orders, and decrees applicable or relating
to the business and operation of WPBF (including all federal,
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state, and local laws, rules, and regulations relating in any way to RF
radiation, protection of or pollution to the environment, protection of human
health, and occupational safety and health), except for any noncompliance by
either Seller that would not have a material adverse effect on the business or
operations of WPBF or impair or hinder the ability of either Seller to perform
its obligations under this Agreement. In connection with their ownership or
operation of WPBF, Sellers have obtained and been in compliance with all
permits, licenses, registrations, and other consents that are required under
any federal, state, or local laws, rules, or regulations relating in any way to
RF radiation, protection of or pollution to the environment, protection of
human health, or occupational safety and health, except where the failure to
obtain or comply with any such permit, license, registration, or other consent
would not have a material adverse effect on the business or operations of WPBF
or impair or hinder the ability of either Seller to perform its obligations
under this Agreement.
3.19 Transactions with Affiliates. Except as set forth on Schedule
3.19, there are no agreements relating to the business of WPBF between either
Seller and any of its Affiliates (other than the other Seller), neither Seller
has been involved in any material business arrangement or relationship relating
to WPBF with any of its Affiliates (other than the other Seller), and no
Affiliate of either Seller (other than the other Seller) owns any material
property or right, tangible or intangible, that is used in the business or
operations of WPBF.
3.20 Environmental Matters. Except as disclosed on Schedule 3.20, no
substances regulated under or subject to any federal, state, or local laws,
rules, regulations, or ordinances relating to the protection of or pollution to
the environment, including without limitation, PCBs, CFCs, asbestos, hazardous
substances, hazardous materials, hazardous waste, toxic substances, radioactive
materials, oils, hydrocarbons, photographic chemicals and photographic
developing and processing products, and other pollutants and contaminants, are
in, on, under, or about the Real Property in quantities that require
remediation under such laws.
3.21 Disclosure. No representation, warranty, or covenant made by
Sellers in this Agreement or the schedules or exhibits hereto, taken as a
whole, contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein and therein,
taken as a whole, not misleading in the light of the circumstances under which
they were made.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to each 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, on the Closing Date, will be duly qualified to conduct
business in the State of Florida. Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and the documents contemplated
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hereby, and to perform and comply with all of the terms, covenants, and
conditions to be performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Buyer have been duly authorized by all
necessary actions on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion
in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
governmental Consents provided for in Section 6.1 and Section 6.2, 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): (a) do not require the consent of any third party
(including any governmental or regulatory authority); (b) will not conflict
with the Articles or Incorporation or By-Laws, as amended and/or restated, of
Buyer; and (c) will not violate, conflict with, or result in a breach of, or
constitute a default under, any law, judgment, order, injunction, decree, rule,
regulation, or ruling of any court or governmental instrumentality; or (d) will
not violate, conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, or accelerate or permit the acceleration
of any performance required by the terms of, any mortgage, indenture, lease,
contract, agreement, instrument, license, or permit to which Buyer is a party
or by which Buyer may be bound legally or affected.
4.4 Buyer Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate WPBF under
the Communications Act, 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 (a) disqualify Buyer as an assignee of the FCC Licenses or as the owner
and operator of WPBF or (b) cause the FCC to fail to approve in a timely
fashion the application for the FCC Consent.
4.5 Disclosure. No representation, warranty, or covenant made by
Buyer in this Agreement or the schedules or exhibits hereto, taken as a whole,
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained herein and therein, taken as a
whole, not misleading in the light of the circumstances under which they were
made.
SECTION 5 OPERATIONS OF WPBF PRIOR TO CLOSING.
Between the date of this Agreement and the Closing Date, Sellers shall
comply with the covenants in this Section 5:
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5.1 Generally. From the date hereof until the Closing Date,
except as may be expressly permitted or contemplated by this Agreement
or as otherwise agreed to in writing by Buyer, Sellers shall conduct
the business and operations of WPBF in the usual, regular, and
ordinary course consistent with past practice, and shall use
commercially reasonable efforts to preserve intact the business and
operations of WPBF, keep available the services of its Employees, and
preserve its relationships with customers, suppliers, licensees,
licensors, distributors, agents, lessors, lessees, and others having
business dealings with WPBF and the Sellers, and to comply in all
material respects with all Contracts. From the date hereof until the
Closing Date, Sellers shall (i) maintain their inventory of supplies,
parts, spare parts, and other materials and keep their books of
account, records, and files in the ordinary course of business
consistent with past practice, (ii) maintain their promotional
activities and expenditures in the ordinary course of business
consistent with past practice, and (iii) operate and maintain all of
the Assets consistent with past practice. From the date hereof until
the Closing Date, Sellers will sell or cause to be sold advertising
time with respect to WPBF only in the ordinary course of business
consistent with past practice, and will not enter into any advertising
sales contracts for WPBF with a term greater than one year or any
barter or trade arrangements for more than $60,000 of airtime. From
the date hereof until the Closing Date, Sellers shall not materially
increase the aggregate compensation payable to the Employees of WPBF
taken as a whole.
5.2 Contracts. Sellers will not amend in any material
respect or terminate any Material Contract (or waive any material
right thereunder), or enter into any contract or commitment
relating to WPBF or the Assets, or incur any obligation that will be
binding on Buyer after Closing, except for (a) cash time sales
agreements and production agreements made in the ordinary course of
business, (b) trade or barter agreements made in the ordinary course
of business, and (c) other contracts entered into in the ordinary
course of business that do not involve consideration, in the
aggregate, in excess of $500,000 measured at Closing. Prior to the
Closing Date, Sellers shall deliver to Buyer a list of all Contracts
entered into between the date of this Agreement and the Closing Date
and shall make available to Buyer copies of such Contracts. On or
before March 31, 1997, Sellers will deliver or make available to Buyer
a true and complete copy (excluding disclosure schedules) of the
agreement for the sale by Paxson Communications of Ft. Pierce-34, Inc.
of its interest in television station WTVX-TV, Ft. Pierce, Florida.
5.3 Disposition of Assets. Neither Seller shall sell, assign,
lease, or otherwise transfer or dispose of any of the Assets, except
where no longer used in the business or operations of WPBF or in
connection with the acquisition of replacement property of equivalent
kind and value.
5.4 Encumbrances. Neither Seller shall create, assume
or permit to exist any liens, security interests, mortgages, pledges,
encumbrances, or restrictions upon the Assets, except for Permitted
Liens and liens that will be removed prior to the Closing Date.
5.5 Licenses. Neither Seller shall cause or permit, by any
act or failure to act, any of the Licenses listed on Schedule 3.4 to
expire without renewal or to be revoked, suspended, or modified.
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5.6 Access to Information. Sellers shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access, upon reasonable notice, to the Assets, the business
and operations of WPBF, and to all other books, records, and documents
of Sellers relating to WPBF for the purpose of audit and inspection,
and will furnish or cause to be furnished to Buyer or its authorized
representatives, upon reasonable notice, all information with respect
to the affairs and business of WPBF that Buyer may reasonably request.
Without limiting the foregoing, Buyer shall have the right to inspect
the Assets within twenty days prior to Closing to ascertain whether
any Event of Loss has occurred.
5.7 Insurance. Sellers shall maintain the existing insurance
policies on the Assets or other policies providing substantially
similar coverages.
5.8 Consents. Sellers shall (consistent with Section 6.6) use
reasonable efforts to obtain all Consents, without any change in the
terms or conditions of any Assumed Contract or License that could
reasonably be expected to be materially less advantageous to Buyer
than those pertaining under the Assumed Contract or License as in
effect on the date of this Agreement. Seller shall promptly advise
Buyer of any difficulties experienced in obtaining any of the Consents
and of any conditions proposed, considered, or requested for any of
the Consents.
5.9 Financial Information. Sellers shall furnish Buyer within
thirty days after the end of each month ending between the date of
this Agreement and the Closing Date statement of income and expense
for the month just ended, a balance sheet as at the last day of the
month then ended, and such other financial information as Buyer may
reasonably request.
5.10 Compliance with Laws. Sellers shall comply in all
material respects with all laws, rules, and regulations, including FCC
rules and regulations, and all Licenses, including FCC Licenses,
applicable or relating to the business and operations of WPBF.
5.11 Advice as to Certain Changes. Sellers shall promptly
advise Buyer of any change or event resulting in, or which Sellers
believe may reasonably be expected to result in a material adverse
change in the assets, properties, or condition of WPBF, taken as a
whole.
5.12 Matters. Sellers will promptly deliver to Buyer copies
of any reports, applications or communications to or from the FCC or
its staff related to WPBF which are delivered or received between the
date of this Agreement and the Closing Date. Sellers shall provide
Buyer with a reasonable opportunity to review and comment on such
applications prior to filing. Sellers shall promptly advise Buyer of
any communications to or from the FCC or its staff with respect to
WPBF and Sellers shall keep Buyer informed of the status of any
negotiations with the FCC or its staff and consult with Buyer, in
advance, with respect to any agreements or undertakings with the FCC
or its staff regulating the programming or its operation of WPBF that
would continue after the Closing Date.
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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) Sellers and Buyer shall prepare and file with the FCC on
or before March 31, 1997, an appropriate application for the FCC Consent. The
parties shall prosecute the application with all reasonable diligence and
otherwise use reasonable 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, in its reasonable judgment, be
burdensome in any material respect (financial or otherwise) on it. Buyer and
Sellers shall oppose any petitions to deny or other objections filed with
respect to any applications for the FCC Consent and 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
right of any party to exercise its rights under Section 9.
6.2 HSR Act Filing. Sellers 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, that are required in connection with
the transactions contemplated hereby under the HSR Act on or before April 7,
1997; (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 that may be reasonably required in connection with
such filings; (d) promptly file, after any request by the FTC or DOJ and after
appropriate negotiation with the FTC or DOJ of the scope of such request, any
information or documents requested by the FTC or DOJ; and (e) furnish each
other with any correspondence from or to, and notify each other of any other
communications with, the FTC or DOJ that relates to the transactions
contemplated hereunder, and to the extent practicable, to permit each other to
participate in any conferences with the FTC or DOJ.
6.3 Control of WPBF. Prior to Closing, Buyer shall not, directly or
indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of WPBF; such operations, including complete control of
WPBF's programs, employees, and policies, shall be the sole responsibility of
WPBF's licensee.
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6.4 Risk of Loss.
(a) The risk of any loss, damage, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Sellers at all times prior to the completion of the Closing.
(b) If any substantial part of the Assets is lost, damaged,
destroyed, condemned, or confiscated prior to the Closing Date or any other
event occurs that results in (i) taking WPBF off-the-air for a period of three
consecutive days or more, or (ii) preventing a signal transmission by WPBF in
the normal and usual manner in all material respects for a period of seven days
or more (any such event being referred to as an "Event of Loss"), Sellers shall
notify Buyer of the foregoing in writing within five business days. Within
five business days of receipt of Sellers' written notification pursuant to the
preceding sentence, Buyer shall notify Sellers in writing of its election:
(1) to require that Sellers undertake to remedy the
Event of Loss, in which event Sellers shall use commercially reasonable efforts
to replace or repair the Assets with comparable property of like value and
quality or otherwise to remedy the Event of Loss as soon as practicable; or
(2) to terminate this Agreement in accordance with
Section 9.2(d). If Buyer fails to notify Sellers within five business days of
receipt of Sellers' notification pursuant to this Section 6.4(b), Buyer shall
be deemed to have elected under Section 6.4(b)(1) to require Sellers to
undertake to remedy the Event of Loss.
(c) If the Event of Loss is not remedied before the date on
which the Closing would otherwise occur pursuant to Section 8.1(a)(1), then
Buyer may elect, by delivering written notice of its election to Sellers at
least five days prior to the date on which the Closing would otherwise occur
pursuant to Section 8.1(a)(1):
(1) to require that the Closing be postponed until
after the Event of Loss has been remedied, or
(2) to require that the Closing occur on the date
provided in Section 8.1(a)(1), in which event (A) Sellers shall deliver to
Buyer at Closing all remaining insurance proceeds received, to the extent not
already expended by Sellers in connection with the remedy of the Event of Loss,
and (B) Buyer shall bear any additional costs or expenses incurred by Buyer, in
excess of such insurance proceeds, in completing such remedy of the Event of
Loss. If Buyer fails to notify Sellers at least five business days prior to
the date on which the Closing would otherwise occur pursuant to Section
8.1(a)(1) of its election pursuant to this Section 6.4(c), Buyer shall be
deemed to have elected under Section 6.4(c)(2) to require that the Closing
occur on the date provided in Section 8.1(a)(1).
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6.5 Confidentiality.
(a) Except as and to the extent required by law, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement other than
information generally available to the public, information received from third
parties having the right to disclose such information, information
independently developed by the receiving party, or information required by law
to be disclosed. If this Agreement is terminated, each party will return to
the other party all information obtained by the such party from any other party
in connection with the transactions contemplated by this Agreement or destroy
such information and provide the other party with a certificate of destruction.
(b) No party shall publish any press release or make any
other public announcement concerning this Agreement or the transactions
contemplated hereby without the prior written consent of each other party,
which shall not be withheld unreasonably; provided, however, that nothing
contained in this Agreement shall prevent any party, after notification to each
other party, from making any filings with governmental authorities that, in its
judgment, may be required or advisable in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
6.6 Cooperation. Buyer and Sellers 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 Sellers shall use all reasonable efforts to take or
cause to be taken all actions necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including making such filings with governmental
and regulatory authorities, providing information and using reasonable efforts
to obtain all necessary or appropriate waivers, consents and approvals, and
executing such other documents as may be necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use reasonable
efforts to consummate the transaction contemplated hereby and to fulfill their
obligations under this Agreement. Notwithstanding the foregoing, and except as
otherwise expressly provided in this Agreement, no party shall have any
obligation to expend funds to obtain any of the Consents (other than any fee
payable to the FCC in connection with the filing of the applications for FCC
Consent and any fee imposed by the FTC in connection with filings made pursuant
to the HSR Act, in each case to the extent provided in Section 11.1).
6.7 Access to Books and Records. To the extent requested for any
reasonable business purposes hereunder, (i) Sellers shall provide Buyer access
and the right to copy for a period of five years from the Closing Date any
books and records relating to WPBF or the Assets but not included in the Assets
and (ii) Buyer shall provide Sellers access and the right to copy for a period
of five years after the Closing Date any books and records relating to WPBF or
the Assets with respect to periods prior to the Closing that are included in
the Assets. Except to the extent required by law, each party will keep
confidential information received pursuant to Section 6.7.
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6.8 Disclaimer of Further Representations. Buyer agrees that it is
purchasing and accepting the Assets without any representations or warranties,
except for the representations and warranties specifically set forth in this
Agreement and the representations and warranties in the certificate delivered
by Sellers pursuant to Section 8.2(c). To the fullest extent permitted by law,
Buyer hereby unconditionally and irrevocably waives and releases any and all
actual or potential claims that it might have against Sellers regarding any
form of warranty, express or implied, of any kind or type, including warranties
of fitness, relating to or in connection with the purchase of the Assets, and
any warranty arising out of any statement contained in that certain
"Confidential Information Memorandum," distributed in August 1996 on behalf of
Sellers by Alex. Brown & Sons Incorporated, other than the representations and
warranties specifically set forth in this Agreement and the representations and
warranties in the certificate delivered by Sellers pursuant to Section 8.2(c).
This waiver and release is, to the fullest extent permitted by law, absolute,
complete, total, and unlimited in every way and includes, to the fullest extent
permitted by law, a waiver and release of implied warranties, warranties of
fitness for a particular use, warranties of merchantability, claims based on
apparent or latent defects or deficiencies, whether now or hereafter existing,
and strict liability rights and claims of every kind and type (including claims
regarding defects that were not or are not discoverable and all other extant or
later created or conceived of strict liability or strict liability-type claims
and rights).
6.9 Collection of Accounts Receivable.
(a) Collection. On or as soon as practicable after the
Closing Date, Sellers shall deliver to Buyer a complete list of the Accounts
Receivable setting forth, with respect to each receivable, the name and address
of the account debtor, the date of the receivable, and the amount owed. At the
Closing, each Seller will designate Buyer as its agent solely for the purposes
of collecting the Accounts Receivable. Buyer will use commercially reasonable
efforts to collect the Accounts Receivable during the "Collection Period,"
which shall be the period beginning on the Closing Date and ending on the last
day of the fourth calendar month beginning after the Closing Date. Buyer shall
not make any referral or compromise of any of the Accounts Receivable to a
collection agency or attorney for collection and shall not settle or adjust the
amount of any of the Accounts Receivable without the written approval of
Sellers. If Buyer receives monies from an account debtor of Buyer that is also
an account debtor of either Seller with respect to any of the Accounts
Receivable, Buyer shall credit the sums received to the oldest account due.
(b) Reports. On or before the fifth business day after the
end of each full calendar month during the Collection Period, Buyer shall
deliver to Sellers a list of the amounts collected by Buyer before the end of
such month with respect to the Accounts Receivable. On or before the fifth
business day after the end of the Collection Period, Buyer shall deliver to
Sellers a list of all of the Accounts Receivable that remain uncollected.
(c) Deposit of Collections. Sellers shall establish and
maintain during the Collection Period (and for as long after the Collection
Period as Sellers deem appropriate) a bank
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account at a commercial bank in the West Palm Beach, Florida, metropolitan area
for the deposit of collections of the Accounts Receivable. Sellers shall have
sole disbursement authority over each such bank account. Within five (5)
business days after collecting any amounts with respect to any of the Accounts
Receivable, Buyer shall cause the amount collected to be deposited in the
appropriate bank account established by Sellers pursuant to this Section
6.9(c).
(d) Further Obligations. After the expiration of the
Collection Period, Buyer shall have no further obligation hereunder other than
(i) so long as Sellers continue to maintain the bank accounts established
pursuant to Section 6.9(c), to deposit in such accounts any payments with
respect to any of the Accounts Receivable that Buyer subsequently receives, and
(ii) thereafter, to remit directly to Sellers any payments with respect to any
of the Accounts Receivable that Buyer subsequently receives.
6.10 Noncompetition Agreement. At Closing, Buyer and PCC shall enter
into a Noncompetition Agreement in the form of Schedule 6.10.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS 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 Sellers 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, except to the extent any representation or warranty fails to be true
and complete as the result of an Event of Loss with respect to which Buyer made
an election pursuant to Section 6.4(b)(1), and Buyer shall have received a
certificate dated as of the Closing Date, executed on behalf of each Seller by
an officer of such Seller, to that effect.
(b) Covenants and Conditions. Each 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, and Buyer shall have received a
certificate, executed on behalf of each Seller by an officer of such Seller, to
that effect.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer (other than any Consent required for the assignment of any
Assumed Contract listed on Schedule 3.8 that is not a Material Contract)
without any material adverse change in the terms or conditions of any Assumed
Contract or any License (except as Buyer may have otherwise agreed).
(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,
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each 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) HSR Act. The waiting period, and any extensions thereof,
under the HSR Act shall have expired without action by the DOJ or the FTC to
prevent the Closing.
(f) Governmental Authorizations. Licensee shall be the
holder of all FCC Licenses. There shall not have been any modification of any
License that could have an adverse effect on the business and operations of
WPBF. No proceeding shall be pending or to Sellers' knowledge, threatened the
effect of which reasonably could be expected to revoke, cancel, fail to renew,
suspend, or modify adversely any FCC License.
(g) Injunction, etc. There shall not be any order
outstanding against any party hereto or law promulgated that prevents the
consummation of the transactions contemplated by this Agreement.
(h) Deliveries. Seller shall have made all the deliveries to
Buyer set forth in Section 8.2.
(i) Adverse Change. Between the date of this Agreement and
the Closing Date, there shall have been no material adverse change in the
assets, properties, or condition of WPBF, taken as a whole, including any
unrestored damage, destruction, or loss materially affecting the conduct of the
business of WPBF, which has not been waived by Buyer in accordance with the
terms of this Agreement, except to the extent that any material adverse change
results from or represents an Event of Loss with respect to which Buyer made an
election pursuant to Section 6.4(b)(1).
7.2 Conditions to Obligations of Sellers. All obligations of Sellers
at the Closing are subject at Sellers' 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, and Sellers shall have received a certificate dated as of the
Closing Date, executed on behalf of Buyer by an officer of Buyer, to that
effect.
(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, and Sellers shall have received a certificate,
executed on behalf of Buyer by an officer of Buyer, to that effect.
(c) FCC Consent. The FCC Consent shall have been granted
without the imposition on either Seller of any conditions that need not be
complied with by such Seller under
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Section 6.1, Buyer shall have complied with any conditions imposed on it by the
FCC Consent, and the FCC Consent shall have become a Final Order.
(d) HSR Act. The waiting period, and any extensions thereof,
under the HSR Act shall have expired without action by the DOJ or the FTC to
prevent the Closing.
(e) Injunction, etc. There shall not be any order
outstanding against any party hereto or law promulgated that prevents the
consummation of the transactions contemplated by this Agreement.
(f) Deliveries. Buyer shall have made all the deliveries set
forth in Section 8.3.
SECTION 8 CLOSING AND CLOSING DELIVERIES.
8.1 Closing.
(a) Closing Date.
(1) Except as provided in the following sentence or
in Section 8.1(a)(2) or as otherwise agreed to by Buyer and Sellers, the
Closing shall take place at 10:00 a.m. on a date, to be set by Sellers on at
least five days' written notice to Buyer, which shall be not earlier than the
first business day after and not later than the twentieth business day after
the later of (A) the day on which the FCC Consent becomes a Final Order and (B)
the day on which the waiting period under the HSR Act shall have expired. If
Sellers fail to specify the date for Closing pursuant to the preceding sentence
prior to the fifteenth business day after the later of (A) the day on which the
FCC Consent becomes a Final Order and (B) the day on which the waiting period
under the HSR Act shall have expired, the Closing shall take place on the
twentieth business day after the later of (A) the day on which the FCC Consent
becomes a Final Order and (B) the day on which the waiting period under the HSR
Act shall have expired.
(2) If any Event of Loss occurs and Buyer makes an
election pursuant to Section 6.4(c)(1), the Closing shall take place on a date,
to be set by Sellers on at least five days' written notice to Buyer, after the
Event of Loss has been remedied.
(b) Closing Place. The Closing shall be held at the offices
of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Sellers.
8.2 Deliveries by Sellers. Prior to or on the Closing Date, Sellers
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed instruments of
conveyance and transfer, including warranty deeds, bills of sale, motor vehicle
titles, assignments, and other transfer
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documents, all in form and substance reasonably satisfactory to Buyer, that are
sufficient to vest good and marketable title to the Assets in the name of
Buyer, free and clear of all liens, security interests, mortgages, pledges,
encumbrances, or restrictions except for Permitted Liens.
(b) Consents. A copy any instrument evidencing any Consent
received by Sellers prior to the Closing.
(c) Certificate. A certificate, dated as of the Closing
Date, executed on behalf of each Seller by an officer of such Seller,
certifying (1) that the representations and warranties of Sellers 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 (except for such changes
contemplated by Section 5 that may have occurred between the date of this
Agreement and the Closing Date), except to the extent any representation or
warranty fails to be true and complete as the result of an Event of Loss with
respect to which Buyer made an election pursuant to Section 6.4(b)(1), and (2)
that each Seller has in all material respects performed and complied with all
of its obligations, covenants, and agreements set forth in this Agreement to be
performed and complied with on or prior to the Closing Date.
(d) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records included in
the Assets.
(e) Opinions of Counsel. An opinion of Sellers' counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(e)
hereto.
(f) Guaranty. A guaranty by Paxson Communications
Corporation, substantially in the form of Schedule 8.2(f) hereto.
(g) Noncompetition Agreement. The Noncompetition Agreement
in the form of Schedule 6.10, duly executed by PCC.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Estimated Purchase Price as provided
in Section 2.4(a).
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform each Seller's
obligations under the Licenses and Assumed Contracts to the extent provided in
Section 2.5.
(c) 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
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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 6.10, duly executed by Buyer.
SECTION 9 TERMINATION.
9.1 Termination by Sellers. This Agreement may be terminated by
Sellers prior to the Closing and the purchase and sale of the Assets abandoned,
if neither Seller is then in material default, upon written notice to Buyer,
upon the occurrence of any of the following:
(a) Conditions. If on the date on which the Closing is
required to take place pursuant to Section 8.1(a) any of the conditions
precedent to the obligations of Sellers set forth in this Agreement has not
been satisfied or waived in writing by Sellers.
(b) Judgments. If there shall be in effect on the date on
which the Closing is required to take place pursuant to Section 8.1(a) any
judgment, decree, or order that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or
before December 31, 1997.
(d) Absence of Board Approval. At any time after March 24,
1997, if Buyer has not notified Sellers in writing prior to the time that
Sellers elect to terminate this Agreement pursuant to this Section 9.1(d) that
the board of directors of Buyer has approved the execution, delivery, and
performance by Buyer of this Agreement.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer
and the purchase and sale of the Assets abandoned, if Buyer is not then in
material default, upon written notice to Sellers, upon the occurrence of any of
the following:
(a) Conditions. If on the date on which the Closing is
required to take place pursuant to Section 8.1(a) any of the conditions
precedent to the obligations of Buyer set forth in this Agreement has not been
satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date on
which the Closing is required to take place pursuant to Section 8.1(a) any
judgment, decree, or order that would prevent or make unlawful the Closing.
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(c) Upset Date. If the Closing shall not have occurred on or
before December 31, 1997.
(d) Event of Loss. If an Event of Loss occurs and Buyer
notifies Sellers of its election to terminate the Agreement within five
business days after the receipt of Sellers' notice of the occurrence of the
Event of Loss.
(e) Absence of Board Approval. If the board of directors of
Buyer fails to approve the execution, delivery, and performance by Buyer of
this Agreement on or before March 24, 1997 and Buyer notifies Sellers on March
24, 1997 of its election to terminate the Agreement pursuant to this Section
9.2(e).
9.3 Termination by Mutual Consent. This Agreement may be terminated
upon the mutual written consent of Sellers and Buyer.
9.4 Payment of Liquidated Damages. If this Agreement is terminated by
Sellers due to Buyer's breach of this Agreement, then Buyer shall immediately
pay to Sellers Two Million Five Hundred Thousand Dollars in immediately
available funds, and the payment to Sellers pursuant to this Section 9.4 shall
be liquidated damages and shall constitute full payment and the exclusive
remedy for any damages suffered by Sellers by reason of Buyer's breach of this
Agreement. Sellers and Buyer agree in advance that actual damages would be
difficult to ascertain and that the amount of the payment to be made to Sellers
pursuant to Section 9.4 is a fair and equitable amount to reimburse Sellers for
damages sustained due to Buyer's breach of this Agreement.
9.5 Buyer's Rights on Termination. If this Agreement is terminated
by Buyer due to either Seller's breach of any provision of this Agreement,
Buyer shall have all rights and remedies available at law or equity.
9.6 Specific Performance. The parties recognize that if Sellers
breach this Agreement and refuse to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Sellers shall waive the defense that there is an
adequate remedy at law.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES.
10.1 Representations and Warranties. Without prejudice to
representations and warranties in other agreements delivered hereunder, all
representations and warranties contained in this Agreement shall be deemed
continuing representations and warranties and shall survive the Closing Date
for a period of twelve months following the Closing; provided, however, that
any
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representation or warranty that would otherwise terminate in accordance with
this Section 10.1 shall continue to survive, if a claim for indemnification
shall have been made under Section 10 on or prior to such termination date,
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Section 10. 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 either party shall affect the other party's right
to rely on any representation, warranty, or covenant made by such party or
relieve such party of any obligations under this Agreement as the result of a
breach of any of its representations and warranties.
10.2 Indemnification by Sellers. After the Closing, and regardless of
any investigation made at any time by or on behalf of Buyer or any information
Buyer may have, Sellers jointly and severally hereby agree to indemnify and
hold harmless Buyer from and against, and shall reimburse Buyer for, any and
all losses, liabilities, and damages (including punitive and exemplary damages
and fines or penalties and any interest thereon), costs and expenses (including
reasonable fees and disbursements of counsel and expenses of investigation and
defense), claims, or other obligations of any nature (collectively, "Losses")
which result from:
(a) Any inaccuracy in or breach of any representation and
warranty, or any breach or nonfulfillment of any covenant or agreement of
either Seller contained in this Agreement or in any certificate, document or
instrument delivered to Buyer under this Agreement;
(b) All liabilities not required to be assumed by Buyer
pursuant to Section 2.6 including all obligations of either Seller not required
to be assumed by Buyer pursuant to this Agreement, including any liabilities
arising at any time under any Contract not included in the Assumed Contracts or
with respect to any Excluded Assets; and
(c) The operation or ownership of WPBF and the Assets prior
to the Closing, including any liabilities arising under the Licenses or the
Assumed Contracts that relate to events occurring prior to the Closing Date
except insofar as the Purchase Price was reduced pursuant to Section 2.3(a) as
a result of the proration of such liabilities.
10.3 Indemnification by Buyer. After the Closing, and regardless of
any investigation made at any time by or on behalf of either Seller or any
information that either Seller may have, Buyer hereby agrees to indemnify and
hold harmless each Seller from and against, and shall reimburse each Seller
for, any and all Losses which result from:
(a) Any inaccuracy in or breach of any representation and
warranty, or any breach or nonfulfillment of any covenant or agreement of Buyer
contained in this Agreement or in any certificate, document or instrument
delivered to Buyer under this Agreement, or
(b) Any and all obligations required to be assumed by Buyer
pursuant to Section 2.5 of this Agreement; and
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(c) The operation or ownership of WPBF and the Assets after
the Closing.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim.
If the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five business
days after written notice of such action, suit, or proceeding was given to
Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and 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, through counsel
reasonably acceptable to the Claimant, 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.
A claim may not be settled by the Indemnifying Party without the prior written
consent of the Claimant (which consent will not unreasonably be withheld)
unless, as part of such settlement, the Claimant shall receive a full and
unconditional release reasonably satisfactory to the Claimant. 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 in good faith by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
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10.5 Certain Limitations. Notwithstanding anything in this Agreement
to the contrary,
(a) neither Seller shall be required to indemnify or
otherwise be liable to Buyer with respect to any claim arising from the failure
of Sellers to obtain any Consent if the obtaining of such Consent was not a
condition precedent to the obligations of Buyer set forth in this Agreement or
the condition that such Consent be obtained was waived by Buyer;
(b) neither Seller shall be required to indemnify or
otherwise be liable to Buyer for any breach of a representation or warranty, or
for the breach of any covenant contained in Section 5 of this Agreement, except
to the extent the losses, obligations, liabilities, costs, and expenses of
Buyer arising from all such breaches by both Sellers exceed in the aggregate
One Hundred Thousand Dollars; it being understood that this limitation applies
only to indemnification for breaches of representations and warranties and
breaches of covenants contained in Section 5 and does not apply to other
indemnification rights, including the right to indemnification for Excluded
Liabilities, or to claims relating to the adjustments and prorations pursuant
to Section 2.3(a);
(c) Buyer shall not be required to indemnify or otherwise be
liable to any Seller for any breach of a representation or warranty, except to
the extent the losses, obligations, liabilities, costs, and expenses of both
Sellers arising from all such breaches by Buyer exceed in the aggregate One
Hundred Thousand Dollars; it being understood that this limitation applies only
to indemnification for breaches of representations and warranties and does not
apply to other indemnification rights or to claims relating to the adjustments
and prorations pursuant to Section 2.3(a);
(d) no party shall indemnify or otherwise be liable to any
other party with respect to any claim for any breach of a representation or
warranty, or for the breach of any covenant contained in Section 5 of this
Agreement, unless notice of the claim is given within twelve months after the
Closing Date; it being understood that this limitation applies only to
indemnification for breaches of representations and warranties and breaches of
covenants contained in Section 5 and does not apply to other indemnification
rights, including the right to indemnification for Excluded Liabilities, or to
claims relating to the adjustments and prorations pursuant to Section 2.3(a);
(e) neither Seller shall be required to indemnify or
otherwise be liable to Buyer for any breach of a representation or warranty, or
for the breach of any covenant contained in Section 5 of this Agreement, to the
extent the losses, obligations, liabilities, costs, and expenses of Buyer
arising from all such breaches by all Sellers exceed in the aggregate Ten
Million Dollars; it being understood that this limitation applies only to
indemnification for breaches of representations and warranties and breaches of
covenants contained in Section 5 and does not apply to other indemnification
rights, including the right to indemnification for Excluded Liabilities, or to
claims relating to the adjustments and prorations pursuant to Section 2.3(a);
and
(f) Buyer shall not be required to indemnify or otherwise be
liable to any Seller for any breach of a representation or warranty to the
extent the losses, obligations, liabilities, costs,
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<PAGE> 38
and expenses of all Sellers arising from all such breaches by Buyer exceed in
the aggregate Ten Million Dollars; it being understood that this limitation
applies only to indemnification for breaches of representations and warranties
and does not apply to other indemnification rights or to claims relating to the
adjustments and prorations pursuant to Section 2.3(a).
SECTION 11 MISCELLANEOUS.
11.1 Fees and Expenses. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection with
the authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives, and each party shall be responsible for all fees or
commissions payable to any finder, broker, advisor, or similar Person retained
by or on behalf of such party (including, in the case of Sellers, all fees or
commissions payable to Alex. Brown & Sons Incorporated and, in the case of
Buyer, Chase Securities Inc.), except that all filing fees (including all FCC
filing fees and all fees required in connection with filings under the HSR
Act), transfer taxes, recordation taxes, sales taxes, document stamps, or other
charges levied by any governmental entity in connection with the transactions
contemplated by this Agreement shall be paid by Buyer.
11.2 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, or sent by
facsimile transmission, (c) deemed to have been given on the date of personal
delivery or the date set forth in the records of the delivery service or on the
return receipt or by facsimile confirmation, and (d) addressed as follows:
If to either Seller: c/o Paxson
Communications Corporation
601 Clearwater Park Road West
Palm Beach, Florida 33401
Attention: Lowell W. Paxson,
President Telecopier:
561-655-9424
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<PAGE> 39
With copies to: Dow, Lohnes &
Albertson, PLLC 1200 New
Hampshire Avenue, N.W. Suite
800 Washington, D.C.
20036-6802 Attention: John
R. Feore, Jr. Telecopier:
202-776-2222
Paxson Communications Corporation 601
Clearwater Park Road West
Palm Beach, Florida 33401
Attention: Anthony L.
Morrison, Vice President and
General Counsel Telecopier:
561-655-9424
If to Buyer: The Hearst Corporation
959 Eighth Avenue
New York, New York 120019 Attention:
Frank A. Bennack, Jr.,
President and Chief Executive
Officer; Jonathan E.
Thackeray, Vice President and
General Counsel; and John G.
Conomikes, Vice President and
General Manager, Hearst
Broadcasting Telecopier:
212-649-2035
With a copy to: Brooks, Pierce,
McLendon, Humphrey & Leonard
First Union Capitol Center
Suite 1600 Raleigh, North
Carolina 27601 Attention:
Wade H. Hargrove Telecopier:
919-839-0304
or to any other or additional Persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2.
11.3 Arbitration. Except as otherwise provided to the contrary below
or in Section 2.3(b), any dispute arising out of or related to this Agreement
that Sellers and Buyer are unable to resolve by themselves shall be settled by
arbitration in West Palm Beach, Florida by a panel of three arbitrators.
Sellers, collectively, and Buyer shall each designate one disinterested
arbitrator, and the two arbitrators so designated shall select the third
arbitrator. The persons selected as arbitrators 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 for large cases of the American
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<PAGE> 40
Arbitration Association. The written decision of a majority of the arbitrators
shall be final and binding on Sellers and Buyer. The costs and expenses of the
arbitration proceeding shall be assessed between Sellers 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 either Seller or Buyer against any other party except (a) an
action to compel arbitration pursuant to this Section or (b) an action to
enforce the award of the arbitration panel rendered in accordance with this
Section.
11.4 Benefit and Binding Effect. No party may assign this Agreement
without the prior written consent of each other party hereto, except that
Buyer, prior to the receipt of the FCC Consent, may (a) assign its right to
acquire the Assets to a "qualified intermediary" (within the meaning of Section
1.1031(k)-1(g)(4)(iii) of the Department of the Treasury's regulations
promulgated pursuant to the Internal Revenue Code, so long as (i) the
"qualified intermediary" causes the Assets to be assigned to Buyer immediately
thereafter, and (ii) the assignment to the "qualified intermediary" would not
delay the Closing, and (b) assign this Agreement to an Affiliate of Buyer.
Sellers agree that they will not unreasonably withhold their consent to a
proposed assignment by Buyer following the receipt of the FCC Consent to a
"qualified intermediary" or to an Affiliate of Buyer, each as contemplated by
the preceding sentence; Buyer agrees that it would not be unreasonable for
Sellers to withhold their consent to such an assignment if it would, in any
respect, delay the Closing or delay the date on which the FCC Consent would
become a Final Order. Any assignment by Buyer of all or part of its rights
under this Agreement shall not affect Buyer's obligations hereunder, and Buyer
shall, as a condition to any such assignment, deliver to Sellers its guaranty
(substantially similar in form to Schedule 8.2(f)) of the performance by its
assignee of all obligations of Buyer and its assignee hereunder. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. This Agreement is not
intended to, and shall not, confer upon any other person except the parties
hereto (and their permitted assigns) any rights or remedies hereunder.
11.5 Further Assurances; Reasonable Consent. 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 Sellers, any additional deeds, bills of sale, 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. When its consent under this Agreement is
requested, each party agrees to respond promptly and reasonably to the request.
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).
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<PAGE> 41
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 Sellers with respect to the subject matter of this Agreement.
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 that is signed by the party
against which enforcement of any such amendment, supplement, or modification is
sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
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<PAGE> 42
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first written above.
PAXSON COMMUNICATIONS OF
WEST PALM BEACH-25, INC.
[Corporate Seal] By: /s/ Lowell W. Paxson
--------------------------------
Name: Lowell W. Paxson
------------------------------
Title: Chairman & CEO
-----------------------------
PAXSON WEST PALM BEACH LICENSE, INC.
[Corporate Seal] By: /s/ Lowell W. Paxson
--------------------------------
Name: Lowell W. Paxson
------------------------------
Title: Chairman & CEO
-----------------------------
THE HEARST CORPORATION
[Corporate Seal] By: /s/ David J. Barrett
--------------------------------
Name: David J. Barrett
------------------------------
Title: Vice-President
-----------------------------
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<PAGE> 1
EXHIBIT 10.155
===============================================================================
PURCHASE AND SALE OF OPTION AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
CLEVELAND-67, INC.
AND
GLOBAL BROADCASTING SYSTEMS, INC.
* * *
MARCH 26, 1997
===============================================================================
<PAGE> 2
PURCHASE AND SALE OF OPTION AGREEMENT
This PURCHASE AND SALE OF OPTION AGREEMENT is made as of March 26, 1997,
by and between Paxson Communications of Cleveland-67, Inc., a Florida
corporation ("Paxson"), and Global Broadcasting Systems, Inc., a Delaware
corporation ("Buyer").
RECITALS
A. Paxson, Whitehead Media, Inc. ("Whitehead"), Whitehead
Broadcasting of Ohio, Inc. ("Whitehead-Broadcasting") and Whitehead Media of
Ohio, Inc. ("Whitehead-Ohio") (Whitehead-Broadcasting and Whitehead-Ohio are
collectively referred to herein as the "Sellers" and individually as a "Seller")
are parties to an Option Agreement (the "Option Agreement"), dated December 29,
1995 as amended on December 31, 1996 and as further amended on March 21, 1997
(as amended, the "Option Agreement"), pursuant to which Sellers have granted to
Paxson an exclusive and irrevocable option (the "Option") to purchase the
assets, real, personal and mixed, tangible and intangible, owned and held by
Sellers that are used or useful in the conduct of the business and operations of
Television Station WOAC (TV), Channel 67, Canton, Ohio (the "Station") (such
assets are referred to herein as the "Station Assets").
B. Sellers own all of the Station Assets, including all of the
licenses, permits and other authorizations issued by the Federal Communications
commissions (the "FCC") in connection with the Station.
C. Buyer has agreed to buy and Paxson has agreed to sell to Buyer
the Option on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the above and of the mutual promises
and covenants contained herein, and other good and valuable consideration, the
parties, intending to be legally bound, agree as follows:
1. Assignment of Option. Paxson hereby grants, sells, assigns and
transfers to Buyer all of its rights, title and interest in and to the Option
and to the Option Agreement subject to the terms and conditions hereof.
2. Acceptance. Buyer hereby accepts the assignment of all of
Paxson's rights, title and interest in and to the Option and the Option
Agreement and hereby agrees to assume all of Paxson's obligations thereunder
subject to the terms and conditions hereof.
3. Exercise of Option. Simultaneously with the execution of this
Agreement, Buyer shall exercise the Option by executing the Asset Purchase
Agreement in the form attached hereto as Exhibit A (the "Purchase Agreement"),
and Paxson shall advise the Sellers in writing of the option assignment and
exercise and provide Sellers with a copy of the Purchase Agreement.
<PAGE> 3
-2-
4. Performance of Purchase Agreement. Buyer hereby agrees to use
good faith efforts to consummate the transactions contemplated by the Purchase
Agreement, including, without limitation, to file and prosecute any and all
applications with the FCC which are required by the Purchase Agreement. Buyer
hereby agrees to comply with the terms and provisions of the Purchase
Agreement. Buyer shall not otherwise amend or change any terms of the Purchase
Agreement without the consent of Paxson if (i) such amendment or change is
reasonably likely to cause the transactions contemplated by the purchase
Agreement not to be consummated or to be delayed or (ii) such amendment or
change is reasonably likely to reduce the Purchase Price (as defined below)
payable hereunder by Buyer to Paxson. Nothing contained in this Section 4 shall
limit Buyer's rights under the Purchase Agreement or limit Buyer's rights to
terminate the Purchase Agreement in accordance with the terms thereof.
5. Purchase Price. In consideration for the assignment by Paxson
of its rights, title and interest in and to the Option and the Option
Agreement, Buyer hereby agrees to pay Paxson a purchase price (the "Purchase
Price") equal to $23,500,000 reduced by (i) the amount of the purchase price
payable to Sellers under the Purchase Agreement less the amount of any advance
toward the payment of such purchase price paid by Paxson to Sellers prior to
the closing date under the Purchase Agreement pursuant to the Option Agreement,
as amended and (ii) the portion of the principal amount outstanding, together
with accrued and unpaid interest, under the Credit Agreement dated as of
December 29, 1995 (the "Credit Agreement"), among Whitehead and its Affiliates,
the several Lenders from time to time parties thereto, CIBC Inc., as
Documentation Agent, and Banque Paribas as Administrative Agent that is
allocable to the Station as set forth in Schedule 6.03 to the Credit Agreement
and Section 2.4 of the Purchase Agreement, as of the Purchase Agreement Closing
Date (as defined below) (the "Payoff Amount"). The Purchase Price shall be
further reduced on the Purchase Agreement Closing Date by the Escrow Deposit
described in Section 7 [which portion of the Purchase Price shall be paid in
accordance with Sections 7(a) and (c)]. The Purchase Price shall be paid by
Buyer to Paxson on the closing date under the Purchase Agreement (the "Purchase
Agrement Closing Date") by wire transfer of immediately available funds to an
account designated by Paxson.
6. Pay-off Amount. On the Closing Date, Buyer shall pay or cause
to be paid the Payoff Amount to the Lenders under the Purchase Agreement.
7. Escrow. No later than April 4, 1997, Buyer shall deposit in
escrow with First Union National Bank of Florida (the "Escrow Agent")
$2,350,000 (the "Escrow Deposit"). The Escrow Deposit shall be held in
accordance with the terms hereof and the Escrow Agreement attached hereto as
Exhibit B. The Escrow Deposit shall be payable as follows:
(a) On the Purchase Agreement Closing Date, $1,850,000 of
the Escrow Deposit shall be disbursed to Paxson as a credit towards the payment
by Buyer of the Purchase Price and any interest or other proceeds from the
investment of the Escrow Deposit shall be disbursed to Buyer.
<PAGE> 4
-3-
(b) $500,000 of the Escrow Deposit (the "Indemnification Fund")
shall remain in the Escrow Account for twelve months after closing as security
for any lability of Sellers to Buyer under Section 10 of the Pruchase
Agreement. The Indemnification Fund, less any reserves or deductions to cover
Sellers' indemnification obligations to Buyer under Section 10 of the Pruchase
Agreement, shall be disbursed to Paxson, along with all accrued interest
thereon, at the expiration of the aforesaid twelve-month period.
(c) The Escrow Deposit shall be disbursed to Paxson if the Purchase
Agreement is terminated by Sellers due to Buyer's material breach of the
Pruchase Agreement. In such event, any and all interest earned on the Escrow
Deposit shall be paid to Buyer.
(c) The Escrow Deposit together with any interest or other proceeds
earned thereon shall be disbursed to Buyer if the Pruchase Agreement is
terminated pursuant to Section 9.1 or 9. of the Pruchase Agreement and Buyer is
not in material breach of the Pruchase Agreement.
If the Escrow Deposit is disbursed to Paxson pursuant to Section 7(c),
then such payment shall be liquidated damages and shall constitute full payment
and the exclusive remedy for any damages suffered by Paxson by reason of
Buyer's breach of this Agreement or the Purchase Agreement. Paxson and Buyer
agree in advance that actual damages would be difficult to ascertain and that
the amount of the Escrow Deposit is a fair and equitable amount to reimburse
Paxson for damages sustained due to Buyer's breach of this Agreement or the
Pruchase Agreement.
8. Unwind. The assignment by Paxson of its rights, title and interest
in and to the Option and the Option Agrement to Buyer shall be automatically
rescinded, all rights, title and interest of Paxson in and to the Option and
the Option Agreement shall be automatically returned to Paxson and this
Agrement shall be automatically rescinded and terminated it (i) the
transactions contemplated by the Pruchase Agreement have not been consummated
prior to April 1, 1998, or (ii) the Pruchase Agrement is terminated for any
reason whatsoever.
9. Representations and Warranties of Paxson.
Paxson hereby represents and warrants to Buyer as follows:
(a) Organization, Standing, Authority, Ownership. Paxson is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida and has the requisite corporate power and
authority to executive, delivery perform this Agreement in accordance with its
terms.
(b) Authorization and Binding Obligation. The execution delivery
and performance of this Agrement by Paxson have been duly authorized by all
necessary corporate
<PAGE> 5
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action on the part of Paxson. This Agreement has been duly executed and
delivered by Paxson and constitutes a legal, valid, and binding obligation of
Paxson, enforceable against Paxson in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion
in the enforcement of equitable remedies.
(c) Absence of Conflicting Agreement. Subject to the receipt
of the consent of the Lenders under the Credit Agreement, the execution,
delivery and performance by Paxson 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 By-laws of Paxson; (iii) will not conflict
with, result in a breach of, or constitute a default under, any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; and (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license or permit to which
Paxson is a party or by which Paxson may be bound.
(d) Brokers. Other than Media Venture Partners (whose fee
will be paid by Paxson), neither Paxson 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.
(e) Ownership of the Option. Paxson is the lawful owner of
the Option free and clear of all liens, security interests, claims or
encumbrances of any nature whatsoever and has the right under the Option
Agreement to transfer the Option to Buyer. Pursuant to Section 3 hereof, Paxson
will give to Sellers all notices required by the Option Agreement to effectuate
this assignment. The Option Agreement is in full force and effect.
(f) Litigation. There are no claims, disputes, actions,
proceedings, suits, arbitrations or investigations pending or to Paxson's
knowledge, threatened, relating to the Option or the Option Agreement.
10. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Paxson as follows:
(a) Organization, Standing Authority and Ownership. Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
authority to execute, deliver, and perform this Agreement and the Purchase
Agreement and to perform the Option Agreement in accordance with their terms.
<PAGE> 6
-5-
(b) Authorization and Binding Obligation. The execution,
delivery and performance of this Agreement and the Purchase Agreement by Buyer
and the performance of the Option Agreement by Buyer have been duly authorized
by all necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes a legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
(c) Absence of Conflicting Agreements. The execution,
delivery and performance by Buyer of this Agreement and the Purchase Agreement
and the performance by Buyer of the Option Agreement (with or without the
giving of notice, the lapse of time or both): (i) do not require the consent of
any third party; (ii) will not conflict with the Certificate of Incorporation
or By-laws of Buyer; (iii) will not conflict with, result in a breach of, or
constitute a default under, any applicable law, judgement, order, ordinance,
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in 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.
(d) Brokers. Neither Buyer nor any person or entity acting
on its behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
11. Miscellaneous.
(a) Attorneys' Fees. In the event either party files a
lawsuit or institutes other formal proceedings (including arbitration) for any
remedy available under this Agreement, the prevailing party shall be entitled
to be reimbursed by the other party for all reasonable expenses incurred
hereby, including reasonable attorneys fees.
(b) Fees and Expenses. Except as provided in Subsection
(a) of this Section, each party shall pay its own expenses incurred in
connection with the authorization, preparation, execution and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents
and representatives. Each party shall be responsible for all fees or
commissions payable to any other finder, broker, advisor, or similar person
retained by or on behalf of such party.
(c) Arbitration. Except as otherwise provided to the
contrary below, any dispute arising out of or related to this Agreement that the
parties hereto are unable to resolve by themselves shall be settled by
arbitration by a panel of three (3) neutral arbitrators (meaning arbitrators who
have had no prior relationship with the parties or their respective
<PAGE> 7
-6-
stockholders, directors, officers, or employees ) 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 profession
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 hits 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 the parties hereto. The costs and expenses of the
arbitration proceeding shall be assessed between the parties hereto in a manner
to be decided by a majority of the arbitrators in accordance with Section 11 of
this Agreement, 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 any party hereto
against the other except (i) an action to compel arbitration pursuant to this
Section or (ii) an action to enforce the award of the arbitration panel
rendered in accordance with this Section.
(d) Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agrement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
If to Buyer: Barbara Laurence
President
Global Broadcasting Systems, Inc.
1740 Broadway, 17th Floor
New York, New York 10019
With a copy to: Regina Jabbour, Esq.
Global Broadcasting Systems, Inc.
1740 Broadway, 17th Floor
New York, New York 10019
and
<PAGE> 8
-7-
Lewis J. Paper, Esquire
Dickstein, Shapiro Morris & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
If to Paxson: Lowell W. Paxson, Chairman
Paxson Communications of
Cleveland-67, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, FLLC
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(d).
(e) Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, that Buyer may assign this Agreement to any entity controlled by the
same principals who control Buyer. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(f) 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.
(g) 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).
(h) 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.
(i) 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
<PAGE> 9
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gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
(j) Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior and contemporaneous
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.
(k) 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, provided further,
that notwithstanding the foregoing, Buyer may file this Agreement or provide
notification of it in any Form S-1 Registration Statement or any amendment
thereof filed or to be filed with the Securities and Exchange Commission.
(l) Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signature on each counterpart were
upon the same instrument.
(m) Hart-Scott-Rodino. Within ten (10) days after
execution of the Purchase Agreement by Buyer and Sellers, Paxson and Buyer will
mutually determine whether any application or other documents need to be filed
with the Federal Trade Commission or the Department of Justice under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 ("HSR") with respect to
this Agreement, and, if so, (i) Paxson and Buyer will file such application or
other documents at the expiration of the aforesaid 10-day period; (ii) equally
divide the cost of the filing fee; and (iii) refrain from consummating this
Agreement until the expiration of the waiting period under HSR.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
PAXSON COMMUNICATIONS OF
CLEVELAND-67, INC.
By: /s/ LOWELL W. PAXSON
------------------------------
Name:
Title:
GLOBAL BROADCASTING SYSTEMS, INC.
By: /s/ BARBARA LAURENCE
------------------------------
Name: Barbara Laurence
Title: President
<PAGE> 1
EXHIBIT 10.155.1
- ------------------------------------------------------------------------------
PURCHASE AND SALE OF OPTION AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
ATLANTA-14, INC.
AND
GLOBAL BROADCASTING SYSTEMS, INC
* * *
MARCH 26, 1997
- -------------------------------------------------------------------------------
<PAGE> 2
PURCHASE AND SALE OF OPTION AGREEMENT
This PURCHASE AND SALE OF OPTION AGREEMENT is made as of March 26,
1997, by and between Paxson Communications of Atlanta-14, Inc., a Florida
corporation ("Paxson"), and Global Broadcasting Systems, Inc., a Delaware
corporation ("Buyer").
RECITALS
A. Paxson, Whitehead Media, Inc. ("Whitehead"), Whitehead Broadcasting
of Georgia, Inc. ("Whitehead-Broadcasting") and Whitehead Media of Georgia,
Inc. ("Whitehead-Georgia") ("Whitehead-Broadcasting and Whitehead-Ohio are
collectively referred to herein as the "Sellers" and individually as a
"Seller") are parties to an Option Agreement dated December 29, 1995 as amended
on December 31, 1996, and further amended on March 26, 1997 (as amended, the
"Option Agreement"), pursuant to which Sellers have granted to Paxson an
exclusive and irrevocable option (the "Option") to purchase the assets, real
personal and mixed, tangible and intangible, owned and held by Sellers that are
used or useful in the conduct of the business and operations of Television
Station WNGM(TV), Channel 34, Athens, Georgia (the "Station") (such assets are
referred to herein as the "Station Assets").
B. Sellers own all of the Station Assets, including all of the
licenses, permits and other authorizations issued by the Federal Communications
Commission (the "FCC") in connection with the Station.
C. Buyer has agreed to buy and Paxson has agreed to sell to buyer the
Option on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the above and of the mutual promises
and covenants contained herein, and other good and valuable consideration, the
parties, intending to be legally bound, agree as follows:
1. Assignment of Option. Paxson hereby grants, sells, assigns and
transfers to Buyer all of its rights, title and interest in and to the Option
and to the Option Agreement subject to the terms and conditions hereof.
2. Acceptance. Buyer hereby accepts the assignment of all of Paxson's
rights, title and interest in and to the Option an the Option Agreement and
hereby agrees to assume all of Paxson's obligations thereunder subject to the
terms and conditions hereof.
3. Exercise of Option. Simultaneously with the execution of this
Agreement, Buyer shall exercise the Option by executing the Asset Purchase
Agreement in the form attached hereto as Exhibit A (the "Purchase Agreement")
and Paxson shall advise the Sellers in writing of the option assignment and
exercise and provide Sellers with a copy of the Purchase Agreement.
<PAGE> 3
-2-
4. Performance of Purchase Agreement. Buyer hereby agrees to use good
faith efforts to consummate the transactions contemplated by the Purchase
Agreement, including, without limitation, to file and prosecute any and all
applications with the FCC which are required by the Purchase agreement. Buyer
hereby agrees to comply with the terms and provisions of the Purchase
Agreement. Buyer shall not otherwise amend or change any terms of the Purchase
Agreement without the consent of Paxson if (i) such amendment or change is
reasonably likely to cause the transactions contemplated by the Purchase
agreement not to be consummated or to be delayed or (ii) such amendment or
change is reasonably likely to reduce the Purchase Price (as defined below)
payable hereunder by Buyer to Paxson. Nothing contained in this Section 4 shall
limit Buyers's rights under the Purchase Agreement or limit Buyer's rights to
terminate the Purchase Agreement in accordance with the terms thereof.
5. Purchase Price. In consideration for the assignment by Paxson of
its rights, title and interest in and to the Option and the Option Agreement,
Buyer hereby agrees to pay Paxson a purchase price (the "Purchase Price") equal
to $50,000,000 reduced by (i) the amount of the purchase price payable to
Sellers under the Purchase Agreement less the amount of any advance toward the
payment of such purchase price paid by Paxson to Sellers prior to the closing
date under the Purchase Agreement pursuant to the Option Agreement, as amended
and (ii) the portion of the principal amount outstanding, together with accrued
and unpaid interest, under the Credit Agreement dated as of December 29, 1995
(the "Credit Agreement"), among Whitehead and its Affiliates, the several
Lenders from time to time parties thereto, CIBC Inc., as Documentation Agent,
and Banque Paribas as Administrative Agent that is allocable to the Station as
set forth in Schedule 6.03 to the Credit Agreement and Section 2.4 of the
Purchase Agreement, as of the Purchase Agreement Closing Date (as defined
below) (the "Payoff Amount"). The Purchase Price shall be further reduced on
the purchase Agreement Closing Date by the Escrow Deposit described in Section
7 [which portion of the Purchase Price shall be paid in accordance with
Sections 7(a) and (b)]. The Purchase Price shall be paid by Buyer to Paxson
on the closing date under the Purchase Agreement (the "Purchase Agreement
Closing Date") by wire transfer of immediately available funds to an account
designated by Paxson.
6. Pay-Off Amount. On the Closing Date, Buyer shall pay or cause to
be paid the Payoff Amount to the Lenders under the Purchase Agreement.
7. Escrow. No later than April 4, 1997, Buyer shall deposit in escrow
with First Union National Bank of Florida (the "Escrow Agent") $5,000,000 (the
"Escrow Deposit"). The Escrow Deposit shall be held in accordance with the
terms hereof and the Escrow Agreement attached hereto as Exhibit B. The Escrow
Deposit shall be payable as follows:
(a) On the Purchase Agreement Closing Date, $4,500,000 of the
Escrow Deposit shall be disbursed to Paxson as a credit towards the payment by
Buyer of the Purchase Price and any interest or other proceeds from the
investment of the Escrow Deposit shall be disbursed to Buyer.
<PAGE> 4
-3-
(b) $500,000 of the Escrow Deposit (the "Indemnification
Fund") shall remain in the Escrow Account for twelve months after closing as
security for any liability of Sellers to Buyer under Section 10 of the Purchase
Agreement. The Indemnification Fund, less any reserves or deductions to cover
Sellers' indemnification obligations to Buyer under Section 10 of the Purchase
Agreement, shall be disbursed to Paxson, along with all accrued interest
thereon, at the expiration of the aforesaid twelve-month period.
(c) The Escrow Deposit shall be disbursed to Paxson if the
Purchase Agreement is terminated by Sellers due to Buyer's material breach of
the Purchase Agreement. In such event, any and all interest earned on the
Escrow Deposit shall be paid to Buyer.
(d) The Escrow Deposit together with any interest or other
proceeds earned thereon shall be disbursed to Buyer if the Purchase Agreement
is terminated pursuant to Section 9.1 or 9.2 of the Purchase Agreement and
Buyer is not in material breach of the Purchase Agreement.
If the Escrow Deposit is disbursed to Paxson pursuant to Section 7(c),
then such payment shall be liquidated damages and shall constitute full payment
and the exclusive remedy for any damages suffered by Paxson by reason of
Buyer's breach of this Agreement or the Purchase Agreement. Paxson and Buyer
agree in advance that actual damages would be difficult to ascertain and that
the amount of the Escrow Deposit is a fair and equitable amount to reimburse
Paxson for damages sustained due to Buyer's breach of this Agreement or the
Purchase Agreement.
8. Unwind. The assignment by Paxson of its rights, title and
interest in and to the Option and the Option Agreement to Buyer shall be
automatically rescinded, all rights, title and interest of Paxson in and to
the Option and the Option Agreement shall be automatically returned to Paxson
and this Agreement shall be automatically rescinded and terminated if (i) the
transactions contemplated by the Purchase Agreement have not been consummated
prior to April 1, 1998, or (ii) the Purchase Agreement is terminated for any
reason whatsoever.
9. Representations and Warranties of Paxson.
Paxson hereby represents and warrants to Buyer as follows:
(a) Organization, Standing Authority, Ownership. Paxson is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida and has the requisite corporate power and
authority to execute, deliver, and perform this Agreement in accordance with
its terms.
(b) Authorization and Binding Obligation. The execution,
delivery and performance of this Agreement by Paxson have been duly authorized
by all necessary corporate
<PAGE> 5
- 4 -
action on the part of Paxson. This Agreement has been duly executed and
delivered by Paxson and constitutes a legal, valid, and binding obligation of
Paxson, enforceable against Paxson in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion
in the enforcement of equitable remedies.
(c) Absence of Conflicting Agreements. Subject to the receipt of
the consent of the Lenders under the Credit Agreement, the execution, delivery
and performance by Paxson 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 By-laws of Paxson; (iii) will not conflict with,
result in a breach of, or constitute a default under, any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; and (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license or permit to which
Paxson is a party or by which Paxson may be bound.
(d) Brokers. Other than Media Venture Partners (whose fee will be
paid by Paxson), neither Paxson 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.
(e) Ownership of the Option. Paxson is the lawful owner of the
Option free and clear of all liens, security interests, claims or encumbrances
of any nature whatsoever and has the right under the Option Agreement to
transfer the Option of Buyer. Pursuant to Section 3 hereof, Paxson will give to
Sellers the notices required by the Option Agreement to effectuate this
assignment. The Option Agreement is in full force and effect.
(f) Litigation. There are not claims, disputes, actions,
proceedings, suits, arbitrations or investigations pending or to Paxson's
knowledge, threatened, relating to the Option or the Option Agreement.
10. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Paxson as follows:
(a) Organization, Standing Authority and Ownership. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to execute, deliver, and perform this Agreement and the Purchase
Agreement and to perform the Option Agreement in accordance with their terms.
<PAGE> 6
-5-
(b) Authorization and Binding Obligation. The execution,
delivery and performance of this Agreement and the Purchase Agreement by Buyer
and the performance of the Option Agreement by Buyer have been duly authorized
by all necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
(c) Absence of Conflicting Agreements. The execution, delivery
and performance by Buyer of this Agreement and the Purchase Agreement and the
performance by Buyer of the Option Agreement (with or without the giving of
notice, the lapse of time or both): (i) do not require the consent of any third
party; (ii) will not conflict with the Certificate of Incorporation or By-laws
of Buyer; (iii) will not conflict with, result in a breach of, or constitute a
default under, any applicable law, judgment, order, ordinance, injunction,
decree, rule, regulation or ruling of any court or governmental instrumentality;
and (iv) will not conflict with, constitute grounds for termination of, result
in 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.
(d) Brokers. Neither Buyer nor any person or entity acting on
its behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
11. Miscellaneous.
(a) Attorneys' Fees. In the event either party files a
lawsuit or institutes other formal proceedings (including arbitration) for any
remedy available under this Agreement, the prevailing party shall be entitled
to be reimbursed by the other party for all reasonable expenses incurred
hereby, including reasonable attorneys fees.
(b) Fees and Expenses. Except as provided in Subsection (a)
of this Section, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution and performance of this
Agreement, including all fees and expenses of counsel, accountants, agents and
representatives. Each party shall be reasonable for all fees or commissions
payable to any other finder, broker, advisor, or similar person retained by or
on behalf of such party.
(c) Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that the parties
hereto are unable to resolve by themselves shall be settled by arbitration by a
panel of three (3) neutral arbitrators (meaning arbitrators who have had no
prior relationship with the parties or their respective
<PAGE> 7
- 6 -
stockholders, directors, officers, or employees) 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 the parties hereto. The costs and expenses of the
arbitration proceeding shall be assessed between the parties hereto in a manner
to be decided by a majority of the arbitrators in accordance with Section
11 of this Agreement, 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 any party hereto
against the other except (i) an action to compel arbitration pursuant to this
Section or (ii) an action to enforce the award of the arbitration panel
rendered in accordance with this Section.
(d) Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Buyer: Barbara Laurence
President
Global Broadcasting Systems, Inc.
1740 Broadway, 17th Floor
New York, New York 10019
With a copy to: Regina Jabbour, Esq.
Global Broadcasting Systems, Inc.
1740 Broadway, 17th Floor
New York, New York 10019
and
<PAGE> 8
- 7 -
Lewis J. Paper, Esquire
Dickstein, Shapiro Morris & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
If to Paxson: Lowell W. Paxson, Chairman
Paxson Communications of
Altanta-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
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(d).
(e) Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, that Buyer may assign this Agreement to any entity controlled by the
same principals who control Buyer. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(f) 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.
(g) 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).
(h) 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.
(i) 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
<PAGE> 9
-8-
gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
(j) Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior and contemporaneous
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.
(k) 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, provided further,
that, notwithstanding the foregoing, Buyer may file this Agreement or provide
notification of it in any Form S-1 Registration Statement or any amendment
thereof filed or to be filed with the Securities and Exchange Commission.
(l) Conterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart wre upon the same
instrument.
(m) Hart-Scott-Rodino. Within ten (10) days after execution
of the Purchase Agreement by Buyer and Sellers, Paxson and Buyer will mutually
determine whether any application or other documents need to be filed with the
Federal Trade Commission or the Department of Justice under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 ("HSR") with respect to
this Agreement, and, if so, (i) Paxson and Buyer will file such application or
other documents at the expiration of the aforesaid 10-day period; (ii) equally
divide the cost of the filing fee; and (iii) refrain from consummating this
Agreement until the expiration of the waiting period under HSR.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first written above.
PAXSON COMMUNICATIONS OF
ATLANTA-14, Inc.
By: /s/ LOWELL W. PAXSON
-------------------------------------
Name: Lowell W. Paxson
Title:
GLOBAL BROADCASTING SYSTEMS, INC.
By: /s/ Barbara Laurence
-------------------------------------
Name: Barbara Laurence
Title: President
<PAGE> 1
EXHIBIT 10.156
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
WHITEHEAD MEDIA OF FLORIDA, INC.,
WHITEHEAD BROADCASTING OF FLORIDA, INC.
AND
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
FOR
TELEVISION STATION WTVX(TV),
FT. PIERCE, FLORIDA
MARCH 21, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
RECITALS........................................................... 1
AGREEMENTS......................................................... 1
SECTION 1. DEFINITIONS............................................. 1
"Assets"........................................................... 1
"Assumed Contracts"................................................ 1
"Closing".......................................................... 1
"Closing Date"..................................................... 2
"Consents"......................................................... 2
"Contracts"........................................................ 2
"FCC".............................................................. 2
"FCC Consent"...................................................... 2
"FCC Licenses"..................................................... 2
"Final Order"...................................................... 2
"Intangibles"...................................................... 2
"Licenses"......................................................... 2
"Permitted Liens".................................................. 3
"Person"........................................................... 3
"Purchase Price"................................................... 3
"Real Property".................................................... 3
"Tangible Personal Property"....................................... 3
SECTION 2. PURCHASE AND SALE OF ASSETS............................. 3
2.1 Agreement to Sell and Buy................................... 3
2.2 Excluded Assets............................................. 4
2.3 Purchase Price.............................................. 4
(a) Prorations.............................................. 4
(b) Manner of Determining Adjustments....................... 5
2.4 Assumption of Liabilities and Obligations................... 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER................ 5
3.1 Organization, Standing and Authority........................ 5
3.2 Authorization and Binding Obligation........................ 6
3.3 Absence of Conflicting Agreements........................... 6
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........ 7
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.7 Contracts................................................... 7
3.8 Consents.................................................... 8
3.9 Intangibles................................................. 8
3.10 Insurance................................................... 8
3.11 Reports..................................................... 8
3.12 Personnel................................................... 8
(a) Employees and Compensation.............................. 8
(b) Labor Relations......................................... 9
(c) Liabilities............................................. 9
3.13 Taxes....................................................... 9
3.14 Claims and Legal Actions.................................... 9
3.15 Environmental Matters....................................... 10
3.16 Compliance with Laws........................................ 11
3.17 Full Disclosure............................................. 11
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER................. 11
4.1 Organization, Standing and Authority........................ 11
4.2 Authorization and Binding Obligation........................ 11
4.3 Absence of Conflicting Agreements........................... 12
4.4 Full Disclosure............................................. 12
4.5 Buyer Qualifications........................................ 12
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING.............. 12
5.1 Generally................................................... 12
5.2 Contracts................................................... 12
5.3 Disposition of Assets....................................... 13
5.4 Encumbrances................................................ 13
5.5 Licenses.................................................... 13
5.6 Rights...................................................... 13
5.7 Access to Information....................................... 13
5.8 Insurance................................................... 13
5.9 Consents.................................................... 13
5.10 Books and Records........................................... 14
5.11 Notification................................................ 14
5.12 Compliance with Laws........................................ 14
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS........................ 14
6.1 FCC Consent................................................. 14
6.2 Control of the Station...................................... 15
6.3 Risk of Loss................................................ 15
6.4 Confidentiality............................................. 15
6.5 Cooperation................................................. 15
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.6 Access to Books and Records................................. 15
6.7 Broker...................................................... 16
6.8 HSR Act Filing.............................................. 16
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT
CLOSING...................... 16
7.1 Conditions to Obligations of Buyer.......................... 16
(a) Representations and Warranties.......................... 16
(b) Covenants and Conditions................................ 16
(c) Consents................................................ 16
(d) FCC Consent............................................. 16
(e) Governmental Authorizations............................. 16
(f) Deliveries.............................................. 17
(g) HSR Act................................................. 17
7.2 Conditions to Obligations of Seller......................... 17
(a) Representations and Warranties.......................... 17
(b) Covenants and Conditions................................ 17
(c) Deliveries.............................................. 17
(d) FCC Consent............................................. 17
(e) HSR Act................................................. 17
SECTION 8. CLOSING AND CLOSING DELIVERIES.......................... 17
8.1 Closing..................................................... 17
(a) Closing Date............................................ 17
(b) Closing Place........................................... 18
8.2 Deliveries by Seller........................................ 18
(a) Transfer Documents...................................... 18
(b) Estoppel Certificate.................................... 18
(c) Consents................................................ 18
(d) Certificates............................................ 18
(e) Licenses, Contracts, Business Records, Etc.............. 18
(f) Opinions of Counsel..................................... 18
8.3 Deliveries by Buyer......................................... 18
(a) Purchase Price.......................................... 19
(b) Assumption Agreements................................... 19
(c) Officer's Certificate................................... 19
(d) Opinion of Counsel...................................... 19
SECTION 9. TERMINATION............................................. 19
9.1 Termination by Seller....................................... 19
(a) Conditions.............................................. 19
(b)......................................................... 19
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(c) Upset Date.............................................. 19
(d)......................................................... 19
9.2 Termination by Buyer........................................ 20
(a) Conditions.............................................. 20
(b) Judgments............................................... 20
(c) Upset Date.............................................. 20
9.3 Rights on Termination....................................... 20
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES................ 21
10.1 Representations and Warranties.............................. 21
10.2 Indemnification by Seller................................... 21
10.3 Indemnification by Buyer.................................... 22
10.4 Procedure for Indemnification............................... 22
10.5 Specific Performance........................................ 23
10.6 Attorneys' Fees............................................. 23
SECTION 11. MISCELLANEOUS.......................................... 24
11.1 Fees and Expenses........................................... 24
11.2 Arbitration................................................. 24
11.3 Notices..................................................... 24
11.4 Benefit and Binding Effect.................................. 25
11.5 Further Assurances.......................................... 25
11.6 GOVERNING LAW............................................... 26
11.7 Headings.................................................... 26
11.8 Gender and Number........................................... 26
11.9 Entire Agreement............................................ 26
11.10 Waiver of Compliance; Consents.............................. 26
11.11 Counterparts................................................ 26
11.12 Press Releases.............................................. 26
</TABLE>
<PAGE> 6
LIST OF SCHEDULES
<TABLE>
<S> <C> <C>
Schedule 2.2 -- Excluded Property
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Assumed Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Insurance Policies
Schedule 3.12 -- Employee Matters
Schedule 8.2(f) -- Form of Opinion of Seller's Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
</TABLE>
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of March 21, 1997, by and among
Whitehead Media of Florida, Inc., a Delaware corporation ("Whitehead-Florida"),
Whitehead Broadcasting of Florida, Inc., a Delaware corporation ("Whitehead
Broadcasting" and collectively with Whitehead-Florida, "Seller"), and Paxson
Communications of Ft. Pierce-34, Inc., a Florida corporation ("Buyer").
RECITALS
A. Seller is the owner and operator of television station WTVX(TV), Ft.
Pierce, Florida (the "Station"), pursuant to authorizations issued by the
Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all the
assets that are owned by Seller or in which Seller has a transferable interest
and which are used or useful in the business or operations of the Station, for
the price and on the terms and conditions set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings set
forth in this Section:
"Assets" means the assets to be sold, transferred, or otherwise conveyed to
Buyer under this Agreement, as specified in Section 2.1 and 2.2.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that are
to be assumed by Buyer upon its purchase of the Station, (ii) all Contracts
entered into by Seller in the ordinary course of business which comply with the
provisions of Section 5.3 hereof; and (iii) any other Contracts entered into by
Seller between the date of this Agreement and the Closing Date that Buyer agrees
in writing to assume.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 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.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses and/or Construction Permits issued by the
FCC to Seller in connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service marks,
service names, licenses, patents, permits, jingles, proprietary information,
technical information and data, machinery and equipment warranties, and other
similar intangible property rights and interests (and any goodwill associated
with any of the foregoing) applied for, issued to, or owned y 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 government authorities to Seller in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
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"Permitted Liens" means liens for taxes not yet due and payable.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, or any governmental entity.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means Seller's interests in real property, leaseholds and
subleaseholds, purchase options, easements, licenses, rights to access, and
rights of way, and all buildings and other improvements thereon, which are used
or useful in the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
furniture, leasehold improvements, office equipment, plant, inventory, spare
parts, and other tangible personal property which is owned by the Seller or in
which Seller has an interest and which is used or useful in the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding any
Tangible Personal Property consumed in the ordinary course of business between
the date hereof and the Closing Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, assign and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase and accept,
all of the Assets and property interests owned by Seller or in which Seller has
a property interest which are used or useful in connection with the conduct of
the business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding the
assets described in Section 2.2, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for Permitted Liens), including
the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill of the Station, if any;
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(f) All proprietary information, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including filings with the FCC relating to
the business and operation of the Station, which belong to Seller and is within
its possession and control;
(g) All choses in action of Seller relating to the Station that are
assignable to Buyer as provided herein;
(h) All records required by the FCC to be kept by the Station and copies
of all other books and records which belong to Seller and are within its
possession and control relating to the business or operations of the Station
(exclusive of corporate, financial and accounting records), including executed
copies of the Assumed Contracts; and
2.2 Excluded Assets. The Assets shall exclude the following assets.
(a) Seller's cash on hand as of the Closing and all other cash in any of
Seller's bank or savings accounts; any insurance policies, letters of credit, or
other similar items and cash surrender value in regard thereto; and any stocks,
bonds, certificates of deposit and similar securities or other investments;
(b) All corporate and accounting records of Seller and copies of all
other books and records relating to the business and operations of the Station;
and
(c) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets shall be $1,500,000.
Contemporaneously with the execution of this Agreement, Buyer has paid to Seller
in cash an advance toward the payment of the Purchase Price in the amount of One
Million Dollars ($1,000,000), and Seller hereby acknowledges receipt of such
amount. Buyer shall pay Seller in cash at the Closing the balance of the
Purchase Price in the amount of Five Hundred Thousand Dollars ($500,000),
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. local time, on
the day prior to the Closing Date. 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 Asset under
this Agreement which shall be governed by Section 11.1 hereof), prepaid time
sales agreements 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
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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 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall (a) assume and undertake to pay, discharge, and perform all
obligations and liabilities of the 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 and those relating to the period
prior to the Closing which Buyer agrees to assume pursuant to the prorations and
adjustments and (b) shall pay that portion of the principal and interest due and
payable following the Closing Date pursuant to the terms of the Credit Agreement
dated as of December 29, 1995, among Whitehead Media, Inc. and its Affiliates,
the several Lenders From Time to Time Parties thereto, CIBC Inc., as
Documentation Agent, and Banque Paribas, as Administrative Agent that is
allocable to the Station as set forth in Schedule 6.03 to the Credit Agreement.
Buyer shall not assume any other obligations or liabilities of Seller, including
(i) any obligations or liabilities under any Contract not included in the
Assumed Contracts, (ii) any obligations or liabilities under the Assumed
Contracts relating to the period prior to the Closing Date, (iii) any claims or
pending litigation or proceedings relating to the operation of the Station prior
to the Closing, (iv) any obligations or liabilities arising under agreements
entered into other than in the ordinary course of business, (v) any obligation
to any employee of the Station for severance benefits, vacation time, or sick
leave accrued prior to the Closing Date relating to any employee of Seller who
is not employed or offered employment by Buyer within the 90-day adjustment
period, or (vi) any obligations or liabilities caused by, arising out of, or
resulting from any action or omission of Seller prior to the Closing, and all
such obligations and liabilities shall remain and be the obligations and
liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation organized
under the laws of Delaware. Seller has all requisite power and authority (i) to
own, lease, and use the Assets as now owned, leased, and used, (ii) to conduct
the business operations of the Station as now conducted, and (iii) to execute
and deliver this Agreement and the documents
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contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Seller hereunder and
thereunder. Seller is not a participant of any joint venture or partnership with
any 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 corporate actions on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against it in accordance with its terms except
as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally, and by
judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents
listed on Schedule 3.3 and making any filing required under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act"),
the execution, delivery, the performance of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (i) do not require the consent of any third party; (ii) will not conflict
with, result in a breach of, or constitute a default under, any law, judgment,
order, ordinance, injunction, decree, rule, regulation, or ruling of any court
or governmental instrumentality in a proceeding involving Seller; (iii) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Seller is a party or by which Seller may be bound; (iv) will not
create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets; and (v) will not
conflict with any provision of Seller's Certificate of Incorporation or By-laws.
3.4 Governmental Licenses. To the best of Seller's knowledge and except as
set forth on Schedule 3.4, (i) Schedule 3.4 includes a true and complete list of
the material Licenses and lists pending applications affecting the Licenses;
(ii) Seller has delivered to Buyer true and complete copies of the Licenses
listed on such Schedule (including any amendment and other modifications
thereto), (iii) the Licenses have been validly issued, and Seller is the
authorized legal holder thereof, (iv) the Licenses listed on Schedule 3.4
comprise all of the material licenses, permits, and other authorizations
required from any governmental or regulatory authority for the lawful conduct of
the business and operations of the Station in the manner and to the full extent
they are now conducted, (v) none of the Licenses is subject to any restriction
or condition that would limit the full operation of the Station as now operated,
(vi) the Licenses are in full force and effect, in all material respects, and
the conduct of the business and operations of the Station is in material
accordance therewith, and (vii) Seller has no reason to believe that any of the
Licenses would not be renewed by the FCC or other granting authority in the
ordinary course.
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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. With respect to each
leasehold or subleasehold interest included in the Real Property being conveyed
under this Agreement, so long as Seller fulfills its obligations under the lease
therefor, Seller has enforceable rights to nondisturbance and quiet enjoyment,
and no third party holds any interest in the leased premises with the right to
foreclose upon Seller's leasehold or subleasehold interest. Seller has full
legal and practical access to the Real Property. All easements, rights-of-way,
and real property licenses relating to the Real Property have been properly
recorded in the appropriate public recording offices. Seller will cooperate with
Buyer and provide such assistance as Buyer may reasonably request in connection
with Buyer's efforts to obtain on or before Closing, at Buyer's election and
expense, a policy of title insurance and a current survey with respect to the
Real Property, including, without limitation, using its best efforts to cause
all lease agreements relating to the Real Property to be 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. To the best of Seller's
knowledge, except for a security interest given in connection with the Credit
Agreement referenced in Section 2.4 hereof and Permitted Liens, 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.
Seller has not taken or permitted to be taken any action which would affect its
ownership of or ability to transfer good title to the Tangible Personal
Property.
3.7 Contracts. Schedule 3.7 is a true and complete list of all Assumed
Contracts except contracts with advertisers for the sale of advertising time on
the Station for cash at prevailing rates and which may be canceled by the
Station without penalty on not more than ninety days' notice. Seller has
delivered to Buyer true and complete copies of all written Assumed Contracts,
true and complete memoranda of all material oral Assumed Contracts (including
any amendments and other modifications to such Assumed Contracts), and a
schedule summarizing Seller's obligations under trade and barter agreements
relating to the Station. To the best of Seller's knowledge, all of the Assumed
Contracts are in full force and effect, and are valid, binding, and enforceable
in accordance with their terms and 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. 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.
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3.8 Consents. Except for the FCC Consent provided in Section 6.1, any
filing required under the HSR Act, and the other Consents described in Schedule
3.3, to the best of Seller's knowledge, no consent, approval, permit, or
authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. To the best of Seller's knowledge, Schedule 3.9 is a true
and complete list of all material Intangibles (exclusive of those listed in
Schedule 3.4), all of which are valid and in good standing and uncontested.
Seller has delivered to Buyer copies of all documents establishing or evidencing
all intangibles.
3.10 Insurance. Schedule 3.10 is a true and complete list of all insurance
policies of Seller that insure any part of the Assets or the business of the
Station. All policies of insurance listed in Schedule 3.10 are in full force and
effect.
3.11 Reports. To the best of Seller's knowledge and except as set forth in
Schedule 3.4, all returns, reports, and statements that the Station is currently
required to file with the FCC or place in its Public File or file with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over Seller and the
Station have been complied with in all material respects and all of such
returns, reports, and statements are substantially complete and correct as
filed.
3.12 Personnel.
(a) Employees and Compensation. Schedule 3.12 contains a true and
complete list of all employees of the Station, their job description, date of
hire, salary and amount and date of last salary increase. Schedule 3.12 also
contains a true and complete list as of the date of this Agreement of all
employee benefit plans or arrangements applicable to the employees of the
Station and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to hospitalization or other health or
life insurance programs, incentive plans, bonus arrangements, and vacation, sick
leave, disability and termination arrangements or policies, including workers'
compensation policies, and a description of all fixed or contingent liabilities
or obligations of Seller with respect to any person now or formerly employed at
the Station or any person now or formerly retained as an independent contractor
at the Station.
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(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.
(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. To the best of the Seller's knowledge, (i) Seller has filed or
caused to be filed all federal income tax returns and all other federal, state,
county, local, or city tax returns which are required to be filed, and it has
paid or caused to be paid all taxes shown on those returns or on any tax
assessment received by it to the extent that such taxes have become due, and
(ii) there are no governmental investigations or other legal, administrative, or
tax proceedings pursuant to which Seller is or could be made liable for any
taxes, penalties, interest, or other charges, the liability for which could
extend to Buyer as transferee of the business of the Station, and no event has
occurred that could impose on Buyer any 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, and except as set forth on
Schedule 3.4, to the best of Seller's knowledge, there is no claim, legal
action, counterclaim, nor any order, decree or judgment, in progress or pending,
or to the knowledge of Seller threatened, against or relating to Seller with
respect to its ownership or operation of the Station or otherwise relating to
the Assets or the business or operations of the Station, nor does Seller know or
have reason to be aware of any basis for the same. In particular, but without
limiting the generality of the foregoing, and except as forth on Schedule 3.14,
to the best of Seller's knowledge, there are no applications, complaints or
proceedings pending or, to the best of its knowledge, threatened (i) before the
FCC relating to the business or operations of the Station other than rule making
proceedings which affect the radio industry generally, (ii) before any federal
or state agency relating to the business or operations of the Station involving
charges of illegal discrimination under any federal or state employment laws or
regulations, or (iii) before any federal, state, or local agency relating to the
business or operations of the Station involving zoning issues under any federal,
state, or local zoning law, rule, or regulation.
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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 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) In connection with its ownership or operation of the Station, Seller
has obtained and been in material compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are required
under, and has complied in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all federal, state, and local
laws, rules, and regulations (including all codes, plans, judgments, orders,
decrees, stipulations, injunctions, and charges thereunder) relating to public
health and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution,
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use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
(f) To the best of Seller's knowledge, all properties and equipment used
in the business of the Station are and have been free of asbestos and
asbestos-related products, PCB's, dioxins, and Extremely Hazardous Substances
(as defined in Section 302 of the Emergency Planning and Community Right-to-Know
Act).
(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.
3.16 Compliance with Laws. To the best Seller's knowledge and except as set
forth on Schedule 3.4, Seller has complied in all material respects with the
Licenses and all federal, state, and local laws, rules, regulations, and
ordinances applicable or relating to the ownership and operation of the Station.
To the best of Seller's knowledge, neither the ownership or use of the
properties of the Station nor the conduct of the business or operations of the
Station conflicts with the rights of any other person or entity.
3.17 Full Disclosure. No representation or warranty made by Seller in this
Agreement or in any certificate, document, or other instrument furnished or to
be furnished by Seller pursuant hereto contains or will knowingly contain any
untrue statement of a material fact.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Florida. Buyer has all requisite power and authority to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with by
Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer have been duly authorized by all
necessary actions on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by
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bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the Consents
and making any filing required under the HSR Act, the execution, delivery, and
performance by Buyer of this Agreement and the documents contemplated hereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Certificate 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; (iv) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any agreement,
instrument, license, or permit to which Buyer is a party or by which Buyer may
be bound, such that Buyer could not acquire the Assets or operate the Station.
4.4 Full Disclosure. No representation or warranty made by Buyer in this
Agreement or in any certificate, document, or other instrument furnished or to
be furnished by Buyer pursuant hereto contains or will knowingly contain any
untrue statement of a material fact.
4.5 Buyer Qualifications. Subject to obtaining the Consents, 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 amended, and
the rules, regulations and policies of the FCC. Subject to obtaining the
Consents, Buyer knows of no fact that would, under existing law and the existing
rules, regulations, policies and procedures of the FCC disqualify Buyer as
assignee of the FCC Licenses or as the owner and operator of the Station.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement and
the Closing Date, Seller shall operate the Station in the ordinary course of
business in accordance with its past practices (except where such conduct would
conflict with the following covenants or with Seller's other obligations under
this Agreement), and in accordance with the other covenants in this Section 5.
5.2 Contracts. Seller will not enter into any contract or commitment which
is not terminable on 90-days notice relating to the Station or the Assets, or
amend or terminate any Contract (or waive any material right thereunder), or
incur any obligation (including obligations relating to the borrowing of money
or the guaranteeing of indebtedness) that will be binding on Buyer after
Closing, except for cash time sales agreements made in the
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ordinary course of business and other contracts or commitments involving less
than $5,000. Prior to the Closing Date, Seller shall deliver to Buyer a list of
all Contracts entered into between the date of this Agreement and the Closing
Date, together with copies of such Contracts.
5.3 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the material Assets, except 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.
5.4 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, (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 either by payment or posting an appropriate
indemnity bond.
5.5 Licenses. Seller shall not cause or permit, by any act or failure to
act, any of the Licenses issued by the FCC to expire or to be revoked,
suspended, or modified, or take any action that could cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the Licenses. Seller shall not fail to
prosecute with due diligence any applications to any governmental authority in
connection with the operation of the Station.
5.6 Rights. Seller shall not knowingly waive any material right relating to
the Station or any of the Assets.
5.7 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
during normal business hours to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Station for
the purpose of audit and inspection and will furnish or cause to be furnished to
Buyer or its authorized representatives all material information with respect to
the affairs and business of the Station that Buyer may reasonably request
(including any operations reports produced with respect to the affairs and
business of the Station).
5.8 Insurance. Seller shall maintain substantially the same insurance
coverage provided by the existing insurance policies on the Station and the
Assets.
5.9 Consents. Seller shall use its best efforts to obtain the Consents
described in Section 8.2(c), without any material change in the terms or
conditions of any Contract or License as in effect on the date of this
Agreement. Seller shall advise Buyer of any communications it receives
concerning the Consents and of any conditions proposed,
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considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use its best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
lenders may request.
5.10 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.11 Notification. Seller shall promptly notify Buyer in writing of any
material change in any of the information contained in Seller's representations
and warranties contained in Section 3 of this Agreement.
5.12 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Station.
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)
days of the execution of this Agreement. The parties shall prosecute the
application with all reasonable diligence and otherwise use their reasonable
commercial efforts to obtain a grant of the 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, provided, however, that the parties shall continue to
have all rights available to them pursuant to Section 9 hereof. If the Closing
shall not have occurred for any reason within the original effective period of
the FCC Consent, and neither party shall have terminated this Agreement under
Section 9, the parties shall jointly request an extension of the effective
period of the FCC Consent. No extension of the FCC Consent shall limit the
exercise by either party of its rights under Section 9.
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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 the Seller until the Closing.
6.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation,
or condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and rules and regulations of securities markets, each party will
keep confidential any information obtained from the other party in 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 four (4) years from the Closing Date any books and
records relating to the Assets but not included in the Assets. Buyer shall
provide Seller access and the right to copy for a period of four (4) years from
the Closing Date any books and records relating to the Assets that are included
in the Assets.
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6.7 Broker. Each of Buyer and Seller represents and warrants that neither
it nor any person or entity acting on its behalf has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transactions
contemplated by this Agreement.
6.8 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 twenty days after the
execution of this Agreement; (b) cooperate with each other in connection with
such HSR Act filings; and (c) promptly file, after any request by the FTC or DOJ
and appropriate negotiation with the FTC or DOJ concerning the scope of such
request, any information or documents requested by the FTC or DOJ. Buyer shall
pay any filing fee required by the FTC under the HSR Act.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing are subject at Buyer's option to the fulfillment or waiver by Buyer
prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All material representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller shall have performed and complied
in all material respects with all material covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) Consents. All Consents shall have been obtained and delivered to
Buyer without any material adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted without the
imposition on Buyer of any material conditions that need not be complied with by
Buyer under Section 6.1 hereof, Seller shall have complied with any material
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the holder of all
material Licenses and there shall not have been any modification of any material
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,
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suspend, or modify adversely any material License. All FCC Licenses are material
Licenses.
(f) Deliveries. Seller shall have made or stand willing to make all the
deliveries to Buyer set forth in Section 8.2.
(g) 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.
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 material representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and complied in
all material respects with all material covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior 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) 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.
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. If Buyer fails to specify the date for Closing
pursuant to the preceding sentence prior to the fifth business day after the
date upon which the FCC Consent becomes a Final Order, the Closing shall take
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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 Ave., N.W., Suite 800, Washington, D.C.
20036, or such other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Subject to the provisions of this Agreement,
duly executed bills of sale, assignments, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets in the name
of Buyer, free and clear of all mortgages, liens, restrictions, encumbrances,
claims, and obligations except for Permitted Liens.
(b) Estoppel Certificate. An Estoppel Certificate of the Lessor of the
leasehold interests listed in Schedule 3.5.
(c) Consents. An executed copy of any instrument evidencing receipt of
any Consent;
(d) Certificates. Certificates, dated as of the Closing Date, executed
by Seller certifying (1) that the material representations and warranties of
Seller contained in this Agreement are true and complete in all material
respects as of the Closing Date as though made on and as of that date; and (2)
that Seller have in all material respects performed and complied with all of its
material obligations, covenants, and agreements set forth in this Agreement to
be performed and complied with on or prior to the Closing Date and such
additional Certificates and confirmations to Buyer's lenders as Buyer may
reasonably request in connection with obtaining financing for the performance of
its payment obligations hereunder.
(e) Licenses, Contracts, Business Records, Etc. Copies of all Licenses
and Assumed Contracts.
(f) Opinions of Counsel. Opinions of Seller's counsel dated as of the
Closing Date, substantially in the form of Schedule 8.2(f) hereto.
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.
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(a) Purchase Price. The balance of 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) Officer's Certificate. A certificate, dated as of the Closing Date,
executed on behalf of Buyer by its President, certifying (1) that the
representations and warranties of Buyer contained in this Agreement are true and
complete in all material respects as of the Closing Date as though made on and
as of that date, and (2) that Buyer has in all material respects performed and
complied with all of its obligations, covenants, and agreements set forth in
this Agreement to be performed and complied with on or prior to the Closing
Date.
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as of the
Closing Date, substantially in the form of Schedule 8.3(d) hereto.
SECTION 9. TERMINATION
9.1 Termination by Seller. Subject to the limitations set forth in Section
9.1(d) below, 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 within eighteen
(18) months of the date of this Agreement.
(d) Limitation. Notwithstanding Seller's rights set forth in Section
9.1(a), (b) or (c), any attempt by Seller to terminate this Agreement shall have
no force or effect whatsoever unless:
(i) Seller shall have delivered to Buyer written notice of its
election to terminate this Agreement pursuant to Section 9.1(a), (b) or
(c); and
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(ii)Buyer shall have failed, on or before the date that is 60
days from Buyer's receipt of Seller's written termination notice, to (1)
deliver to Seller written notice of Buyer's election to either (A)
terminate this Agreement pursuant to, and subject to the terms and
conditions of Section 2(e) of that certain Option Amendment and
Cooperation Agreement dated as of March 21, 1997 (the "Option
Cooperation Agreement") or (B) extend the Closing Date hereunder
pursuant to, and subject to the terms and conditions of Section 2(e) of
the Option Cooperation Agreement and (2) pay to Seller (A) the balance
of the Purchase Price pursuant to Section 2.3 hereof, and (B) the actual
out-of-pocket costs and expenses incurred by Seller in connection with
the transactions contemplated to be consummated under the WTVX Option
Agreement and this Agreement in accordance with, and subject to the
limitations set forth in, Section 11.1 hereof and Section 4 of the
Option Cooperation Agreement (the "Reimbursable Expenses"); and
(iii) Seller shall have delivered to Buyer at least 5 business
days prior to the expiration of the 60-day period referred to in clause
(ii) of this Section 9.1(d), wire transfer instructions and
documentation, including copies of invoices or receipts, in form and
substance reasonably satisfactory to Buyer, evidencing the Reimbursable
Expenses.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer and the
purchase and sale of the Station abandoned, if Buyer is not then in material
default, upon written notice to Seller, upon the occurrence of any of the
following:
(a) Conditions. If on the date that would otherwise be the Closing Date
any of the conditions precedent to the obligations of Buyer set forth in this
Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order, not caused by
Buyer, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred within eighteen
(18) months plus fifteen days of the date of this Agreement.
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 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.
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SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the closing for a period of twelve (12) months
provided, however, that as to any representation or warranty made by either the
Buyer or Seller which the other party knows, or has reason to believe, is not
true as of the Closing Date, such representation or warranty shall not survive
the Closing. Until the Closing, Buyer and Seller will immediately advise each
other, in a detailed written notice, of any fact or occurrence or any pending or
threatened occurrence of which any of them obtains knowledge and which (a) (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or a
Schedule hereto, (b) (if existing and known at any time prior to or at the
Closing) would make the performance by any party of a covenant contained in this
Agreement impossible or make that performance materially more difficult than in
the absence of that fact or occurrence, or (c) (if existing and known at the
time of the Closing) would cause a condition to any party's obligations under
this Agreement not to be fully satisfied.
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) Subject to the proviso contained in the first sentence of Section
10.1, any and all losses, liabilities, or damages resulting from any untrue
representation, breach of warranty, or material omission or nonfulfillment of
any covenant by Seller contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer pursuant to
this Agreement, including any liabilities arising at any time under any Contract
not included in the Assumed Contracts.
(c) Any and all losses, liabilities, or damages contingent or otherwise
resulting from the operation or ownership of the Station 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.
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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) Subject to the proviso contained in the first sentence of Section
10.1, any and all losses, liabilities, or damages resulting from any untrue
representation, breach of warranty, or material omission or nonfulfillment of
any covenant by Buyer contained in this Agreement or in any certificate,
Schedule, document, or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer pursuant to this
Agreement.
(c) Any and all losses, liabilities, or damages contingent or otherwise,
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 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.
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(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification under this Agreement, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party subject to reimbursement for reasonable actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate int he defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided in Sections 10.2 and 10.3 shall
extend to the shareholders, directors, officers, employees, and representatives
of any Claimant although for the purpose of the procedures set forth in this
Section 10.4, any indemnification claims by such parties shall be made by and
through the Claimant.
(f) Notwithstanding anything in this Agreement to the contrary, neither
party shall indemnify or otherwise be liable to the other party for any breach
of a representation or warranty, or for breach of any covenant in this Agreement
except to the extent the losses, obligations, liabilities, costs and expenses of
such party arising therefrom exceed in the aggregate Ten Thousand Dollars
($10,000). The provisions of the foregoing sentence shall not apply to
liabilities assumed by either party pursuant to the adjustments and prorations.
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, as its sole and exclusive remedy, to obtain
specific performance of the terms of this Agreement. If any action is brought by
Buyer to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 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.
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SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Buyer hereby agrees to reimburse Seller for its
professional fees and its other actual and, with respect to discretionary costs
and expenses only, pre-approved out-of-pocket costs and expenses, incurred in
connection with the transactions contemplated to be consummated under this
Agreement; provided, however, that the aggregate amount of expenses reimbursable
pursuant to this Section 11.1 of this Agreement with respect to the
out-of-pocket costs and expenses of Seller in respect of legal and accounting
services shall be subject to the limitation set forth in the proviso in Section
4.a of the Option Cooperation Agreement. Except as provided above, each party
shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives, and each
party shall be responsible for all fees or commissions payable to any finder,
broker, advisor, or similar person retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below, any
dispute arising out of or related to this Agreement that Seller and Buyer are
unable to resolve by themselves shall be settled by arbitration in the District
of Columbia by a panel of three arbitrators. Seller and Buyer shall each
designate one disinterested arbitrator, and the two arbitrators so designated
shall select the third arbitrator. Before undertaking to resolve the dispute,
each arbitrator shall be duly sworn faithfully and fairly to hear and examine
the matters in controversy and to make a just award according to the best of his
or her understanding. The arbitration hearing shall be conducted in accordance
with the commercial arbitration rules of the American Arbitration Association.
The written decision of a majority of the arbitrators shall be final and binding
on Seller and Buyer. The costs and expenses of the arbitration proceeding shall
be assessed between Seller and Buyer in a manner to be decided by a majority of
the arbitrators, and the assessment shall be set forth in the decision and award
of the arbitrators. Judgment on the award, if it is not paid within thirty days,
may be entered in any court having jurisdiction over the matter. No action at
law or suit in equity based upon any claim arising out of or related to this
Agreement shall be instituted in any court by Seller or Buyer against the other
except (i) an action to compel arbitration pursuant to this Section, (ii) an
action to enforce the award of the arbitration panel rendered in accordance with
this Section, or (iii) a suit for specific performance pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be (a) in writing, (b)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by
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commercial delivery service or registered or certified mail, return receipt
requested, (c) deemed to have been given on the date of personal delivery or the
date set forth in the records of the delivery service or on the return receipt,
and (d) addressed as follows:
If to Seller: Mr. Eddie L. Whitehead
Whitehead Media of Florida, Inc.
Whitehead Broadcasting of Florida, Inc.
832 Folsom Street
San Francisco, CA 94107
Telephone: (415) 243-8866
Facsimile: (415) 547-1434
If to Buyer: Mr. Lowell W. Paxson
Paxson Communications of Ft. Pierce-34, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign its rights and obligations under this Agreement
to a wholly-owned subsidiary or commonly controlled affiliate without seeking or
obtaining Seller's prior approval, provided that such assignment does not
relieve Buyer of its responsibilities hereunder. 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. 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, 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.
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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 Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
11.12 Press Releases. Neither party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the
-26-
<PAGE> 33
other party; provided, however, that nothing contained herein shall prevent
either party from promptly making all filings with governmental authorities as
may, in its judgment, be required or advisable in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, in which case the other party shall be first notified in
writing.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-27-
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
FT. PIERCE-34, INC.
By: /s/ Lowell W. Paxson
---------------------------------------
Name: Lowell W. Paxson
-------------------------------------
Title: Chairman
--------------------------------------
WHITEHEAD MEDIA OF FLORIDA, INC.
By: /s/ Eddie L. Whitehead
---------------------------------------
Name: Eddie L. Whitehead
-------------------------------------
Title: President
--------------------------------------
WHITEHEAD BROADCASTING OF FLORIDA, INC.
By: /s/ Eddie L. Whitehead
---------------------------------------
Name: Eddie L. Whitehead
-------------------------------------
Title: President
--------------------------------------
-28-
<PAGE> 1
EXHIBIT 21
PAXSON COMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
FLORIDA
COMPANY (EXCEPT AS NOTED)
- ------- -----------------
<S> <C>
Excel Products.............................................. L42070
Infomall of Los Angeles, Inc. .............................. P94000052168
Pax Jax, Inc. .............................................. P96000023965
Paxson Akron License, Inc. ................................. P95000065323
Paxson Albany License, Inc. ................................ P96000051080
Paxson Atlanta License, Inc. ............................... P96000040915
Paxson Birmingham License, Inc. ............................ P96000065971
Paxson Boston License, Inc. ................................ P94000085412
Paxson Broadcasting of Jacksonville, L.P. .................. A31714
Paxson Broadcasting of Miami, L.P. ......................... A32271
Paxson Broadcasting of Orlando, L.P. ....................... A32272
Paxson Broadcasting of Tampa, L.P. ......................... A31713
Paxson Communications LP, Inc. ............................. P93000081704
Paxson Communications LPTV, Inc. ........................... P96000010714
Paxson Communications Management Company, Inc. ............. P93000081692
Paxson Communications Marketing, Inc. ...................... P93000081692
Paxson Communications Networks, Inc. ....................... P93000081701
Paxson Communications of Akron-23, Inc. .................... P95000065333
Paxson Communications of Albany-55, Inc. ................... P95000079551
Paxson Communications of Atlanta-14, Inc. .................. P94000022800
Paxson Communications of Battle Creek-43, Inc. ............. P95000075969
Paxson Communications of Birmingham-44, Inc. ............... P96000065973
Paxson Communications of Boston-46, Inc. ................... P96000063137
Paxson Communications of Boston-60, Inc. ................... P96000085409
Paxson Communications of Cleveland-67, Inc. ................ P95000036550
Paxson Communications of Cookeville, Inc. .................. P95000007640
Paxson Communications of Dallas-68, Inc. ................... P95000085164
Paxson Communications of Dayton-26, Inc. ................... P95000071495
Paxson Communications of Denver-59, Inc. ................... P95000062232
Paxson Communications of Detroit-31, Inc. ..................
Paxson Communications of Florida, Inc. ..................... P93000081697
Paxson Communications of Ft. Pierce-34, Inc. ............... P95000025424
Paxson Communications of Greensboro-16, Inc. ............... P96000023982
Paxson Communications of Hartford-18, Inc. ................. P97000008960
Paxson Communications of Houston-49, Inc. .................. P95000006056
Paxson Communications of Kansas City-50, Inc. .............. P96000005920
Paxson Communications of the Keys, Inc. .................... P96000100953
Paxson Communications of Little Rock-42, Inc. .............. P96000065967
Paxson Communications of Los Angeles-30, Inc. .............. P94000091708
Paxson Communications of Miami-35, Inc. .................... P94000011565
Paxson Communications of Milwaukee-55, Inc. ................ P95000062234
Paxson Communications of Minneapolis-41, Inc. .............. P94000091711
Paxson Communications of New London-26, Inc. ............... P94000085416
Paxson Communications of New York-43, Inc. ................. P95000065335
Paxson Communications of Oklahoma City-62, Inc. ............ P96000045522
Paxson Communications of Orlando-56, Inc. .................. P95000003238
</TABLE>
1
<PAGE> 2
<TABLE>
<CAPTION>
FLORIDA
COMPANY (EXCEPT AS NOTED)
- ------- -----------------
<S> <C>
Paxson Communications of Philadelphia-61, Inc. ............. P94000080836
Paxson Communications of Phoenix-13, Inc. .................. P95000038304
Paxson Communications of Phoenix-51, Inc. .................. P96000064771
Paxson Communications of Providence-69, Inc. ............... P96000014754
Paxson Communications of Releigh-Durham-47, Inc. ........... P95000085626
Paxson Communications of Sacramento-29, Inc. ............... P96000053210
Paxson Communications of Salt Lake City-16, Inc. ........... P96000023968
Paxson Communications of Salt Lake City-30, Inc. ........... P96000101694
Paxson Communications of San Jose-65, Inc. ................. P94000085432
Paxson Communications of San Juan, Inc. .................... P96000008017
Paxson Communications of Scranton-64, Inc. ................. P96000089642
Paxson Communications of Seattle-24, Inc. .................. P96000062382
Paxson Communications of St. Louis-13, (formerly -- Paxson
Communications of Minneapolis-45, Inc.)................... P94000091716
Paxson Communications of Tallahassee, Inc. ................. P96000023978
Paxson Communications of Tampa-66, Inc. .................... P94000011563
Paxson Communications of Tulsa-44, Inc...................... P96000023962
Paxson Communications of Washington-60, Inc................. P95000037463
Paxson Communications of Washington-66, Inc................. P96000085426
Paxson Communications of West Palm Beach-25, Inc............ P94000022769
Paxson Cookeville License, Inc.............................. P95000025426
Paxson Dallas License, Inc.................................. P94000085161
Paxson Dayton License, Inc.................................. P96000014744
Paxson Denver License, Inc.................................. P96000014743
Paxson Detroit License, Inc.................................
Paxson Greensboro License, Inc.............................. P96000023973
Paxson Houston License, Inc................................. P95000006054
Paxson Jacksonville License, L.P............................
Paxson Kansas City License, Inc............................. P96000095916
Paxson Keys License, Inc.................................... P96000100943
Paxson Little Rock License, Inc............................. P96000065963
Paxson Los Angeles License, Inc............................. P94000091722
Paxson Communications Marketing Ventures....................
Paxson Miami License, L.P................................... A93000000189
Paxson Milwaukee License, Inc............................... P96000097792
Paxson Minneapolis License, Inc............................. P94000091724
Paxson Networks, Inc........................................ P93000082991
Paxson New London License, Inc.............................. P94000085420
Paxson New York License, Inc................................ P95000065329
Paxson Oklahoma City License, Inc........................... P93000085943
Paxson Orlando License, Inc................................. A93000000188
Paxson Outdoor, Inc......................................... P93000060855
Paxson Philadelphia License, Inc............................ P94000080839
Paxson Phoenix License, Inc................................. P95000038137
Paxson Pittsburgh License, Inc..............................
Paxson Sacramento License, Inc.............................. P96000052213
Paxson Salt Lake City License, Inc.......................... P96000084316
Paxson San Jose License, Inc................................ P94000085434
Paxson Scranton License, Inc................................ P96000089646
Paxson Seattle License, Inc................................. P96000062360
Paxson Sports of Miami, Inc................................. P94000011568
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
FLORIDA
COMPANY (EXCEPT AS NOTED)
- ------- -----------------
<S> <C>
Paxson Sports Ventures, Inc................................. P96000035360
Paxson St. Louis License, Inc............................... P95000031448
Paxson Tallahassee License, Inc............................. P96000047634
Paxson Tampa License, L.P................................... A93000000190
Paxson Washington License, Inc.............................. P95000037458
Paxson West Palm Beach License, Inc......................... P04000035065
Paxson/R&R Network, Inc..................................... P96000051075
PCC Direct (formerly Paxson Merchandising Ventures, Inc.)...
Delaware
The Infomall Cable Network, Inc............................. 7479797
Delaware
The Infomall TV Network, Inc................................ 7384841
World Travelers Network -- Miami, Inc....................... P94000033056
World Travelers Network, Inc................................ P94000033053
</TABLE>
3
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-60819) and the Registration Statement on Form S-8
(No. 333-20163) of Paxson Communications Corporation and its subsidiaries of our
report dated February 12, 1997, except as to Notes 2, 18 and 19, which are as of
March 26, 1997, appearing in this Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears in this Form 10-K.
/s/ PRICE WATERHOUSE LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
March 31, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 61,748,788
<SECURITIES> 0
<RECEIVABLES> 31,437,591
<ALLOWANCES> 1,576,593
<INVENTORY> 0
<CURRENT-ASSETS> 95,835,370
<PP&E> 180,211,612
<DEPRECIATION> 35,796,200
<TOTAL-ASSETS> 543,182,460
<CURRENT-LIABILITIES> 19,634,533
<BONDS> 227,655,096
184,709,646
0
<COMMON> 48,754
<OTHER-SE> 106,726,483
<TOTAL-LIABILITY-AND-EQUITY> 543,182,460
<SALES> 144,497,611
<TOTAL-REVENUES> 144,497,611
<CGS> 0
<TOTAL-COSTS> 144,620,842
<OTHER-EXPENSES> 5,159,491
<LOSS-PROVISION> 1,287,819
<INTEREST-EXPENSE> 31,608,725
<INCOME-PRETAX> (26,572,465)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,572,465)
<DISCONTINUED> 353,564
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,218,901)
<EPS-PRIMARY> (1.10)
<EPS-DILUTED> (1.10)
</TABLE>
