EXHIBIT 1
EXCHANGE AGREEMENT
This Exchange Agreement is entered into as of October 30, 1996, by and
among XXXX X. XXXXXXXXX, as Trustee ("Xxxxxxxxx"); CHANNEL AMERICA BROADCASTING,
INC., formerly EVRO Corporation, a Florida Corporation ("Channel America"); and
HALLMARK PROPERTIES, INC., a Florida corporation ("Hallmark").
WITNESSETH
WHEREAS, Xxxxxxxxx, as Trustee of H.P.I. Qualified S Trust ("Trust") owns
all of the issued and outstanding stock of Hallmark.
WHEREAS, Hallmark's only asset is certain real property located in Pasco
County, Florida and more particularly described on Exhibit A attached hereto
together with all easements, rights of way, privileges, appurtenances and other
rights pertaining thereto (the "Property");
WHEREAS, Channel America would like to acquire an interest in the
Property; and
WHEREAS, Xxxxxxxxx, as Trustee would like to diversify his holdings by
acquiring a stock interest in Channel America, a corporation listed on the
NASDAQ Exchange.
NOW THEREFORE, in consideration of the premises, the sum of One Dollar
($1.00) each to the other in hand paid, the receipt of which is hereby
acknowledged, and terms, conditions, covenants, and agreements hereinafter set
forth, the parties hereto agree as follows:
1. EXCHANGE OF SHARES. At the Closing, Xxxxxxxxx shall deliver to Channel
America a duly issued stock certificate representing all of the issued and
outstanding shares of Hallmark (the "Hallmark Shares"), which certificates shall
be delivered free and clear of all encumbrances, liens, security interests and
restrictions (other than the restrictions imposed by this Agreement and other
than a standard Securities Act legend which will appear on all such
certificates) together with a "Stock Power" which has been signed by Xxxxxxxxx
and on which Xxxxxxxxx'x signature has been witnessed, and in exchange therefor
Channel America shall deliver to Xxxxxxxxx a certificate representing that
number and type of shares of Channel America described in Paragraph 3 below free
and clear of all encumbrances, liens, security interests and restrictions (other
than restrictions imposed by this Agreement and other than a standard Securities
Act Legend).
2. EXCHANGE PRICE. The total value of the Hallmark Shares is Six Hundred
Fifty Thousand Dollars ($650,000.00) subject to adjustment as provided elsewhere
in this Agreement ("Exchange Price").
3. PAYMENT OF EXCHANGE PRICE. The Exchange Price shall be paid by Channel
America issuing to Xxxxxxxxx 2,447,059 shares of Common Stock ("Common Shares")
of Channel America. The number of Common Shares constituting full Exchange Price
was determined in accordance with the following formula based upon a bid price
of 17/32 (.53125):
Exchange Price divided by (current bid price x 50%) = # Common Shares
650,000 divided by (.53125 x 50%) = # Common Shares
650,000 divided by (.265625) = # Common Shares
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2,447,058.80 = # Common Shares
Proof: 2,447,059 x $.53125 = $1,300,000
4. DELIVERY OF COMMON SHARES. At the Closing, Channel America shall
deliver to Xxxxxxxxx duly issued stock certificate(s) representing that number
of Common Shares calculated pursuant to Paragraph 3 above, which certificate(s)
shall be delivered free and clear of all encumbrances, liens, security interests
and restrictions (other than the restrictions imposed by this Agreement and
other than a standard Securities Act legend which will appear on all such
certificates). The Common Shares of Channel America which will be issued to
Xxxxxxxxx, as provided in this Agreement:
(a) have not been registered under the Securities Act of 1933, as
amended ("1933 Act") or under any state securities laws ("Blue Sky Laws");
(b) will be issued by Channel America in reliance upon exemptions from
registration under the 1933 Act and applicable Blue Sky Laws;
(c) may not be resold by the holder thereof unless such shares are
registered under the 1933 Act and any applicable Blue Sky Law unless exemptions
from such registration requirements are available; and
(d) will be represented by a certificate(s) which contains the
following or a similar legend:
The securities represented by this certificate may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration statement
under the Securities Act of 1933 (the "Act"), or pursuant to an exemption from
registration under the Act, the availability of which is to be established to
the satisfaction of the Company.
5. Intentionally omitted.
6. REGISTRATION REQUIREMENTS.
(a) COMMITMENT TO REGISTER WITHIN ONE YEAR. Channel America will:
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(i) upon Xxxxxxxxx'x request, within one year from the date of this Agreement,
at its expense, prepare and file with the Securities and Exchange Commission a
Registration Statement on Form S-1 under the 1933 Act relating to the resale to
the public of the Common Shares held by Xxxxxxxxx; (ii) use its best efforts to
have such Registration Statement become effective as promptly as possible; and
(iii) furnish Xxxxxxxxx with copies of such Registration Statement and any
prospectus forming a part thereof as may be necessary in connection with the
resale or offering to the public of the Common Shares covered thereby.
(b) "PIGGYBACK" REGISTRATION RIGHTS. In addition to the registration
rights provided above, Channel America will advise Xxxxxxxxx, at least ten days
prior to the filing of any Registration Statement for shares of Channel America
of the same class as the Common Shares held by Xxxxxxxxx, and at Xxxxxxxxx'x
request, will include at Channel America's expense in such Registration
Statement, Xxxxxxxxx'x Common Shares; provided, however, in the event that
Xxxxxxxxx shall elect not to include its Common Shares in such Registration
Statement, Channel America will have no further obligation with respect to the
filing of a Registration Statement with respect to the resale and offering to
the public of the Common Shares held by Xxxxxxxxx either pursuant to
subparagraph (a) above or otherwise.
(c) In the event of transfer or sale of Xxxxxxxxx'x Share, Channel
America's duties with regard to registration shall accrue to the transferee.
7. REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND HALLMARK. Xxxxxxxxx
and Hallmark represent and warrant to Channel America that:
(a) TITLE. Hallmark has no assets other than the Property and owns
legal, beneficial, good and marketable title to the Property free and clear of
all liens and encumbrances except for: (i) those liens and encumbrances which
will be removed at Closing; (ii) utility easements and/or rights of way approved
by Channel America and of benefit to the Property; (iii) assignment of eminent
domain proceeds as specifically detailed in Schedule 7(a) and Paragraph 17
below; and (iv) an existing mortgage (the "Existing Mortgage") held by the
Village Bank of FLorida ("Lender") with an approximate outstanding balance of
Seven Hundred Forty-Four Thousand Dollars ($744,000.00). Hallmark will provide
Channel America with copies of those liens and encumbrances to be removed at
Closing, upon Channel America's request.
(b) NO CONTRACT. Hallmark has entered into no contract to sell, assign
or otherwise convey the Property or any portion thereof or interest therein,
except a consent by Hallmark to an Order of Taking pursuant to an eminent domain
proceeding by the Florida Department of Transportation. There are no parties
with any rights of possession in the Property, except as to grantee's of the
aforesaid easements and/or rights of way, and except as to the tenancies as set
forth on Schedule 7(b) attached hereto and made a part hereof. At Channel
America's
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request, Hallmark agrees to furnish an estoppel certificate from each tenant, in
form and content satisfactory to Channel America.
(c) BOARD APPROVAL. The execution and delivery of this Agreement and
the conveyance herein contemplated have been, or as of Closing shall have been,
duly authorized by the Board of Directors of Hallmark.
(d) ORGANIZATION, STANDING AND POWER. Hallmark is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Hallmark has all necessary corporate power and authority to own, use
and transfer its properties and assets and to transact the business as now being
conducted. There is no other jurisdiction in which the character or use of
Hallmark's assets or the nature of the business makes necessary the licensing or
qualification of Hallmark to do business as a foreign corporation. Hallmark has
no subsidiaries.
(e) CAPITAL STRUCTURE. The authorized capital stock of Hallmark
consists of 1,000 shares of Common Stock, 1,000 shares of which are outstanding.
There are no shares of preferred stock issued and outstanding. All shares of
Hallmark's Common Stock now outstanding have been duly authorized and validly
issued and are fully paid and nonassessable. All shares of Hallmark's Common
Stock now outstanding are owned, of record by Xxxxxxxxx, as Trustee, free and
clear of all encumbrances. Except for this Agreement, there are no outstanding
options, warrants, convertible securities or other rights obligating Hallmark or
Xxxxxxxxx to issue, sell or deliver any shares of the capital stock of Hallmark,
or requiring Hallmark's shareholders to grant, extend or enter into any such
commitment.
(f) FINANCIAL STATEMENTS. Except as otherwise disclosed in Schedule
7(h), Schedule 7(f) comprises a true, correct and complete copy of the financial
statements which include the balance sheet of Hallmark as at December 31, 1995
(the "Ending Date") and the related statements of income and changes in
financial condition for the fiscal year then ended. The financial statements are
in accordance with the books of accounts and records of Hallmark. The financial
statements present fairly and with substantial accuracy Hallmark's financial
position as at the dates thereof and the results of Hallmark's operations,
changes in Hallmark's financial position and other information of Hallmark
included therein for the periods or as at the dates therein set forth, with no
material omissions or inaccuracy. The financial statements show all known
material assets and known material liabilities of any kind or nature, direct or
indirect, absolute or contingent, existing as of the dates indicated.
(g) NO UNDISCLOSED LIABILITIES. Except as disclosed in this Agreement,
Schedule 7(g) or in the financial statements, and except for liabilities or
obligations incurred since the Ending Date in the ordinary course of business
Hallmark does not have, nor are any of its assets or properties subject to, any
known material
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debt, liability, obligation or commitment of any kind or nature, whether
indirect, whether accrued, absolute or otherwise. To the best of Xxxxxxxxx'x
knowledge, there are no facts which could serve as the basis for any material
debt, liability, obligation or commitment of Hallmark not so disclosed.
(h) ABSENCE OF CERTAIN CHANGES. Since the Ending Date, there has not
been any material adverse change in the condition (financial or otherwise),
assets, liabilities or business of Hallmark, or any damage, destruction or loss,
whether or not covered by insurance, materially adversely affecting its
properties or the business. Except as set forth on Schedule 7(h) and except for
the transactions contemplated by this Agreement, since the Ending Date, to the
best of Xxxxxxxxx'x knowledge the Company has not:
(i) created, assumed or permitted to exist any lien or encumbrance
on any of its assets except for statutory liens such as for unpaid taxes not yet
owed;
(ii) sold, leased or otherwise transferred any of its assets, or
cancelled any of its rights or claims, other than in the ordinary course of
business for fair and adequate consideration in money or money's worth;
(iii) sold, assigned or transferred any patent, trademark, trade
name, copyright technology or software right or license or other intangible
assets;
(iv) incurred any other liability or obligation other than current
liabilities in an aggregate amount not exceeding $500, other than incurred in
the ordinary course of business;
(v) paid, prepaid or discharged any liability or obligation not in
the ordinary course of business;
(vi) lost, surrendered or had revoked or limited any license,
permit or other right granted by any governmental authority to operate any asset
in the manner in which it was intended to be operated;
(vii) entered into any contract not in the ordinary course of
business, or cancelled, modified adversely, assigned, encumbered or in any way
discharged or terminated (other than by performance) any contract not in the
ordinary course of business;
(viii) received any notice of termination of or default under any
contract;
(ix) allowed to occur or exist any event of default under any
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contract to which it is a party other than as set forth in Schedule 7(h).
(x) other than in the ordinary course of business made any loan or
advance, acquired any accounts receivable or otherwise extended any credit,
except to customers or acquired the securities or obligations of any person;
(xi) made any capital expenditure, or any commitment therefor, in
excess of $1,000;
(xii) made any material change in the rate of compensation payable
or to become payable by Hallmark to any of its officers, employees or agents or
in the formula for determining any such compensation, or entered into or amended
in any material respect any contract providing for compensation or benefits
outside the ordinary course of business, except for withdrawals of cash;
(xiii) made any commitment (through negotiations or otherwise) or
incurred any liability to any labor organization or became aware of any material
threat of strike or other interruption of work arising from labor difficulties;
(xiv) materially reduced or failed to carry insurance in at least
the respective amounts carried on the Ending Date;
(xv) experienced any adverse change in its relationship with any
of its suppliers, distributors, dealers or customers;
(xvi) experienced any other change in the business which could
have a material adverse effect on the ongoing operations or financial condition
of Hallmark; or
(vii) altered or revised any of its accounting principles,
procedures, methods or practices.
(i) COMPLIANCE WITH LAWS. Hallmark is in full compliance in all
material respects with all applicable laws, rules, ordinances, orders and
regulations and there is no basis for any action, suit or proceeding arising out
of or in connection therewith. Hallmark has not received any notice of any
violation of any such law, rule, ordinance, order or regulation, and Hallmark is
not subject to any settlement agreement or consent decree with continuing
obligations or restrictions on Hallmark. Each item comprising Hallmark's assets
and the current uses thereof conform in all material respects to all such laws,
rules, ordinances, orders and regulations, all applicable franchises, permits,
licenses and other documents.
(j) ACCOUNTS RECEIVABLE. All of the accounts receivable (including the
accounts, obligations, contracts and instruments which underlie such accounts
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receivable) reflected in the financial statements set forth in Schedule 7(f),
net of the reserve for doubtful accounts shown thereon, and those accounts
receivable arising subsequent to the Ending Date and prior to the Closing Date
will be good and collectable on the Closing Date at their respective full
amounts, net of reserves excepting returns that occur in the ordinary course of
Hallmark's business consistent with historical practice. To the knowledge of
Xxxxxxxxx, all of such accounts receivable are owned by Hallmark free of all
claims and encumbrances. Since the Ending Date, Hallmark has not modified or
otherwise compromised any accounts receivable, or any indebtedness due
thereunder, or any guarantee or repurchase obligation related thereto, except in
the ordinary course of business in accordance with prior practices.
(k) MATERIAL CONTRACTS. Hallmark has heretofore delivered to Channel
America true, correct and complete copies of all of Hallmark's material,
executed and written contracts listed in Schedule 7(k). Each of the material
contracts listed in Schedule 7(k) is valid and binding, in full force and
effect. There has not been under any such material contract any default by
Hallmark or of any other party thereto, nor any event which, after notice or
lapse of time, or both, would constitute any such default or result in a right
to accelerate against or a loss of rights by Hallmark.
(l) OTHER CONTRACTS. Hallmark is not a party to, or otherwise bound
by, any written material contract or other instrument requiring payments in
excess of $1,000 which cannot be terminated within 60 days. There has not been
any material default by Hallmark, nor any event which, after notice or lapse of
time, or both, would constitute any such material default or result in a right
to accelerate against or a loss of rights by Hallmark, in any obligation to be
performed by Hallmark under any material contract or other material instrument
now in effect relating to the assets or the business, nor has Hallmark waived
any right thereunder.
(m) LEGAL PROCEEDINGS, ETC. Except as disclosed in Schedule 7(h),
there is no legal, equitable, administrative or arbitration action, suit,
proceeding or known investigation pending or threatened against or affecting
Hallmark or any of its assets which, if adversely determined, could adversely
affect the business, the operations or properties, or the condition, financial
or otherwise, of Hallmark, or the ability of Hallmark to consummate the actions
contemplated hereby. There is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against Hallmark and there is no basis for any action,
suit, proceeding or investigation against Hallmark. No such action, suit,
proceeding, known investigation, judgment, decree, injunction, rule or order
arises out of the employment of labor, equal employment opportunity,
occupational health and safety, economic stabilization or environmental
protection. Hallmark is not in default with respect to any order, injunction or
decree of any court or governmental department, commission, board or agency, and
no such order, injunction or decree is now in effect which restrains the
operations or the use of the
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properties of Hallmark.
(n) TAX MATTERS. All returns or reports concerning taxes of any kind
required to be filed by Hallmark and any and all taxes, interest and penalties
which are disclosed by such returns or reports to be due to any taxing authority
or which may be required to be paid to any taxing authority, whether or not
disclosed by such returns or reports, with respect to any period up to the
Closing Date have been duly paid or are set forth on the financial statements.
No such return or report for any period up to and including the Closing Date has
been examined by any taxing authority, nor has Hallmark received any notice of
the intention of any taxing authority to conduct an examination thereof.
(o) INSURANCE. Schedule 7(o) contains a true, correct and complete
description of all material fire, theft, casualty, liability, life,
hospitalization, medical reimbursement and other insurance coverage insuring
Hallmark and its personnel, assets, properties and business operations,
specifying, with respect to each the risk insured against, the limits of
coverage, the deductible amount (if any) and the premium rate. All of such
policies, plans and programs are maintained by Hallmark. The insurance described
in Schedule 7(o) shall remain outstanding and duly in force, and the specific
coverages thereof shall be fully maintained, through and including the Closing
Date.
(p) LABOR RELATIONS AND EMPLOYMENT ISSUES. No material labor dispute,
strike or other work stoppage has occurred and is continuing or has been
threatened. Hallmark has not entered into any collective bargaining agreement
with any employee, union, labor organization or other employee representatives
or group of employees and no such organization or person has made or is making
any attempt to organize or represent employees of Hallmark.
(q) EMPLOYEE BENEFIT PLANS. With the exception of any plan described
in Schedule 7(q), Hallmark does not maintain, administer or contribute to, and
since the date of its incorporation has not maintained, administered or
contributed to, any pension plan, VEBA or any welfare plan, whether insured or
otherwise, or any benefit arrangement.
(r) AFFILIATED TRANSACTIONS. Except as set forth on Schedule 7(r),
Hallmark is not indebted in any amount whatsoever to, nor is there any business
relationship, whether under any contract or otherwise, between Hallmark and, any
person who is an officer, director or shareholder of Hallmark, or any of their
respective spouses, children, or "affiliated persons" as that term is defined
under the Securities and Exchange Act of 1934, other than indebtedness for
salaries or bonuses or employment relationships in the ordinary course of
business, nor is any of such persons indebted to Hallmark in any amount
whatsoever. Except as heretofore disclosed to Channel America in writing, no
officer, director or shareholder of
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Hallmark, nor any spouse, child or affiliated person, has any interest in any
competitor, supplier or customer of Hallmark, except for interests amounting to
less than 5% in any company.
(s) BROKERS AND FINDERS. Neither Hallmark, nor any of its respective
officers, directors, employees or agents has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
(t) FAIR VALUE. The fair market value of Channel America's stock is at
least equal to the fair market value of the Common Stock of Hallmark.
(u) NO CONFLICT. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and the compliance and/or
fulfillment of the terms and provisions hereof, will not violate or conflict
with or, with or without notice or passage of time any provisions of Hallmark's
Certificate of Incorporation, its Bylaws or any Resolution heretofore adopted
and still effective, or result in breach of or constitute a default under the
terms, conditions, or provisions of any agreement or instrument of which
Hallmark or Xxxxxxxxx is a party, or by which the Property is bound, including,
but not limited to, the Existing Mortgage, or any applicable regulation, of any
governmental agency, or judgment, action or decree of any Court having
jurisdiction over Xxxxxxxxx, Hallmark or the Property.
(v) NO MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty made herein, nor any statement or certificate given or to be given to
Channel America pursuant hereto or with respect to the transactions contemplated
hereby, contains or will contain any intentionally untrue statement of material
fact or intentionally omit or will intentionally omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
(w) NO MORTGAGE ACCELERATION/LENDER APPROVAL NOT REQUIRED. The
transfer of the Hallmark Shares will not constitute an event of default under
the Existing Mortgage, or otherwise accelerate repayment of amounts owed under
the Existing Mortgage, and the Lender's consent to the transactions contemplated
herein is not required.
(x) SALE OF STOCK. Xxxxxxxxx has no present intention to dispose of
the Common Shares being acquired hereunder.
(y) SPECIFIC ADDITIONAL REPRESENTATIONS WITH RESPECT TO THE PROPERTY.
(i) The use and occupancy of the Property (and to the best of
Xxxxxxxxx'x and Hallmark's knowledge, that of Hallmark's predecessors) has been
in conformity with applicable law and regulations, Hallmark has not received any
notice
10
of violation of any applicable law, and as of the date of Closing there will be
no conditions or circumstances of the Property that would constitute a violation
of existing laws or regulations.
(ii) The Property is zoned commercial, and Channel America's
planned use, does not violate any applicable deed restrictions affecting the
Property or any other covenants, restrictions or agreements, site plan
approvals, or subdivision regulations applicable to the Property;
(iii) Neither Hallmark or Xxxxxxxxx has any knowledge of any
proposed change in the zoning classification for the Property;
(iv) no notices of violation of any law or municipal ordinances or
of federal, state, county or municipal or other governmental agency regulations,
orders or requirements relating to the Property have been entered or received by
Hallmark, and neither Hallmark or Xxxxxxxxx has any reason to believe that any
such notice may or will be entered;
(v) there is no action or proceeding (zoning or otherwise) or
governmental investigation pending, or, to the knowledge of Xxxxxxxxx or
Hallmark, threatened against or relating to the Property, nor, to the knowledge
of Xxxxxxxxx or Hallmark, is there any basis for such action, except for a
certain eminent domain proceeding by the Florida Department of Transportation,
as referenced in Paragraph 7(a);
(vi) None of the activities of Hallmark, and to the best of
Xxxxxxxxx'x and Hallmark's knowledge none of the activities of any past owner or
past or present operator or tenant of the Property, have resulted in the
generation of any "Hazardous Substances" (Hazardous Substances shall mean any
and all hazardous or toxic materials, substances, pollutants, contaminants and
wastes, including but not limited to all elements and compounds defined as
"Hazardous Substances", "Hazardous Waste", "Hazardous Material", "oil" or
"petroleum products" under any governmental environmental law or regulation) nor
has Hallmark, or to the best of Hallmark's or Xxxxxxxxx'x knowledge has any past
owner, operator or tenant, stored, disposed of or released any Hazardous
Substance on the Property, nor used all or any part of the Property as a
depository for Hazardous Substances, nor do the improvements on the Property
contain asbestos, nor does any equipment contain polychlorinated biphenyls, and
there are not now, nor have there ever been, underground storage tanks on the
Property. Xxxxxxxxx and Hallmark further certify, represent and warrant to
Channel America that neither the Property nor to the best of Xxxxxxxxx'x or
Hallmark's knowledge is any adjacent property listed on the National Priority
List of Suspected Hazardous Waste Sites, nor are they listed on any state report
of inactive hazardous waste sites, and that no event has occurred which, with
the passage of time or the giving of notice or both, would constitute
non-compliance
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with any governmental environmental law or regulation. Hallmark and Xxxxxxxxx
hereby agree to provide Channel America with satisfactory proof of the foregoing
certifications, representations, and warranties, acceptable to Channel America's
and its legal counsel.
(vii) there are no contracts affecting the Property; and no
services, material or work have been supplied by Hallmark's contractors,
subcontractors or material persons with respect to the Property for which
payment has not been made in full. If, subsequent to the Closing Date, any
mechanic's or other lien, charge or order for the payment of money shall be
filed against the Property or against Channel America or Channel America's
assigns, based upon any act or omission, or alleged act or omission before or
after the Closing Date, of Hallmark, its agents, servants or employees, or any
contractor, subcontractor, material person connected with construction or
repairs made to the Property by or on behalf of Hallmark (whether or not such
lien, charge or order shall be valid or enforceable as such), within thirty (30)
days after notice to Hallmark of the filing thereof, Hallmark shall take such
action, by bonding, deposit, payment or otherwise, as will remove or satisfy
such lien of record against the Property.
(z) RELIANCE. The foregoing representations and warranties are made by
Hallmark with the knowledge and expectation that Channel America is placing
complete reliance thereon and all representations and warranties made by
Hallmark shall survive Closing.
8. REPRESENTATIONS AND WARRANTY OF CHANNEL AMERICA. Channel America
represents and warrants to Xxxxxxxxx with respect to the Common Shares of
Channel America being issued that:
(a) BOARD APPROVAL. The execution and delivery of this Agreement and
the issuance of the Common Shares herein contemplated have been, or as of
Closing shall have been, duly authorized by the Board of Directors of Channel
America.
(b) LACK OF SHAREHOLDER APPROVAL. The execution and delivery of this
Agreement and the issuance of the Common Shares herein contemplated do not
require shareholder approval.
(c) NO CONFLICT. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and the compliance and/or
fulfillment of the terms and provisions hereof, will not violate or conflict
with or, with or without notice or passage of time, any provisions of Channel
America's Certificate of Incorporation, its Bylaws or any Resolution heretofore
adopted and still effective,
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or result in breach of or constitute a default under the terms, conditions, or
provisions of any agreement or instrument of which Channel America is a party,
or any applicable regulation of any governmental agency, or judgment, action or
decree of any Court having jurisdiction over Channel America.
(d) NO MATERIAL MISSTATEMENT OR OMISSIONS. No representation or
warranty made herein by Channel America nor any statement or certificate given
or to be given to Xxxxxxxxx pursuant hereto or with respect to the transactions
contemplated hereby, contains or will contain any intentionally untrue statement
of material fact or intentionally omit or will intentionally omit to state a
material fact necessary to make the statements contained herein or therein not
misleading.
9. CONDITIONS PRECEDENT TO CHANNEL AMERICA'S CLOSING HEREUNDER. All
obligations of Channel America under this Agreement are subject to Hallmark and
Xxxxxxxxx having performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by them prior to
Closing.
10. CONDITIONS PRECEDENT TO HALLMARK AND XXXXXXXXX'X CLOSING HEREUNDER.
All obligations of Xxxxxxxxx and Hallmark under this Agreement are subject to
Channel America having performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by it prior to
Closing.
11. SPECIFIC TERMS, COVENANTS AND CONDITIONS WITH RESPECT TO THE PROPERTY.
(a) COVENANTS.
(i) Between the date hereof and the Closing Date, Hallmark will
not enter into any leases of any portion of the Property, nor enter into any
other agreements affecting the Property, in each case without the prior written
consent of Channel America; and
(ii) Hallmark will provide Channel America with the following
documents within thirty (30) days of the date hereof:
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(A) an up-to-date, Abstract of Title to the Property;
(B) a survey (as required by Subparagraph 11(c) below);
(C) an official real property tax search;
(D) copies of the real estate tax bills for the Property for the
current tax year(s);
(E) appropriate bankruptcy federal court searches.
(b) TITLE INSURANCE.
(i) Within thirty (30) days of Hallmark's delivery to Channel
America of the documents required pursuant to Subparagraph 11(a) above, Channel
America shall order a title insurance report for issuance of a fee title
insurance policy from a title company selected by Channel America (the "Title
Company"), at Channel America's sole cost and expense, and within ten (10) days
after receipt of such report, Channel America shall furnish a copy thereof to
Hallmark's attorneys. Upon receipt of the title report, Hallmark shall forthwith
undertake, with due diligence, to eliminate those exceptions which Channel
America is not required to accept under the terms of this Agreement. If Hallmark
is unable to eliminate such exceptions and to provide good and marketable title
in accordance with the terms of this Agreement within the Contingency Period (as
defined in Paragraph 13(a) below), Hallmark shall so notify Channel America and
Channel America may thereafter either (1) rescind this Agreement by notice given
to Xxxxxxxxx and Hallmark, in which event the provisions of Paragraph 14 shall
apply or (2) elect to accept title and a title insurance policy subject to such
exceptions with a refund of a portion of the Exchange Price for any decrease in
market value of the Property as a result of such exceptions.
(ii) Xxxxxxxxx shall eliminate any liens or encumbrances affecting
the Property which may be removed or satisfied by the payment of a liquidated
sum of money, and shall not be deemed unable to provide title in accordance with
the terms of this Agreement if he shall fail or refuse to eliminate any such
liens or encumbrances. Notwithstanding the foregoing, Xxxxxxxxx, in lieu of
satisfying such liens or encumbrances, may deposit with the Title Company such
amount of money as may be determined by the Title Company as being sufficient to
induce it to insure Channel America against collection of such liens and/or
encumbrances, including interest and penalties, out of or against the Property,
in which event such liens and encumbrances shall not be objections to title.
(c) SURVEY. Within thirty (30) days of the date hereof, Hallmark shall
deliver to Channel America its existing 1994 Survey, together with an affidavit
from Xxxxxxxxx, that there have been no changes that would effect a current
survey.
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All recorded easements shall be identified by the applicable recording
information. Except as specifically noted on the survey, there are no
encroachments of lot or building lines or obstructed easements. The Property is
located in any area designated as being within the 100 year flood plan, pursuant
to the Flood Disaster Act of 1973, as amended. Hallmark and Xxxxxxxxx certify
that the flood hazard has been insured by Flood Insurance. The legal description
on the Survey will coincide exactly with that on the title commitment ordered
pursuant to Subparagraph 11(b).
12. CLOSING DATE. For all purposes of this Agreement, the "Closing Date"
shall be on or before the 30th day of October, 1996 at the offices of Channel
America or at such other place as the parties hereto shall mutually agree. At
Closing, the Hallmark Shares shall be exchanged for the Common Shares.
13. ADDITIONAL CONDITIONS SUBSEQUENT TO CLOSING.
(a) The Agreement is contingent upon Channel America's receipt of a
copy of a July 18, 1996 Phase I ASTM E 1528 Environmental Transaction Screening
Report. If the result of the aforementioned report or any phase thereof shall
not be satisfactory to Channel America, in its sole discretion, Channel America,
by written notice to Xxxxxxxxx and Hallmark given within the Contingency Period,
may request a reduction in the Exchange Price in accordance with the provisions
of Paragraph 14 below.
(b) This Agreement is contingent upon Channel America verifying that
water, storm sewer, sanitary sewer, gas, electric and telephone services to the
Property are available in satisfactory condition and in capacities satisfactory
to Channel America for its planned use of the Property. In the event all such
utilities are not available, or are not in satisfactory condition, or the
capacities are not adequate, in Channel America's sole discretion, it, at its
option, by written notice to Xxxxxxxxx and Hallmark given within the Contingency
Period, may request a reduction in the Exchange Price in accordance with the
provisions of Paragraph 14 below.
(c) This Agreement is contingent upon Purchaser's ascertaining that
the current zoning classification of the Property will permit Channel America's
planned use of the Property. Nothing contained in this Subparagraph, however,
shall in any way restrict Channel America's use of the Property once this
exchange is consummated, nor shall it restrict Channel America from changing its
intended use of the Property prior to Closing.
14. REFUND OF EXCHANGE PRICE. In the event any of the contingencies set
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forth in Paragraph 13 have not been satisfied within three (3) months from the
date hereof (the "Contingency Period"); the exceptions to title arising as
described in Paragraph 11 have not been remedied to Channel America's
satisfaction; Xxxxxxxxx or Hallmark has failed to comply with any other term of
this Agreement; or any of the representations or warranties contained in this
Agreement are false or misleading (all of the aforementioned items hereinafter
referred to as "Triggering Events"), then upon receipt of notice, Xxxxxxxxx
shall promptly return to Channel America that number of Common Shares of Channel
America which have an equivalent value to the reduction in value to the Property
caused by the Triggering Event, as determined by mutual agreement of the
parties. For purposes of this paragraph, equivalent value shall be determined
using the same formula used to determine payment of the Exchange Price.
15. APPORTIONMENTS AND CLOSING EXPENSES.
(a) The Exchange Price shall be adjusted by the following, which are
to be apportioned as of the Closing Date as to the Property:
(i) real property taxes;
(ii) water rates and charges; and
(iii) sewer taxes and rents;
(b) The apportionment of taxes shall be made on the basis of the last
ascertainable tax xxxx.
(c) If, on the Closing Date, the Property or any part thereof, shall
be or shall have been affected by assessments which are, or which may become,
payable in annual installments, Xxxxxxxxx shall pay all such installments due
and payable on or before Closing Date and Channel America shall pay all such
installments due and payable after the Closing Date.
(d) Xxxxxxxxx/Hallmark shall take all actions as may be necessary in
order to fully comply with the applicable provisions of the Tax Law of the State
of Florida, and any rules regulations or orders which may be promulgated
thereunder.
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16. ADDITIONAL POST-CLOSING DOCUMENTS. Within thirty (30) days after the
Closing, Xxxxxxxxx, at his sole cost and expense (other than title insurance in
(d) below which shall be paid for by Channel America), shall deliver to Channel
America the documents, instruments, items and payments required by this
Agreement to be delivered by Xxxxxxxxx or Hallmark, including, without
limitation, the following (each document hereafter mentioned to be in form and
substance reasonably satisfactory to Channel America and its legal counsel):
(a) An affidavit with respect to tenancies, certifying that there are
none, except as set forth in Schedule 7(b) hereof.
(b) Tenant estoppel certificate as required in Paragraph 7(b) above.
(c) Any other affidavit required by the Title Company in order to
deliver title insurance coverage to Channel America.
(d) An affidavit with respect to mechanics' liens certifying that
there are no unpaid bills for services rendered or materials furnished to the
Property and an agreement indemnifying Channel America against claims for any
such services or materials.
(e) Certification that the Representations and Warranties set forth in
Paragraph 5 are true and correct as of the date of Closing.
17. CONDEMNATION. Awards received as a result of any eminent domain
condemnation by the Florida Department of Transportation have been previously
assigned to a third party as set forth on Schedule 7(a) and such third party
shall have the right to represent Hallmark in connection with any litigation
proceeding arising out of such eminent domain proceeding.
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18. SELLER COMPLIANCE WITH REAL ESTATE REPORTING REQUIREMENT OF 1986 TAX
REFORM ACT. Xxxxxxxxx agrees to comply with the real estate reporting
requirement, if any, of the Internal Revenue Code of 1986, as amended, and, if
required, to file with the Internal Revenue Service a Form 1099 or such other
form acceptable to the Internal Revenue Service. Xxxxxxxxx shall indemnify,
defend and hold harmless Channel America from and against any and all claims,
liabilities, costs and expenses resulting from failure to comply with said real
estate reporting requirement.
19. INDEMNIFICATION.
(a) XXXXXXXXX'X INDEMNIFICATION. Xxxxxxxxx shall be responsible for,
and hereby indemnifies Channel America and holds it and its agents, successors
and assigns harmless, at all times from and after the Closing Date, from,
against and in respect of:
(i) all material losses, damages and deficiencies resulting from
any breach of any representation or warranty, or any breach or non-fulfillment
of any covenant or agreement of Xxxxxxxxx or Hallmark made in this Agreement;
and
(ii) all material actions, suits, proceedings, claims, demands,
assessments, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including reasonable attorneys' fees and expenses) incident to any of
the foregoing, including actions, suits, proceedings, claims and demands
asserted by Buyer against the Shareholder except for matters which may be
unenforceable by virtue of a complete defense as a result of being time-based.
(b) CHANNEL AMERICA INDEMNIFICATION. Channel America shall be
responsible for, and hereby indemnifies Hallmark and Xxxxxxxxx and holds each of
them and their respective agents, successors and assigns harmless, at all times
from and after the Closing Date, from, against and in respect of:
(i) all losses, damages and deficiencies resulting from any
failure or breach of any representation or warranty, or any breach or
non-fulfillment of any covenant or agreement, of Channel America made in this
Agreement; and
(ii) all actions, suits, proceedings, claims, demands,
assessments, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including reasonable attorneys' fees and expenses) incident to any of
the
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foregoing, including actions, suits, proceedings, claims and demands asserted by
Hallmark or Xxxxxxxxx against Channel America.
(c) PROCEDURES FOR INDEMNIFICATIONS. Whenever a claim shall arise for
indemnification under this Agreement, the party alleging indemnification (the
"Indemnified Party"), shall notify the party from whom indemnification is sought
(the "Indemnifying Party") of such claim and stating in reasonable detail the
nature thereof the facts constituting the basis for such claim. In the event of
any such claim or action by a third party, the Indemnifying Party may assume the
defense thereof; provided however, that no settlement of any such claim or
action shall be made without the prior written consent of the Indemnified Party
(which consent may not be unreasonably withheld). If any Indemnifying Party
assumes the defense of any such claim or action, the Indemnifying Party shall be
entitled to select counsel and take all steps necessary in the settlement or
defense thereof; provided, however, that the Indemnified Party may, at its own
expense, participate in any such action with the counsel of its choice. The
Indemnified Party shall not compromise or settle such claim or action without
the prior written consent of the Indemnifying Party (which consent may not be
unreasonably withheld). If the Indemnifying Party does not assume the defense of
any such claim or action in accordance with the terms hereof, the Indemnified
Party may defend against such claim or action in such manner as it may deem
appropriate, including, but not limited to, settling such claim or action (after
giving notice of the same to an Indemnifying Party) on such terms as the
Indemnified Party may deem appropriate, and the Indemnifying Party will promptly
indemnify the Indemnified Party in accordance with the provisions of this
Paragraph 19.
(d) NOTICE OF CLAIM BETWEEN PARTIES. If any party believes that it has
suffered or incurred any loss, damage or deficiency as referenced above, such
party shall notify the other promptly in writing in accordance with the Notice
provisions set forth in this Agreement, describing such loss, damage or
deficiency, the amount thereof, and the method of computation of such loss,
damage or deficiency, all with reasonable particularity and containing a
reference to the provisions of this Agreement in respect of which such loss,
damage or deficiency shall have occurred.
20. LIABILITY OF XXXX X. XXXXXXXXX AS TRUSTEE. The liability of Xxxxxxxxx
shall be limited to that which would accrue to him in his capacity as trustee
only and he shall be deemed to incur no personal liability in regard to this
transaction.
21. NOTICES. All notices, demands and requests required or permitted to be
given hereunder shall be deemed duly given if mailed by certified or registered
mail,
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postage prepaid, and pending designation of another address, addressed as
follows:
Xxxx X. Xxxxxxxxx
P.O. Box 274147
Xxxxx, Xxxxxxx 00000-0000
Channel America Broadcasting, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxx, Xxxxxxx 00000-0000
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Scolaro, Shulman, Xxxxx,
Xxxxxx & Xxxxxxxx, P.C.
00 Xxxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
22. ADDITIONAL DOCUMENTS. The parties hereto agree that they will at any
time, and from time to time, after the Closing and upon the request of the
other, execute, acknowledge, and deliver or cause to be executed, acknowledged
and delivered further assignments, transfers, conveyances, powers of attorney,
acts, and assurances as may be reasonably required in accordance with this
Agreement to more fully effect the transactions contemplated by this Agreement.
23. SURVIVAL OF WARRANTIES. Each of the covenants, representations and
warranties of each of the parties to this Agreement, as contained herein, shall
be true and correct as of the Closing Date and beyond during the Contingency
Period as though such covenants, representations and warranties were made at and
as of such time, except for changes occurring in the ordinary course of
business. Each of the parties shall on or before the Closing Date perform all of
their undertakings herein in accordance with the terms hereof.
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24. ENTIRE AGREEMENT AND COUNTERPARTS. This Agreement contains the entire
Agreement between the parties, superseding in all respects any and all prior
oral or written agreements or understandings, and shall be amended or modified
only by written instruments signed by both parties hereto. This Agreement may be
executed in counterparts and by facsimile signature, each of which shall be
deemed an original and all of which, taken together, shall constitute one
Agreement.
25. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
26. GOVERNING LAW. This Agreement shall be governed by, construed and
interpreted in accordance with the internal laws of the State of Florida without
regard to the principals of conflicts of law.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals the
day and date first above written.
/s/ XXXX X. XXXXXXXXX
-------------------------------------------
Xxxx X. Xxxxxxxxx, as Trustee
HALLMARK PROPERTIES, INC.
By: /s/ XXXX X. XXXXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxxxx, President
CHANNEL AMERICA BROADCASTING, INC.
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxx, Chief Executive Officer
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EXHIBIT A
DESCRIPTION OF PROPERTY
22
EXHIBIT B
AMENDED CERTIFICATE OF DESIGNATION,
PREFERENCES, RIGHTS AND LIMITATIONS OF
SERIES C CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE OF EVRO CORPORATION
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SCHEDULES
7(a) Assignment of Condemnation Proceeds
7(b) List of Tenancies
7(f) Financial Statements
7(g) Undisclosed Liabilities
7(h) Changes, Defaults, Legal Proceedings
7(k) List of Material Contracts
7(o) Insurance Policies
7(q) Employee Benefit Plans
7(r) Affiliated Loans or Transactions
24
