Asset Purchase Agreement - Bloomington Comco Inc. and WYZZ Inc.
ASSET PURCHASE AGREEMENT
THIS AGREEMENT FOR PURCHASE OF ASSETS ("this Agreement") is dated as of
January 16, 1996, and is by and between Bloomington Comco, Inc. duly organized
under the laws of the State of Illinois (referred to herein as "Seller" ), and
WYZZ, Inc., a corporation duly organized under the laws of the State of Maryland
("Buyer").
RECITALS
WHEREAS, Seller owns certain assets and is the licensee of certain
broadcast licenses issued by the Federal Communications Commission ("FCC") (the
"Station Assets") as described in more detail in Article I hereof and which are
used in connection with the business and operation of broadcast station WYZZ-TV
Channel 43, Peoria/Bloomington, Illinois, (the "Station").
WHEREAS, Seller desires to sell to Buyer the Station and the Station
Assets described in more detail below, and Buyer desires to acquire the Station
Assets all on the terms described herein.
WHEREAS, at the Closing (as defined in Section 2.2 herein) Seller will
transfer to Buyer all of the Station Assets described in this Agreement and
existing on the Closing Date.
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
TRANSFER OF ASSETS
1.1 Transfer of Assets. Upon and subject to the terms and conditions
stated in this Agreement, on the Closing Date, Seller shall convey, transfer,
deliver, and, in the case of the FCC Authorizations (as defined below) , assign
to the Buyer, and the Buyer shall acquire, by assignment or otherwise, from
Seller, all of Seller's rights in, to and under the Station Assets described
below.
(a) FCC Authorizations. All FCC Authorizations issued to
Seller with respect to the Station, including, without limitation, those shown
on Schedule 1.1(a) to this Agreement, and all applications therefor, together
with any renewals, extensions, or modifications thereof and additions thereto.
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(b) Tangible Personal Property. The equipment, vehicles,
furniture, fixtures, transmitting towers, transmitters, office materials and
supplies, spare parts and other tangible personal property of every kind and
description owned as of the date of this Agreement by Seller and used
in-connection with the business and operations of the Station, as more
particularly described on Schedule 1.1(b), and any additions, improvements,
replacements, and alterations thereto made between the date of this Agreement
and the Closing Date, but excluding: (I) all such property which is consumed,
retired, or disposed of by Seller in the ordinary course of their business
between the date of this Agreement and the Closing Date; or (ii) as otherwise
permitted by this Agreement.
(c) Real Property. The real property owned by Seller listed
and designated as such on Schedule 1.1(c) (the "Realty"), and all buildings,
structures, towers, and improvements thereon listed and designated as such on
Schedule 1.1(c) (the "Real Property Improvements") owned as of the date hereof
by Seller and used in the business and operations of the Station and all other
leaseholds and other interests in real property listed and designated as such on
Schedule 1.1(c) (the "Leasehold Interests").
(d) Agreements for Sale of Time. All orders and agreements now
existing or entered into in the Station's ordinary course of business between
the date hereof and the Closing Date for the sale of advertising time on the
Station to the extent unperformed as of the Closing Date.
(e) Program Contracts. All program licenses and contracts
listed on Schedule 1.1(e) under which Seller is authorized to broadcast film
product or programs on the Station, other than the Excluded Contracts (as
defined in Section 1.2(g)), together with all program licenses and contracts
that will have been entered into in the ordinary course of business of the
Station and which have been reviewed with and accented by the Buyer between the
date of this Agreement and the Closing Date and the making of which by Seller is
permitted by this Agreement, to the extent existing as of the Closing Date
(collectively, the "Program Contracts").
(f) Other Contracts. Any contracts (including all operating
lease arrangements, equipment operating leases, and other operating leases)
relating to the Station Assets, to which Seller and/or Station is a party (in
addition to any not included in those set forth in Sections 1.1(c), 1.1(d) and
1.1(e) hereof) (collectively, "Other Contracts") listed on Schedule 1.1(f),
together with all such contracts in any way related to the Station Assets that
will have been entered into in the ordinary course of business of the Station
between the date of this Agreement and the Closing Date and the making of which
by Seller is permitted by this Agreement, to the extent existing as of the
Closing Date. As used in this Agreement, "Contract" means any agreement, lease,
arrangement, commitment, or understanding, written or oral, expressed or
implied, to which the Station or Seller with respect to the Station are a party
or are bound.
(g) Trademarks, etc. The trademarks, service marks, patents,
trade names, jingles, slogans, and logotypes including, without limitation,
Seller's right to use the call letters
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"WYZZ" owned and used by Seller in connection with the business and operation of
the Station Assets by the Station and Seller as of the date hereof listed on
Schedule 1.1(g) to this Agreement ("Trademarks, etc.") as well as any others
acquired by Seller in connection with the business and operation of the Station
Assets by the Station and Seller between the date hereof and the Closing Date.
(h) Programming Copyrights. All program and programming
materials and elements of whatever form or nature owned by Seller and used
solely in connection with the business and operations of the Station as of the
date hereof, whether recorded on tape or any other substance or intended for
live performance, and whether completed or in production, and all related common
law and statutory copyrights owned by or licensed to Seller and used in
connection with the business and operations of the Station, together with all
such programs, materials, elements, and copyrights acquired between the date
hereof and the Closing date as set forth on Schedule 1.1(h) to this Agreement
(collectively, the "Programming Copyrights").
(I) Files and Records. All files and other records of Seller
relating solely to the business and operations of the Station other than account
books of original entry and other than duplicate copies of such files and
records, if any, that are maintained at the corporate offices of Seller or
Seller's parent corporation, if any, for tax accounting purposes.
(j) Goodwill. All of Seller's goodwill in and going concern
value of the Station.
(k) Other Assets. All other assets of Seller relating to the
business and operation of Station Assets by the Station and/or the Seller not
expressly excluded in Section 1.2 hereof.
(l) Prepaid Items. All deposits and prepaid expenses.
(m) Financial Statements, Books,, and Records. Copies of all
financial statements (whether internal, compilation, reviewed, or audited),
including all books, records, accounts, checks, payment records, tax records
(including payroll, unemployment, real estate, and other tax records), and other
such similar books and records of Seller with respect to the station for three
(3) fiscal years immediately preceding the date hereof and all interim periods
following the date hereof through and including the Closing.
(n) Network Affiliation Agreements. Any and all of the
Station's network affiliation agreements, including but not limited to Seller's
affiliation agreement with the Fox Broadcasting Company or Fox Inc.
(collectively "Fox") listed on Schedule 1.1(n) to this Agreement.
1. 2. Excluded Assets. There shall be excluded from the Station Assets
and retained by Seller, to the extent in existence on the Closing Date, the
following assets (the "Excluded Assets") :
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(a) Cash. All cash, cash equivalents, and cash items of any
kind whatsoever, certificates of deposit, money market instruments, bank
balances, and rights in and to bank accounts, marketable and other securities of
either Seller.
(b) Personal Property Disposed Of. All tangible personal
property disposed of or consumed in the ordinary course of the business of the
Station between the date of this Agreement and the Closing.
(c) Insurance. All contracts of insurance and all insurance
plans and the assets thereof.
(d) Claims. Any and all claims of Seller with respect to
transactions occurring prior to the Closing Date, including, without limitation,
claims for tax refunds and claims of Seller under contracts with respect to
events occurring prior to the Closing Date.
(e) Name. Any right to use the name "Bloomington Comco, Inc.,"
or any logo or variation thereof.
(f) Pension Assets, Etc. Pension, profit sharing, retirement,
bonus, stock purchase, savings plans and trusts, 401(k) plans, health insurance
plans, and the assets thereof, and all other plans, agreements, or
understandings to provide employee benefits of any kind for employees of Seller.
(g) Certain Contracts. The agreements listed on Schedule
1.2(g) hereof (the "Excluded Contracts") and any contract which is not capable
of being transferred or assigned without the approval or consent of any party
thereto or any third party if such approval or consent has not been obtained,
subject, however, to Sections 1.3 and 8.5 hereof.
(h) Certain Books and Records. Seller's account books of
original entry with respect to the Station, and all books, records, accounts,
checks, payment records, tax records (including payroll, unemployment, real
estate, and other tax records), and other similar books, records, and
information of Seller relating to Seller's operation of the business of the
Station prior to Closing, with the proviso that Buyer shall be allowed to
maintain copies of all such records and/or upon a written request for same shall
be allowed further access to all excluded records at all reasonable times.
(I) Receivables. All notes and accounts receivable and other
receivables of seller relating to or arising out of the operation of the Station
prior to the Closing.
1.3. Liabilities. The Station Assets, including those subject to
capital lease arrangements, shall. be sold and conveyed to Buyer, as of the
Closing Date, free and clear of all liens, security interests, and encumbrances
except (a) those disclosed on Schedule 1.3 hereto as "continuing" and the leases
listed on Schedule 1.1(c); (b) encumbrances on the real property
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included in the Station Assets that do not materially affect the value or the
current use and enjoyment thereof in the operation of the Station; and (c) the
Assumed Liabilities (as hereinafter defined) and the other obligations and
liabilities of Buyer assumed hereunder (all of the foregoing are sometimes
referred to herein collectively as "Permitted Encumbrances"). Buyer agrees that
on the Closing Date Buyer shall assume, undertake, and agree to pay, satisfy,
perform, and discharge only those liabilities and obligations of Seller which
have not yet accrued but which arise on or after the Closing Date under the
contracts assigned pursuant to Sections 1.1(d) and (e) and any contracts that
are entered into after the date hereof as permitted by this Agreement (all of
the foregoing are referred to herein collectively as the "Assumed Liabilities").
If any required approval of or consent to the transfer and assignment
of any contract included in the Station Assets is not obtained, Buyer shall
assume and shall pay, satisfy, perform, and discharge Seller's liabilities and
obligations which arise thereunder on and after the Closing Date unless Buyer's
enjoyment of the rights and benefits under any such contract is expressly
terminated by the other party thereto by affirmative action within six (6)
months after the Closing Date because of such failure to obtain approval or
consent and not because of any other default or nonperformance by Buyer or of a
failure of Buyer. The liabilities and obligations assumed pursuant to the
immediately preceding sentence shall also constitute "Assumed Liabilities" for
purposes of this Agreement.
Buyer shall not assume or be liable for (a) any liability or obligation
arising out of the business or operations of the Station or the Station Assets
prior to the Closing Date (except for the Assumed Liabilities and other
obligations and liabilities specifically assumed by Buyer hereunder) ; (b) any
liability or obligation under any contracts not specifically assumed by Buyer
hereunder; (c) any liability or obligation of Seller for any federal, state, or
local income or other taxes (subject, in the case of real estate or payroll
taxes, if any, to proration at Closing); (d) any liability or obligation with
respect to the Excluded Contracts; (e) any liability or obligation to any
employee or former employee of Seller or the Station attributable to any period
of time prior to the Closing Date including any liability for accrued vacation
and other benefits; (f) any liability or obligation of Seller arising out of any
litigation, proceeding, or claim by any person or entity relating to the
business or operations of the Station by Seller prior to the Closing Date,
whether or not such litigation, proceeding, or claim is pending, threatened, or
asserted before, on, or after the Closing Date; (g) any severance or other
liability arising out of the termination of any employee's employment with
Seller; or (h) any duty, obligation, or liability relating to any pension,
401(k) or other similar plan, agreement, or arrangement provided by Seller to
employees of Seller, and none of such plans shall be assumed by Buyer. The
foregoing paragraph shall act exclusively for the benefit of the parties to this
Agreement and not for the benefit of any other person or entity.
Seller shall not be held liable for by Buyer (a) any liability or
obligation arising out of the business or operations or the Station Assets by
the Buyer on or after the Closing Date; (b) any Assumed Liabilities or other
liabilities and obligations assumed by the Buyer under this Agreement; (c) any
liability or obligation of Buyer for any federal, state, or local income or
other taxes; (d) any liability or obligation incurred or assumed by Buyer with
respect to any of the
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Station Assets; (e) any liability or obligation to any employee or former
employee of Buyer or the Station attributable to any period of time after the
Closing Date; (f) any liability or obligation of Buyer arising out of any
litigation, proceeding, or claim by any person or entity relating to the
business or operation of the Station or the Station Assets by Buyer on or after
the Closing Date; or (g) any duty, obligation, or liability relating to any
pension, 401(k) or other similar plan, agreement, or arrangement provided by
Buyer to employees of Buyer.
ARTICLE 2
PAYMENTS AND CLOSING
2.1. Purchase Price.
(a) Payment of Purchase Price. In consideration of Seller's
performance of this Agreement, the transfer and delivery of the Station Assets,
and the assignment of the FCC Authorizations, on the Closing Date, Buyer will
pay to Seller an amount equal to ten (10) times the broadcast cash flow ("BCF")
of the Station as stated on or as calculated from the audited financial
statements (see Section 5.9 below) of Seller for the twelve (12) month period
beginning October 1, 1994 and ending September 30, 1995 minus the total of (I)
One Million Dollars ($1,000,000.00) , which has been paid into escrow in
accordance with Section 11.2 hereof and which is to be released to Sellers at
Closing and less an amount of $50,000.00 (the "Covenant Payment"), which will be
allocated to the Covenant Not to Compete (see Section 8.7 below) . As part of
the Purchase Price Buyer will assume the Assumed Liabilities and other
obligations and liabilities to be assumed by Buyer hereunder on the Closing
Date. The Purchase Price shall never exceed an amount equal to ten (10) times
the BCF of the Station in the aggregate in order for the Buyer to be obligated
to consummate the transactions contemplated by this Agreement and shall never be
less than Twenty Three Million Dollars and No Cents ($23,000,000.00), in the
aggregate, in order for the Seller to be obligated to consummate the
transactions contemplated by this Agreement. The Purchase Price shall be paid by
Buyer to Seller by wire transfer of immediately available funds to such bank
account(s) as Seller may designate on or prior to the Closing Date. For purposes
of calculating the Purchase Price, BCF shall be defined in accordance with
Generally Accepted Accounting Principals ("GAAP") applied on a consistent basis
without duplication as net income before Federal Income Tax and, to the extent
applicable to income, any Illinois Business Tax, plus (on an accrual basis to
the extent used in determining net income before taxes) (I) interest,
depreciation and amortization (including program amortization) and (ii)
corporate overhead allocations and management fees, and plus or minus any other
non-cash transactions (such as barter and trade), minus programming payments
made, or scheduled to be made in accordance with the original terms of each
program contract for such period. Additional adjustments to BCF shall be made in
accordance with Schedule 2.1 hereto. The Buyer and Seller shall within ninety
days of this date review and reach a final agreement as to the adjustments on
Schedule 2.1.
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(b) Allocation of Purchase Price. Buyer and Seller agree to
allocate the Purchase Price among the Covenant Not to Compete and the Station
Assets based on the appraisal to be performed by a mutually acceptable appraisal
service used generally in the television industry for such appraisals. The
parties shall undertake all reasonable efforts to complete this allocation
within sixty (60) days from this same date. Buyer and Seller agree to file all
relevant returns and reports and (including, without limitation, Forms 8594,
Asset Acquisition Statements, and all income and other tax returns) on the basis
of such allocations.
2.2. Closing. The closing of the purchase and sale of the Station
Assets (the "Closing") shall be held in the offices of Thomas & Libowitz, P.A.,
USF&G Tower at 10:00 a.m.., local time, on a regular business day, as should be
mutually agreed upon by the parties, which, accept as otherwise provided herein,
is not later than December 31, 1996 (the "Closing Expiration Date"). However, if
FCC approvals and consents to the transactions contemplated hereby shall have
become a "Final Grant" on a date prior to the Closing Expiration Date, Closing
shall occur in thirty (30) business days following "Final Grant", provided if
the FCC approvals and consents to the transactions contemplated hereby shall
become a "Final Grant" less than thirty (30) days prior to the closing
Expiration Date, the Closing Expiration Date shall be extended and the Closing
shall occur on the thirtieth business day after "Final Grant" which is a
business day. The term "Final Grant" is defined for purposes of this Agreement
to mean action by the FCC as to which no further steps (including those of
appeal or certiorari) can be taken with respect to any action or proceeding, to
review, modify, or set the determination aside, whether under Section 402 or 405
of the Communications Act of 1934 (the "Communications Act"), or otherwise. For
purposes of this Agreement the term "Closing Date" shall mean the day the
closing occurs.
2.3. Deliveries at Closing. All actions at the Closing shall be deemed
to occur simultaneously, and no document or payment shall be deemed to be
delivered or made until all documents and payments are delivered or made to the
reasonable satisfaction of Buyer, Seller, and their respective counsel.
(a) Deliveries by Seller. At the closing, Seller shall deliver
to Buyer such instruments of conveyance and other customary documentation as
shall in form and substance be reasonably satisfactory to Buyer and its counsel,
including, without limitation, the following:
(i) one or more bills of sale and affidavits of title
conveying the personal property and all leases, contracts, and other intangible
assets included in the Station Assets, and, with the consent of the FCC, one or
more assignments of the FCC Authorizations;
(ii) any mortgage discharges or releases of liens
that are necessary in order to transfer the Station Assets as contemplated by
Section 1.3;
(iii) certificates of Seller as required by Section
8.1(c) hereof;
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(iv) a certified copy of the resolutions or
proceedings of Seller authorizing the transactions contemplated at Closing by
this Agreement;
(v) a certificate as to the existence and good
standing of Seller, each issued by the Illinois Secretary dated shortly before
the Closing Date;
(vi) a receipt for the Purchase Price;
(vii) the opinions of counsel required by Section 8,3
hereof;
(viii) all consents received by Seller through the
Closing to the assignment to or assumption by Buyer of licenses, contracts, and
leases included in the Station Assets;
(ix) assignments of all Leasehold Interests and all
necessary consents thereto;
(x) special warranty deed(s) or other documents of
conveyance acceptable to Buyer evidencing the Transfer of the Real Property and
Real Property Improvements;
(xi) a list of cable systems which carry the
station's signal as of a date which is not prior to the seventh (7th) day prior
to the Closing Date, which list shall be certified by an officer of the Seller
as not being materially inaccurate to the best of Seller's knowledge;
(xii) the Covenant Not to Compete contemplated by
Section 8.7 hereof; and
(xiii) such other documents as Buyer shall reasonably
request.
(b) Deliveries by Buyer. At the Closing, Buyer shall deliver
to Seller the Purchase Price and such instruments of assumption and other
customary documentation as shall in form and substance be reasonably
satisfactory to Seller and its counsel, including, without limitation, the
following:
(i) the Purchase Price, which shall be delivered in
the manner set forth in Section 2.1 hereof;
(ii) an assumption of liabilities pursuant to which
Buyer will assume the Assumed Liabilities;
(iii) a certificate of Buyer as required by Section
7.1(c) hereof;
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(iv) a certified copy of the resolutions or
proceedings or Buyer authorizing the transactions contemplated by this
Agreement;
(v) a certificate as to the existence and good
standing of Buyer issued by the Department of Assessments and Taxation of
Maryland shortly before the Closing Date and a Certificate of the Illinois
Secretary of State as to Buyer's qualification to do business in the State of
Illinois;
(vi) the opinion of counsel required by Section 7.3
hereof;
(vii) the Covenant Not to Compete contemplated by
Section 8.7 hereof; and
(viii) such other documents as Seller shall
reasonably request.
2.4. Adjustments.
(a) Operation of the Station's Assets by the Seller and the
income, expenses, and liabilities attributable thereto through 11:59 p.m. on the
day preceding the Closing Date (the "Adjustment Date") shall be for the account
for the Seller and, thereafter, for the account of the Buyer, and shall be
prorated accordingly. Items including, but not limited to power and utility
charges, ad valorem, property taxes upon the basis of the most recent assessment
available, commissions, wages, payroll taxes, and accrued vacation pay of
employees of Seller who enter into employment of Buyer (all such vacation pay
accrued prior to the Closing Date is the responsibility of Seller), rents, and
similar prepaid and deferred items shall be prorated between Seller and Buyer,
the proration to be made as of the Adjustment Date. There shall be no prorations
and/or adjustments with respect to any sick leave, personal leave days, accrued
on or prior to the Closing Date by any employee of Seller, and Seller shall
assume and be responsible for all Liabilities in respect thereto. All special
assessments and similar charges or liens imposed against the Realty, Leasehold
Interest, and Real Property Improvements in respect of any period of time
through the Adjustment Date, whether payable in installments or otherwise, shall
be the responsibility of the Seller, and amounts payable with respect to such
special assessments, charges, or liens, with respect to any period of time after
the Adjustment Date shall be the responsibility of the Buyer and shall be
adjusted as required hereunder.
In the event the Buyer performs or causes to be performed a Phase 1 or
Phase 2 Environmental Audit (the "Environmental Audits") prior to or within
thirty (30) days after the Closing Date, Seller agrees to contribute up to
Thirty Thousand Dollars ($30,000.00) (the "Remediation Fee") to the cost of any
remediation advised by such Environmental Audits. Such Remediation Fee shall be
part of the adjustments contemplated by this Section 2.4.
Except for "Related Party Trades" addressed later in this paragraph,
all trade, barter, similar arrangements for the sale of advertising time, other
than for cash (with the exception of Film or Program Barter Agreements and Radio
Barter Agreements) ("Trades") shall be prorated
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as of the Adjustment Date. If, on the Closing Date, the aggregate value of the
Stations performance obligations on or after the Closing Date under all such
Trades, less the aggregate value of the goods, services, or other items to be
received thereunder, on or after the Closing Date, exceeds Fifty Thousand
Dollars ($50,000.00) then the Buyer shall receive a credit against the Purchase
Price for the amount of such excess and, if upon the Closing Date the aggregate
value of goods, services, or other items to be received under all Trades,
exceeds the Stations performance obligations on or after the Closing Date by
more than Fifty Thousand Dollars ($50,000.00) , then the Purchase Price shall be
increased by an amount of such excess. Trades shall be valued in accordance with
the evaluation method currently used by Buyer, which method shall be declared
and approved by the Seller, such approval not to be unreasonably withheld. There
shall be no other proration or adjustment with respect to Trades, and there
shall be no prorations or adjustment with respect to any film or program barter
agreements, radio barter agreements, or program contracts, Any related party
transactions involving Trades ("Related Party Trades") which result in a
liability on Seller's balance sheets as of the Adjustment Date shall be solely
Seller's responsibility, shall not be an assumed Liability, and shall not be
included in any proration of Trades hereunder.
(b) As of the Closing Date, to the extent practical, the
adjustments provided in Section 2.4 (a) shall be made on the basis of the then
most recently available financial statements and other information of the
Station (the "Preliminary Adjustments"). Within forty-five (45) days after the
Closing Date, the Buyer shall prepare a closing balance sheet (the "Closing
Balance Sheet") as of the closing of business on the Adjustment Date and submit
it to the Seller for review. Within seventy-five (75) days after the Closing
Date, final adjustment pursuant to Section 2.4 shall be determined, and any
required refund or payment shall be made on the basis of the Closing Balance
Sheet. if any dispute arises over the amount to be refunded or paid, such refund
or payment shall nonetheless be made to the extent such amount is not in
dispute.
If any such dispute can not be resolved by the parties or their
respective independent public accountants within ninety (90) days after Closing,
it shall be referred to a mutually satisfactory independent accounting firm of
national stature which has not been employed by any party hereto for the two (2)
years of the date of such referral. Any such referral shall be to an accounting
firm selected by the Seller's and Buyer's respective independent public
accountants, The determination of such firm shall be conclusive and bonding on
each party hereto. one half of the fees of such firm shall be paid by the Seller
and the other half shall be paid by the Buyer.
(c) To the extent that Buyer receives distributions from the
Fox Children's Network ("FCN Profits") after the Closing Date, Buyer shall
distribute and pay to the Seller, in an amount not to exceed $82,000 FCN Profits
received by it for calendar years 1993, 1994, and 1995, to the extent such FCN
Profits are distributed to the Station in calendar years 1996 and 1997;
provided, however, that the collection from Fox of any of the FCN Profits shall
be the sole responsibility of Seller and Buyer shall not be responsible for the
collection on Seller's behalf of any such profits.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1. Organization. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Illinois. Seller
has the requisite power and authority to carry on the business of the Station
now being conducted by it, to own and operate the Station Assets owned and
operated by it, and to enter into and consummate the transactions contemplated
by this Agreement.
3.2. Approval/Authority. All requisite actions and proceedings
necessary to be taken by Seller in connection with the execution and delivery of
this Agreement and the consummation of transactions contemplated hereby and
necessary to make the same effective have been, or with respect to the Closing
will be, duly and validly taken. This Agreement has been duly and validly
authorized, executed, and delivered by Seller and constitutes its valid and
binding agreement, enforceable in accordance with and subject to its terms,
except as limited by laws affecting the enforcement of creditors' rights or
contractual obligations generally.
3.3. No Defaults. Except as set forth on Schedule 3.3, as of the date
of this Agreement (after giving effect to all approvals and consents which have
been obtained), neither the execution and delivery by Seller of this Agreement,
nor the consummation by Seller of the transactions contemplated by this
Agreement to be consummated on, prior, or subsequent to the Closing Date, will
constitute, or, with the giving of notice or the passage of time or both, would
constitute, a material violation of or would conflict in any material respect
with or result in any material breach of or any material default under, any of
the terms, conditions, or provisions of the Communications Act, the rules,
regulations and public policies of the FCC or any other federal, state and local
laws, rules, regulations, ordinances, judgments, orders and/or decrees to which
either Seller is subject, or of Seller's Articles of Incorporation or By-laws,
or any material contract, agreement, or instrument to which Seller is a party or
by which Seller is bound.
3.4. Brokers. There is no broker or finder or other person or entity
who would have any valid claim against Buyer for a commission or broker's fee in
connection with this Agreement where the transactions contemplated hereby as a
result of any agreement or understanding of or action taken by Seller or any
affiliate of Seller.
3.5. Condition of Assets. All material tangible assets included in
Station Assets, including, without limitation, the Realty, the Leasehold
Interests, and the Real Property Improvements, are being maintained in
accordance with general industry practices and/or good operating condition and
repair, ordinary ware and tear excepted.
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3.6. Title.
(a) Seller has good and marketable title to the Real Property
listed on Schedule 1.1(c), free and clear of all mortgages, security interests,
liens, charges, and encumbrances of any nature whatsoever, except: (I) for
liens, for Real Property, taxes not yet due and payable and (ii) as disclosed in
Schedule 1.3 of this Agreement, and (iii) for encumbrances which do not
materially detract from the value of the Real Property or which do not
materially affect the current use and enjoyment thereof in the operation of the
Station. Seller is not in material default under any of the Leasehold Interests.
Except as set forth in this Section 3.6 or disclosed on a Certificate of Zoning
Classification and Legality of Use from the cities of Peoria and Bloomington,
Illinois, or the counties of McLean, Tazewell, Woodford, or Peoria, Illinois
(copies of which have been provided to the Buyer), the Realty, Leasehold
Interests, and the Real Property Improvements listed on Schedule 1.1(c) and
their present uses comply in all material respect with all applicable zoning
laws and ordinances; and to the Sellers knowledge, there exists no notice of any
violations of housing, building, safety, fire ordinances, with respect to the
Realty, Leasehold Interests, and Real Property Improvements listed on Schedule
1.1(c) . The zoning classifications for the Realty and Leasehold Interests
listed on Schedule 1.1(c) are set forth on Schedule 1.1(c). The Realty and real
property which is subject to the Leasehold Interests is currently serviced by a
community sewage system.
Seller has not received any notice and has no knowledge of any pending,
threatened, or contemplated condemnation proceedings affecting the Realty, the
Leasehold Interests, or the Real Property Improvements listed on Schedule 1.1(c)
or any part thereof or any sale or disposition of the real property which is the
subject of the Leasehold Interests or any portion thereof in lieu of
condemnation.
The Seller is not in material default under any of its Leasehold
Interests.
(b) Seller has good and marketable title to the tangible
assets and personal property included in the Station Assets and all such assets
and personal property will on the Closing Date be free and clear of all security
interests, mortgages, pledges, liens, encumbrances, or charges of any mature,
except for Permitted Encumbrances.
Seller has good and marketable title to the tangible assets and
personal property included in the Station Assets, and all such assets and
personal property of free and clear of all liens and encumbrances.
3.7. Insurance. The Station and the Station Assets are, as of the date
of this Agreement, adequately insured for their replacement costs by Seller
against loss or damage by fire and other hazards and risks of the character
usually insured against by persons operating similar properties and businesses
under policies issued by insurers of recognized responsibility and Seller agree
to keep the Station and Station Assets adequately insured for their replacement
costs naming the Buyer as a named insured as its interest appears from this same
date forward, through and including the Closing Date.
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3.8. Contracts. Schedules 1.1(d), 1.1(e). 1.1(f), 1.(g), 1.1(h),
1,1(n), and 3.10 to this Agreement contain a list of the following, as to which
the Station or Seller with respect to the Station is a party;
(a) any television network affiliation agreements;
(b) contracts evidencing time sales to advertisers or
advertising agencies which are "trade" or "barter" transactions which require
the furnishing of advertising time on the Station after the date of this
Agreement;
(c) sales agency or advertising representation contracts which
are not terminable by Seller without penalty upon notice of thirty (30) days or
less;
(d) employment contracts;
(e) licenses or agreements under which either Seller is
authorized to broadcast on the Station filmed or taped programming supplied by
others;
(f) leases of personal property which have a term, including
renewal options exercisable by any other party thereto, ending more than one
year after the date of this Agreement and/or which involve annual payments of
more than $10,000.00;
(g) contracts not made in the ordinary and usual course of
business; and
(h) any other contracts which are material to the business and
operation of the Station and the Station Assets.
3.9. Program Contracts. All information regarding the contracts listed
on Schedule 1.1(e) is correct and accurate, including, without limitation, the
contract price, number of exhibitions licensed or available, the number of
exhibitions aired and remaining, the amount of license fees paid and amount of
unpaid license fees, any information concerning additional episodes licensed
thereunder and the fees therefore, or any other information concerning
additional episodes licensed thereunder and the fees therefore, or any other
information regarding such contracts set forth in Schedule 1.1(e).
3.10. Employees. Schedule 3.10 lists all employees of the Seller as of
the date of this Agreement and their respective salaries and dates of hire and
includes information on the benefits provided to employees (including, without
limitation, pension, retirement, hospitalization, life, accident or medical
insurance, vacation, and other employee benefit plans, agreements, arrangements,
or understandings). Except as described on Schedule 3.10, Seller has no written
or oral contracts of employment with any employee. Except as disclosed on
Schedule 3.10, neither Seller is a party to or subject to any collective
bargaining agreements with respect to the Station, nor does either Seller have
any other contracts with any labor union or other labor organization with
respect to the Station. Seller is not a party to any pending or, to the best of
its
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knowledge and belief (after inquiry of the Station's management) , threatened
labor dispute affecting the Station.
3.11. Litigation. Except as set forth on Schedule 3.11 hereto: (I)
Seller, with respect to the Station, has not been operating under or subject to
or in default with respect to any order, writ, injunction, or decree of any
court or federal, state, municipal, or other governmental department,
commission, board, agency, or instrumentality which has had or could reasonably
be expected to have a material adverse effect on the operations of the Station;
(ii) there is no litigation pending by or against, or to the best of Seller's
knowledge and belief (after inquiry of the Station's management) threatened
against, Seller related to or affecting any of the Station Assets which
materially interferes or could reasonably be expected to materially interfere
with the operations of the Station or with Seller's ability to transfer the
Station Assets to Buyer. There are no attachments, executions, or assignments
for the benefit of creditors or voluntary or involuntary proceedings in
bankruptcy pending against or contemplated by Seller, and no such actions have
been threatened against Seller. There is no litigation or proceeding pending or,
to the best of Sellers knowledge and belief, threatened against or affecting
Seller that would affect Seller's ability to carry out the transactions
contemplated by this Agreement.
3.12. Compliance with Laws. Seller, with respect to the Station, is to
the best of its knowledge and belief in compliance in all material respects with
all applicable laws, regulations, and orders, and the present uses by Seller of
the Station Assets does not, to the best of Seller's knowledge and belief I
violate any such laws, regulations, or orders in any material respect.
3.13. Business since December 31, 1995. From December 31, 1995, to the
date of this Agreement there has been no material adverse change in the
Station's financial condition [as represented in the unaudited balance sheets
and related statements of income, operations and cash flows for the fiscal year
ended December 31, 1995 (the "1995 Financial Statements") previously delivered
by the Seller to the Buyer], business, or assets taken as a whole (provided that
the foregoing shall exclude any material adverse change attributable to facts
effecting the television industry generally or to the general economical
conditions or governmental or legislative laws, rules, regulations), and the
business of the Station, in all material respects has been conducted in the
ordinary course of business and in the same manner as it was before December 31,
1995.
3.14. Environmental. To the best of Seller's knowledge and belief and
except as stated in Schedule 3.14. neither Seller nor the Station are the
subject of any (I) "Superfund" evaluation; (ii) any investigation or proceeding
of any governmental authority evaluating whether any remedial action is
necessary to respond to release of "Hazardous Substances" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CHURCHLY"), "Hazardous Waste" as defined by the Resource Conservation and
Recovery Act of 1976 ("RCRA"), or any substance regulated by the Toxic
Substances Control Act ("TSCA"); or (iii) any requirement to remove asbestos
material or polychlorinated bipheryls. Seller has complied with all applicable
federal, state and local environmental laws and regulations, except where the
failure to do so would not have a Material Adverse Effect. For
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purposes of this Section, "Material Adverse Effect" means any change in or
effect on the business currently conducted by the Station that is or is
reasonably likely to be materially adverse to the Station. Except as stated in
Schedule 3.14., to Seller's knowledge after due inquiry within its organization,
but without any independent environmental assessment, as of the Closing Date,
neither the Realty, Leasehold Interests, or Real Property Improvements contains
any condition or substance which under the aforesaid environmental laws and
regulations thereunder, as interpreted as of this date by judicial and
regulatory authorities, will result in recovery by any person of remedial or
removal costs, expenses or damages, or expenditures by Buyer for abatement or
remedial actions. Seller has no reason as of the date of this Agreement to
believe that an independent environmental assessment would lead to the discovery
of any such condition or substance, Absent any previous knowledge or beliefs by
Seller, Seller shall not be deemed in breach of this Article III, Section 3.14.
Environmental should any Phase I or Phase II environmental audit performed or
caused to be performed by Buyer reveal any such condition or substance.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1. Incorporation. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland, and, as
of the Closing date, will be qualified to transact business in Illinois, and has
the corporate power and authority to enter into and consummate the transactions
contemplated by this Agreement.
4.2. Corporate Action. All corporate actions and proceedings necessary
to be taken by or on the part of Buyer in connection with the execution and
delivery of this Agreement and the consummation of transactions contemplated
hereby and necessary to make the same effective have been duly and validly
taken. This Agreement has been duly and validly authorized, executed, and
delivered by Buyer, and constitutes its valid and binding agreement, enforceable
in accordance with and subject to its terms, except as limited by laws affecting
the enforcement of creditors' rights or contractual obligations generally.
4.3. No Defaults. As of this Agreement or the Closing Date, the
execution and delivery by Buyer of this Agreement, or the consummation by Buyer
of the transactions contemplated hereby, do not or will not constitute or, with
the giving of notice or the passage of time or both, would not constitute a
violation of or would conflict with or result in any breach of or default under
any of the terms, conditions, or provisions of any judgment, law, or regulation,
or Buyer's certificate of incorporation or bylaws, or any contract, agreement,
or instrument to which Buyer is a party or by which it is or will be bound.
4.4. Brokers. To Buyer's knowledge there is no broker or finder or
other person who would have any valid claim against Seller for a commission or
brokerage in connection with this Agreement or the transactions contemplated
hereby as a result of any agreement or understanding of or action taken by
Buyer.
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4.5. Litigation. There is no litigation, proceeding, or investigation
of any nature pending or, to the best of Buyer's knowledge, threatened against
or affecting it that would affect Buyer's ability fully to carry out the
transactions contemplated by this Agreement. There are no attachments,
executions, or assignments for the benefit of creditors or voluntary or
involuntary proceedings in bankruptcy pending against or contemplated by Buyer,
and no such actions have been threatened against Buyer.
ARTICLE 5
COVENANTS OF SELLER PENDING THE CLOSING
5.1. Maintenance of Business until Closing. Until the Closing Date,
Seller shall, with respect to the Station Assets, continue to carry on its
business and operations and keep its books of account, records, and files
complete in the ordinary course of business. Seller shall operate the Station in
all material respects in accordance with the terms of and in compliance in all
material respects with all applicable laws and FCC rules and regulations.
Seller will maintain in full force and effect through the Closing Date
adequate property damage (at replacement cost), liability, and other insurance
with respect to the Station Assets.
Prior to the Closing Date, Seller will not, without the prior written
consent of Buyer (to the extent the following restrictions are permitted by the
FCC and all applicable law):
(a) sell, lease, transfer, or agree to sell, lease, or
transfer any Station Assets which are material to the operation of the station,
considered as a whole or which have individually or in the aggregate a value in
excess of $10,000.00 without replacement thereof with a substantially equivalent
asset of substantially equivalent kind, condition, and value;
(b) enter into any contract of employment or collective
bargaining agreement which will be binding on Buyer, permit any increases in the
compensation of any of the Station's employees; provided, however, that Seller
may pay bonuses to any of its employees;
(c) apply to the FCC for any construction permit that would
materially restrict the Station's present operations or make any material change
in the Station's Real Property, Real Property Improvements or Leasehold
Interests.
Seller shall be entitled to renew or extend the term of any contract
listed on Schedules 1.1(c), 1.1(d), 1.1(e), and 1.1(f) which, by its terms,
expires or will expire prior to December 31, 1996; provided, however, such
renewal or extension does not increase the amounts payable thereunder during
such renewal or extension term unless said increase is in accordance with the
Station's usual practices and which increase has been approved in advanced by
Buyer,
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5.2. Goodwill/Compliance with Agreements. Seller shall use all
reasonable efforts to preserve the business organization of the Station and
preserve the goodwill of the Station's suppliers, customers, and others having
business relations with it in accord with the provisions of this Agreement.
5.3. Reports; Access to Facilities, Files, and Records. From time to
time from the date hereof through the closing Date, at the request of Buyer,
Seller shall give or cause to be given to the officers, employees, agents, and
representatives of Buyer: (a) access (in the presence of any representative
designated by Seller) upon reasonable prior notice, during normal business
hours, to all facilities, properties, accounts, books, deeds, title papers,
insurance policies, licenses, agreements, contracts commitments, records,
equipment, machinery, fixtures, furniture, vehicles, accounts payable and
receivable, and inventories of Seller relating to the Station, and (b) all such
other information in Seller's possession concerning the affairs of the Station
as Buyer may reasonably request; provided, however, that the foregoing does not
unreasonably disrupt or interfere with the business and operations of Seller or
the Station.
5.4. Notice of Proceedings. Seller will promptly notify Buyer in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereunder, or upon receiving any notice from
any governmental department, court, agency, or commission of its intention to
institute an investigation into or institute a suit or proceeding to restrain or
enjoin the consummation of this Agreement or such transactions, or to nullify or
render ineffective this Agreement or such transactions if consummated.
5.5. Confidential Information. Seller shall not use or disclose to any
person or entity (except as may be required by law or in conducting the Audit
(as defined in Section 5.9), and then only with notice to Buyer) any
confidential information received from Buyer or its agents in the course of
investigating, negotiating, and completing the transactions contemplated by this
Agreement. Nothing shall be deemed confidential information that: (a) is or was
known to either Seller at the time of its initial disclosure to either Seller or
any representative of either Seller; (b) has become or becomes publicly known or
available other than through disclosure by either Seller; (c) is or was
rightfully received by Seller from any person or entity unrelated to either
Seller; or (d) is or was independently developed by either Seller.
5.6. Consummation of Closing. Seller shall use reasonable efforts to
fulfill and perform all conditions and obligations on their part to be fulfilled
and performed under this Agreement and to cause all terms and conditions set
forth herein to be fulfilled and cause the transactions contemplated by this
Agreement in connection with the Closing to be fully carried out.
5.7 Notice of Certain Developments. Seller shall give prompt written
notice to Buyer if prior to the Closing Date: (a) Station Assets shall have
suffered damage on account of fire, explosion, or other cause of any nature; (b)
the regular broadcast transmission of the Station in the normal and usual manner
in which it heretofore has been operating is interrupted in any
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material manner for a period of more than ten (10) consecutive days; or (c)
carrying the Station's signal of such market cable system's intention to delete
the Station from carriage or chan Station's channel position on such market
cable system.
5.8. Covenants of Sellers Prior to Closing. Seller covenants and agrees
that until the Closing occurs:
(a) Consents. Seller will use reasonable efforts (without
being required to make any payment not specifically required by the terms of any
licenses, leases, and other contracts) to obtain or cause to be obtained prior
to the Closing Date consents to the assignment to or assumption by Buyer of all
material licenses, leases, and other contracts included in the Station Assets
that require the consent of any third party by reason of the transactions
provided for in this Agreement. If any material necessary consent or approval is
not obtained prior to the Closing Date, then Seller will cooperate with Buyer in
any reasonable arrangement deemed necessary or desirable by Buyer to provide to
Buyer, after the Closing Date, the benefits under such contracts, including
enforcement for the benefit of Buyer of any and all rights of Seller against
third parties.
(b) Consummation of Agreement. Seller shall use their best
efforts to fulfill and perform all conditions and obligations on their part to
be fulfilled and performed under this Agreement and to cause the transactions
contemplated by this Agreement to be fully carried out.
(c ) Updated Information. Seller agrees to provide to Buyer on
or shortly prior to the Closing Date a list of any additional leases or
contracts which would have been required to be listed on Schedule 1.1(d),
1.1(e), 1.1(f), or 3.10.
(d) Hart-Scott-Rodino. As promptly as practicable Seller shall
prepare and file all documents with the Federal Trade Commission and the United
States Department of Justice, as is required to comply with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("Hart-Scott-Rodino Act"),
and shall promptly furnish all materials thereafter requested by any of the
regulatory agencies having jurisdiction over such filings.
(e) Environmental Audit. Upon notification and request by the
Buyer, Seller agrees, as soon as practicable after said notification and request
by Buyer, to grant to Buyer and its Agents access to the Realty, Leasehold
interests, and Real Property Improvements, for the purpose of conducting, at
Buyer's Expense, the Environmental Audits. Any such Environmental Audits shall
be conducted by a reputable environmental investigatory firm of the Buyers
choice.
(f) Application for Commission Consent. As promptly as
practicable after the date of this Agreement and no event later than fifteen
(15) days after the date hereof, Seller will complete Seller's portion of
applications to the FCC requesting its written consent to the assignment of the
FCC Authorizations for the Station to Buyer, and upon receipt of Buyer's
applications pursuant to Article Six, Section 6.4 (c) , Application for
Commission Consent, will promptly file such applications with the FCC jointly
with Buyer. Seller will diligently take or
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cooperate in the taking of all steps that are necessary, proper, or desirable to
expedite the preparation of such applications and its prosecution to a "Final
Grant", as that term is defined in Article II, Section 2.2 Closing. Seller will
promptly provide Buyer with a copy of any pleading, order, or other document
served on it relating to such applications. The Seller shall make timely
application for any renewals or extensions of the FCC Licenses which may be
required by any applicable FCC rules, regulations or procedures.
5.9. Audit of Station. Immediately following the date hereof and within
ninety (90) days thereafter, the Buyer shall conduct an audit (the "Audit") the
financial operations of the Station for the twelve (12) month period beginning
October 1, 1994 and ending September 30, 1995. This Audit will be the basis for
determining the BCF and the Purchase Price. The Seller and the Seller's agents,
servants, and employees will cooperate with the Buyer and the Buyer"s agents,
servants and employees in conducting and completing the Audit within ninety (90)
days from the date hereof. It is anticipated that the Audit will be completed on
or prior to ninety (90) days from the date hereof, and copies of the Audit will
be delivered to the Seller as soon as practical after completion. The Audit will
be conducted by Arthur Andersen L.L.P., the Buyer's independent certified public
accounting firm, and the results thereof, along with the determination of BCF
and the Purchase Price, will be conclusive and binding on both parties hereto.
ARTICLE 6
COVENANTS OF BUYER PENDING THE CLOSING
6.1. Confidential Information. Buyer shall not use for its or any third
party's benefit and shall not disclose to third parties (except as may be
required by law or which is necessary in completing the Audit) any confidential
information (including, without limitation, financial information and
information regarding program contracts and revenue) received from Seller or
their agents in the course of investigating, negotiating, and performing the
transactions contemplated by this Agreement. Nothing shall be deemed to be
confidential information that: (a) is known to Buyer at the time of its
disclosure to it; (b) becomes publicly known or available other than through
disclosure by Buyer; (c) is rightfully received by Buyer from a third party; or
(d) is independently developed by Buyer.
6.2. Consummation of Agreement. Subject to the provisions of Section
11.1 of this Agreement, Buyer shall use its best efforts to fulfill and perform
all conditions and obligations on its part to be fulfilled and performed under
this Agreement and to cause the transactions contemplated by this Agreement to
be fully carried out. Buyer agrees to cooperate with Seller in connection with
obtaining consents to the assignment to or assumption by Buyer of licenses,
leases, and other contracts included in the Station Assets, and to execute such
assumption instruments as may be required in connection with obtaining such
consents.
6. 3. Notice of Proceeding. Buyer will promptly notify seller in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree
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restraining or enjoining the consummation of this Agreement or the transactions
contemplated hereunder, or upon receiving any notice from any governmental
department, court, agency, or commission of its intention to institute an
investigation into or institute a suit or proceeding to restrain or enjoin the
consummation of this Agreement or such transactions, or to nullify or render
ineffective this Agreement or such transactions if consummated.
6.4. Covenants of Buyer Prior to Closing. Buyer covenants and agrees
that until the closing occurs:
(a) Consents for Closing. Buyer will use reasonable efforts
jointly with Seller to obtain or cause to be obtained prior to the Closing Date
all necessary consents relating to the Station Assets for the Closing and to
execute such assumption instruments as may be required in connection with
obtaining any necessary consent, so long as such assumption instruments and/or
agreements do not alter the original terms and conditions of the contracts in
question in any material respect to the detriment of Buyer.
(b) Hart-Scott-Rodino. As promptly as practicable Buyer shall
prepare and file all documents with the Federal Trade Commission and the United
States Department of Justice, as is required to comply with the
Hart-Scott-Rodino, and shall promptly furnish all materials thereafter requested
by any of the regulatory agencies having jurisdiction over such filings.
(c) Application for Commission Consent. As promptly as
practicable after the date of this Agreement and in no event later than fifteen
(15) days from the date hereof, Buyer will complete and give to Seller a fully
executed copy of Buyer's portion of the application to the FCC requesting its
written consent to the assignment of the FCC Authorizations for the station (and
any extension or renewals thereof) to Buyer. Buyer will diligently take or
cooperate in the taking of all steps that are necessary, proper, or desirable to
expedite the preparation of such application and its prosecution to a Final
Grant as that term is defined in Article 2, Section 2.2 Closing. Buyer will
promptly provide Seller with a copy of any pleading, order, or other documents
served on it relating to such application.
6.5. Audit of Station. As soon as practical, but not later than forty
five (45) days after the date hereof , Buyer covenants to cause its accountants,
Arthur Andersen L.L.P., to conduct and complete the Audit at Buyer's expense for
the purposes of preparing audited financial statements of the Seller and the
Station for the purposes of establishing the Station's BCF and the Purchase
Price.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
by this Agreement are, at their option, subject to the fulfillment of the
following conditions prior to or at the Closing Date:
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7.1. Representations Warranties, Covenants.
(a) each of the representations and warranties of Buyer
contained in this Agreement shall have been true and accurate in all material
respects as of the date when made and shall be deemed to be made again on and as
of the Closing Date and shall then be true and accurate in all material respects
except to the extent changes are permitted or contemplated pursuant to this
Agreement;
(b) Buyer shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or complied with by it prior to or at the Closing Date; and
(c) Buyer shall have delivered to Seller a certificate of an
officer of Buyer dated as of the Closing Date certifying to the fulfillment of
the conditions set forth in Sections 7.1(a) and 7.1(b).
7.2. Proceedings.
(a) As of the Closing Date, no action or proceeding shall have
been instituted and be pending before any court or governmental body to restrain
or prohibit, or to obtain substantial damages in respect of, the consummation of
this Agreement that, in the reasonable opinion of Seller, may reasonably be
expected to result in a preliminary or permanent injunction against such
consummation or, if the transactions contemplated hereby were consummated, an
order to nullify or render ineffective this Agreement or such transactions or
the recovery against Seller of substantial damages; and
(b) As of the Closing Date, none of the parties to this
Agreement shall have received written notice from any governmental body of (I)
its intention to institute any action or proceeding to restrain or enjoin or
nullify this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including a routine
civil investigative demand) into the consummation of this Agreement, or (ii)the
actual commencement of such an investigation.
7.3 Opinion of Counsel. Seller shall have received opinions of Buyer's
counsel and Buyer's special FCC counsel, each dated as of the Closing Date, in
the forms attached to this Agreement as Schedule 7.3.
7.4. Hart-Scott-Rodino. The waiting period under the Hart-Scott-Rodino
Act shall have expired, and there shall not be outstanding any order of a court
restraining the transactions contemplated hereby.
7.5. Other Instruments. Buyer shall have delivered to Seller such
instruments, documents, and certificates as are contemplated by Section 2.3(b)
to be delivered on the Closing Date.
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7.6. The Audit. Buyer shall have delivered the Audit to the Seller and
the determination of Seller's BCF for fiscal year ended September 30, 1995 on or
before ninety (90) days from the date hereof.
7.7. Allocations. Buyer shall have entered into an agreement with
Seller as to the allocation of the Purchase Price.
7.8. BCF. The BCF of the Station for the twelve (12) month period
beginning October 1, 1995 and ending September 3, 1995, as calculated pursuant
to Section 2.1(b) hereof, shall be no less than Two Million Three Hundred
Thousand Dollars and No Cents ($2,300,000.00).
7.9. Covenants Not to Compete. The Seller shall have received the
Covenant Not to Compete from Buyer in the form attached as Schedule 8.7 to this
Agreement along with the Covenant Payments.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to the Closing
Date.
8.1. Representations, Warranties, Covenants.
(a) Each of the representations and warranties of Seller
contained in this Agreement shall have been true and accurate in all material
respects as of the date when made and shall be deemed to be made again on and as
of the Closing Date and shall then be true and accurate in all material respects
except to the extent changes are permitted or contemplated pursuant to this
Agreement.
(b) Seller shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or complied with by it prior to or at the Closing Date,
including the delivery to Buyer of the instruments conveying the Station Assets
to Buyer.
(c) Seller shall have delivered to Buyer a certificate of an
officer of Seller dated the Closing Date certifying to the fulfillment of the
conditions set forth in Sections 8.1(a) and 8.1(b).
8.2. Proceedings.
As of the Closing Date, (a) no action or proceeding shall have been
instituted and be pending before any court or governmental body to restrain, or
prohibit or to obtain substantial
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damages in respect of, the consummation of this Agreement that, in the
reasonable opinion of Buyer, may reasonably be expected to result in a
preliminary or permanent injunction against such consummation or, if the
transactions contemplated hereby were consummated, an order to nullify or render
ineffective this Agreement or such transactions or the recovery against Seller
of substantial damages; and (b) none of the parties to this Agreement shall have
received written notice from any governmental body of (I) its intention to
institute any action or proceeding to restrain or enjoin or nullify this
Agreement or the transactions contemplated hereby, or to commence any
investigation (other than a routine letter of inquiry, including a routine civil
investigative demand) into the consummation of this Agreement, or (ii) the
actual commencement of such an investigation.
8.3 Opinion of Counsel. Buyer shall have received an opinion of
Seller's counsel dated as of the Closing Date in the form attached to this
Agreement as Schedule 8.3(I), and an opinion of Seller's special FCC counsel
dated, as of the Closing Date in substantially the form attached to this
Agreement as Schedule 8.3(ii).
8.4. Hart-Scott-Rodino. The waiting period under the Hart-Scott-Rodino
Act shall have expired, and there shall not be outstanding any order of a court
restraining the transactions contemplated hereby.
8.5. Consents. Sellers shall have obtained prior to the Closing Date
any necessary consents from third parties with respect to Station's network
affiliation in agreements and to the contracts included in the Station Assets as
are listed as "material" on Schedule 8.5 to this Agreement.
8.6. Leases/Subleases. The Buyer shall have received from the Seller,
certain leases (the "Leases" or the "Subleases") for the Realty, Leasehold
Interests and/or Real Property Improvements, fully executed by the Seller which
will enable the Buyer to continue to operate the Station Assets consistent with:
previous operating expenses and practices, (ii) Stations current FCC
Authorizations, and (iii) all FCC Rules, Regulations and Procedures, The
Leases/Subleases to be delivered hereunder and which are contemplated hereby
shall be reasonably acceptable to the Buyer and shall be consistent in all
material terms with the material terms of the existing Leases/Subleases for the
Leasehold Interests and Real Property Improvements.
8.7. Covenant Not to Compete. Buyer shall have received a Covenant Not
to Compete from Seller in the form of Schedule 8.7 to this Agreement.
8.8. Other Instruments. Seller shall have delivered to Buyer such
instruments, documents, and certificates as are contemplated by Section 2.3(a)
and Section 11.14 hereof.
8. 9. Allocations. The Seller shall have entered into an agreement with
the Buyer as to the allocation of the Purchase Price.
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ARTICLE 9
INDEMNIFICATION
9.1. Survival. All statements of any party contained in this Agreement
(including the Schedules hereto) or in any certificate delivered by it pursuant
to this Agreement shall be deemed to be representations and warranties made
pursuant to this Agreement. The representations, warranties, covenants, and
agreements of Seller and Buyer contained in or made pursuant to this Agreement
shall be deemed to have been made as of the date of this Agreement and, to the
extent applicable, on the Closing Date, shall survive the Closing Date, and
shall remain operative and in full force and effect for a period of one (1) year
after the Closing Date regardless of any investigation or statement as to the
results thereof made by or on behalf of any party; provided, however, that: (I)
Buyer's obligation to pay, perform, and discharge the Assumed Liabilities shall
survive until such Assumed Liabilities have been paid, performed, or discharged
in full; (ii) Seller's obligations with respect to all obligations and
liabilities not assumed by Buyer pursuant to this Agreement shall survive until
such obligations and liabilities have been paid, performed, or discharged in
full; (iii) the covenants and agreements contained in this Article 9 shall
continue in full force and effect until fully discharged; (iv) the
representations and warranties contained in Sections 3.4 and 4.4 (Brokers) shall
continue in full force and effect in perpetuity; and (v) any covenants or
agreements contained herein or made pursuant hereto which by their terms are to
be performed after the Closing shall survive until fully performed and
discharged in full.
9.2. Indemnification of Buyer. Seller agrees that, after the Closing,
it shall indemnify and hold Buyer harmless from and against any and all damages,
claims, losses, expenses, costs, obligations, and liabilities including, without
limiting the generality of the foregoing, liabilities for reasonable attorneys'
fees and expenses ("Loss and Expense") suffered directly or indirectly by Buyer
by reason of or arising out of (I) any material breach of a representation or
warranty made by Seller pursuant to this Agreement; (ii) any material failure by
Seller to perform or fulfill any of its covenants or agreements set forth in
this Agreement; (iii) any failure by Seller to pay, perform, or discharge any
liabilities or obligations not specifically assumed by Buyer pursuant to this
Agreement; or (iv) any litigation, proceeding, or claim by any third party
arising from the business or operations of the Station by Seller prior to the
Closing Date, except to the extent arising from obligations or liabilities of or
assumed by Buyer pursuant to this Agreement.
9.3. Indemnification of Seller. Buyer agrees that, after the closing,
it shall indemnify and hold Seller harmless from and against any and all Loss
and Expense suffered directly or indirectly by Seller by reason of or arising
out of (I) any material breach of representation or warranty made by Buyer
pursuant to this Agreement; (ii) any material failure by Buyer to perform or
fulfill any of its covenants or agreements set forth in this Agreement; (iii)
any failure by Buyer to pay, perform, or discharge any Assumed Liabilities or
any other obligations or liabilities of or assumed by Buyer under this
Agreement; or (iv) any litigation, proceeding, or
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claim by any third party arising from the business or operations of the Station
on or after the Closing Date.
9.4. Limitation of Liability. Notwithstanding Sections 9.1, 9.2 and 9.
3 hereof , after the Closing, Seller shall not indemnify or otherwise be liable
to Buyer, and Buyer shall not indemnify or otherwise be liable to Seller unless
the aggregate amount of Buyer's or Seller's, as applicable, Loss and Expense
exceeds Ten Thousand Dollars ($10,000.00), in which event the indemnified party
shall be entitled to recover its aggregate Loss and Expense inclusive of such
Ten Thousand Dollars ($10,000.00) threshold; provided, however, that the
foregoing limitation shall not be applicable to the obligation of Buyer to pay
and discharge any Assumed Liabilities or any other obligations or liabilities of
Buyer under this Agreement or the obligation of Seller to pay and discharge
liabilities to third parties not assumed by Buyer hereunder.
9.5. Bulk Sales Indemnity. Buyer hereby waives compliance with the
provisions of any applicable bulk transfer laws, and Seller covenants to pay and
discharge when due all debts, obligations, and liabilities incurred prior to the
Closing Date relating to the Station and/or the Station Assets except the
Assumed Liabilities and other obligations assumed by Buyer under this Agreement.
Seller further agrees to indemnify and hold Buyer harmless from and indemnify
Buyer against any and all Loss and Expense, including, without limitation, any
claims made by creditors, with respect to non-compliance with any bulk transfer
law, except to the extent that such claims result from the Assumed Liabilities
and other obligations or liabilities to be paid or discharged by Buyer as
provided in this Agreement and/or Buyer's failure to pay the same when due.
9.6. Notice of Claims. If Buyer or Seller believe that it has suffered
or incurred any Loss and Expense, such party shall notify the other promptly in
writing and, in any event, within the applicable time period specified in
Section 9.1, describing such Loss and Expense, the amount thereof, if known, and
the method of computation of such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. If any action at law
or suit in equity is instituted by a third party with respect to which any of
the parties 'intends to claim any liability or expense as Loss and Expense under
this Article 9, such party shall promptly notify the indemnifying party of such
action or suit.
9.7. Defense of Third Party Claims. The indemnifying party under this
Article 9 shall have the right to conduct and control through counsel of its own
choosing any third party claim, action, or suit, but the indemnified party may,
at its election, participate in the defense of any such claim, action, or suit
at its sole cost and expense provided that, if the indemnifying party shall fail
to defend any such claim, action, or suit, then the indemnified party may defend
through counsel of its own choosing such claim, action, or suit, and (so long as
it gives the indemnifying party at least fifteen (15) days' notice of the terms
of the proposed settlement thereof and permits the indemnifying party to then
undertake the defense thereof) settle such claim, action, or suit, and to
recover from the indemnifying party the amount of such settlement or of any
judgment and the costs and expenses of such defense. The indemnifying party
shall
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not compromise or settle any third party claim, action, or suit without the
prior written consent of the indemnified party, which consent will not be
unreasonably withheld or delayed.
ARTICLE 10
POST-CLOSING MATTERS
10.1 Employee Matters. Buyer shall have no obligation to hire or retain
any employees of Seller subsequent to the Closing Date. Buyer does not agree to
pay and/or reimburse Seller for and/or to indemnify Seller from and against any
severance, sick leave, personal days, accrued vacation, or other liabilities
arising out of Seller's termination of the employment of any of its employees in
connection with the sale of the Station to Buyer (including, without limitation,
any liabilities under the so-called WARN Act or any applicable state laws
regarding termination of employees), This Section 10.1 shall operate exclusively
for the benefit of the parties to this Agreement and not for the benefit of any
other person or entity.
10.2. Corporate Name. Promptly after the Closing Date, Seller shall
take such action as is necessary to change or abandon the use of the name of
WYZZ-TV except as may be required by applicable law or regulation.
Notwithstanding anything in this Agreement to the contrary, Seller shall be
entitled to continue to use the name WYZZ-TV in connection with the collection
of any disputed receivables not collected by Buyer as provided herein.
10.3. Receivables. For a period of ninety (90) days after the Closing
Date, Buyer, as agent for Seller, agrees to use reasonable efforts in accordance
with normal business practices (but not including resorting to litigation or
threat thereof) to collect on behalf of Seller all accounts receivable of the
Station accrued through the Closing Date. All payments received from account
debtors shall be applied on a "first in, first out" basis, except to the extent:
(a) any account debtor may have specified otherwise, in which case, the account
debtor's instructions shall govern; or (b) an account is disputed by the account
debtor as properly d
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from account debtors shall be applied on a "first in, first out" basis, except
to the extent: (a) any account debtor may have specified otherwise, in which
case, the account debtor's instructions shall govern; or (b) an account is
disputed by the account debtor as properly due, and the account debtor has so
notified Buyer in writing, in which case, all payments received shall be applied
as provided above, except to the extent of such dispute. Buyer will promptly
give Seller written notice of any such dispute with respect to which Buyer has
received notice from the account debtor. The full amount of all payments
collected by Buyer monthly shall be remitted to Seller within fifteen (15) days
after the end of each calendar month during such ninety (90) day period. So
long as Buyer is in compliance with this Section 10.3 neither Seller, nor its
agents, shall make any direct solicitation of the account debtors for collection
purposes or other direct attempts to collect from account debtors during such
ninety (90) period except as may be agreed to by Buyer, except with respect to
those accounts which may be or become more than ninety (90) days past due, and
except those accounts from which Buyer has received written notice of a dispute
from the account debtor. Immediately following such ninety (90) day period,
Buyer shall furnish Seller with all files concerning any uncollected
receivables, and Buyer shall have no further responsibilities hereunder except
to remit promptly to Seller any amounts subsequently received by it on account
of such receivables.
ARTICLE 11
TERMINATION/MISCELLANEOUS
11.11. Termination of Agreement Prior to the closing Date. This Agrement
may be terminated at any time on or prior to the closing Date as follows:
(a) By Seller:
(1) if any of the conditions provided in Article 7 hereof have
not been met by the time required and have not been waived provided that the
failure to meet such conditions is not due to Seller's breach of the Agreement;
or
(ii) if Buyer fails to deliver any payment as required by
Sections 2. 1 (a) by or at the time such payment is due hereunder.
(b) By Buyer:
(1) if any of the conditions or deliveries provided in Article
8 and required by Section 11. 14 hereof have not been met or delivered by the
time required and have not been waived provided that the failure to meet such
conditions is not due to Buyer's breach o the Agreement; or
(c) By Either Buyer or Seller as Follows:
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(I) by mutual consent of all parties; or
(ii) if the Closing shall not have been completed by the dates set
forth in Article II, Section 2.2.
The parties hereto agree that 'time is of the essence with respect to the
provisions of this Section 11.1.
11.2. Liabilities upon Termination.
---------------------------
(a) Simultaneous with the execution and delivery of this Agreement,
Buyer and Seller are entering into an escrow agreement (the "Escrow Agreement")
with First Mariner Bank, a Maryland banking corporation, as escrow agent (the
"Escrow Agent"), substantially in the form of Schedule 11.2(a) hereto; and in
connection therewith, Buyer is depositing with Escrow Agent the amount of One
Million Dollars $1,000,000.00 (the "Escrow Deposit") by check or by wire
transfer of immediately available funds, and any interest thereon will be held
for the account of Buyer in accordance with the Escrow Agreement. Seller and
Buyer each agree to give notice to the Escrow Agent only in accordance with the
Escrow Agreement and this Section 11.2.
(b) The full amount of the Escrow Deposit shall be payable to Seller
if the Agreement is terminated by Seller pursuant to Article 11, Section 11.1
Termination of Agreement, Subsection (a) By Seller.
(c) The full amount of the Escrow Deposit shall be payable to Buyer
if: (i) the Agreement is terminated by Buyer pursuant to Article 11, Section
11.1 Termination of Agreement, Subsection (b) By Buyer; or (ii) the Agreement is
terminated by either party pursuant to Article 11, Section 11.1 Termination of
Agreement, Subsection (c) By Either Buyer or Seller as Follows.
(d) Seller's sole and exclusive remedy for any termination of this
Agreement or any failure of performance or compliance by Buyer with any covenant
or agreement contained in this Agreement prior to the Closing shall be its right
to receive the Escrow Deposit as provided in this Section 11.2. Buyer's sole and
exclusive remedies for any wrongful failure of performance or compliance by
Seller with any covenant, warranty, or agreement contained in this Agreement
shall be (i) its right to the return of the Escrow Deposit as provided in this
Agreement, and (ii) its right to seek specific enforcement of this Agreement
against Seller subject to FCC approval and other required approvals; provided,
however, Buyer shall not be entitled to specific performance unless it shall
have complied with and shall not be in breach of the terms and conditions of
this Agreement.
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11.3. Expenses. Each party hereto shall bear all of its expenses incurred
in connection with the transactions contemplated by this Agreement, including,
without limitation, accounting and legal fees incurred in connection herewith
provided that Seller and Buyer each shall pay one-half (1/2) of the FCC filing
fees, the Hart-Scott-Rodino Act filing fee, and any sales or transfer taxes
arising from transfer of the Station Assets.
11.4. Assignments. This Agreement shall not be assigned by any party hereto
without the prior written consent of the other party except that Buyer may
assign its rights and interests hereunder to any third party provided that Buyer
gives seller written notice thereof and that such assignment shall not relieve
Buyer of any of its obligations or liabilities hereunder without Seller's
consent. Any attempt to assign this Agreement without the required consent shall
be void. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
11.5. Further Assurances. From time to time prior to, at, and after the
Closing Date, each party hereto will execute all such instruments and take all
such actions as another party being advised by counsel shall reasonably request
in connection with carrying out and effectuating the intent and purpose hereof,
and all transactions and things contemplated by this Agreement, including,
without limitation, the execution and delivery of any and all confirmatory and
other instruments, in addition to those to be delivered on the Closing Date, and
any and all actions which may reasonably be necessary to complete the
transactions contemplated hereby.
11.6. Notices. All notices, demands, and other communications which nay or
are required to be given hereunder or with respect hereto shall be in writing,
shall be delivered personally or sent by nationally recognized overnight
delivery service, charges prepaid, or by registered or certified mail,
retum-receipt requested, and shall be deemed to have been given or made when
personally delivered, the next business day after delivery to such overnight
delivery service, five (5) days after deposited in the mail, first class postage
prepaid, addressed as follows:
(a) If to Seller:
Bloomington Comco, Inc.
2250 Seymour Avenue
Cincinnati, Ohio 45212
Attn: Gerald J. Robinson
With Copy to:
or to such other address as Seller may from time to time designate.
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( b) If to Buyer:
Sinclair Broadcast Group, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attn: Mr. David D. Smith
With Copy to:
Steven A. Thomas, Esquire
Thomas & Libowitz, P.A.
The USF&G Tower
100 Light Street
Suite 1100
Baltimore, Maryland 21202-1053
or to such other address as Buyer may from time to time designate.
11.7. Captions. The captions of Articles and Sections of this Agreement are
for convenience only, and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
11 .8. Law Governing. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND WITHOUT REFERENCE TO ITS
PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO THE EXTENT THAT THE FEDERAL LAW OF THE
UNITED STATES GOVERNS THE TRANSACTIONS CONTEMPLATED HEREBY.
11.9. Consent to Jurisdiction, Etc. IN THE EVENT OF ANY ACTION OR
PROCEEDING WITH RESPECT TO ANY MATTER PERTAINING TO THIS AGREEMENT, THE PARTIES
HERETO HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY, THE PARTIES HERETO HEREBY
IRREVOCABLY CONSENT TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF THE COURTS OF
ILLINOIS LOCATED IN THE CITY OF BLOOMINGTON AND OF ANY FEDERAL COURT LOCATED IN
THE CENTRAL DISTRICT OF ILLINOIS IN CONNECTION WITH ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT THE PARTIES HERETO HEREBY WAIVE
PERSONAL SERVICE OF ANY PROCESS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING
AND AGREE THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL
ADDRESSED TO OR BY PERSONAL DELIVERY TO THE OTHER PARTY AT SUCH OTHER PARTY'S'S
ADDRESS SET FORTH PURSUANT TO PARAGRAPH 11*6 HEREOF* IN THE ALTERNATIVE, IN ITS
DISCRETION, ANY OF THE PARTIES
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HERETO MAY EFFECT SERVICE UPON ANY OTHER PARTY IN ANY OTHER FORM OR MANNER
PERMITTED BY LAW,
11.10. Waiver of Provisions. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation, or warranty of
this Agreement.
11.11. Counterparts. This Agreement may be executed in two (2) or more
counterparts, and all counterparts so executed shall constitute one (1)
agreement binding on all of the parties hereto, notwithstanding that all the
parties are not signatory to the same counterpart.
11.12. Entire Agreement/Amendments. This Agreement (including the Schedules
hereto), constitute the entire Agreement among the parties pertaining to the
subject matter hereof and supersede any and all prior and contemporaneous
agreements, understandings, negotiations, and discussions, whether oral or
written, between them relating to the subject matter hereof. No amendment or
waiver of any provision of this Agreement shall be binding unless executed in
writing by the party to be bound thereby.
11.13. Access to Books and Records. Buyer shall preserve for at least three
(3) years after the Closing Date all books and records included in the Station
Assets. At the request of Seller, Buyer agrees from time to time to give to the
officers, employees, accountants, and counsel of Seller access, upon reasonable
prior notice during normal business hours, to the property, accounts, books,
contracts, records, accounts payable and receivable, records of employees of
Seller and other information concerning the affairs of the Station and to the
employees of Buyer as Seller may reasonably request in connection with any audit
by State of Federal Agencies of the Seller or the Station for any period prior
to the Closing Date and Seller's preparation of tax returns and reports. At the
request of Buyer, Seller agrees from time to time to give the officers,
employees, accountants, and counsel of Buyer access, upon reasonably prior
notice during normal business hours, to the books, records, and files retained
by Seller with respect to the business and operation of the Station by Seller as
Buyer may reasonable request in connection with an audit of the Station. Both
the Buyer and Seller shall be permitted at their own expense to make extracts
from or copies of the foregoing books, records, and files of the other party.
11.14. Delivery of Schedules: This Agreement has been executed by the
parties hereto prior to the attachment of the Schedules to be supplied by
Seller. The Seller has agreed that all Schedules shall be completed within
forty-five (45) days from this same date and shall be
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supplied by Seller to Buyer within Sixty (60) days of this same date, at which
time all Schedules shall be attached hereto and shall be a part hereof. If the
Schedules have not been completed and delivered in accordance with this Section
11,14, the Seller shall have breached its obligations hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
WITNESS/ATTEST: SELLER
BLOOMINGTON COMCO, INC.
---------------------------------- By:_________________________(SEAL)
BUYER:
WYZZ, INC.
---------------------------------- By:_________________________(SEAL)
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