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EXHIBIT 10.183
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STOCK PURCHASE AGREEMENT
BY AND AMONG
CHANNEL 46 OF TUCSON, INC.,
▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC.
AND
SUNGILT CORPORATION, INC.
* * *
SEPTEMBER 9, 1997
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TABLE OF CONTENTS
Page
ARTICLE 1. CERTAIN DEFINITIONS.............................................................................2
Section 1.1 Terms Defined in this Section..........................................................2
Section 1.2 Clarifications.........................................................................5
ARTICLE 2. THE INITIAL CLOSING.............................................................................5
Section 2.1 The Initial Closing....................................................................5
Section 2.2 Sale of Initial Shares.................................................................5
Section 2.3 Purchase Price.........................................................................6
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING................................................6
Section 3.1 Organization of the Company............................................................6
Section 3.2 Tower Site.............................................................................6
Section 3.3 Extension 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
Section 3.7 Loan Documents.........................................................................7
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING
THE INITIAL CLOSING.............................................................................7
Section 4.1 Organization and Standing..............................................................7
Section 4.2 Power and Authority....................................................................7
Section 4.3 Conflicts..............................................................................8
Section 4.4 Investment.............................................................................8
Section 4.5 Disclosure.............................................................................8
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..............................................................................9
Section 5.4 Exchange Act; Investment Company Act...................................................9
Section 5.5 Capitalization.........................................................................9
Section 5.6 Assets and Liabilities of the Company. ..............................................10
Section 5.7 Broker................................................................................10
Section 5.8 Construction Permit...................................................................10
Section 5.9 Tower Site............................................................................10
Section 5.10 Consents..............................................................................10
Section 5.11 Claims and Legal Actions..............................................................10
Section 5.12 Disclosure............................................................................11
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Page
ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AT
THE INITIAL CLOSING............................................................................11
Section 6.1 Representations and Warranties........................................................11
Section 6.2 Covenants and Conditions..............................................................11
Section 6.3 Extension Application.................................................................11
Section 6.4 Approvals for Tower Site..............................................................11
Section 6.5 Contribution..........................................................................11
Section 6.6 Tower Site............................................................................12
Section 6.7 Deliveries. .........................................................................12
Section 6.8 Construction Permit; Adverse Proceedings..............................................13
Section 6.9 No Liabilities........................................................................13
Section 6.10 Loan Documents........................................................................13
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE INITIAL CLOSING.........................................................13
Section 7.1 Representations and Warranties........................................................13
Section 7.2 Covenants and Conditions..............................................................13
Section 7.3 Deliveries............................................................................13
Section 7.4 Adverse Proceedings...................................................................14
ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION......................................................14
Section 8.1 General...............................................................................14
Section 8.2 FCC Consent...........................................................................15
Section 8.3 Employee Benefit Plans................................................................15
Section 8.4 Labor Relations.......................................................................15
Section 8.5 Licenses..............................................................................16
Section 8.6 Compliance with Laws..................................................................16
Section 8.7 Notification..........................................................................16
Section 8.8 Preservation of Business..............................................................16
Section 8.9 Performance of Agreements.............................................................16
Section 8.10 Cable Carriage........................................................................16
ARTICLE 9. THE OPTION AND THE SECOND CLOSING..............................................................16
Section 9.1 Call Option...........................................................................16
Section 9.2 Put Option.
.................................................................................................................17
Section 9.3 The Second Closing....................................................................18
Section 9.4 Sale of Option Shares.................................................................18
Section 9.5 Purchase Price for Option Shares......................................................18
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Page
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING
THE SECOND CLOSING.............................................................................19
ARTICLE 11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY AND SELLER REGARDING THE SECOND CLOSING
..............................................................................................19
Section 11.1 Contracts.............................................................................19
Section 11.2 Copyrights, Trademarks and Similar Rights.............................................19
Section 11.3 Governmental Authorizations...........................................................20
Section 11.4 Title to and Condition of Real Property...............................................20
Section 11.5 Title to and Condition of Tangible Personal Property..................................20
Section 11.6 Compliance With Laws..................................................................21
Section 11.7 Reports...............................................................................21
Section 11.8 Public Inspection File................................................................21
Section 11.9 Taxes.................................................................................21
Section 11.10 Dividends and Redemptions.............................................................21
Section 11.11 Notices; Condemnation.................................................................21
Section 11.12 Liabilities of the Company............................................................22
Section 11.13 Disclosure............................................................................22
ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AT
THE SECOND CLOSING.............................................................................22
Section 12.1 Representations and Warranties........................................................22
Section 12.2 Covenants and Conditions..............................................................22
Section 12.3 FCC Consent...........................................................................22
Section 12.4 Consents..............................................................................22
Section 12.5 Deliveries. .........................................................................23
Section 12.6 Adverse Proceedings...................................................................23
Section 12.7 Time Brokerage Agreement..............................................................24
Section 12.8 Adverse Change........................................................................24
ARTICLE 13. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE SECOND CLOSING..........................................................24
Section 13.1 Representations and Warranties........................................................24
Section 13.2 Covenants and Conditions..............................................................24
Section 13.3 FCC Consent...........................................................................24
Section 13.4 Consents..............................................................................24
Section 13.5 Deliveries. .........................................................................24
Section 13.6 Time Brokerage Agreement..............................................................25
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Page
Section 13.7 Adverse Proceedings...................................................................25
ARTICLE 14. JOINT COVENANTS................................................................................25
Section 14.1 Confidentiality.......................................................................25
Section 14.2 Cooperation...........................................................................25
Section 14.3 Governmental Consents.................................................................26
Section 14.4 Station Operation and Contracts.......................................................26
ARTICLE 15. TRANSFER TAXES; FEES AND EXPENSES..............................................................26
Section 15.1 Transfer Taxes........................................................................26
Section 15.2 Filing Fees...........................................................................26
Section 15.3 Expenses..............................................................................26
ARTICLE 16. ESCROW DEPOSIT.................................................................................27
Section 16.1 Escrow Deposit........................................................................27
ARTICLE 17. RISK OF LOSS...................................................................................28
Section 17.1 Risk of Loss..........................................................................28
Section 17.2 Postponement of the Second Closing Date...............................................28
Section 17.3 Option to Terminate...................................................................28
ARTICLE 18. TERMINATION RIGHTS.............................................................................28
Section 18.1 Termination by the Parties............................................................28
Section 18.2 Termination by Buyer..................................................................29
ARTICLE 19. SPECIFIC PERFORMANCE...........................................................................29
ARTICLE 20. INDEMNIFICATION................................................................................29
Section 20.1 Seller's and the Company's Indemnification............................................29
Section 20.2 Buyer's Indemnification...............................................................30
Section 20.3 Notice of Claim.......................................................................30
Section 20.4 Assumption and Defense of Third-Party Action..........................................30
Section 20.5 Limitation Period.....................................................................31
ARTICLE 21. OTHER PROVISIONS...............................................................................31
Section 21.1 Survival of Representations, Warranties and Covenants.................................31
Section 21.2 Press Releases........................................................................31
Section 21.3 Further Assurances....................................................................31
Section 21.4 Benefit and Assignment................................................................31
Section 21.5 Entire Agreement......................................................................31
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Section 21.6 Headings..............................................................................32
Section 21.7 Governing Law.........................................................................32
Section 21.8 Notices...............................................................................32
Section 21.9 Counterparts..........................................................................33
Section 21.10 PCC Guaranty..........................................................................33
Section 21.11 Shareholders Guaranty.................................................................33
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)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of the 9th
day of September, 1997, by and among SUNGILT CORPORATION, INC. a __________
corporation ("Seller"); CHANNEL 46 OF TUCSON, INC., a Delaware corporation (the
"Company"); and ▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, 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.
BMPCT-960801LM ("Construction Permit"), issued by the Federal Communications
Commission ("FCC") for new television station KXGR, Channel 46, Green Valley,
Arizona (the "Station") and has pending before the FCC an application to extend
the Construction Permit, File No. BMPCT-970424KF (the "Extension 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; (c) Buyer
and the Company desire to enter into a Lease Agreement pursuant to which Buyer
agrees to lease to the Company certain assets used or useful in the business
and operations of the Station; and (d) 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.
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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:
"Call" means the requirement of Seller to convey the Option Shares to
Buyer in the manner described in Section 9.1.
"Call Notice" means the written notice sent by Buyer to Seller
requiring Seller to convey all of the Option Shares to Buyer in the manner
described in Section 9.1.
"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.
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"Escrow Deposit" means $100,000 in cash deposited by Buyer with the
Escrow Agent pursuant to the Escrow Agreement.
"FCC Consent" means action by the FCC granting its consent to the
transfer of control of the Company as contemplated by this Agreement.
"FCC Licenses" means those licenses, permits, and authorizations
issued by the FCC in connection with the business and operations of the
Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Initial Closing" means the consummation of the purchase and sale of
the Initial Shares pursuant to this Agreement in accordance with the provisions
of Article 2.
"Initial Closing Date" means the date on which the Initial Closing
occurs, as determined pursuant to Section 2.1.
"Initial Shares" means 490 shares of the voting common stock, par
value $.01 per share, of the Company 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.
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"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.
"Put" means the requirement of Buyer to purchase the Option Shares
from Seller in the manner described in Section 9.2.
"Put Notice" means the written notice sent by Seller to Buyer
requiring Buyer to purchase from Seller the Option Shares in the manner
described in Section 9.2.
"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,
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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 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, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, 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 Two Hundred Sixty-Five Thousand
Dollars ($265,000). Fifteen Thousand Dollars ($15,000) of the Initial Shares
Purchase Price shall be paid on the date of execution of this Agreement and the
remaining portion of the Initial Shares Purchase Price shall be paid at the
Initial Closing by Buyer to Seller, in accordance with written
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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 formed in the State of Delaware and to be duly qualified to
conduct business in the State of Arizona.
Section 3.2 Tower Site. Prior to the Initial Closing, Seller shall
cause the Company to enter into a Tower Lease, acceptable to Buyer, providing
for the construction and operation of the Station's transmission facilities at
the Tower Site specified in the Construction Permit.
Section 3.3 Extension Application. Seller shall vigorously prosecute
the Extension Application before the FCC. Seller shall promptly file following
the date hereof a request with the FCC for a special temporary authority (the
"Special Temporary Authority") to operate the Station at a minimum power level
of 10 kilowatts. Such request shall be in form reasonably acceptable to Buyer.
Seller and the Company shall consult with Buyer with respect to its content and
any actions to be taken with respect thereto. Seller shall vigorously prosecute
the Special Temporary Authority before the FCC.
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
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(b) to notify Buyer promptly of (i) any adverse development
with respect to the Extension 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.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER REGARDING
THE INITIAL CLOSING
As an inducement to Seller and the Company to enter into this
Agreement and consummate the transactions contemplated to occur upon the
Initial Closing, Buyer represents and warrants to Seller and the Company as
follows:
Section 4.1 Organization and Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and shall be, on or before the Initial Closing Date, duly qualified
to conduct business as a foreign corporation in the State of Arizona.
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 Bylaws; (ii) conflict with or result in a breach of or
constitute a default under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other agreement or
instrument to which Buyer is a party or by which it or its assets may be bound
or affected, or any decree, judgment or order of any court or governmental
department,
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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
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 Arizona. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of _______ and is duly qualified to conduct business in the State of
Arizona. Seller has delivered to Buyer true and complete copies of (a) the
Articles of Incorporation and By-laws of Seller and (b) 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
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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 or Seller, (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 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.
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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 equally by Seller and Buyer to
▇▇▇▇▇▇▇ Communications Corporation, which fees and commissions total $117,500.
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 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, Company shall
have valid and enforceable lease for the site described on Schedule 5.9 hereto
(the "Tower Site").
Section 5.10 Consents. To the best of Seller's knowledge, except for
the Pro Forma FCC Consent and the grant of the Extension Application, 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.
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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.
Section 6.3 Extension Application. The FCC shall have granted either
the Extension Application or the Special Temporary Authority 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. Company shall have a valid and enforceable
lease for the Tower Site.
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.
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(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 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 Extension 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
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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 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.
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(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.
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 the first to occur of Buyer's receipt of the Put Notice (as
defined below) or Seller's receipt of the Call Notice (as defined below), shall
file with the FCC an appropriate application for the FCC Consent. Seller and
Buyer shall thereafter prosecute the application for the FCC Consent with all
diligence and otherwise use their respective best efforts to obtain a grant of
the application for the FCC Consent as expeditiously as possible. Each party
agrees to comply with any condition imposed on it by the FCC Consent, except
that no party shall be required to comply with a condition if (i) the condition
was imposed on it as the result of a
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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, 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 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.
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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 and Lease
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 Tucson,
Arizona 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 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 Call Option.
(a) In consideration of Buyer's undertakings herein and in
the Transaction Documents, the receipt and sufficiency of which are hereby
acknowledged by Seller, Seller hereby grants to Buyer, subject to the
provisions of Article 18 hereof, an exclusive and irrevocable option to
purchase from Seller the Option Shares (the "Call Option"), free and clear of
any claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges or encumbrances of any nature whatsoever; provided,
however, that the Call Option shall not be exercisable by Buyer in the event
that an amount that is fifty-one one-hundredths (51/100) of the Fair Market
Value of the Company, as determined by utilizing the procedures set forth in
Section 9.5(b), is less than the purchase price for the Option Interest set
forth in Section 9.5(a)(ii).
(b) Buyer may give written notice to Seller of Buyer's
intention to exercise the Call Option (the "Call Notice") at any time during
the six (6) month period beginning on the date the Station commences operations
pursuant to program test authority (the "Option Period") or if the FCC imposes
a holding period on the Seller then during the six (6) month period following
the first anniversary of the Station's commencement of broadcast operations. In
the event that Buyer fails to give Seller the Call Notice prior to the end of
the Option Period, the Call Option shall expire. If Buyer timely gives Seller
the Call Notice but the Call Option is not exercisable due to the limitation
set forth in the provision to Section
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9.1(a) hereof, then Buyer's Call Option shall remain in full force and effect
for the remainder of the Option Period.
(c) Within five (5) business days of Seller's receipt of the
Call Notice, Seller and Buyer shall file with the FCC the application for the
FCC Consent and shall file such notices with, and obtain such approvals of, any
other 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 Put Option.
(a) In consideration of Sellers's and the Company's
undertakings herein and in the Transaction Documents, the receipt and
sufficiency of which are hereby acknowledged by Buyer, Buyer hereby grants to
Seller an exclusive and irrevocable option to require Buyer to purchase from
Seller the Option Shares (the "Put Option"), free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions, charges
or encumbrances of any nature whatsoever.
(b) Seller may give written notice to Buyer of Seller's
intention to exercise the Put Option (the "Put Notice") at any time during six
(6) month period beginning on the date the Station commences operation pursuant
to Program Test Authority (the "Option Period") or if the FCC imposes a holding
period on the Seller then during the six (6) month period following the first
anniversary of the Station's commencement of broadcast operations.
(c) Within five (5) business days of Seller's receipt of the
Call Notice, Seller and Buyer shall file with the FCC the application for the
FCC Consent and shall file such notices with, and obtain such approvals of, any
other governmental authorities that are required for the acquisition by Buyer
of the Option Shares and shall diligently and expeditiously prosecute such
filings.
Section 9.3 The Second Closing. The Second Closing shall take place at
10:00 a.m., Washington, D.C. time, on a date to be set by Buyer on no less than
five (5) days' written notice to Seller, which date shall not be sooner than
the first business day after the date on which the FCC Consent is granted and
shall not be later than the tenth business day after the date on which the FCC
Consent has become a Final Order, subject to the satisfaction of all other
conditions precedent to the holding of the Second Closing. The Second Closing
shall take place at the offices of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, 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.
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Section 9.4 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.
Section 9.5 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 fifty-one one hundredths
(51/100) of the Fair Market Value of the Company, as determined utilizing the
procedures set forth in subsection (b) hereof and (ii) $3,735,000. The Option
Price shall be paid at the Second Closing by Buyer or Buyer's designee to
Seller by wire transfer of immediately available federal funds or other means
mutually satisfactory to Buyer and Seller in accordance with written
instructions provided by Seller to Buyer no less than two (2) business days
prior to the Second Closing Date.
(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,
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each reference in Article 4 hereof to the "Initial Closing," "Initial Shares"
and the "Initial Closing Date" shall be deemed to be a reference to the Second
Closing, Option Shares and the Second Closing Date, respectively.
ARTICLE 11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY AND SELLER REGARDING THE SECOND CLOSING
All of the representations and warranties of the Company and Seller
set forth in Article 5 hereof shall be true and correct in all material
respects as of the Second Closing Date, with the same force and effect as
though made on and as of the Second Closing Date, except as otherwise
contemplated by the express terms of this Agreement. For the purpose of this
Article 11, each reference in Article 5 hereof to the "Initial Closing" and the
"Initial Closing Date" shall be deemed to be a reference to the Second Closing
and the Second Closing Date, respectively, and each reference to the "Initial
Shares" shall be deemed to be a reference to the Option Shares. 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
Call Notice or Buyer receives the Put Notice, Seller shall deliver to Buyer a
true and complete list and copies of the Contracts. The Contracts shall be
valid and binding agreements of the Company enforceable in accordance with
their terms. The Company shall have complied with the Contracts in all material
respects, and the Company shall not be in default under any of the Contracts.
Section 11.2 Copyrights, Trademarks and Similar Rights. Within ten
(10) days after Seller receives the Call Notice or Buyer receives the Put
Notice, Seller shall deliver to Buyer a true and complete list and copies of
all Intangibles.
Section 11.3 Governmental Authorizations. Within ten (10) days after
Seller receives the Call Notice or Buyer receives the Put Notice, Seller shall
deliver to Buyer a true and complete list and copies of the Licenses. The
Company shall be the authorized legal holder of the Licenses. The Licenses
shall comprise all of the licenses, permits and other authorizations required
from governmental and regulatory authorities for the lawful conduct of the
business and operations of the Station in the manner and to the full extent
they are conducted on the Second Closing Date and 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 Call Notice or Buyer receives the Put Notice,
Seller shall deliver to Buyer
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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 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 Call Notice or Buyer receives
the Put Notice, Seller shall deliver to Buyer a true and complete list of all
material items of Tangible Personal Property. 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. 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.
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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 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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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 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.
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(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 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
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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. Buyer, 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. 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. Buyer and Seller shall have each paid ▇▇▇▇▇▇▇ Communications
Corporation on or before the Second Closing Date one-half of the broker's fees
and commissions due 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:
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(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 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
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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
December 31, 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
(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 without any
payment by 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").
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Section 18.2 Termination by Buyer. This Agreement may be terminated by
Buyer, if not then in material default, upon written notice to Seller and the
Company, if the FCC denies the Extension Application or the application for the
Pro Forma FCC Consent.
ARTICLE 19. REMEDIES
Section 19.1 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 ▇▇▇ 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.
Section 19.2 Arbitration. Except as set forth in Section 19.1, 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 in Washington,
D.C. by a panel of three arbitrators. Buyer, on the one hand, and Seller and
Company, on the other hand, 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 the parties hereto. The party substantially
prevailing in such arbitration shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses in an amount not to
exceed in the aggregate under all agreements between the parties relating to
the Station in excess of the amount set forth in Section 21.7 of this
Agreement. 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 any party hereto against any other party
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) as provided in Section 19.1.
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
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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.
Section 20.2 Buyer's Indemnification. Buyer shall indemnify, defend
and hold Seller and the Company and their respective officers, directors,
employees, or agents, 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
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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.
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.
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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.
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). All proceedings brought against any party
hereto arising out of or relating to this Agreement or the transactions
contemplated hereby shall be brought in a forum located in the District of
Columbia. The party substantially prevailing in any proceeding shall be
entitled to reimbursement from the other party of its reasonable legal fees and
expenses in an amount not to exceed $50,000 in the aggregate under all
agreements among the parties relating to the Station.
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: ▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy (which shall ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
not constitute notice) to: Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
A Professional Limited Liability Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
To Company and Seller: Sungilt Corporation, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
- 32 -
39
With a copy (which shall ▇▇▇▇▇▇ ▇▇▇▇, Esquire
not constitute notice) to: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
21.8.
Section 21.9 Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signature on each counterpart were
upon the same instrument.
Section 21.10 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, ▇▇▇▇▇▇ 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]
- 33 -
40
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement as of the date first above written.
CHANNEL 46 OF TUCSON, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SUNGILT CORPORATION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ COMMUNICATIONS OF
TUCSON-46, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name:
Title:
FOR PURPOSES OF SECTION 21.10 ONLY:
▇▇▇▇▇▇ COMMUNICATIONS
CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name:
Title:
41
EXHIBIT A
42
EXHIBIT A
================================================================================
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
CHANNEL 46 OF TUCSON, INC.
AND
▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC.
FOR
TELEVISION STATION KXGR
GREEN VALLEY, ARIZONA
* * *
_______, 1997
================================================================================
43
TABLE OF CONTENTS
Page
-----
SECTION 1. LEASE OF STATION AIR TIME.............................................................................1
1.1 Representations.................................................................................1
1.2 Effective Date; Term............................................................................1
1.3 Scope...........................................................................................2
1.4 Option to Renew.................................................................................2
1.5 Consideration...................................................................................2
1.6 Licensee Operation of Station...................................................................2
1.7 Licensee Representations and Warranties.........................................................3
1.8 Programmer Responsibility.......................................................................4
1.9 Contracts.......................................................................................4
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE.......................................................4
2.1 Licensee Authority..............................................................................4
2.2 Additional Licensee Obligations.................................................................4
2.3 Responsibility for Employees and Expenses.......................................................5
SECTION 3. STATION PROGRAMMING POLICIES..........................................................................5
3.1 Broadcast Station Programming Policy Statement..................................................5
3.2 Licensee Control of Programming.................................................................5
3.3 Programmer Compliance with Copyright Act........................................................6
3.4 Sales...........................................................................................6
3.5 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......................................................................................8
4.4 Time Brokerage Challenge........................................................................8
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
..................................................................................................................8
5.1 Confidential Review.............................................................................8
5.2 Political Advertising...........................................................................8
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT.................................................................9
6.1 Termination.....................................................................................9
6.2 Termination Procedures..........................................................................9
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6.3 Force Majeure..................................................................................10
6.4 Other Agreements...............................................................................10
SECTION 7. MISCELLANEOUS........................................................................................10
7.1 Assignment.....................................................................................10
7.2 Call Letters...................................................................................10
7.3 Counterparts...................................................................................10
7.4 Entire Agreement...............................................................................10
7.5 Taxes..........................................................................................11
7.6 Headings.......................................................................................11
7.7 Governing Law..................................................................................11
7.8 Notices........................................................................................11
7.9 Severability...................................................................................12
7.10 Arbitration....................................................................................12
7.11 No Joint Venture...............................................................................12
45
EXHIBIT A
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this _____ day of _____, 1997, by and
between Channel 46 of Tucson, Inc., a Delaware corporation (the "Licensee"), and
▇▇▇▇▇▇ Communications of Tucson-46, Inc., a Florida corporation (the
"Programmer").
WHEREAS, Licensee, Programmer and Sungilt Corporation, Inc. have
entered into a Stock Purchase Agreement dated as of September __, 1997 (the
"Purchase Agreement");
WHEREAS, the Purchase Agreement provides that Licensee and Programmer
shall enter into this Time Brokerage Agreement, pursuant to which the Programmer
shall provide programming for television station KXGR, Channel 46, Green Valley,
Arizona (the "Station"), that is in conformity with Station policies and
procedures, Federal Communications Commission ("FCC") policies for time
brokerage arrangements, and the provisions hereof, upon completion of
construction of the Station and commencement of broadcast operations pursuant to
program test authority ("PTA");
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Licensee's full authority to manage and
control the operation of the Station; and
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. This Agreement shall become immediately and
automatically effective upon completion of construction of the Station and
commencement of
46
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broadcast operations pursuant to PTA, and this Agreement shall continue in force
for an initial term of five (5) years (the "Initial Term") from that date unless
otherwise extended or terminated as set forth below; provided, however, that
this Agreement shall terminate automatically upon the closing of the
transactions contemplated by the Second Closing (as defined in the Purchase
Agreement) under the Purchase Agreement.
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, 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. Programmer may, at
its option, produce the programming (including commercial announcements and
related production activities) to be provided pursuant to this Agreement from
Programmer's existing studio and production facilities.
1.4 Option to Renew. Subject to the termination provisions of Section 6
hereof, and if the transactions contemplated by the Purchase Agreement have not
been consummated prior to the expiration of the Initial Term, this Agreement may
be renewed for an additional term as mutually agreed upon by the Licensee and
the Programmer.
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
47
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expense management level and other employees consisting of a General Manager and
such operational and other personnel as outlined in the budget previously
provided to Programmer, who will direct the day-to-day operations of the
Station, and who will report to and be accountable to the 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 permits and other
authorizations necessary for the construction or operation of the Station, and
such permits and other authorizations are and will be in full force and effect
throughout the term of this Agreement. There is not now pending, or to
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, 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.
48
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1.8 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, 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.
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 Green
Valley, Arizona, the Station's service area and the educational and
informational needs of children. From time to time, 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.
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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 General Manager and such
operational and other personnel as may be necessary or appropriate), and will be
responsible for the salaries, taxes, benefits, insurance and related costs for
all the Licensee's employees used in the broadcast transmission of its programs
and necessary to other aspects of Station operation. Whenever on the Station's
premises, all personnel shall be subject to the overall supervision of
Licensee's General Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment 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.
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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.
3.4 Sales. Programmer shall retain all of the Station's network
compensation revenues, any revenues received from any network or program
supplier with respect to affiliation or use of programming by Programmer, any
retransmission consent revenues and all revenues from the sale of advertising
time within the programming it provides to the 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
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viewers in Green Valley 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 Green Valley 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 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, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Licensee's operations
52
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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 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
53
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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 such other remedies as may be available
at law or equity, this Agreement may be terminated as set forth below by either
Licensee or Programmer by written notice to the other if the party seeking to
terminate is not then in material default or breach hereof, upon the occurrence
of any of the following:
(a) if, subject to the provisions of Section 7.9, this
Agreement is declared invalid or illegal in whole or substantial part by an
order or decree of an administrative agency or court of competent jurisdiction
and such order or decree has become final and no longer subject to further
administrative or judicial review;
(b) if the other party is in material breach of its
obligations hereunder and has failed to cure such breach within thirty (30) days
of notice from the non- breaching party;
(c) with the mutual consent of both parties;
(d) if there has been a material change in FCC rules, policies
or precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review and this Agreement cannot be reformed, in a manner acceptable to
Programmer and Licensee, to remove and/or eliminate the violation; and
(f) upon a termination of the Purchase Agreement or the Second
Closing thereunder in accordance with its terms.
6.2 Termination Procedures. 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.
54
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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, Programmer shall have the right to assign its rights and interests
hereunder to its lenders as collateral security for Programmer's obligations to
such lenders.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
7.2 Call Letters. Upon request of Programmer, subject to the consent of
the 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
55
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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.
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 Delaware.
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: ▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To Licensee: Channel 46 of Tucson, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: _____________
Telephone: _____________
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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.
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 Washington, D.C. 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.
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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]
58
IN WITNESS WHEREOF, the parties hereto have executed this Time
Brokerage Agreement the day and year first above written.
LICENSEE: CHANNEL 46 OF TUCSON, INC.
By:
----------------------------------------
Name:
Title:
PROGRAMMER: ▇▇▇▇▇▇ COMMUNICATIONS
OF TUCSON-46, INC.
By:
----------------------------------------
Name:
Title:
59
ATTACHMENT I
COMPENSATION SCHEDULE
Programmer shall reimburse Licensee on a monthly basis for Licensee's
payment of Station expenses listed on Attachment II upon receipt from the
Licensee of a certificate (with attached invoices, etc.) documenting payment of
those expenses.
Payments shall be made by delivery of a check to Licensee at an address
to be designated.
60
ATTACHMENT II
STATION EXPENSES
(1) Tower Lease and Utility Payments
(2) Employee Salaries and Benefits (2)
(3) Property Insurance and Taxes
(4) Equipment Repair and Maintenance
(5) Programming Expenses
(6) Miscellaneous Reasonable and Necessary Station
Expenses
61
ATTACHMENT III
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station KXGR, Green
Valley, Arizona. All programming and advertising broadcast by the station must
conform to these policies and to the provisions of the Communications Act of
1934, as amended [the "Act"], and the Rules and Regulations of the Federal
Communications Commission ["FCC"].
Station Identification
The station must broadcast a station identification announcement once an hour as
close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the station's call letters (currently, [KXGR]);
followed immediately by (2) the station's city of license (Green Valley,
Arizona).
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrent, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the station to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose behalf
the matter is sponsored. Products or services furnished to the station in
consideration for an identification of any person, product, service, trademark
or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the station shall obtain a list of the chief executive officers, members
of the executive committee
62
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or board of directors of the sponsoring organization and shall place this list
in the station's public inspection file.
Payola/Plugola
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the station so that
all required station identification announcements can be made. All persons
responsible for station programming must, from time to time, execute such
documents as may be required by station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The station shall not rebroadcast the signal of any other broadcast station
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The station shall not air attacks upon the honesty, character, integrity or like
personal qualities of any identified person or group. If such an attack should
nonetheless occur during the presentation of views on a controversial issue of
public importance, those responsible for programming shall submit a tape or
transcript of the broadcast to station management and to the person attacked
within 48 hours, and shall offer the person attacked a reasonable opportunity to
respond.
Political Editorials
Unless specifically authorized by station management, the station shall not air
any editorial which either endorses or opposes a legally qualified candidate for
public office.
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Political Broadcasting
All "uses" of the station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and regulations.
Obscenity and Indecency
The station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the station shall knowingly
issue any ▇▇▇▇, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the ▇▇▇▇ or invoice. No entity which sells advertising for airing on
the station shall misrepresent the nature or content of aired advertising, nor
the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The station shall not knowingly broadcast false information concerning a crime
or catastrophe.
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- 4 -
Children's Programming
The station shall broadcast reasonable amounts of educational and informational
programming designed for children aged 16 years and younger.
Children's Advertising
Programming designed for children aged 12 years and younger shall not include
more than 12 minutes of commercial matter per hour, Monday through Friday, and
shall not include more than 10.5 minutes of commercial matter per hour on
weekend programming. There shall be no host selling, as that term is defined by
the FCC, in children's programming on the station.
Emergency Information
Any emergency information which is broadcast by the station shall be transmitted
both aurally and visually or only visually.
Lottery
The station shall not advertise or broadcast any information concerning any
lottery (except the Arizona State Lottery and any other state lottery). The
station may advertise and provide information about lotteries conducted by
non-profit groups, governmental entities and in certain situations, by
commercial organizations, if and only if there is no state or local restriction
or ban on such advertising or information and the lottery is legal under state
or local law. Any and all lottery advertising must first be approved by station
management.
Advertising
Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
65
- 5 -
Unfair Imitation. Infringements of another advertiser's rights through
plagiarism or unfair imitation of either program idea or copy, or any
other unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
Profanity. Any programs or announcements that are slanderous, obscene,
profane, vulgar, repulsive or offensive, as evaluated by station
management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
66
ATTACHMENT IV
FORM OF PAYOLA AFFIDAVIT
City of )
------------------------ )
)
County of ) SS:
---------------------- )
)
State of )
----------------------
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
____________________, being first duly sworn, deposes and says as follows:
1. He is ________________ for ________________.
Position
2. He has acted in the above capacity since ____ .
3. No matter has been broadcast by Station for which service, money or
other valuable consideration has been directly or indirectly paid, or
promised to, or charged, or accepted, by him from any person, which
matter at the time so broadcast has not been announced or otherwise
indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station ____ for
which service, money, or other valuable consideration has been directly
or indirectly paid, or promised to, or charged, or accepted by Station
_____ or by any independent contractor engaged by Station _____ in
furnishing programs, from any person, which matter at the time so
broadcast has not been announced or otherwise indicated as paid for or
furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation of broadcast
matter on Station _________.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
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- 2 -
7. He, his spouse and his immediate family do not have any present
direct or indirect ownership interest in (other than an investment in a
corporation whose stock is publicly held), serve as an officer or
director of, whether with or without compensation, or serve as an
employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management or persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station , or any other station owned by its
licensee (excluding nominal stockholdings in publicly owned
companies).
8. The facts and circumstances relating to such interest are none _____ as
follows: _____:
_______________________________________________________________________
_______________________________________________________________________
-----------------------------
Affiant
Subscribed and sworn to before me
this _____ day of __________, 19___.
------------------------------------
Notary Public
My Commission expires: .
--------------
68
EXHIBIT B
69
EXHIBIT B
================================================================================
CONSTRUCTION AGREEMENT
BY AND BETWEEN
CHANNEL 46 OF TUCSON, INC.
AND
▇▇▇▇▇▇ COMMUNICATIONS OF
TUCSON-46, INC.
FOR
TELEVISION STATION KXGR
GREEN VALLEY, ARIZONA
* * *
________, 1997
================================================================================
70
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS.................................................................................1
SECTION 2. THE WORK....................................................................................2
SECTION 3. COMPLETION OF THE WORK......................................................................3
SECTION 4. COST OF THE WORK............................................................................3
SECTION 5. BUDGET......................................................................................3
SECTION 6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS.......................................................4
SECTION 7. SUBCONTRACTORS..............................................................................5
SECTION 8. PROTECTION OF PERSONS AND PROPERTY..........................................................5
SECTION 9. INSURANCE...................................................................................5
SECTION 10. DAMAGES.....................................................................................6
SECTION 11. TERMINATION.................................................................................6
SECTION 12. MISCELLANEOUS PROVISIONS....................................................................6
SECTION 13. COUNTERPARTS................................................................................8
71
EXHIBIT B
CONSTRUCTION AGREEMENT
THIS CONSTRUCTION AGREEMENT (the "Agreement") is entered into as of
this _____ day of _____ , 199_, by and between ▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-
46, INC., a Florida corporation ("Contractor"), and CHANNEL 46 OF TUCSON, INC.,
a Delaware corporation ("Permittee").
W I T N E S S E T H
WHEREAS, Permittee holds a Construction Permit issued by the Federal
Communications Commission ("FCC") for new television station KXGR, Channel 46,
Green Valley, Arizona, FCC File No. BMPCT-960801LM (the "Construction Permit");
WHEREAS, Permittee, Contractor and Sungilt Corporation, Inc. have
entered into a Stock Purchase Agreement dated as of September __, 1997 (the
"Purchase Agreement"); and
WHEREAS, the Purchase Agreement provides that Contractor and Permittee
shall enter into this Agreement in order to permit Contractor to specify the
materials and equipment required to construct the facilities proposed in the
Construction Permit for new television station KXGR, Channel 46, Green Valley,
Arizona (the "Station"), and to undertake, following consultation with
Permittee, such construction.
NOW THEREFORE, in consideration of the above and of the mutual promises
covenants contained herein, the parties, intending to be legally bound, agree as
follows:
SECTION 1. DEFINITIONS. In addition to the terms which are elsewhere
defined in this Agreement, the following terms shall have the respective
meanings hereinafter set forth:
A. "Budget" shall mean the preliminary budget as agreed to by
Permittee and Contractor, as described in Exhibit 1 attached hereto, as such
Budget may be amended in accordance with Section 6 of this Agreement.
B. "Contract Documents" shall mean this Agreement, all
authorizations issued to the Permittee for the Station's operation and
construction, the Plans and Specifications and the Budget.
C. "Plans and Specifications" shall mean the plans and
specifications described in Exhibit 2 attached hereto, and as supplemented from
time to time with the agreement of Contractor and Permittee.
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- 2 -
D. "Work" shall mean all labor, materials and equipment
necessary or appropriate for the construction of the facilities described in the
Plans and Specifications as authorized in the Construction Permit.
SECTION 2. THE WORK.
A. Contractor agrees to do the following at Contractor's
expense:
(i) In consultation with Permittee, specify for purchase
by Contractor and lease by Permittee pursuant to the Lease Agreement (as defined
below) of the equipment, supplies and materials necessary or appropriate for the
construction and installation of the facilities described in the Plans and
Specifications and as authorized in the Construction Permit; and
(ii) With the concurrence of the Permittee, construct
and/or install the facilities described in the Plans and Specifications in
accordance with the Construction Permit and all applicable zoning, building or
other governmental laws, ordinances or regulations.
B. Permittee has done or agrees to do the following:
(i) Maintain in effect the Construction Permit, as it may
be modified, including the filing, if necessary, of an application to extend the
expiration date of the Construction Permit and prosecuting such application
diligently;
(ii) File with the FCC or any other governmental agency
and prosecute to the full extent any amendments to the Construction Permit and
any other applications which may be necessary for the implementation of the
Construction Permit, the construction of the Station, and the commencement and
continuation of the Station's operations as proposed in the Construction Permit;
(iii) Prepare and timely file with the FCC an application
for license for the constructed facilities in accordance with the rules and
regulations of the FCC; and
(iv) Cooperate with Contractor in timely filing and
obtaining any zoning, building and other permits that are required in connection
with the Plans and Specifications and the Work, obtain and maintain in full
force and effect a lease for, or ownership of, the Station's transmitter and
antenna facilities, and execute the necessary
73
- 3 -
documents and agreements provided by Contractor in accordance with its
obligations hereunder.
SECTION 3. COMPLETION OF THE WORK.
A. The Work shall be commenced upon the execution of this
Agreement and shall be substantially completed as promptly as reasonably
practicable; provided, however, that the parties agree that such date shall be
extended by reason of strikes, labor troubles, inability to procure material,
failure of power, governmental actions or inactions, riots, insurrection, war or
other reasons beyond the control of the parties.
B. The Work shall be deemed to be substantially complete when
(i) construction is sufficiently complete, in accordance with the Contract
Documents, so that the Station may begin operating pursuant to Program Test
Authority under FCC rules using the facilities proposed in the Construction
Permit and (ii) all permits, modifications of permits, authorizations and
licenses necessary to operate such facilities have been obtained. Any Work
required by the Contract Documents which remains to be completed after the date
of substantial completion shall, if reasonably feasible, be completed by
Contractor within ninety (90) days after the date of substantial completion.
C. Upon substantial completion of the construction of the
Station as specified above, Contractor and Permittee shall enter into a Lease
Agreement (the "Lease Agreement") which is attached hereto as Exhibit 3.
D. If the Special Temporary Authority (as defined in the
Purchase Agreement) is granted by the FCC, Contractor shall construct the
temporary facilities described in the application for the Special Temporary
Authority at its expense and upon substantial completion of the construction of
such temporary facilities, Contractor shall lease such facilities to Permittee
in accordance with the Lease Agreement.
SECTION 4. COST OF THE WORK. Contractor shall be responsible for the
entire cost of the Work. Upon execution of this Agreement, Contractor shall pay
the Permittee Two Thousand Five Hundred Dollars ($2,500) per month to cover the
antenna site lease for the Station specified in the Construction Permit and
Permittee shall provide Contractor with an executed copy of such lease.
SECTION 5. BUDGET. Permittee and Contractor acknowledge and agree that
the Budget represents the estimated cost of the Work. Promptly after the date
hereof, Contractor shall obtain firm bids from responsible manufacturers,
suppliers, and contractors approved by Permittee for the performance of the Work
or portions thereof, and shall supply copies of all
74
- 4 -
bids to Permittee. Upon receipt of the bids and upon the agreement by Permittee
and Contractor to accept those bids, Contractor shall accept the bids and the
Budget shall be adjusted to conform to the bids.
SECTION 6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS.
A. Contractor shall supervise and direct the Work, using its
best skill and attention and, subject to the concurrence of Permittee, shall be
responsible for all construction means, methods, techniques, sequences and
procedures and for coordinating all portions of the Work under this Agreement.
B. Contractor shall be responsible to the Permittee for the
acts and omissions of Contractor's employees, contractors, subcontractors and
other persons providing or performing any of the Work.
C. Unless otherwise provided in the Contract Documents,
Contractor shall provide all labor, materials, equipment, tools, construction,
equipment and machinery, water, heat, utilities, transportation and other
facilities and services necessary for the proper execution and completion of the
Work, whether temporary or permanent and whether or not incorporated or to be
incorporated in the Work.
D. Contractor shall at all times enforce strict discipline and
good order among any person working at the construction site.
E. Contractor warrants to Permittee that all materials and
equipment furnished under this Contract will be new, unless otherwise specified
in Exhibit A, and that all Work will be of good quality, free from faults and
defects and in conformance with the Contract Documents.
F. Contractor shall comply in all material respects with all
laws, ordinances, rules, regulations and lawful orders of any public authority
bearing on the performance of the Work.
G. Contractor shall prepare and submit to Permittee for
Permittee's approval an estimated progress schedule for the Work. The progress
schedule shall be related to the entire project to the extent required by the
Contract Documents and shall provide for expeditious and practicable completion
of the Work.
H. Contractor at all times shall keep the construction site
free from accumulation of waste material or rubbish caused by the Work. At the
completion of the
75
- 5 -
Work, Contractor shall remove or cause to be removed all waste materials and
rubbish from and about the construction site and tools, construction equipment,
machinery and surplus materials.
SECTION 7. SUBCONTRACTORS. By an appropriate written agreement, Contractor
shall require each subcontractor retained by Contractor to be bound by the terms
of the Contract Documents, and to assume all the obligations and
responsibilities which Contractor, by those documents, assumes toward Permittee.
SECTION 8. PROTECTION OF PERSONS AND PROPERTY.
A. Contractor shall take all reasonable precautions for the safety of,
and shall provide all reasonable protection to prevent damage, injury or
loss to:
(i) all individuals employed to perform the Work;
(ii) all materials and equipment to be used in the Work,
whether in storage, on or off the site, under the care, custody or control of
Contractor or any of its subcontractors; and
(iii) other property at the site or adjacent thereto.
B. Contractor shall give all notices and comply in all material
respects with all applicable laws, ordinances, rules, regulations and lawful
orders of any public authority bearing on the safety of persons or property or
their protection from damage, injury or loss.
SECTION 9. INSURANCE.
A. Contractor shall purchase and maintain or cause to be purchased and
maintained such insurance as will protect Contractor and Permittee from claims
set forth below which may arise out of or result from the Work, whether such
operations be by Contractor or by any subcontractor or by anyone directly or
indirectly employed by any of them, or by anyone for whose acts any of them may
be liable:
(i) claims under workmen's compensation, disability benefit and
other similar employee benefit acts;
(ii) claims for damages because of bodily injury, occupational
sickness or disease, or death;
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(iii) claims for damages insured by usual personal injury
liability coverage which are sustained (1) by any person as a result of an
offense directly or indirectly related to the employment of such person by
Contractor, or (2) by any other person;
(iv) claims for damages, other than to the Work itself,
because of injury to or destruction of tangible property; and
(v) claims for damages because of bodily injury or death or
any property damage arising out of the ownership, maintenance or use of any
motor vehicle in respect of the Work.
B. The insurance required by this Section shall be written for
not less than the limits of liability agreed to by Contractor and Permittee or
required by law, whichever is greater.
C. Certificates of Insurance acceptable to Permittee and
Contractor shall be delivered to Permittee prior to commencement of the Work.
These Certificates shall contain a provision that coverage afforded under the
policies will not be canceled until at least thirty (30) days' prior written
notice has been given to the Permittee.
D. Permittee shall purchase and maintain property insurance
upon the entire Work to the full insurable value thereof. This insurance shall
insure against the perils of fire and extended coverage, shall include "all
risk" insurance for physical loss or damage including, without duplication of
coverage, theft, vandalism and malicious mischief and shall provide that all
proceeds from such insurance shall go to Contractor.
SECTION 10. DAMAGES. In the event of a default by Contractor of its
obligations under this Agreement or the failure of Contractor to complete the
Work, Contractor shall not be liable to Permittee for any consequential damages
as a result of such failure or delay. The sole liability of Contractor to
Permittee shall be for the full cost and expense of completing the Work in
accordance with the Contract Documents and the Plans and Specifications.
SECTION 11. TERMINATION. This Agreement shall terminate, and neither
party shall have any further obligation hereunder, upon the earlier to occur of
(a) the completion of the Work or (b) the Second Closing (as defined in the
Purchase Agreement).
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SECTION 12. MISCELLANEOUS PROVISIONS.
A. The Contract shall be governed by the laws of the State of
Delaware applicable to contracts made and to be performed there, without
reference to the principles of the conflicts of law.
B. Permittee and Contractor each binds itself and its
successors, assigns and legal representatives to the other party hereto and to
the successors, assigns and legal representatives of such other party with
respect to all covenants, agreements and obligations contained in the Contract
Documents.
C. The parties hereto agree to cooperate fully with each other
in preparing, filing, prosecuting, advocating grant, and taking any other
actions necessary with respect to any applications or actions which are or may
be necessary to obtain the consent of the FCC or of any other governmental
instrumentality, or any third party to, or are or may be necessary or helpful in
order to accomplish the transactions contemplated by this Agreement.
D. All notices, demands and requests required or permitted to
be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery or sent by commercial delivery service or
certified mail, return receipt requested, (iii) deemed to have been given on the
date of personal delivery, the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows::
If to Permittee: Channel 46 of Tucson, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to Contractor: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.D.
E. No action or failure to act by Permittee or Contractor
shall constitute a waiver of any right or duty afforded any of them under this
Agreement, nor shall any such action or failure to act constitute an approval of
or acquiescence in any breach thereunder, except as may be specifically agreed
in writing.
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F. If the Contract Documents, laws, ordinances, rules,
regulations or orders or any public authority having jurisdiction require any
portion of the Work to be inspected, tested or approved, Contractor shall give
Permittee timely notice of its readiness so Permittee may observe such
inspection, testing or approval.
G. Licensee's and Contractor's respective obligations
hereunder are unique and valuable and not readily subject to compensation by
money damages alone. Accordingly, in the event either party should breach its
obligations under this Agreement, the other party shall be entitled to an order
directing specific performance from a court of competent jurisdiction, in
addition to all other remedies at law or in equity.
SECTION 13. COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures on all counterparts
were upon the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
79
IN WITNESS WHEREOF, Permittee and Contractor have executed this
Construction Agreement as of the date first above written.
▇▇▇▇▇▇ COMMUNICATIONS OF
TUCSON-46, INC.
By:
-----------------------------------
Name:
Title:
CHANNEL 46 OF TUCSON, INC.
By:
-----------------------------------
Name:
Title:
t
80
EXHIBIT 1
BUDGET
81
EXHIBIT 3
LEASE AGREEMENT
82
EXHIBIT 10.183
================================================================================
LEASE AGREEMENT
BY AND BETWEEN
CHANNEL 46 OF TUCSON, INC.
AND
▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC.
FOR
TELEVISION STATION KXGR
GREEN VALLEY, ARIZONA
* * *
__________ __, 1997
================================================================================
83
TABLE OF CONTENTS
Page
----
SECTION 1. TERM..................................................................................................1
(a) Initial and Renewal Term......................................................................1
(b) Holding Over..................................................................................1
(c) Automatic Termination.........................................................................2
SECTION 2. RENT AND TAXES........................................................................................2
(a) Rent for Initial and Renewal Terms............................................................2
(b) Security Deposit..............................................................................3
(c) Taxes.........................................................................................3
(d) Payment.......................................................................................3
SECTION 3. USE OF ASSETS.........................................................................................3
SECTION 4. ALTERATIONS...........................................................................................4
SECTION 5. MAINTENANCE AND REPAIRS...............................................................................4
SECTION 6. INDEMNITY AND INDEMNITY INSURANCE.....................................................................5
SECTION 7. ASSIGNMENT............................................................................................6
SECTION 8. CONDEMNATION..........................................................................................6
SECTION 9. INTERFERENCE AND RF RADIATION.........................................................................7
(a) General.......................................................................................7
(b) RF Radiation..................................................................................7
SECTION 10. FORCE MAJEURE........................................................................................7
SECTION 11. MECHANICS' LIENS.....................................................................................7
SECTION 12. LESSOR'S LIEN........................................................................................7
SECTION 13. QUIET ENJOYMENT......................................................................................8
SECTION 14. DEFAULT..............................................................................................8
SECTION 15. SURRENDER OF LEASED ASSETS...........................................................................8
84
Page
----
SECTION 16. NOTICES..............................................................................................8
SECTION 17. PROPERTY INSURANCE...................................................................................9
SECTION 18. TAXES...............................................................................................10
SECTION 19. CAPTIONS............................................................................................10
SECTION 20. COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES....................................................10
SECTION 21. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS........................................................................................................10
SECTION 22. COUNTERPARTS........................................................................................10
SECTION 23. ATTORNEYS FEES......................................................................................10
SECTION 24. MISCELLANEOUS.......................................................................................10
SECTION 25. ENTIRE AGREEMENT....................................................................................10
SECTION 26. WAIVER OF JURY TRIAL................................................................................11
(ii)
85
LEASE AGREEMENT
THIS LEASE is made and entered into as of this __________ day of
________, ____, by and between ▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC., a
Florida corporation (hereinafter referred to as "Lessor"), and CHANNEL 46 OF
TUCSON, INC., a Delaware corporation (hereinafter referred to as "Lessee").
STATEMENT OF FACTS
A. Lessor, Lessee and Sungilt Corporation, Inc. ("SC") have entered
into a Stock Purchase Agreement dated as of August ____, 1997 ("Purchase
Agreement").
B. Pursuant to the Purchase Agreement, Lessor and Lessee have entered
into a Construction Agreement, dated as of _____ __, 1997, which provides that
Lessor and Lessee shall enter into a Lease Agreement pursuant to which Lessor
shall lease to Lessee certain assets used or useful in the operation of new
television station KXGR, Channel 46, Green Valley, Arizona (the "Station").
▇. ▇▇▇▇▇▇ and Lessee desire to set forth herein the terms and
conditions of such Lease.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Lease, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. TERM.
(a) Initial and Renewal Term. Lessee shall have the right to use
the assets described in Exhibit A hereto (the "Leased Assets") for an Initial
Term commencing on the date hereof (the "Commencement Date") and expiring at
12:00 Midnight on a date which is five years from the date hereof (the "Initial
Term"), unless this Lease is sooner terminated as hereinafter provided and
provided further that this Lease shall terminate upon the Second Closing as
provided for in the Purchase Agreement or if SC is in default under the Purchase
Agreement. This Lease may be renewed for one additional one-year term (the
"Renewal Term"), unless at least 90 days prior to the expiration of the Initial
Term Lessor or Lessee shall have provided written notice to the other stating
that it does not intend to renew this Lease for a Renewal Term. The Initial Term
and Renewal Term shall be subject to all of the terms and conditions set forth
in this Lease.
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(b) Holding Over. If Lessee or anyone claiming under Lessee
shall remain in possession of the Leased Assets or any part thereof after the
expiration of the Initial Term or the Renewal Term without any agreement in
writing between the Lessor and Lessee with respect thereto, prior to acceptance
of rent by Lessor, the person remaining in possession shall be deemed a holdover
lessee, and, after acceptance of rent by Lessor, the party remaining in
possession of the Leased Assets shall be deemed a lessee from month-to-month,
subject to the provisions of this Lease. The rental during any such period shall
equal one hundred twenty-five percent (125%) of the rental in effect immediately
preceding such expiration.
(c) Automatic Termination. Notwithstanding anything in this
Lease to the contrary, this Lease shall automatically terminate upon the earlier
to occur of the Second Closing (as defined in the Purchase Agreement) or the
termination of the Time Brokerage Agreement (as defined in the Purchase
Agreement), and neither Lessor nor Lessee shall have any further obligations
hereunder, except as provided in Section 3(b) and except that Lessee shall be
responsible for any unpaid Rent.
SECTION 2. RENT AND TAXES.
(a) Rent for Initial and Renewal Terms. Lessee covenants and
agrees to pay Lessor for the use of the Leased Assets during the Initial Term
and the Renewal Term the amounts set forth below (the "Rent"):
(1) On or before the last day of the month in which the
Commencement Date falls, Lessee shall pay as Rent for each day of the period
beginning on the Commencement Date and ending on the last day of such month the
sum of _________ Dollars ($________).
(2) Lessee shall pay to Lessor monthly Rent in the amount of
___________ Dollars ($________) (the "Base Rent") for the period beginning with
the first full calendar month following the Commencement Date and continuing
until the termination of this Lease.
(3) In the event that this Lease is renewed, the Rent to be
paid by Lessee to Lessor during the Renewal Term shall be equal to the sum of
the Base Rent plus the amount determined by multiplying the Base Rent by the
percentage increase, if any, in the U.S. Department of Labor, Bureau of Labor
Statistics, Revised All-Cities Consumer Price Index for the Tucson, Arizona
metropolitan area (the "CPI") published immediately prior to the last day of the
Initial Term over the CPI published immediately prior to the
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- 3 -
Commencement Date. In no event shall the Rent to be paid by Lessee during the
Renewal Term be less than the Base Rent.
(4) If the CPI ceases to exist or is substantially changed,
Lessor shall substitute a similar index. Except as otherwise specifically
provided herein, installments of Rent during the Initial Term and the Renewal
Term shall be paid in advance in United States Dollars (without prior notice or
invoice by Lessor) on or before the first of the month and any amounts which are
payable when invoiced hereunder shall be due within twenty (20) days after
Lessee's receipt of such invoice.
(b) Security Deposit. As security for the timely performance
of Lessee's obligations hereunder, Lessee shall pay to Lessor on the
Commencement Date the amount of __________ Dollars ($_______) which shall be
held by Lessor as a security deposit for the Initial Term and the Renewal Term.
Lessor shall be permitted to apply the security deposit to satisfy Lessee's
obligations hereunder.
(c) Taxes. Lessee shall pay to Lessor, when invoiced, any and
all taxes and assessments levied or assessed on or against the use of the Leased
Assets and/or the rental payments due hereunder.
(d) Payment. All monthly payments of rent or other sums due
Lessor hereunder shall be sent to or made at the offices of Lessor designated in
Section 16 hereof, or such other place as may be designated by Lessor from time
to time.
SECTION 3. USE OF ASSETS.
(a) Lessee shall have the right to use the Leased Assets only
for the purpose of constructing and operating the Station and for the
construction and operation of transmit and receive towers, satellite receivers
and associated equipment related to Lessee's operation of the Station.
(b) Lessee accepts the Leased Assets in their present
condition ("as is") and agrees that it will take good care of the Leased Assets,
subject to reasonable wear and tear, and that Lessee will return the Leased
Assets to Lessor in the same condition as said Leased Assets were in at the time
control was turned over to Lessee, subject to reasonable wear and tear, and
damage done by Lessor, if any. Furthermore, at Lessor's option, Lessee at its
sole cost and expense shall remove or change all alterations made pursuant to
Section 4(a) hereof so as to return said Leased Assets to Lessor in said same
condition, subject to this subsection 3(b). Lessee agrees that it will comply
with all laws, ordinances, orders, rules, regulations
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or requirements of all governmental authorities which are applicable to its use
of the Leased Assets.
(c) Lessee, at its own cost and expense, shall obtain and
maintain in effect any and all permits, licenses and approvals that are or may
be required with respect to the construction or operation of the Station by each
governmental authority having jurisdiction over such construction or operation.
SECTION 4. ALTERATIONS.
(a) Subject to Lessor's approval, which approval shall not be
unreasonably withheld, Lessee, at its own expense and subject to the provisions
of Subsection 4(b) hereof, may make such alterations, additions, changes and
improvements (herein called "Alterations") to the Leased Assets as Lessee may
deem necessary or desirable, subject to Lessor's approval, which approval shall
not be unreasonably withheld; provided that said Alterations shall not lessen
the value of the Leased Assets.
(b) Before Lessee may make any Alterations to the Leased
Assets in accordance with the rights granted by Subsection 4(a) hereof, Lessee
shall submit to Lessor written specifications for such Alterations that are
proposed for Lessor's approval. Lessor, within thirty (30) days after receipt by
it of the written specifications, shall notify Lessee whether it approves such
Alterations. If Lessor fails to notify Lessee in writing within such thirty (30)
day period that it disapproves of such Alterations, Lessee may proceed to cause
the Alterations to be made.
SECTION 5. MAINTENANCE AND REPAIRS.
(a) Lessor shall be responsible for the repair and maintenance
of the Leased Assets. In the event that Lessee reasonably determines that a
repair or replacement is needed and Lessor after written notice does not make
said repair or replacement within a reasonable period of time, Lessee shall
notify Lessor in writing that it considers said repair or replacement necessary
and that it is contemplating making said repair. Lessee may then, at its option,
make such repair or replacement and charge the reasonable cost incurred to
Lessor. It is agreed that nothing in the foregoing shall relieve Lessor from
full performance of its obligations and that the remedy referred to above is in
addition to any other remedy available to Lessee.
(b) If the Leased Assets shall be partially damaged by fire or
other cause without the fault or neglect of Lessee or its employees, agents,
visitors or licensees, the Lessor shall proceed forthwith to replace or to
repair the Leased Assets with reasonable
89
- 5 -
diligence at the expense of Lessor; provided, if the Leased Assets are to be
replaced or repaired and are unusable in whole or in part following such damage,
the rent payable hereunder during the period in which they are unusable shall be
adjusted equitably; provided further, however, if the Leased Assets are totally
damaged or rendered wholly unusable by fire or other cause, including, but not
limited to, condemnation, and Lessor shall decide not to replace the same, then,
within ninety (90) days after such fire, casualty or condemnation, Lessor may
give Lessee notice in writing of the decision not to replace, whereupon the
Initial Term or Renewal Term of this Lease shall terminate, Lessee shall
surrender the Leased Assets to Lessor, and rent shall be abated for the
unexpired portion of this Lease, effective as of the date of said written notice
from Lessor, and Lessor shall have no further obligation or liability to Lessee.
It is agreed that nothing in this Subsection 5(b) shall require Lessor to
replace or to repair any or all Alterations.
(c) Lessor will maintain the Leased Assets so as to comply
with existing rules and regulation imposed by any governmental authority having
jurisdiction over the construction or operation of the Station, and make any
repairs and modifications reasonably necessary to maintain the Leased Assets in
good condition and in compliance with good broadcast engineering practices. In
performance of its obligation to maintain and repair the Leased Assets, it may
be necessary from time to time for Lessor to request that Lessee temporarily
cease its broadcast operation, turn off electrical power and/or make other
adjustments to its equipment and operations. Lessor agrees to schedule such
work, as far as reasonably possible, from 1:00 A.M. to 5:00 A.M., and Lessor
will not cause any temporary interruption of Lessee's broadcast operation under
this provision unless such interruption is required by and consistent with good
engineering practices. Lessee agrees to cooperate with Lessor and to comply with
and honor Lessor's reasonable requests for temporary cessation of its broadcast
operation, to turn off electrical power and/or to make other adjustments to its
equipment or operation, as necessary, to allow Lessor to perform such work in an
orderly and timely manner.
SECTION 6. INDEMNITY AND INDEMNITY INSURANCE.
(a) Lessee shall indemnify and hold harmless Lessor from any
and all claims, expenses or liabilities, including reasonable attorneys' fees
and court costs, for injuries to or death of persons, or damage to property
arising out of or in connection with Lessee's use of the Leased Assets. Lessee
further agrees to defend on behalf of Lessor all legal actions, if any, arising
out of any such claim for such damages. Lessor shall not be liable for loss or
damage sustained by Lessee by reason of business interruption resulting from any
or all acts or omissions of Lessor or violations by Lessor of any or all terms,
covenants or conditions of this Lease.
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(b) Lessee agrees that it will, at its expense, obtain and
maintain during the Initial Term or Renewal Term public liability insurance
against claims of injury to or death of persons, or damage to property arising
out of or in connection with Lessee's use of the Leased Assets, naming Lessee
and Lessor as insured persons. Such public liability insurance shall be with an
insurer that Lessor finds reasonably satisfactory and shall have limits of not
less than One Million Dollars ($1,000,000) with respect to claims of injury to
or death of any number of persons in any one occurrence and not less than Two
Hundred Thousand Dollars ($200,000) for property damage in any one occurrence.
Lessee agrees to name Lessor as a co-insured party on any and all such public
liability insurance policies. Satisfactory evidence of such coverage shall be
submitted by Lessee to Lessor.
SECTION 7. ASSIGNMENT.
(a) Lessee's Right to Assign. Neither this Lease nor any of
the rights, interests or obligations of Lessee hereunder shall be assigned,
encumbered, hypothecated, subleased or otherwise transferred without the prior
written consent of Lessor.
(b) This Lease shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
SECTION 8. CONDEMNATION.
(a) If during the Initial Term or Renewal Term of this Lease
the Leased Assets or any portion thereof shall be appropriated by any
corporation or authority having the right of eminent domain, or if access to the
Leased Assets is restricted by action of any such corporation or authority and
reasonably comparable access is not made available to the Leased Assets, this
Lease and all obligations of Lessor and Lessee hereunder shall cease and
terminate as of the date the appropriating corporation or authority takes
possession thereof or materially restricts access to the Leased Assets. All
obligations of Lessee to pay any rents or other charges whatsoever under the
terms of this Lease shall be apportioned as of such date in the same manner as
if the Lease had expired on such date according to its terms.
(b) Whenever used herein, the terms "appropriated" or
"appropriation" shall include any voluntary transfer of the Leased Assets or any
part thereof to any corporation or authority having the right of eminent domain
as a result of a settlement of a threatened or pending appropriation action.
(c) In the event of the appropriation of the whole or any part
of the Leased Assets, the amount received as compensation for the appropriation
(including in the case of an appropriation of part of the Leased Assets, any
amount allowed as damages to the
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remainder) shall be paid in full to Lessor, subject, however, to any right of
Lessee to receive any additional or specific award from the appropriating
corporation or authority to which it might be entitled.
(d) In any appropriation of the Leased Assets, Lessee shall
have the right to prove in the proceeding and to receive any award which may be
for damages to or condemnation of Lessee's movable trade fixtures, equipment,
furniture and furnishings and for moving and relocation expenses.
SECTION 9. INTERFERENCE AND RF RADIATION.
(a) General. Lessee will conduct its activities in accordance
with applicable requirements of the FCC and sound electronic and engineering
practice.
(b) RF Radiation. Lessee shall, at Lessee's expense, take all
actions required to ensure that Lessee's broadcast operation does not expose
workers or the general public to levels of radio frequency radiation in excess
of the "Radio Frequency Protection Guides" recommended in the American National
Standard Safety Levels with Respect to Human Exposure to Radio Frequency
Electromagnetic Fields, 300 kHz to ▇▇▇ ▇▇▇ (▇▇▇▇ ▇▇▇.▇-▇▇▇▇) issued by the
American National Standards Institute.
SECTION 10. FORCE MAJEURE. Neither Lessor nor Lessee shall be required
to perform any term, condition or covenant in this Lease so long as such
performance is delayed or prevented by force majeure, which shall mean Acts of
God, strikes, lockouts, material or labor restrictions by any governmental
authority, civil riots, floods, and any other cause not reasonably within the
control of Lessor or Lessee and which by the exercise of due diligence Lessor or
Lessee is unable, wholly or in part, to prevent or to overcome; provided,
however, force majeure shall not excuse Lessee from its obligation to pay rent
or other sums hereunder and Lessee shall be required to pay any and all rent and
such other sums as provided by this Lease.
SECTION 11. MECHANICS' LIENS. Lessee shall not suffer or permit any
mechanics' liens to be filed against the Leased Assets by reason of work, labor
or materials supplied or claimed to have been supplied to Lessee that are not
removed or for which adequate bond has not been provided within thirty (30) days
of such filing. Furthermore, if any such lien at any time shall be filed against
the Leased Assets, Lessee shall proceed with due diligence to cause the same to
be discharged of record by payment, deposit, bond, order of court or otherwise.
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SECTION 12. LESSOR'S LIEN. Lessor shall have a first lien upon every
right and interest of Lessee to and in the Leased Assets for the payment of rent
and all other sums payable by Lessee hereunder and as security for the
performance and observance of the agreements, conditions, and obligations of
this Lease by and between Lessor and Lessee, dated the date hereof, which
agreements, conditions, and obligations are to be performed and observed by
Lessee.
SECTION 13. QUIET ENJOYMENT. Lessor covenants that, upon payment by
Lessee of all rents and the performance by Lessee of all obligations pursuant to
this Lease, Lessee shall and may peaceably and quietly have and enjoy the Leased
Assets for and during the Initial Term and any Renewal Term of this Lease,
pursuant to the terms hereof, free from any hindrance from any person or persons
whomsoever claiming by, through or under Lessor.
SECTION 14. DEFAULT. If the Lessee defaults in fulfilling any of its
material covenants or obligations hereunder, or if the Lessee does not fully
make all payments of rent when due under this Lease, Lessor at its option may
terminate and end this Lease and recover the Leased Assets provided that Lessee
has been given written notice by Lessor and that Lessee has not made full
payment of the rent and cured all other such defaults, if any, within fifteen
(15) days following such notice. Furthermore, if Lessee fails to make a payment
of Rent hereunder when due, Lessee shall be liable for and pay to Lessor a late
payment charge at the rate of eighteen percent (18%) per annum, computed from
the date said payment was due until the date said payment is actually made. In
the event of a default hereunder, other than the nonpayment of rent or other
monetary obligation, the Lessor shall have the right to terminate this Lease if
Lessee does not cure such default within thirty (30) days of written notice from
Lessor. In the event of said defaults, in addition to said termination rights,
Lessor shall have all other rights and remedies to which it may be entitled. A
waiver by the Lessor of any breach of this Lease or any terms, conditions or
promises herein contained must be in writing to be effective and shall not be or
construed to be a waiver of any subsequent breach of the same or any other term,
condition or promise herein and the payment by the Lessee and acceptance by the
Lessor of rent hereunder shall not be construed to be a waiver of any breach of
terms or conditions herein except as to the particular installment of rent so
paid and accepted.
SECTION 15. SURRENDER OF LEASED ASSETS. Lessee, upon the expiration of
the Initial Term or Renewal Term of this Lease or the earlier termination of
this Lease, shall surrender to Lessor the Leased Assets in accordance with the
terms and conditions provided for in Subsection 3(b) hereof.
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SECTION 16. NOTICES. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, delivered by personal delivery, or sent by commercial delivery service
or certified mail, return receipt requested, (ii) deemed to have been given the
date of personal delivery, or the date set forth in the records of the delivery
service or on the return receipt, and (iii) addressed as follows:
If to Lessor: ▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
(which shall A Professional Limited Liability Company
not constitute ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
notice) to: ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
If to Lessee: Channel 46 of Tucson, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy ▇▇▇▇▇▇ ▇▇▇▇, Esquire
(which shall One Market Plaza
not constitute ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
notice) to: ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
16.
SECTION 17. PROPERTY INSURANCE.
(a) Lessor shall, at its expense, obtain and maintain during
the Initial Term and Renewal Term of this Lease, "All Risk", hazard insurance on
the Leased Assets. Such insurance shall cover at least all risks customarily
insured against in the broadcasting industry, subject to standard deductibles.
(b) Lessee hereby releases Lessor from and holds Lessor
harmless against any and all claims that Lessee may hereafter have for loss,
theft, disappearance, damage or
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destruction of the Leased Assets, regardless of the cause thereof.
Notwithstanding the generality of the foregoing, this release shall not apply to
any grossly negligent, willful or wanton act of the Lessor, its employees,
agents or representatives. In the event that insurance on the Leased Assets was
in force at the time of such loss, theft, disappearance, damage or destruction,
Lessee agrees to take all necessary action to make this release effective and
binding upon its insurance carriers so that such carriers specifically waive all
right of subrogation, if any, that such carriers might otherwise have against
Lessor and its employees, agents or contractors.
SECTION 18. TAXES. During the term hereof, Lessor agrees to pay all
personal property taxes assessed against the Leased Assets within thirty (30)
days of its receipt of a true and correct statement.
SECTION 19. CAPTIONS. The captions or headings of sections in this
Lease are inserted for convenience only and shall not be considered in
construing the provisions hereof.
SECTION 20. COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES. This
Lease shall inure to the benefit of and be binding upon the successors and
assigns of Lessor and Lessee.
SECTION 21. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Any
and all representations, warranties and covenants contained in this Lease shall
survive the execution of the Lease and shall continue in full force and effect
during the Initial Term and any Renewal Term hereof.
SECTION 22. COUNTERPARTS. More than one counterpart of this Lease may
be executed by the parties hereto and each duly executed counterpart shall be
deemed an original.
SECTION 23. ATTORNEYS FEES. In the event an action is brought to
enforce or construe any of the terms or conditions of this Lease, the prevailing
party shall be entitled to reasonable attorneys' fees and costs.
SECTION 24. MISCELLANEOUS.
(a) This Lease shall be governed by the laws of the State of
Delaware and may be modified or amended only by a writing, signed by the party
against whom the amendment or modification is sought to be enforced.
95
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(b) Failure of either party to exercise its rights hereunder
shall not operate as a waiver of the future exercise of such right.
SECTION 25. ENTIRE AGREEMENT. This Lease, including the exhibits
hereto, sets forth the entire understanding of the parties hereto at the time of
execution and delivery hereof with respect to the subject matter hereof.
SECTION 26. WAIVER OF JURY TRIAL. To the extent they may lawfully do
so, the parties hereto irrevocably waive all rights to a trial by jury in any
proceeding hereinafter instituted by or against either party in respect of this
Lease.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
96
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first set forth above.
CHANNEL 46 OF TUCSON, INC.
By:
-----------------------------------
Name:
Title:
▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC.
By:
-----------------------------------
Name:
Title:
97
EXHIBIT A
Leased Assets
98
EXHIBIT C
99
EXHIBIT C
================================================================================
SHAREHOLDERS AGREEMENT
BY AND AMONG
SUNGILT CORPORATION, INC.
▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC.
AND
CHANNEL 46 OF TUCSON, INC.
* * *
_____________, 1997
================================================================================
100
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (the "Agreement") is made as of the ____
day of __________, 199_, by and among ▇▇▇▇▇▇ Communications of Tucson-46, Inc.,
a Florida corporation ("▇▇▇▇▇▇"), Channel 46 of Tucson, Inc., a Delaware
corporation (the "Company"), and Sungilt Corporation, Inc.. an ____________
corporation ("SC"). SC and ▇▇▇▇▇▇ are sometimes referred to herein individually
as "Shareholder" and collectively as "Shareholders."
R E C I T A L S
A. The Company holds a construction permit issued by the Federal
Communications Commission ("FCC") for new television station KXGR, Channel 46,
Green Valley, Arizona (the "Station").
B. The Company's authorized capital stock consists of one thousand
(1,000) shares of voting common stock, all of which shares are issued and
outstanding (the "Common Stock").
C. SC holds 510 shares of Common Stock (the "SC Stock") and, on the
date hereof, SC has conveyed to ▇▇▇▇▇▇ 490 shares of Common Stock (the "▇▇▇▇▇▇
Stock").
▇. ▇▇▇▇▇▇, the Company and SC have entered into a Stock Purchase
Agreement ("Purchase Agreement") as of September __, 1997.
E. The parties hereto desire to set forth certain understandings and
agreements relating to, among other things, the issuance and transfer of the
capital stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
undertakings contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, SC, ▇▇▇▇▇▇ and the
Company, intending to be legally bound, agree as follows:
ARTICLE I. RESTRICTIONS
Section 1.1 Scope of Agreement. This Agreement shall apply to (i) any
transfer of shares of Common Stock (now owned or hereafter acquired) and any
other shares of capital stock of the Company, whether or not outstanding on the
date hereof, by any Shareholder or any transferee or successor of any
Shareholder, whether by sale, exchange, assignment, disposition, bequest, gift,
pledge, mortgage, hypothecation or otherwise, whether voluntary,
101
involuntary or by operation of law, whether resulting from death, bankruptcy,
insolvency or otherwise, and (ii) the issuance or transfer by the Company of any
shares of capital stock of the Company, whether or not authorized or outstanding
on the date hereof, or any options, warrants or any form of debt or equity
presently or hereinafter convertible into shares of capital stock of the Company
(any and all such transfers in clauses (i) or (ii) are referred to hereinafter
as a "Transfer").
Section 1.2 Transfer Restrictions.
(a) Neither SC, ▇▇▇▇▇▇ nor the Company shall agree to, cause
or permit any Transfer.
(b) The restriction in Section 1.2(a) above shall not apply to
(i) any sale, transfer, assignment or disposition to a person or entity that
controls, is controlled by or is under common control with SC or ▇▇▇▇▇▇, as the
case may be, or (ii) any sale, transfer, assignment or disposition of the ▇▇▇▇▇▇
Stock resulting from the sale or transfer of all of the issued and outstanding
stock of ▇▇▇▇▇▇ or any entity that owns or controls ▇▇▇▇▇▇, or (iii) any sale or
transfer of the SC Stock to ▇▇▇▇▇▇ pursuant to the terms of the Stock Purchase
Agreement dated as of March __, 1997, among the Company, ▇▇▇▇▇▇ and SC (the
"Purchase Agreement").
(c) No Transfer shall be effective unless a Transfer is made
pursuant to the terms of this Agreement, and the successors or assigns of SC or
▇▇▇▇▇▇ as a result of any Transfer permitted by the terms of this Agreement
shall have duly executed a document evidencing their agreement to be bound by
the terms of this Agreement.
Section 1.3 Legends or Certificates. In order to effectuate this
Agreement, and to avoid any transfer of shares in violation of the Securities
Act of 1933 or of the securities laws of any state, each certificate
representing any share of capital stock of the Company shall bear legends in
substantially the following form:
The Shares represented by this Certificate are subject to an Agreement
dated August 20, 1996, entered into in order, inter alia, to restrict
the transferability of such Shares. Said Agreement is automatically
binding upon any person who acquires the Shares. Any transfer or
acquisition in violation of such Agreement is null and void. A copy of
the Agreement is available for inspection at the principal office of
the Company.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE
- 2 -
102
TRANSFERRED OR SOLD UNLESS SO REGISTERED OR UNLESS AN EXEMPTION IS
AVAILABLE.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of SC. SC hereby represents,
warrants and agrees as follows:
(a) SC is a corporation duly organized, validly existing and
in good standing under the laws of the State of _______.
(b) SC has the corporate power and authority to enter into
this Agreement and carry out its obligations hereunder. The consummation of the
transactions contemplated hereby, and all previous actions taken by SC with
respect to such transactions, have been duly and validly authorized by SC's
Board of Directors. No other corporate acts or proceedings on the part of SC are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby, or any previous actions taken by SC with respect to such
transactions, and when duly executed and delivered by the parties hereto, this
Agreement will constitute a valid and legally binding obligation of SC,
enforceable against SC in accordance with its terms.
(c) Neither the execution and delivery by SC of this
Agreement, the consummation by SC of the transactions contemplated hereby, any
previous actions taken by SC with respect to such transactions, nor compliance
by SC with any provision hereof, will violate or conflict with, or result in a
breach of any provision or any of the terms, conditions or provisions of, the
Articles of Incorporation or Bylaws of SC or any contracts, agreements or
obligations of SC or by which SC is bound.
Section 2.2 Representations and Warranties of the Company. The Company
hereby represents, warrants and agrees as follows:
(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) The Company has the corporate power and authority to enter
into this Agreement and carry out its obligations hereunder. The consummation of
the transactions contemplated hereby, and all previous actions taken by the
Company with respect to such transactions, have been duly and validly authorized
by the Company's Board of Directors. No other corporate acts or proceedings on
the part of the Company are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby, or any previous actions
taken by the Company with respect to such transactions, and when duly executed
and delivered by the parties hereto, this Agreement will constitute a valid and
- 3 -
103
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(c) Neither the execution and delivery by the Company of this
Agreement, the consummation by the Company of the transactions contemplated
hereby, any previous actions taken by the Company with respect to such
transactions, nor compliance by the Company with any provision hereof, will
violate or conflict with, or result in a breach of any provision or any of the
terms, conditions or provisions of, the Articles of Incorporation or the Bylaws
of the Company or any other contracts, agreements or obligations of the Company
or by which the Company is bound.
Section 2.3 Representations and Warranties of ▇▇▇▇▇▇. ▇▇▇▇▇▇ hereby
represents, warrants and agrees as follows:
(a) ▇▇▇▇▇▇ is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida.
(b) ▇▇▇▇▇▇ has the corporate power and authority to enter into
this Agreement and carry out its obligations hereunder. The consummation of the
transactions contemplated hereby, and all previous actions taken by ▇▇▇▇▇▇ with
respect to such transactions, have been duly and validly authorized by ▇▇▇▇▇▇'▇
Board of Directors. No other corporate acts or proceedings on the part of ▇▇▇▇▇▇
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby, or any previous actions taken by ▇▇▇▇▇▇ with
respect to such transactions, and when duly executed and delivered by the
parties hereto, this Agreement will constitute a valid and legally binding
obligation of ▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇ in accordance with its terms.
(c) Neither the execution and delivery by ▇▇▇▇▇▇ of this
Agreement, the consummation by ▇▇▇▇▇▇ of the transactions contemplated hereby,
any previous actions taken by ▇▇▇▇▇▇ with respect to such transactions, nor
compliance by ▇▇▇▇▇▇ with any provision hereof, will violate or conflict with,
or result in a breach of any of the terms, conditions, or provisions of, the
Articles of Incorporation or Bylaws of ▇▇▇▇▇▇ or any contracts, agreements or
obligations of ▇▇▇▇▇▇ or by which ▇▇▇▇▇▇ is bound.
ARTICLE III. BOARD OF DIRECTORS.
(a) The Board of Directors of the Company (the "Board") shall
have full discretion and authority with respect to the management, business and
affairs of the Company. The Board shall have full right, power and authority in
the management of the business and affairs of the Company and to do or cause to
be done any and all acts deemed by the Board to be necessary or appropriate to
effectuate the purposes of the Company.
- 4 -
104
(b) Until such time as SC no longer holds the SC Stock, the
Board shall have three members, and SC shall be entitled to designate two
members of the Board and their replacements or successors, if any, and ▇▇▇▇▇▇
shall be entitled to designate one member of the Board and his replacements or
successors, if any. At such time as ▇▇▇▇▇▇ acquires the SC Stock, the Board
shall have one member, and ▇▇▇▇▇▇ shall be entitled to designate such member of
the Board and his replacements or successors, if any. Each member of the Board
shall have one vote. A quorum of the Board shall be deemed present for the
purpose of taking any action required to be taken by the Board if there are
present, in person, or by video or audio conferencing, one member of the Board
designated by SC and the member of the Board designated by ▇▇▇▇▇▇. Any action
taken by the Board shall be valid if approved by a majority of the Board members
present at any meeting of the Board at which a quorum is present.
(c) Regular meetings of the Board regarding any matters shall
be held quarterly. Meetings of the Board may be called by any member of the
Board by giving the other members written notice of the time, date, place and
purpose of the meeting at least five days in advance thereof, or by giving
telephonic notice of the same at least seventy-two hours in advance thereof. Any
Board member participating in a meeting of the Board shall be deemed to have
waived notice of such meeting. Any meeting of the Board shall be held at such
location as the Board may deem appropriate; provided, however, that any
representative of the Board may, at its option, participate by video or audio
conferencing or other comparable communications equipment. Any action required
or permitted to be taken at any meeting of the Board may be taken without a
meeting if a written consent to such action is signed by all members of the
Board and such written consent is filed with the minutes of its proceedings. Any
member of the Board may appoint a proxy to act on his behalf at any meeting,
provided that he delivers notice thereof to the other members of the Board prior
to the commencement of such meeting. The Board may adopt such other procedural
rules with respect to the meetings and other conduct of the Board as it may deem
desirable.
(d) SC hereby designates ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ as
its initial representatives, and ▇▇▇▇▇▇ hereby designates ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as
its initial representative. Each Shareholder may, at its sole discretion, change
its respective designee or designees to the Board by giving written notice of
such change to the other Shareholder.
ARTICLE IV. OPERATIONAL PROVISIONS. While this Agreement is in effect, the
following actions may be taken with respect to the Company only with the consent
of each Shareholder:
(a) any fundamental change in the nature of the business
conducted by it;
- 5 -
105
(b) a reorganization of its capital, a reclassification of its
interests or the consolidation or merger of it with another entity;
(c) any sale of all or a substantial portion of its assets;
(d) any transaction with an affiliate (as defined in the rules
under the Securities Act of 1933) of either Shareholder on terms less favorable
to it than the terms available from an unrelated third party;
(e) entering into any contract or agreement, other than the
Time Brokerage Agreement, Lease Agreement, and Construction Agreement (as
defined in the Purchase Agreement), that involves over the term of the contract
or agreement an aggregate expenditure by it of $25,000 or more;
(f) any individual capital expenditure in excess of $25,000 or
any series of related capital expenditures in excess of $50,000;
(g) incurring any indebtedness for money borrowed in excess of
$25,000 or any increase, modification or extension of any indebtedness for
borrowed money in excess of $25,000;
(h) settling any litigation that requires solely a cash
payment by the Company in excess of $25,000 or settling any litigation that
requires a remedy other than solely a cash payment if that remedy could have a
material adverse effect on the Company or the Station;
(i) guaranteeing any obligation of any person in excess of
$10,000;
(j) doing any act in contravention of this Agreement, the
Delaware Corporation Law or the Certificate of Incorporation or By-laws of the
Company;
(k) doing any act that would make it impossible to carry on
its business except upon its dissolution and liquidation;
(l) confessing a judgement against it if the result thereof
could have a material adverse effect on it, the Station or any Shareholder;
(m) using any assets of the Station other than for its
benefit; or
(n) adopting an annual budget for the Station, provided that
the second annual budget shall equal the first annual budget plus CPI.
- 6 -
106
ARTICLE V. TERMINATION. This Agreement shall terminate and all rights and
obligations hereunder shall cease upon the occurrence of any of the following
events:
(a) The consummation of the sale of the SC Stock to ▇▇▇▇▇▇
pursuant to the Purchase Agreement;
(b) The agreement in writing to terminate this Agreement
executed by each Shareholder;
(c) The voluntary or involuntary dissolution of the Company.
This Agreement shall terminate with respect to any Shareholder upon the
disposition by such Shareholder of its Common Stock in accordance with the terms
of this Agreement; provided, however, that this Agreement shall survive such
termination and continue to be binding upon every Shareholder which is or will
become a party hereto; or
(d) Upon termination of the Purchase Agreement provided that
▇▇▇▇▇▇ does not then own any common stock in the Company.
ARTICLE VI. MISCELLANEOUS
Section 6.1 Binding Effect. This Agreement shall be binding upon the
parties hereto and their successors and assigns. Each of the parties to this
Agreement shall execute and deliver or cause to be executed and delivered any
and all documents or legal instruments necessary to carry out the provisions
hereof.
Section 6.2 Enforceability. In the event any provision of this
Agreement is found to be unenforceable or invalid, such provisions shall be
severable from this Agreement to the extent that it is a provision which is not
essential and the absence of which would not have prevented the parties from
entering into this Agreement. The unenforceability or invalidity of a provision
which has been performed shall not be grounds for invalidation of this Agreement
under circumstances in which the true controversy between the parties does not
involve such provision.
Section 6.3 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware.
Section 6.4 Modifications. This Agreement may not be modified, amended,
altered or supplemented except by a written agreement or other instrument signed
by the parties hereto.
Section 6.5 Headings. Headings in this Agreement are for convenience or
reference only and shall not affect the construction or interpretation of this
Agreement.
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107
Section 6.6 Entire Agreement. This Agreement represents the only
agreements and understandings between the parties hereto with respect to the
subject matter hereof.
Section 6.7 Attorneys' Fees. In the event any legal action is required
by a party to this Agreement to enforce the provisions hereof against one of the
other parties hereto, the prevailing party shall be entitled to recover its
costs of legal action, including reasonable attorneys' fees, from the other
party involved in such action.
Section 6.8 Specific Performance. Each party hereto acknowledges that
there will be no adequate remedy at law if any other party hereto fails to
perform any of its obligations hereunder and that each party will be irreparably
harmed by any such failure. Accordingly, each party hereto agrees that each
party, in addition to any other remedy to which it may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of
the other party or parties under this Agreement.
Section 6.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
Section 6.10 Notices. All notices provided by this Agreement shall be
in writing and shall be given by certified mail (return receipt requested), by
overnight delivery, shipment prepaid, or by personal delivery, by one party to
another, addressed to such other party or parties at the applicable address set
forth below:
To SC and the Company at:
Sungilt Corporation, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with copy to: ▇▇▇▇▇▇ ▇▇▇▇, Esquire
One Market Plaza
▇▇▇▇▇▇▇ Street Tower, 9th Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
- 8 -
108
To ▇▇▇▇▇▇ at:
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
A Professional Limited Liability Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
or any replacement address of which SC, the Company or ▇▇▇▇▇▇ gives the other
parties notice under this section.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 9 -
109
IN WITNESS WHEREOF, SC, ▇▇▇▇▇▇ and the Company have each caused this
Shareholders Agreement to be executed by a duly authorized officer thereof, as
of the date first above written.
CHANNEL 46 OF TUCSON, INC.
By:
----------------------------------------
Name:
Title:
SUNGILT CORPORATION
By:
----------------------------------------
Name:
Title:
▇▇▇▇▇▇ COMMUNICATIONS OF
TUCSON-46, INC.
By:
----------------------------------------
Name:
Title:
110
EXHIBIT D
111
EXHIBIT D
================================================================================
ESCROW AGREEMENT
BY AND AMONG
▇▇▇▇▇▇ COMMUNICATIONS OF
TUCSON-46, INC.
SUNGILT CORPORATION, INC.
CHANNEL 46 OF TUCSON, INC.
AND
FIRST UNION NATIONAL BANK OF FLORIDA
* * *
SEPTEMBER __, 1997
================================================================================
112
EXHIBIT D
ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into this ___ day of
September, 1997, by and among CHANNEL 46 OF TUCSON, INC., a Delaware corporation
("Company"); ▇▇▇▇▇▇ COMMUNICATIONS OF TUCSON-46, INC., a Florida corporation
("Buyer"); SUNGILT CORPORATION, INC. ("Seller"); and FIRST UNION NATIONAL BANK
OF FLORIDA ("Escrow Agent").
WHEREAS, Buyer, Seller and the Company have entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") providing for the purchase
by Buyer of the Stock of the Company owned by Seller.
WHEREAS, the Stock Purchase Agreement provides that Buyer shall deposit
in escrow with the Escrow Agent the sum of One Hundred Thousand Dollars
($100,000) (the "Escrow Fund") to be held and disbursed by the Escrow Agent as
provided in Article 16 of the Stock Purchase Agreement and the terms hereof.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF ESCROW AGENT
(a) Buyer and Seller each appoint First Union National Bank of Florida
as Escrow Agent to receive, hold, administer and deliver the Escrow Fund in
accordance with this Agreement and the Escrow Agent accepts such appointment,
all subject to and upon the terms and conditions set forth in this Agreement.
(b) The Escrow Agent shall invest and reinvest the Escrow Fund and the
interest earned thereon as directed by Buyer. Absent specific instructions from
Buyer, the Escrow Agent shall invest the Escrow Fund and the interest earned
thereon only in U.S. government obligations maturing not more than 90 days from
the date of purchase or in a money market account investing solely in U.S.
government obligations.
SECTION 2. GENERAL INTENTION
Buyer herewith deposits the Escrow Fund with the Escrow Agent, and the
Escrow Agent hereby acknowledges receipt of the Escrow Fund. The Escrow Agent
shall dispose of the Escrow Fund and the interest earned thereon in accordance
with the express provisions of this Agreement and, except as required by Section
3 of this Agreement, shall not make, be required to make or be liable in any
manner for its failure to make, any determination under the Stock Purchase
Agreement or any other agreement, including, without limitation, any
determination of whether Buyer or Seller have complied with the terms of the
Stock Purchase
113
Agreement or are entitled to delivery of the Escrow Fund and the interest earned
thereon or to any other right or remedy thereunder.
SECTION 3. RELEASE OF ESCROW FUND
The Escrow Agent shall hold and disburse the Escrow Fund as provided in
this Section 3:
3.1 Seller's Demand. If the Escrow Agent receives a written notice
signed by Seller stating that Seller is entitled to any portion of the Escrow
Fund and certifying that a copy of the notice has been delivered to Buyer in a
manner specified in Section 6, the Escrow Agent shall deliver a copy thereof to
Buyer in a manner specified in Section 6 and, unless the Escrow Agent receives a
written objection from Buyer within ten business days after the date of delivery
of the notice to Buyer as provided in Section 6, the Escrow Agent shall deliver
to Seller the portion of the Escrow Fund claimed by Seller. If the Escrow Agent
receives a written objection from Buyer, the Escrow Agent shall continue to hold
the Escrow Fund and the interest earned thereon until it has received written
instructions signed by Seller and Buyer or a final, non-appealable order of a
court of competent jurisdiction directing delivery of the Escrow Fund, in which
case the Escrow Agent shall deliver the Escrow Fund and the interest earned
thereon in accordance with the instructions or order.
3.2 Buyer's Demand. If the Escrow Agent receives a written notice
signed by Buyer stating that Buyer is entitled to any portion of the Escrow Fund
and the interest earned thereon and certifying that a copy of the notice has
been delivered to Seller in a manner specified in Section 6, the Escrow Agent
shall deliver a copy thereof to Seller in a manner specified in Section 6 and,
unless the Escrow Agent receives a written objection from Seller within ten
business days after the date of delivery of the notice to Seller as provided in
Section 6, the Escrow Agent shall deliver to Buyer the portion of the Escrow
Fund and the interest earned thereon claimed by Buyer. If the Escrow Agent
receives a written objection from Seller, the Escrow Agent shall continue to
hold the Escrow Fund and the interest earned thereon until it has received
written instructions signed by Seller and Buyer or a final, non-appealable order
of a court of competent jurisdiction directing delivery of the Escrow Fund and
the interest earned thereon, in which case the Escrow Agent shall deliver the
Escrow Fund and the interest earned thereon in accordance with the instructions
or order.
3.3 Court Order or Joint Instructions. Notwithstanding anything to the
contrary in this Agreement:
(a) The Escrow Agent may deposit the Escrow Fund and the
interest earned thereon with the clerk of any court of competent jurisdiction
upon commencement of an action in the nature of interpleader or in the course of
any court proceedings involving the disbursement of the Escrow Fund and the
interest earned thereon.
2
114
(b) If at any time the Escrow Agent receives a final,
non-appealable order of a court of competent jurisdiction or written
instructions signed by Seller and Buyer, directing delivery of the Escrow Fund
and the interest earned thereon, the Escrow Agent shall comply with the order or
instructions. Upon any delivery or deposit of the Escrow Fund and all interest
earned thereon as provided in this Section 3, the Escrow Agent shall and will
thereupon be released and discharged from any and all further obligations
arising in connection with this Agreement without further documents or action by
Buyer or Seller.
3.4 Partial Release of Escrow Fund. If the Escrow Agent disburses less
than all of the Escrow Fund pursuant to any demand, court order, or joint
instructions in accordance with this Agreement, that portion of the Escrow Fund
not disbursed shall continue to be held in escrow by the Escrow Agent subject to
the terms of this Agreement.
SECTION 4. ESCROW AGENT
4.1 Indemnification. The Escrow Agent shall not be liable under this
Agreement except for its own gross negligence or willful misconduct. Except with
respect to misconduct claims that are successfully asserted against the Escrow
Agent, Buyer and Seller jointly and severally shall indemnify and hold harmless
the Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursement, arising out of or in connection with this
Agreement.
4.2 Reliance. This Agreement expressly sets forth all of the duties of
the Escrow Agent with respect to any and all matters pertinent to this
Agreement. In performing its duties hereunder, the Escrow Agent shall be
entitled to rely upon any order, judgment, certification, demand, notice
instrument or other writing delivered to it under this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of the service thereof. The Escrow Agent
may act in reliance upon any instrument or signature reasonably believed by it
to be genuine and may assume that any person signing such instrument or
purporting to give any notice hereunder has been duly authorized to do so.
4.3 Advice of Counsel. The Escrow Agent may act in good faith pursuant
to the advice of counsel with respect to any matter relating to this Agreement,
including without limitation, any determination that a court order is final and
non-appealable.
4.4 Resignation. The Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving written notice to Buyer and Seller of
such resignation, specifying a date when such resignation shall take effect. In
such case, Buyer and Seller shall mutually agree upon the selection of a
successor Escrow Agent hereunder.
3
115
SECTION 5. TERMINATION
This Agreement shall be terminated (a) upon the disbursement or release
in accordance with this Agreement of the entire Escrow Fund and all interest
earned thereon, including the deposit of the Escrow Fund with the clerk of any
court of competent jurisdiction in accordance with Section 3 or (b) by written
consent signed by all parties. This Agreement shall not otherwise be terminated.
SECTION 6. NOTICES
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be (a) in writing, (b) delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, (c) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (d) addressed as follows:
If to Seller: Sungilt Corporation, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ______________
Telephone: ______________
If to Buyer: ▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Escrow Agent: First Union National Bank of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 6.
SECTION 7. ESCROW FEES
Buyer shall pay any fees due to the Escrow Agent for the services to be
rendered by the Escrow Agent under this Agreement. Buyer and Seller shall share
equally and pay for or
4
116
reimburse the Escrow Agent upon request for all reasonable expenses, including
reasonable attorneys' fees, incurred by it in the performance of its duties
under this Agreement.
SECTION 8. BENEFIT AND ASSIGNMENT
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. No party hereto
may voluntarily or involuntarily assign its interests under this Agreement
without the prior written consent of the other parties hereto.
SECTION 9. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida.
SECTION 10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original but all of which together will constitute one
and the same instrument.
SECTION 11. ENTIRE AGREEMENT
This Agreement contains all the terms agreed upon by the parties with
respect to the subject matter hereof.
SECTION 12. AMENDMENTS
Except as provided in Section 5, this Agreement may only be modified or
terminated by a writing signed by all the parties hereto, and no waiver
hereunder shall be effective unless embodied in a writing signed by the party to
be charged.
SECTION 13. TAX REPORTING
For tax reporting purposes, all interest earned on the Escrow Fund
shall be deemed to be for the account of Buyer.
5
117
IN WITNESS WHEREOF, the parties hereto have duly executed this Escrow
Agreement as of the date first above written.
▇▇▇▇▇▇ COMMUNICATIONS OF
TUCSON-46, INC.
By:
------------------------------------
Name:
Title:
SUNGILT CORPORATION, INC.
By:
------------------------------------
Name:
Title:
CHANNEL 46 OF TUCSON, INC.
By:
------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF
FLORIDA
By:
------------------------------------
Name:
Title:
118
SCHEDULE 5.6
ASSETS
119
SCHEDULE 5.9
TRANSMITTER SITE
120
SCHEDULE 6.7(F)
OPINIONS OF COUNSEL TO SELLER AND THE COMPANY
(INITIAL CLOSING)
121
SCHEDULE 6.7(f)
FORM OF OPINION OF COUNSEL TO SELLER
AND THE COMPANY TO BE DELIVERED AT INITIAL CLOSING
_______________, 1997
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Stock Purchase Agreement dated as of_______________, 1997 (the
"Purchase Agreement"), by and among Sungilt Corporation, Inc.,
a ______________________ corporation ("Seller"), Channel 46
of Tucson, Inc., a Delaware corporation (the "Company"), and
▇▇▇▇▇▇ Communications of Tucson-46, Inc., a Florida
corporation ("Buyer").
Ladies and Gentlemen:
We have acted as counsel for Seller and the Company in connection with
the transactions contemplated by the Purchase Agreement. This opinion is being
delivered to you pursuant to Section 6.7(f) of the Purchase Agreement. All
capitalized terms not defined in this opinion shall have the meanings set forth
in the Purchase Agreement.
In rendering this opinion, we have reviewed the following documents:
1. the Purchase Agreement;
2. the Construction Agreement;
3. the Time Brokerage Agreement;
4. the Shareholders Agreement;
5. the Escrow Agreement;
6. the Loan Documents;
7. the Assignment of Construction Permit dated __________, 1997
between Seller and the Company;
8. the Tower Lease; and
9. the stock power dated as of the date hereof from Seller to
Buyer for the Initial Shares (the "Stock Power").
122
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
___________________, 1997
Page 2
The documents referred to in clauses 1 through 9 shall be referred to
herein as the "Transaction Documents."
In our examination of documents and records, we have assumed, without
investigation, the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity with originals of all documents submitted to us as telecopied,
certified, photostatic or reproduced copies and the authenticity of all such
documents.
In rendering this opinion, we have also assumed that (i) all parties to
the Transaction Documents (other than Seller and the Company) are duly
organized, validly existing, and in good standing under the laws of their
respective jurisdictions of organization and have the requisite power to enter
into and perform the Transaction Documents, (ii) the execution and delivery of
the Transaction Documents have been duly authorized by all necessary actions and
proceedings on the part of all parties thereto other than Seller and the
Company, (iii) the Transaction Documents have been duly executed and delivered
by all parties thereto other than Seller and the Company, and (iv) the
Transaction Documents constitute legal, valid, binding and enforceable
obligations of all parties thereto other than Seller and the Company.
With respect to questions of fact, we have relied, without independent
inquiry or verification by us, solely upon (a) the representations and
warranties set forth in the Transaction Documents, (b) representations of
officers of the Company and Seller and (c) certificates of public officials.
Our opinion is limited to matters arising under the laws of the State
of California, the General Corporation Law of the State of Delaware and the
United States of America, including the Communications Act of 1934 and the rules
and regulations of the FCC, insofar as such laws apply. We express no opinion
whatsoever as to any other laws or regulations or as to laws relating to choice
of law or conflicts of law principles.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and is qualified to conduct
business as a foreign corporation in Arizona and is in good standing under the
laws of Arizona. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of ___________. Each of Seller and
the Company has all requisite power and authority to execute and deliver the
Transaction Documents and to perform and comply with
123
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
___________________, 1997
Page 3
all of the terms, covenants, and conditions to be performed and complied with by
it thereunder.
2. The execution, delivery and performance of the Transaction
Documents by the Company and Seller have been duly and validly authorized by all
necessary corporate actions on the part of the Company and Seller.
3. The Transaction Documents have been duly executed and
delivered by Seller and the Company and constitute legal, valid and binding
obligations of Seller and the Company, enforceable against them in accordance
with their terms, except that such enforcement may be subject to bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and to
limitations on the availability of equitable remedies.
4. The execution, delivery and performance by Seller and the
Company of the Transaction Documents and the transactions contemplated thereby
will not violate, conflict with or cause a default under: (a) any provision of
the Certificate of Incorporation and By-Laws of the Company and Seller; (b) any
statute, law, regulation or rule or any judgment, decree or order binding upon
Seller or the Company; or (c) to the best of our knowledge, any contract,
agreement or commitment to which Seller or the Company is a party or by which it
is bound.
5. To our knowledge, there is no judgment, award, order, writ,
injunction, arbitration decision or decree materially and adversely affecting
the conduct of the business of the Station, or any litigation, proceeding or
investigation pending or threatened against the Company, except as specifically
identified in Attachment A hereto and except for proceedings of general
applicability to the broadcast industry.
6. Based on our review of information publicly available at the
FCC and our internal files and records and inquiry to Seller and officers of the
Company, (a) the Company is the holder of the Construction Permit, (b) the
Construction Permit is in full force and effect, and (c) the Construction Permit
is not subject to any condition or requirement, other than conditions or
requirements that appear on the face of the Construction Permit or pertain under
generally applicable rules or policies of the FCC. The Extension Application has
been granted and such grant has become a Final Order.
7. The Pro Forma FCC Consent has been obtained, is in full force
and effect and no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay of the Pro Forma FCC Consent.
124
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
___________________, 1997
Page 4
8. The Pledge Agreement included among the Loan Documents is in
form sufficient to create in favor of Buyer a perfected first priority security
interest in all of the capital stock of the Company owned by Seller as security
for the obligations of Seller under the promissory note dated as of the date
hereof from Seller to Buyer.
9. Based on a review of the minute books and stock ledger of the
Company, the authorized capital stock of the Company consists of 1,000 shares of
voting common stock, all of which are issued and outstanding. All such shares
have been validly issued and are fully paid and nonassessable. Upon delivery to
Buyer of the stock certificate representing the Initial Shares, the Stock Power
is in form sufficient to convey good and marketable title to Buyer to the
Initial Shares.
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes which may thereafter may be brought to our
attention. Our opinions are based on statutory and judicial decisions in effect
at the date hereof, and we do not opine with respect to any law, regulation,
rule or governmental policy which may be enacted or adopted after the date
hereof, nor assume any responsibility to advise you of future changes in our
opinions.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Transaction Documents and
is not to be quoted in whole or in part or otherwise referred to in any of your
financial statements or public releases, nor is it to be filed with any
governmental agency or other person without the prior written consent of a
partner of this firm.
Very truly yours,
[ ]
By:
--------------------------
, Partner
------------
125
SCHEDULE 7.3(d)
Opinion of Counsel to Buyer
(Initial Closing)
126
Schedule 7.3(d)
Form of Buyer's Opinion
To Be Delivered at Initial Closing
___________________, 1997
Sungilt Corporation, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Stock Purchase Agreement dated as of ____________________,
1997 (the "Purchase Agreement"), by and among Sungilt
Corporation, Inc., a ______________________ corporation
("Seller"), Channel 46 of Tucson, Inc., a Delaware corporation
(the "Company"), and ▇▇▇▇▇▇ Communications of Tucson-46, Inc.,
a Florida corporation ("Buyer").
Dear Ladies and Gentlemen:
We have acted as special counsel for Buyer in connection with the
transactions contemplated by the Purchase Agreement. This opinion is being
delivered to you pursuant to Section 7.3(d) of the Purchase Agreement. All
capitalized terms not defined in this opinion shall have the meanings set forth
in the Purchase Agreement.
In rendering this opinion, we have reviewed the following documents:
1. the Purchase Agreement;
2. the Construction Agreement;
3. the Time Brokerage Agreement;
4. the Shareholders Agreement;
5. the Escrow Agreement;
6. a certificate dated as of ____________ from the Secretary of
State of Florida relating to the good standing of Buyer (the
"Florida Good Standing Certificate");
7. a certificate dated as of _________________ from the Secretary
of State of Arizona relating to the good standing of Buyer
(the "Arizona Good Standing Certificate");
8. the Articles of Incorporation and the Bylaws of Buyer, each in
the form certified to us by the Secretary of Buyer to be true
and complete and in effect on the date of this opinion; and
127
Sungilt Corporation, Inc.
Page 2
9. resolutions of the Board of Directors of Buyer certified to us
by the Secretary of Buyer to be true and complete, to have
been duly adopted by the Board of Directors of Buyer, and to
be in full force and effect (without having been modified or
rescinded) on the date of this opinion.
The documents referred to in clauses 1 through 5 shall be referred to
herein as the "Transaction Documents."
In our examination of documents and records, we have assumed, without
investigation, the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity with originals of all documents submitted to us as telecopied,
certified, photostatic or reproduced copies and the authenticity of all such
documents.
In rendering this opinion, we have also assumed that (i) all parties to
the Transaction Documents (other than Buyer) are duly organized, validly
existing, and in good standing under the laws of their respective jurisdictions
of organization and have the requisite power to enter into and perform the
Transaction Documents, (ii) the execution and delivery of the Transaction
Documents have been duly authorized by all necessary action and proceedings on
the part of all parties thereto other than Buyer, (iii) the Transaction
Documents have been duly executed and delivered by all parties thereto other
than Buyer, and (iv) the Transaction Documents constitute legal, valid, binding
and enforceable obligations of all parties thereto other than Buyer.
With respect to questions of fact, we have relied, without independent
inquiry or verification by us, solely upon (a) the representations and
warranties set forth in the Transaction Documents, (b) representations of
officers of Buyer and (c) certificates of public officials.
This opinion is limited to the law of the District of Columbia, the
Florida Business Corporation Act and the federal law of the United States of
America, insofar as such laws apply (collectively, "Applicable Law"), except
that Applicable Law includes only those laws and regulations that a lawyer
exercising customary professional diligence would reasonably recognize as being
directly applicable to the transactions contemplated by the Transaction
Documents and excludes those set forth in Section 19 of the Legal Opinion Accord
of the American Bar Association Section of Business Law (1991). We do not
purport to be experts in the laws of the State of Florida, nor are we familiar
with judicial interpretations of the laws of Florida, including the Florida
Business Corporation Act. We have reviewed the text of the Florida Business
Corporation Act and applied it to the
128
Sungilt Corporation, Inc.
Page 3
transactions described herein in light of our knowledge of the law of other
jurisdictions. We note that the Transaction Documents by their terms provide
that they are to be governed by the laws of the State of Delaware. Our opinion
in paragraph 3 is given as if the Transaction Documents were to be governed by
the laws of the District of Columbia rather than the laws of the State of
Delaware or the laws of any other state. We express no opinion as to conflicts
of law rules, or the laws of any states or jurisdictions other than as specified
above. Additional limitations are set forth in the text of the opinion.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. Based solely upon a review of the Florida Good Standing
Certificate, Buyer is a corporation duly organized and in good standing under
the laws of the State of Florida and based solely upon a review of the Arizona
Good Standing Certificate, Buyer is duly qualified to do business as a foreign
corporation in the State of Arizona and is in good standing under the laws of
the State of Arizona.
2. Buyer has full corporate power and authority under the Florida
Business Corporation Act, its Articles of Incorporation and its Bylaws to
execute, deliver and perform the Purchase Agreement and the other Transaction
Documents. Buyer's execution, delivery and performance of the Purchase Agreement
and the other Transaction Documents have been duly and validly authorized by all
necessary corporate action on the part of Buyer under the Florida Business
Corporation Act, its Articles of Incorporation and its Bylaws.
3. The Purchase Agreement and each of the other Transaction
Documents have been duly executed and delivered by Buyer and constitute the
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with their respective terms subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereinafter in effect
relating to creditors' rights and (ii) certain equitable defenses and the
discretion of the court before which any proceeding therefor may be brought.
4. The execution, delivery and performance by Buyer of the
Purchase Agreement and the other Transaction Documents (a) do not violate any
provisions of Buyer's Articles of Incorporation or Bylaws and (b) do not violate
any Applicable Law or any judgment, order, injunction or decree which is
applicable to Buyer and known to us.
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes which may hereafter be brought to our
attention. Our opinions are based on statutory provisions and judicial decisions
in effect at the date hereof,
129
Sungilt Corporation, Inc.
Page 4
and we do not opine with respect to any law, regulation, rule or governmental
policy which may be enacted or adopted after the date hereof nor assume any
responsibility to advise you of future changes in our opinions.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Purchase Agreement and is
not to be quoted in whole or in part or otherwise referred to in any of your
financial statements or public releases, nor is it to be filed with any
governmental agency or other person without the prior written consent of a
member of this firm. This opinion may not be relied upon by any person or entity
other than the person to whom it is addressed.
Very truly yours,
DOW, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
By:
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Member
130
SCHEDULE 12.5(H)
OPINIONS OF COUNSEL TO SELLER AND THE COMPANY
(SECOND CLOSING)
131
SCHEDULE 12.5(h)
FORM OF OPINION OF COUNSEL TO SELLER
AND THE COMPANY TO BE DELIVERED AT SECOND CLOSING
__________________, _____
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Stock Purchase Agreement dated as of ____________, 1997
(the "Purchase Agreement"), by and among Sungilt
Corporation, Inc., a ________________ corporation
("Seller"), Channel 46 of Tucson, Inc., a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇ Communications of
Tucson-46, Inc., a Florida corporation ("Buyer").
Ladies and Gentlemen:
We have acted as counsel for Seller and the Company in connection
with the transactions contemplated by the Purchase Agreement. This opinion is
being delivered to you pursuant to Section 12.5(h) of the Purchase Agreement.
All capitalized terms not defined in this opinion shall have the meanings set
forth in the Purchase Agreement.
In rendering this opinion, we have reviewed the following documents:
1. the Purchase Agreement; and
2. the stock power dated as of the date hereof from Seller
to Buyer for the Option Shares (the "Stock Power").
The documents referred to in clauses 1 and 2 shall be referred to
herein as the "Transaction Documents."
In our examination of documents and records, we have assumed, without
investigation, the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity with originals of all documents submitted to us as telecopied,
certified, photostatic or reproduced copies and the authenticity of all such
documents.
132
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
________________, ____
Page 2
In rendering this opinion, we have also assumed that (i) all parties
to the Transaction Documents (other than Seller and the Company) are duly
organized, validly existing, and in good standing under the laws of their
respective jurisdictions of organization and have the requisite power to enter
into and perform the Transaction Documents, (ii) the execution and delivery of
the Transaction Documents have been duly authorized by all necessary actions
and proceedings on the part of all parties thereto other than Seller and the
Company, (iii) the Transaction Documents have been duly executed and delivered
by all parties thereto other than Seller and the Company, and (iv) the
Transaction Documents constitute legal, valid, binding and enforceable
obligations of all parties thereto other than Seller and the Company.
With respect to questions of fact, we have relied, without
independent inquiry or verification by us, solely upon (a) the representations
and warranties set forth in the Transaction Documents, (b) representations of
Seller and of officers of the Company and (c) certificates of public officials.
Our opinion is limited to matters arising under the laws of the State
of California, the General Corporation Law of the State of Delaware and the
United States of America, including the Communications Act of 1934 and the
rules and regulations of the FCC, insofar as such laws apply. We express no
opinion whatsoever as to any other laws or regulations or as to laws relating
to choice of law or conflicts of law principles.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and is qualified to
conduct business as a foreign corporation in Arizona and is in good standing
under the laws of Arizona. Seller is a corporation duly organized, validly
existing and in good standing under the laws of __________________________.
Each of Seller and the Company has all requisite power and authority to execute
and deliver the Transaction Documents and to perform and comply with all of
the terms, covenants, and conditions to be performed and complied with by it
thereunder.
2. The execution, delivery and performance of the
Transaction Documents by the Company and Seller have been duly and validly
authorized by all necessary corporate actions on the part of the Company and
Seller.
3. The Transaction Documents have been duly executed and
delivered by Seller and the Company and constitute legal, valid and binding
obligations of Seller and the
133
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
_________________, ______
Page 3
Company, enforceable against them in accordance with their terms, except that
such enforcement may be subject to bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and to limitations on the
availability of equitable remedies.
4. The execution, delivery and performance by Seller and the
Company of the Transaction Documents and the transactions contemplated thereby
will not violate, conflict with or cause a default under: (a) any provision of
the Certificate of Incorporation and By-Laws of the Company or Seller; (b) any
statute, law, regulation or rule or any judgment, decree or order binding upon
Seller or the Company; or (c) to the best of our knowledge, any contract,
agreement or commitment to which Seller or the Company is a party or by which
it is bound.
5. To our knowledge, there is no judgment, award, order,
writ, injunction, arbitration decision or decree materially and adversely
affecting the conduct of the business of the Station, or any litigation,
proceeding or investigation pending or threatened against the Company, except
as specifically identified in Attachment A hereto and except for proceedings of
general applicability to the broadcast industry.
6. Based on our review of information publicly available at
the FCC and our internal files and records and inquiry to officers of the
Company and Seller, (a) the Company is the holder of the FCC licenses set forth
on Attachment A hereto (the "FCC Licenses"), (b) the FCC Licenses are in full
force and effect, and (c) the FCC Licenses are not subject to any condition or
requirement, other than conditions or requirements that appear on the face of
the FCC Licenses or pertain under generally applicable rules or policies of the
FCC.
7. The FCC Consent has been obtained, is in full force and
effect and no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay of the FCC Consent.
8. Based on a review of the minute books and stock ledger of
the Company, the authorized capital stock of the Company consists of 1,000
shares of voting common stock, all of which are issued and outstanding. All
such shares have been validly issued and are fully paid and nonassessable. Upon
delivery to Buyer of the stock certificate representing the Option Shares, the
Stock Power is in form sufficient to convey good and marketable title to Buyer
to the Option Shares.
134
▇▇▇▇▇▇ Communications of Tucson-46, Inc.
__________________, _____
Page 4
The information set forth herein is as of the date hereof. We assume
no obligation to advise you of changes which may thereafter may be brought to
our attention. Our opinions are based on statutory and judicial decisions in
effect at the date hereof, and we do not opine with respect to any law,
regulation, rule or governmental policy which may be enacted or adopted after
the date hereof, nor assume any responsibility to advise you of future changes
in our opinions.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Transaction Documents and
is not to be quoted in whole or in part or otherwise referred to in any of your
financial statements or public releases, nor is it to be filed with any
governmental agency or other person without the prior written consent of a
partner of this firm.
Very truly yours,
[ ]
By:
-----------------------------
, Partner
--------
135
SCHEDULE 13.5(D)
OPINION OF COUNSEL TO BUYER
(SECOND CLOSING)
136
Schedule 13.5(d)
Form of Buyer's Opinion
To Be Delivered at Second Closing
___________________, _____
Sungilt Corporation, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Re: Stock Purchase Agreement dated as of ______________, 1997 (the
"Purchase Agreement"), by and among Sungilt Corporation, Inc.,
a ___________________ corporation ("Seller"), Channel 46 of
Tucson, Inc., a Delaware corporation (the "Company"), and
▇▇▇▇▇▇ Communications of Tucson-46, Inc., a Florida
corporation ("Buyer").
Dear Ladies and Gentlemen:
We have acted as special counsel for Buyer in connection with the
transactions contemplated by the Purchase Agreement. This opinion is being
delivered to you pursuant to Section 13.5(d) of the Purchase Agreement. All
capitalized terms not defined in this opinion shall have the meanings set forth
in the Purchase Agreement.
In rendering this opinion, we have reviewed the following documents:
1. the Purchase Agreement;
2. a certificate dated as of ________________ from the Secretary
of State of Florida relating to the good standing of Buyer
(the "Florida Good Standing Certificate");
3. a certificate dated as of ________________ from the
Secretary of State of Arizona relating to the good standing
of Buyer (the "Arizona Good Standing Certificate");
4. the Articles of Incorporation and the Bylaws of Buyer, each in
the form certified to us by the Secretary of Buyer to be true
and complete and in effect on the date of this opinion; and
5. resolutions of the Board of Directors of Buyer certified to us
by the Secretary of Buyer to be true and complete, to have
been duly adopted
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by the Board of Directors of Buyer, and to be in full force
and effect (without having been modified or rescinded) on the
date of this opinion.
In our examination of documents and records, we have assumed, without
investigation, the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity with originals of all documents submitted to us as telecopied,
certified, photostatic or reproduced copies and the authenticity of all such
documents.
In rendering this opinion, we have also assumed that (i) all parties to
the Purchase Agreement (other than Buyer) are duly organized, validly existing,
and in good standing under the laws of their respective jurisdictions of
organization and have the requisite power to enter into and perform the Purchase
Agreement, (ii) the execution and delivery of the Purchase Agreement has been
duly authorized by all necessary action and proceedings on the part of all
parties thereto other than Buyer, (iii) the Purchase Agreement has been duly
executed and delivered by all parties thereto other than Buyer, and (iv) the
Purchase Agreement constitutes the legal, valid, binding and enforceable
obligations of all parties thereto other than Buyer.
With respect to questions of fact, we have relied, without independent
inquiry or verification by us, solely upon (a) the representations and
warranties set forth in the Purchase Agreement, (b) representations of officers
of Buyer and (c) certificates of public officials
This opinion is limited to the law of the District of Columbia, the
Florida Business Corporation Act and the federal law of the United States of
America, insofar as such laws apply (collectively, "Applicable Law"), except
that Applicable Law includes only those laws and regulations that a lawyer
exercising customary professional diligence would reasonably recognize as being
directly applicable to the transactions contemplated by the Purchase Agreement
and excludes those set forth in Section 19 of the Legal Opinion Accord of the
American Bar Association Section of Business Law (1991). We do not purport to be
experts in the laws of the State of Florida, nor are we familiar with judicial
interpretations of the laws of Florida, including the Florida Business
Corporation Act. We have reviewed the text of the Florida Business Corporation
Act and applied it to the transactions described herein in light of our
knowledge of the law of other jurisdictions. We note that the Purchase Agreement
by its terms provides that it is to be governed by the laws of the State of
Delaware. Our opinion in paragraph 3 is given as if the Purchase Agreement were
to be governed by the laws of the District of Columbia rather than the laws of
the State of Delaware or the laws of any other state. We express no opinion as
to conflicts of law rules,
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or the laws of any states or jurisdictions other than as specified above.
Additional limitations are set forth in the text of the opinion.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. Based solely upon a review of the Florida Good Standing
Certificate, Buyer is a corporation duly organized and in good standing under
the laws of the State of Florida and based solely upon a review of the Arizona
Good Standing Certificate, Buyer is duly qualified to do business as a foreign
corporation in the State of Arizona and is in good standing under the laws of
the State of Arizona.
2. Buyer has full corporate power and authority under the Florida
Business Corporation Act, its Articles of Incorporation and its Bylaws to
execute, deliver and perform the Purchase Agreement. Buyer's execution, delivery
and performance of the Purchase Agreement have been duly and validly authorized
by all necessary corporate action on the part of Buyer under the Florida
Business Corporation Act, its Articles of Incorporation and its Bylaws.
3. The Purchase Agreement has been duly executed and delivered by
Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its respective terms subject to (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or hereinafter
in effect relating to creditors' rights and (ii) certain equitable defenses and
the discretion of the court before which any proceeding therefor may be brought.
4. The execution, delivery and performance by Buyer of the
Purchase Agreement (a) do not violate any provisions of Buyer's Articles of
Incorporation or Bylaws and (b) do not violate any Applicable Law or any
judgment, order, injunction or decree which is applicable to Buyer and known to
us.
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes which may hereafter be brought to our
attention. Our opinions are based on statutory provisions and judicial decisions
in effect at the date hereof, and we do not opine with respect to any law,
regulation, rule or governmental policy which may be enacted or adopted after
the date hereof nor assume any responsibility to advise you of future changes in
our opinions.
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This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Purchase Agreement and is
not to be quoted in whole or in part or otherwise referred to in any of your
financial statements or public releases, nor is it to be filed with any
governmental agency or other person without the prior written consent of a
member of this firm. This opinion may not be relied upon by any person or entity
other than the person to whom it is addressed.
Very truly yours,
DOW, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Member