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EXHIBIT 10.85
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EXHIBIT 10.85
THE CHRISTIAN NETWORK, INC.
00000 00xx Xxxxxx, Xxxxx
Xxxxxxxxxx, XX 00000
September 22, 0000
Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxxxx Family Broadcasting, Inc.
X.X. Xxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Dear Xx. Xxxxxx:
The Christian Network, Inc., or its assigns (the "Buyer"), hereby proposes to
enter into a Stock Purchase and Option Agreement with Western Michigan Family
Broadcasting, Inc. and Xxxxxxx X. Xxxxxx (collectively the "Seller") to
initially purchase Forty-Nine (49%) of the Seller's issued and outstanding
common voting stock (the "49% Stock"). Seller has been issued a Construction
Permit ("CP") by the Federal Communications Commission ("FCC") to construct
Television Station WJUE-TV, Battle Creek, Michigan (the "Station"). Following
the purchase of the 49% Stock, Buyer will construct the Station using its own
funds while retaining title to the assets so purchased or otherwise contributed
to the Station's construction. Once the Station has been constructed and
begins operation under Program Test Authority ("PTA") from the FCC, Buyer shall
have an exclusive Option to purchase the remaining Twenty-One (21%) percent of
the Seller's issued and outstanding common voting stock (the "21% Stock").
Additionally, Buyer proposes to create and deliver, at its expense,
programming, including commercial announcements, for the Station following its
construction and commencement of PTA operations for up to one hundred sixty-two
(162) hours per week (the "Time Brokerage Agreement").
TIME BROKERAGE AGREEMENT. The Time Brokerage Agreement shall be executed
simultaneously with the Stock Purchase and Option Agreement (the "Operating
Agreements") and shall provide as follows:
1. Buyer shall pay Seller upon the commencement of the Time Brokerage
Agreement (i.e. PTA commencement), the sum of Four Thousand
Eighty-Five Dollars ($4,085.00) and the same amount each month
thereafter in advance as consideration for air time made available on
the Station.
2. The Time Brokerage Agreement will be executed simultaneously with the
Stock Purchase and Option Agreement and will commence on the day the
Station's PTA begins for an initial term of twelve (12) months.
Thereafter, the term may be extended for the period of time it takes
to Close Buyer's purchase of the 21% Stock.
3. Buyer will have the right to produce its programming (including
commercial announcements and related production activities) from
Buyer's studio and production facilities.
4. In addition to the monthly payments listed above, Buyer shall
reimburse Seller for all expenses of the Station's operation during
the Time Brokerage Agreement. Buyer shall reimburse
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Seller within five (5) business days after receipt of Seller's paid
expense invoices.
5. Consistent with regulations of the FCC, Seller shall elect to be
carried on a "must-carry" basis sixty (60) days prior to commencing
program tests and shall notify cable operators within the Station's
ADI of this election.
STOCK PURCHASE AND OPTION AGREEMENT. Simultaneously with the execution of the
Time Brokerage Agreement, the parties shall execute the Stock Purchase and
Option Agreement which Agreement shall be subject to the following terms and
conditions:
1. Upon the execution of the Stock Purchase and Option Agreement, Buyer
shall purchase the 49% Stock for the purchase price of Two Hundred
Ninety-Four Thousand Dollars ($294,000.00) paid in cash. Seller
acknowledges that said sum represents 49% of the necessary expenses
incurred in connection with the prosecution of the CP before the FCC.
At the same time, Buyer shall loan Xx. Xxxxxx $306,000.00 upon
commercially reasonable terms for twenty-four months at the prime rate
of interest charged by The Bank of New York (the "Loan").
2. Upon the issuance of the 49% Stock to Buyer, and Seller's execution of
an assignable transmitter site lease acceptable to Buyer, Buyer shall
begin to purchase all necessary assets to construct the Station with
Buyer retaining title to all such purchased assets. Once PTA has
begun, Buyer shall forgive all principal and interest payments due
under the Loan and such forgiveness shall represent consideration for
the Option summarized below.
3. Buyer shall have the exclusive Option to purchase the 21% Stock to be
exercised at any time during the ninety (90) day period beginning on
the day after the first anniversary of PTA, or such earlier time if no
one year holding period is required by the FCC. At the closing (the
"Closing") on the 21% Stock, to be held on a date set by Buyer, which
shall be within ten (10) business days after the consent of the FCC to
the transfer of control of Seller to Buyer has become a final order no
longer subject to judicial or administrative review (subject to waiver
of such final order requirement in the sole discretion of Buyer),
Seller will cause the 21% Stock to be transferred to Buyer in
accordance with the provisions of the Stock Purchase and Option
Agreement as described in Paragraph 4 below.
4. The Stock Purchase and Option Agreement shall, among other terms
customary in transactions of this nature, include the following terms:
(a) The purchase price for the 21% Stock shall be TWO HUNDRED
SEVENTY THOUSAND DOLLARS ($270,000.00) in cash at Closing.
(b) The obligations of the parties to consummate the proposed
transfer of control of Seller shall be subject to receipt of
any required consents or authorizations and other conditions
usual and customary in transactions of this nature.
(c) Representations, warranties and covenants shall be set forth
relating to the 21% Stock
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that are usual and customary in transactions of this nature
and which shall survive the Closing for eighteen (18) months.
Each Seller shall represent and warrant that Buyer is the
owner of 70% of issued and outstanding common voting stock of
Western Michigan Family Broadcasting, Inc. and that Xxxxxxx X.
Xxxxxx owns the remaining 30%.
(d) Buyer and Seller shall enter into a Shareholders Agreement at
Closing that will contain customary language for transactions
of this nature including, without limitation, an agreement to
agree on all major corporate decisions such as capital
expenditures, budgets, etc. and a right of first refusal for
each party.
(e) Seller acknowledges that Buyer has a business relationship
with Xxxxxx Communications Corporation ("Xxxxxx") and that
Xxxxxx will participate with Buyer in program production under
the Time Brokerage Agreement with Buyer retaining program time
between 10 pm and 7 am, Monday through Friday and Xxxxxx
programming the remaining time.
5. The parties shall in good faith endeavor to prepare and negotiate the
Operating Agreements acceptable to each party in its discretion, as
soon as possible but no later than October 25, 1995. If these
Operating Agreements are not executed by October 25, 1995, then the
terms of this Letter of Intent shall expire without any liability to
either Seller or Buyer.
6. From the date of its execution of this letter until the sooner of (I)
the execution of the Operating Agreements or (ii) the termination of
the obligations of the parties hereunder, Seller shall not seek,
transfer, convey or otherwise dispose of, with or without
consideration, the CP or any Assets used or useful in or relating to
the Station other than in the ordinary course of business.
7. Buyer shall be afforded, from and after the date hereof, reasonable
opportunity to inspect the Station and the books and records of the
Seller. Until such a time as the Operating Agreements may be executed
which shall supersede this Letter of Intent, this proposal is
contingent upon and subject to proper confirmation and verification by
Buyer of the financial and other information made available to Buyer
by the Seller, review of the Seller's corporate records and proposed
operation of the Station and its technical facilities as may be
requested by Buyer, all to the satisfaction of Buyer in its sole
discretion.
8. Buyer and Seller each agree that it will use its best efforts to keep
confidential (except for such disclosure to attorneys, bankers,
underwriters investors, etc. as may be appropriate in the furtherance
of this transaction) all information of a confidential nature obtained
by it from the other (including the terms of this proposal and the
identity of Buyer) in connection with the transactions contemplated by
this Letter of Intent, and in the event that such transactions are not
consummated, will return to the other all documents and other
materials obtained from the other in connection therewith.
9. Buyer and Seller shall jointly prepare and determine the timing of,
any press release, or other
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announcement to the public following execution of the Operating
Agreements.
10. Seller agrees that until October 25, 1995 or earlier if the parties
mutually determine that they are unable to enter into the Operating
Agreements, it shall not offer or seek to offer, or entertain or
discuss any offer, to sell the Station, or to transfer control of
Seller, nor shall it permit its owners to offer, to seek to offer, or
entertain or discuss any offer to sell, any interest in the Station or
the Seller to third parties.
11. Each party shall hold the other harmless from any liability for a
brokerage commission based upon this transaction and Buyer shall be
responsible for the brokerage Commission due to Communications Equity
Associates.
12. Except for paragraphs 5, 6, 7, 8, 9, 10, and 11 which shall be legally
binding in accordance with their respective terms, neither this letter
nor the acceptance hereof is intended to, and nor shall it create a
binding legal obligation, and the understanding set forth herein is
subject to the execution of the Operating Agreements.
13. Buyer may with the written consent of the Seller which shall not be
unreasonably withheld, assign its rights and obligations under this
letter to another entity, upon which assignment Buyer's rights and
obligations hereunder shall terminate. Such other entity shall be the
signatory to the Operating Agreements.
14. This proposal shall expire at 5:00 P.M., Eastern Standard Time on
September 29, 1995, unless earlier accepted by Seller. Acceptance by
Seller shall be evidenced by the signature of an authorized
representative of Seller and Xx. Xxxxxx on this Letter of Intent
provided to Buyer prior to 5:00 P.M., September 29, 1995.
This letter may be signed in counterparts, all of which taken together shall
constitute one instrument, and any of the parties hereto may execute this
letter by signing any such counterpart. This letter shall become effective
upon execution by all parties hereto. Please indicate your acceptance of the
terms and conditions of this proposal by signing in the space provided below.
The Christian Network, Inc. Western Michigan Family Broadcasting, Inc.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chairman Its: President
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/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
