1
EXHIBIT 10.172
================================================================================
OPTION AGREEMENT
BY AND BETWEEN
XXXXXX COMMUNICATIONS OF
HONOLULU-66, INC.
AND
DOVE BROADCASTING COMPANY OF HAWAII, INC.
FOR
TELEVISION STATION KAPA(TV)
KANEOHE, HAWAII
* * *
MAY 20, 1997
================================================================================
2
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of
May 20, 1997 by and between XXXXXX COMMUNICATIONS OF HONOLULU-66, INC., a
Florida corporation ("Xxxxxx"), and DOVE BROADCASTING COMPANY OF HAWAII, INC., a
Hawaii corporation ("Grantor").
R E C I T A L S
A. Grantor owns or leases all of the assets (the "Assets") that are
used or useful in the business and operations of Television Station KAPA(TV),
Channel 66, Kaneohe, Hawaii (the "Station"), and holds as part of the Assets the
authorizations issued by the Federal Communications Commission ("FCC") for the
Station (the "FCC Licenses").
B. Grantor desires to grant to Xxxxxx an exclusive and irrevocable
option to purchase the Assets, including the FCC Licenses, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Grant of Option. In consideration for One Thousand Dollars
($1,000) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Grantor hereby grants to Xxxxxx an exclusive
and irrevocable option to acquire the Assets, including the FCC Licenses (the
"Option") for a purchase price as set forth in Schedule A thereto and payable
upon the closing of the Asset Purchase Agreement (as defined in Section 3
below); provided, however, that in the event that the Fair Market Value of the
Assets, as determined by utilizing the provisions set forth in Schedule A
thereto is less than $5,000,000, the Option shall not be exercised by Xxxxxx and
Grantor shall be under no obligation hereunder.
2. Effective Date and Notice of Exercise. This Option Agreement
shall become effective upon execution by Xxxxxx and Grantor and may be exercised
by Xxxxxx by delivery to Grantor of written notice of Xxxxxx'x intention to
exercise the Option (the "Option Notice"); which Option Notice may be given by
Xxxxxx at any time during the ninety (90) day period following commencement of
the Station's programming pursuant to program test authority ("Option Period");
provided, however, that in the event the Option cannot be exercised by Xxxxxx
during the Option Period for the reason set forth in Section 2 hereof, an
additional 270 days shall be added to the Option Period.
3
3. Asset Purchase Agreement. Within five (5) business days following
Grantor's receipt of the Option Notice, Grantor and Xxxxxx shall enter into the
Asset Purchase Agreement in the form of Schedule B hereto (the "Asset Purchase
Agreement"), it being understood that the only changes to such form shall be
immaterial corrections and changes, if any, in the information contained in the
Schedules thereto and the addition of Schedules not attached to the Asset
Purchase Agreement at the execution of this Option Agreement to the extent such
changes and information or the addition of Schedules is reasonably required to
reflect events occurring after the date hereof; provided, however, Xxxxxx shall
not be required to enter into the Asset Purchase Agreement if the changes to the
Schedules or the addition of Schedules represent a material adverse change from
the Asset Purchase Agreement and Schedules attached hereto. In the event Xxxxxx
concludes such changes or such additional Schedules represent a material adverse
change, Xxxxxx shall notify Grantor in writing that the changes or additions to
the Asset Purchase Agreement attached hereto are unacceptable whereupon this
Option Agreement shall terminate and be of no further force and effect. In the
absence of such written notice by Xxxxxx to Grantor, the parties shall enter
into the Asset Purchase Agreement and thereafter Grantor and Xxxxxx shall
perform their respective obligations under the Asset Purchase Agreement,
including, without limitation, filing and prosecuting an appropriate application
for FCC consent to the assignment of the FCC Licenses from Grantor to Xxxxxx
(the "FCC Consent").
4. Survival of Option. In the event that the transactions
contemplated by this Option Agreement are not consummated for any reason
whatsoever, the Option shall nevertheless remain exercisable by Xxxxxx during
the period provided for in Section 2 hereof, and, upon such exercise, Xxxxxx and
Grantor shall enter into an Asset Purchase Agreement that is substantially
identical to the Asset Purchase Agreement and thereafter diligently proceed to
perform their obligations thereunder.
5. Control of the Station. Prior to the closing of the transactions
contemplated by the Asset Purchase Agreement, Xxxxxx shall not, directly or
indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station; such operations, including complete
control and supervision of all of the Station programs, employees, and policies,
shall be the sole responsibility of Grantor until the closing of the
transactions contemplated by the Asset Purchase Agreement.
6. Representations and Warranties of Grantor. Grantor represents and
warrants to Xxxxxx as follows:
(a) Grantor is a Hawaii corporation and has full power and
authority to execute and deliver this Option Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Option
Agreement and the consummation of the
- 2 -
4
transactions contemplated hereby by Grantor have been duly and validly
authorized by the Grantor. This Option Agreement has been duly and validly
executed and delivered by Grantor and constitutes a legal, valid and binding
agreement of Grantor enforceable against Grantor in accordance with its terms,
except as such enforceability may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Grantor to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority or any other third party as a
condition to the consummation by Grantor of the transactions contemplated by
this Option Agreement and the Asset Purchase Agreement, and Grantor is required
to make no filing with the FCC except for filing this Option Agreement, the
Asset Purchase Agreement, the application for the FCC Consent, and the filing of
a license application to cover the Station's construction.
(c) Subject to obtaining the FCC Consent, the execution, delivery
and performance of this Option Agreement and the Option Purchase Agreement by
Grantor will not (i) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, agreement, or lease to which Grantor is
a party or by which any of the FCC Licenses or the other Assets are bound, or
(ii) violate any statute, law, rule, regulation, order, writ, injunction or
decree applicable to Grantor, the FCC Licenses or the other Assets.
7. Representations and Warranties of Xxxxxx. Xxxxxx represents and
warrants to Grantor as follows:
(a) Xxxxxx is a Florida corporation and has full corporate power
and authority to execute and deliver this Option Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Option
Agreement and the consummation of the transactions contemplated hereby by Xxxxxx
have been duly and validly authorized by all necessary corporate action on the
part of Xxxxxx. This Option Agreement has been duly and validly executed and
delivered by Xxxxxx and constitutes a legal, valid and binding agreement of
Xxxxxx enforceable against Xxxxxx in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Xxxxxx to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority or any other third party as a
condition to the consummation by Xxxxxx
- 3 -
5
of the transactions contemplated by this Option Agreement and the Asset Purchase
Agreement, and, Xxxxxx is required to make no filing with the FCC except for
filing the application for the FCC Consent and notice of consummation of the
assignment of license when that takes place.
(c) Subject to obtaining the FCC Consent, the execution, delivery
and performance of this Option Agreement and the Option Purchase Agreement by
Xxxxxx will not (i) conflict with Xxxxxx'x organizational documents, (ii) result
in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, agreement, or lease to which Xxxxxx is a party or by which any
of its assets are bound, or (iii) violate any statute, law, rule, regulation,
order, writ, injunction or decree applicable to Xxxxxx.
8. Covenants of Grantor. So long as this Agreement is in effect,
Grantor covenants that it will not, without the Buyer's prior written approval:
(a) Create or incur, assume or suffer to exist any indebtedness,
obligation or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, except for: (i)
indebtedness evidenced by the Loan Agreement of May 20, 1997; and (ii)
indebtedness (other than for borrowed money) incurred in the ordinary course of
business not to exceed Twenty Five Thousand Dollars ($25,000.00) in the
aggregate at any one time.
(b) Create, assume or suffer to exist, directly or indirectly,
any security interest, mortgage, deed of trust, pledge, lien, charge or other
encumbrance, of any nature whatsoever upon any of its properties or assets, now
owned or hereafter as acquired, excluding, however, from the operation of this
covenant:
(i) any security interest or lien created pursuant to the
Loan Agreement ("Loan Agreement") dated as of May 20, 1997 between Grantor and
Xxxxxx;
(ii) liens for taxes or assessments either not delinquent
or the validity of which are being contested in good faith by appropriate legal
or administrative proceedings and as to which adequate reserves shall have been
set aside on its books, in conformity with generally accepted accounting
principles;
(iii) materialmen's, mechanics', carriers', workmen's,
repairmen's, warehousemen's or other like liens arising in the ordinary course
of business and either not yet due and payable or being contested in good faith
by appropriate legal proceedings and as
- 4 -
6
to which adequate reserves shall have been set aside on its books, in conformity
with generally accepted accounting principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
(v) any judgment lien, unless the judgment it secures shall
not, within thirty (30) days after the entry thereof, have been discharged,
vacated, reversed, or execution thereof stayed pending appeal, or shall not have
been discharged, vacated or reversed within thirty (30) days after the
expiration of any such stay.
(c) Sell, transfer, lease or otherwise dispose of any of its
material assets except in connection with the acquisition of replacement
property of equivalent kind and value.
(d) Enter into any consolidation or merger with, or into any
acquisition of all or substantially all of the properties or assets of any
person or entity.
(e) Change, in any material respect, the nature or character of
its business as intended, or engage in any activity not reasonably related to
such business.
(f) Enter into any contract or commitment relating to its stock
or assets except for contracts involving aggregate payments of less than
Twenty-five Thousand Dollars ($25,000.00) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness).
(g) Transfer or grant any right under, or enter into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service xxxx, trade name, franchise, or similar right, or
modify any existing right relating to the Grantor.
(h) Enter into any agreement or grant any person or entity a
right to purchase the Station's FCC licenses or all or substantially all of the
assets of the Grantor.
(i) Enter into any agreement or take any other action that would
interfere with, or prevent, Grantor's transferring the Assets to Buyer as
contemplated hereunder or under the Purchase Agreement.
- 5 -
7
(j) Grantor will notify Buyer promptly of the threat of, or
commencement against itself or its shareholder of any claim, suit, action,
arbitration, legal, administrative or other proceeding, or governmental
investigation or tax audit affecting the Station or Grantor and will cooperate
fully with Buyer in taking any and all actions necessary or desirable to the
consummation of the transactions contemplated by this Agreement.
9. Cooperation. Grantor and Xxxxxx shall cooperate fully with
each other and their respective counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Option Agreement and the Asset Purchase Agreement and will each use their
respective best efforts to perform or fulfill all conditions and obligations to
be performed or fulfilled by them under this Option Agreement and the Asset
Purchase Agreement so that the transactions contemplated hereby shall be
consummated.
10. Specific Performance. The parties recognize that if Grantor
breaches this Option Agreement and refuses to perform under the provisions of
this Option Agreement, monetary damages alone would not be adequate to
compensate Xxxxxx for its injury. Xxxxxx shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Option Agreement. If any
action is brought by Xxxxxx to enforce this Option Agreement, Grantor shall
waive the defense that there is an adequate remedy at law.
11. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Option Agreement shall be (a)
in writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed to
have been given on the date of personal delivery or the date set forth in the
records of the delivery service or on the return receipt, and (d) addressed as
follows:
If to Grantor: Xx. Xxxx Xxxxxxxx
Dove Broadcasting Company of Hawaii, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
With a copy (which shall
not constitute notice to): Xxxxx X. Xxxx, Esquire
Xxxxxxx & Xxxx, Chartered
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
- 6 -
8
If to Xxxxxx: Xxxxxx Communications of Honolulu-66, Inc.
000 Xxxxxxxxxx Xxxx Xxxxx
X. Xxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxx
With a copy (which shall
not constitute notice to): Xxxx X. Xxxxx, Xx., Esq.
Dow, Xxxxxx & Xxxxxxxxx
A Professional Limited Liability Company
Xxxxx 000
0000 Xxx Xxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, X.X. 00000
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.
12. Entire Agreement; Amendment. This Option Agreement and the
Asset Purchase Agreement supersede all prior agreements and understandings of
the parties, oral and written, with respect to its subject matter. This Option
Agreement and the Asset Purchase Agreement may be modified only by an agreement
in writing executed by all of the parties hereto. No waiver of compliance with
any provision of this Option Agreement or the Asset Purchase Agreement will be
effective unless evidenced by an instrument evidenced in writing and signed by
the parties hereto.
13. Further Assurances. From time to time after the date of
execution hereof, the parties shall take such further action and execute such
further documents, assurances and certificates as either party reasonably may
request of the other to effectuate the purposes of this Option Agreement.
14. Counterparts. This Option Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have delivered to it this Option
Agreement duly executed by the other parties hereto.
- 7 -
9
15. Headings. The headings in this Option Agreement are for the
sole purpose of convenience of reference and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Option Agreement.
16. Governing Law. This Option Agreement shall be construed under
and in accordance with the laws of the State of Florida without giving effect to
the principles of conflicts of law.
17. Benefit and Binding Effect; Assignability. This Option
Agreement shall inure to the benefit of and be binding upon Grantor, Xxxxxx and
their respective successors and permitted assigns. No party hereto may assign
this Option Agreement without the prior written consent of the other parties
hereto, except that Xxxxxx at any time prior to the consummation of the
transactions contemplated by this Option Agreement may assign its rights and
obligations under this Option Agreement without Grantor's consent to (a) any
entity controlled by or under common control with Xxxxxx or (b) any other entity
designated by Xxxxxx, which is reasonably acceptable to Grantor based upon its
financial capacity to consummate the transactions contemplated by this Option
Agreement and the Asset Purchase Agreement and its legal qualifications to
acquire the FCC licenses. Upon any permitted assignment by a party in accordance
with this Section 17, all references to "Xxxxxx" herein shall be deemed to be
references to Xxxxxx'x assignee and all references to "Grantor" herein shall be
deemed to be references to Grantor's assignee, as the case may be.
Notwithstanding the foregoing, Xxxxxx may assign its rights, benefits, duties or
obligations hereunder to its lenders as collateral security for the obligations
of Xxxxxx to such lenders.
18. Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Option Agreement, and except as and to the
extent required by law, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Option Agreement. If this Option Agreement is terminated, each party
will return to the other party all information obtained by the such party from
the other party in connection with the transactions contemplated by this Option
Agreement.
19. Press Release. No party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Option Agreement or the transactions contemplated hereby without
the prior written consent of the other party.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 8 -
10
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.
XXXXXX COMMUNICATIONS OF
HONOLULU-66, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
DOVE BROADCASTING COMPANY OF
HAWAII, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
11
SCHEDULE A
PURCHASE PRICE
The Purchase Price for the Assets shall be the lesser of (i) the Fair
Market Value of the Assets as determined utilizing the procedures set forth
below and (ii) $5,000,000. The purchase price shall be paid at the Closing by
Buyer to Seller by wire transfer of immediately available federal funds or other
means mutually satisfactory to Buyer and Seller in accordance with written
instructions provided by Seller to the Buyer prior to the Closing Date.
The Fair Market Value of the Assets shall be determined by an
appraisal, in accordance with the following provisions:
(1) The Fair Market Value of the Assets shall be equal to the
appraised value of the Assets as of the date of the Option Notice, exclusive of
any broker's fee, less the amount of any outstanding debt of the Station.
(2) The appraisal will be conducted in conformity with
standard appraisal techniques in use at the time of the appraisal, applying the
market and economic factors then relevant.
(3) The appraisal will be conducted by a qualified appraiser
with experience in the television broadcast industry to be agreed upon by Seller
and Buyer within five days written notice from Buyer to Seller; provided that,
if the parties fail to agree on an appraiser, any party may apply to the
American Arbitration Association for the appointment of an appraiser, who shall
be a qualified appraiser with experience in the television broadcasting
industry.
(4) The value of the Assets arrived at by the appraiser shall,
absent manifest error, be conclusive and binding on the relevant parties.
12
SCHEDULE B
ASSET PURCHASE AGREEMENT
