ASSET PURCHASE AGREEMENT
This
ASSET PURCHASE AGREEMENT (this “
Agreement ”),
made as of this 3
rd day
of April, 2008, is by and between EBC SOUTHWEST FLORIDA, INC., an
Arkansas corporation (“
Seller ”),
LUKEN COMMUNICATIONS, LLC, a Tennessee limited liability company
(“
Buyer ”),
and Henry Luken, an individual, for the limited purpose set forth
under Section 4.8.
PRELIMINARY STATEMENT
Seller
owns and operates the following television broadcast station
(collectively, the “
Stations ”)
pursuant to FCC Licenses issued by the Federal Communications
Commission (the “
FCC ”):
WUVF-CA
(Facility ID No. 71138), licensed to Naples,
Florida;
WLZE-LP
(Facility ID No. 41376), licensed to Fort Myers,
Florida;
WBSP-CA
(Facility ID No. 64580), licensed to Naples,
Florida;
WEVU-CA
(Facility ID No. 64579), licensed to Fort Myers, Florida;
and
WTLE-LP
(Facility ID No. 36967), licensed to Fort Myers,
Florida.
Subject
to the terms and conditions set forth herein, Seller desires
to assign to Buyer, and Buyer desires to acquire from Seller,
all of the assets used or useful in the business and operation
of the Stations on the terms and subject to the conditions set
forth herein.
AGREEMENT
In
consideration of the statements above and the mutual
agreements and covenants contained in this Agreement, the
parties to this Agreement, intending to be bound legally,
hereby agree as follows:
SECTION 1 - DEFINITIONS
1.1
Certain Defined Terms
. The
terms set forth on
Exhibit A hereto,
as used in this Agreement, have the meanings set forth in
Exhibit A .
1.2
Rules of Construction
. A
reference to one gender shall include any other gender. The parties
agree that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement. Except as
specifically otherwise provided in this Agreement, a reference to a
Section, the Schedules or any Exhibit is a reference to a Section
of this Agreement or the Schedules or Exhibits hereto, and the
terms “hereof,” “herein,” and other like
terms refer to this Agreement as a whole, including the Schedules
and Exhibits to this Agreement. All references to
“Dollars” and “$” refer to the currency of
the United States.
1.3
Sections
. The
division of this Agreement into sections and the insertion of
headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
SECTION 2 -
PURCHASE AND SALE
2.1
Purchase and Sale of the Assets
.
Subject
to the terms and conditions set forth in this Agreement, Seller
hereby agrees to transfer, convey, assign and deliver to Buyer on
the Closing Date, and Buyer agrees to acquire, substantially all of
the assets used or useful in the business or operation of the
Stations, but excluding the Excluded Assets (such assets being
conveyed being collectively referred to herein as the
“
Assets ”),
free and clear of any Lien, except for Permitted Liens, including,
without limitation, the following:
(a) the
Tangible Personal Property;
(b) the
Real Property;
(c) the
Assumed Contracts;
(d) the
FCC Licenses;
(e) the
Intangibles;
(f) the
Internet Websites;
(g) the
deposits and prepaid expenses related to the Stations as allocated
in accordance with
Section 2.5(a) ;
(h) the
FCC logs and all records required by the FCC to be kept by the
Stations, all other books and records relating to the Stations,
including, without limitation, executed copies of the Assumed
Contracts and account books;
(i) the
claims and rights against third parties if and to the extent they
relate to or affect the business or operation of the Stations after
the Effective Time, including, without limitation, all rights under
manufacturers' and vendors' warranties relating to the Assets;
and
(j) all
goodwill related thereto.
2.2
Excluded Assets
. The
Assets shall not include the following assets and properties of
Seller (the “
Excluded Assets ”):
(a) cash
and cash equivalents;
(b) Accounts
Receivable;
(c) contracts
of insurance and insurance plans;
(d) Employee
Contracts and other Contracts that are not Assumed Contracts
(collectively, the “
Excluded Contracts ”);
(e) Seller's
corporate records that pertain to internal corporate matters of
Seller;
(f) the
Employee Plans and Employee Benefits; and
(g) the
assets of Seller located at Seller’s or Seller’s
Affiliate’s master control facility located in Little Rock,
Arkansas .
2.3
Assumption of Liabilities and Obligations
.
(a) As
of the Closing Date, Buyer shall assume and undertake to pay,
discharge and perform only the obligations and liabilities of
Seller under the Assumed Contracts and the FCC Licenses that relate
to the period on and after the Effective Time and arise out of
events related to Buyer's ownership of the Assets or Buyer's
operation of the Stations on and after the Effective Time (the
“
Assumed Liabilities ”):
(b) Seller
shall retain all liabilities of Seller not expressly assumed by
Buyer as an Assumed Liability (the “
Retained Liabilities ”).
2.4
Purchase Price. As
consideration for the sale of the Assets pursuant to the terms and
subject to the conditions hereof, at the Closing, Buyer shall pay
to, and for the benefit of Seller, by wire transfer of immediately
available funds to such account for which instructions are
delivered by Seller to Buyer not less than three (3) days prior to
the Closing, a total aggregate amount equal Eight Million Dollars
and No/100s ($8,000,000.00), subject to adjustment pursuant
to
Section 2.5 and
2.6 hereof
(the “
Purchase Price ”).
In
addition, the Purchase Price will be increased and paid by Buyer to
Seller based on the performance and/or future sale of the Stations
as follows:
(a) If,
within the first 12 month period following Closing, Buyer enters
into an agreement to assign the Stations, collectively or
individually, to an unaffiliated third party, fifty percent (50%)
of the proceeds of the purchase price from that transaction that
are of an amount greater than the Purchase Price referenced herein
shall be paid to Seller within three (3) business days after
closing on the future sale.
(b) If,
within the second 12 month period following Closing, Buyer enters
into an agreement to assign the Stations, collectively or
individually, to an unaffiliated third party, twenty five percent
(25%) of the proceeds of the purchase price from that transaction
that are of an amount greater than the Purchase Price referenced
herein shall be paid to Seller within three (3) business days after
closing on the future sale.
2.5
Prorations and Adjustments at Closing
.
(a) All
revenues and all expenses arising from the Assets shall be
allocated between Buyer and Seller in accordance with generally
accepted accounting principles, consistently applied, and to effect
the principle that Seller shall receive all revenues and shall be
responsible for all expenses, costs and liabilities related to the
period prior the Effective Time, or arising out of events related
to Seller's ownership of the Assets or Seller's operation of the
Stations prior the Effective Time, and Buyer shall receive all
revenues and shall be responsible for all expenses, costs and
obligations related to the period on and after the Effective Time
and arising out of events related to Buyer's ownership of the
Assets or Buyer's operation of the Stations on or after the
Effective Time.
(b) Notwithstanding
anything else in this
Section 2.5 to
the contrary, there shall be no prorations or adjustment pursuant
to
Section 2.5(a) for,
and Seller shall remain solely liable with respect to, the Excluded
Assets and Retained Liabilities.
2.6
Post-Closing Adjustment
.
(a) Not
less than ten (10) Business Days prior to the Closing Date, Seller
shall deliver to Buyer its good faith estimate of the prorations
and adjustments to be made with respect to the Purchase Price
calculated in accordance with
Section 2.5 hereof,
including all estimated accrued liabilities and the deposits and
prepaid expenses allocated in accordance with
Section 2.5(a) (the
“
Preliminary Adjustment Statement ”).
Seller shall, upon delivery of such Preliminary Adjustment
Statement, permit Buyer and its representatives reasonable access
to the accounting records and accountant work papers (if any) used
in connection with the preparation of the Preliminary Adjustment
Statement. The Preliminary Adjustment Statement shall be prepared
in accordance with generally accepted accounting principles,
consistently applied.
(b) Within
thirty (30) days after the Closing Date, Seller shall prepare and
deliver to Buyer an itemized list of the final prorations and
adjustments calculated in accordance with
Section 2.5 (the
“
Closing Adjustment Statement ”).
The Closing Adjustment Statement shall include a description of the
net amount payable by Buyer or Seller as an adjustment pursuant
to
Section 2.5 hereof
(the “
Closing Adjustment Amount ”).
The Closing Adjustment Statement shall be prepared in accordance
with generally accepted accounting principles, consistently
applied. Seller shall, upon delivery of such Closing Adjustment
Statement, permit Buyer and its representatives reasonable access
to the accounting records and accountant work papers (if any) used
in connection with the preparation of the Closing Adjustment
Statement.
(c) Within
thirty (30) days after the date the Closing Adjustment Statement is
delivered to Buyer, Buyer shall complete its examination of the
Closing Adjustment Statement and shall deliver to Seller either (i)
the written acknowledgement of its acceptance of the Closing
Adjustment Statement and the Closing Adjustment Amount, or (ii) a
written report setting forth any proposed adjustments to the
Closing Adjustment Statement and the Closing Adjustment Amount (the
“
Adjustment Report ”).
In the event Buyer, within such thirty (30) day period, fails to
deliver an Adjustment Report, the Closing Adjustment Statement
shall be deemed to be correct and the Closing Adjustment Amount to
have been finally determined for purposes of
Section 2.6(e) hereof.
(d) In
the event Seller and Buyer fail to agree on any or all of the
proposed adjustments to the Closing Adjustment Amount contained in
the Adjustment Report within thirty (30) days after Buyer receives
the Adjustment Report, then any party hereto may retain a
nationally-recognized independent certified public accounting firm
as may be mutually agreed upon by the parties of the need for its
services as an independent auditor and not for Seller or Buyer (the
“
Independent Auditor ”).
The Independent Auditor shall be instructed to make the final
determination with respect to the correctness of the Adjustment
Report in accordance with the terms and provisions of this
Agreement within thirty (30) days after the submission thereof. The
decision by the Independent Auditor as to the adjustments that
should be made to the Closing Adjustment Statement (the
“
Final Adjustment ”)
shall be final and binding on Seller and Buyer. Buyer and Seller
shall share equally the costs and expenses of the Independent
Auditor but each party hereto shall bear its own legal and other
expenses, if any.
(e) The
term “
Final Adjustment Statement ”
shall mean the Closing Adjustment Statement delivered by Buyer
pursuant to
Section 2.6(b) ,
as adjusted, if at all, pursuant to this
Section 2.6 ;
the term “
Final Adjustment Amount ”
shall mean the amount determined from the Final Adjustment
Statement; and the date on which the Final Adjustment Statement is
finally determined pursuant to this
Section 2.6(e) shall
hereinafter be referred to as the “
Adjustment Settlement Date .”
The Final Adjustment Amount shall be paid by the party owing the
debt to the party owed the debt within five (5) Business Days after
the Adjustment Settlement Date.
(f) Any
payments required pursuant to
Section 2.6(e) shall
be made by wire transfer of immediately available funds for credit
to the party hereto owed the debt in accordance with wire transfer
instructions provided by such recipient in writing.
(g) If
either Buyer or Seller fails to pay when due any amount under
this
Section 2.6, interest
on such amount will accrue from the date payment was due and be
payable until paid at the per annum rate of the “prime
rate” as published in the Money Rates column of the Eastern
Edition of
The Wall Street Journal (or
the average of such rates if more than one rate is indicated) plus
two percent (2%) and shall be payable upon demand.
2.7
Allocation of Purchase Price
. Seller
shall prepare an allocation of the Purchase Price among the Assets
(the “
Allocation ”),
no later than ten (10) days prior to the Closing Date. The
Allocation shall be subject to Buyer’s consent, which consent
shall not be unreasonably withheld. Seller and Buyer hereby agree
that the Allocation shall be final and conclusive with respect to
the allocation of the Purchase Price among the Assets, and Seller
and Buyer hereby further agree (a) to use the Allocation for all
accounting, financial reporting and Tax purposes; (b) that any Tax
Returns or other Tax information they may file or cause to be filed
with any governmental agency or fiscal intermediary shall be
prepared and filed in a manner consistent with such Allocation; and
(c) in furtherance of the foregoing and to the extent required,
they will each properly and timely file Form 8594 in accordance
with Section 1060 of the Code.
2.8
Transfer Taxes
. All
recordation, transfer, documentary, excise, sales, value added,
use, stamp, conveyance or other similar Taxes, duties or
governmental charges, and all recording or filing fees or similar
costs, imposed or levied by reason of, in connection with or
attributable to this Agreement or the transactions contemplated
hereby but excluding all income taxes and other fees based upon
gain realized by Seller as a result of the sale of the Assets
(collectively, “
Transfer Taxes ”)
shall be borne equally by Buyer on the one hand, and Seller on the
other hand.
SECTION 3 -
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller
hereby represents and warrants to Buyer as
follows:
3.1
Organization, Qualification and Authority
.
Seller
is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Arkansas and duly qualified
to do business and is in good standing as a foreign corporation in
the State of Florida. Seller has the requisite power and authority
to own and operate the Assets, to carry on the business and
operation of the Stations and to execute, deliver and perform this
Agreement and the documents contemplated hereby according to their
respective terms.
3.2
Authorization and Binding Obligation
. The
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, by Seller
have been duly and validly authorized by all necessary action on
the part of Seller. This Agreement has been duly executed and
delivered by Seller and constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with
its terms, except as the enforceability of this Agreement may be
affected by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
3.3
Absence of Conflicting Agreements;
Consents
. Except
as set forth in
Schedule 3.3 ,
subject to the receipt of the FCC Consent, the execution, delivery
and performance by Seller of this Agreement (with or without the
giving of notice, the lapse of time, or both), and the consummation
by Seller of the transactions contemplated hereby: (a) does not
require the consent of any third party; (b) will not conflict with
the Certificate of Incorporation and Bylaws of Seller; (c) will not
conflict in any material respect with, result in a material breach
of or constitute a material default under (i) any Applicable Law of
any Governmental Authority applicable to Seller or (ii) any
Contract; and (d) will not result in the creation of any Lien on
the Assets other than Permitted Liens. Seller is not a party to,
nor is Seller bound by, any agreement or commitment that prohibits
the execution and delivery by Seller of this Agreement or the
consummation of the transactions by Seller contemplated
hereby.
3.4
FCC Licenses
.
(a)
Schedule 3.4 identifies
and includes an accurate and complete list of all FCC Licenses.
Each FCC License is in full force and effect and the Seller is the
authorized legal holder thereof. The FCC Licenses listed on
Schedule 3.4 constitute
all of the licenses and authorizations required under the
Communications Act or the current rules, regulations and policies
of the FCC for the Stations. The conduct of the business and
operation of the Stations is in accordance with the FCC Licenses
and the Communications Act or the current rules, regulations and
policies of the FCC for the Stations.
(b)
Schedule 3.4 sets
forth a true, correct and complete list of any and all material
pending applications filed with the FCC with respect to the
Stations, true, correct and complete copies of which have been
delivered by Seller to Buyer.
(c) There
is not pending or, to Seller's Best Knowledge, threatened
investigation or proceeding by or before the FCC, nor any pending
or, to Seller's Best Knowledge, threatened order to show cause,
notice of violation, notice of apparent liability, notice of
forfeiture or complaint by, before or with the FCC with respect to
Seller or any or all the Stations. There are no facts, conditions
or events relating to Seller or the Stations that would disqualify
Seller under the Communications Act or the existing rules,
regulations and policies of the FCC as assignor of the FCC Licenses
as provided in this Agreement or from obtaining the FCC Consent to
the transactions contemplated herein within the times contemplated
herein.
(d) All
returns, reports and statements that Seller is required to file
with FCC or Federal Aviation Administration have been filed in a
timely manner and such returns, reports and statements are true,
correct and complete.
(e) The
Stations is in compliance with all rules and regulations of the
Federal Aviation Administration. Each Class A Station license held
by Seller is in compliance with the requirements of Section
73.6001(b) of the FCC’s rules.
3.5
Real Property
.
(a)
Schedule 3.5 contains
an accurate and complete list of all Real Property. There is no
owned Real Property used or useful in the operation of the
Stations. Seller has good leasehold title to the leasehold
interests included in the Real Property, free and clear of all
Liens, except Permitted Liens .
The Real Property listed in
Schedule 3.5 includes
all real property used or useful in the business and operation of
the Stations.
(b) There
are (i) no actual, pending or, to Seller's Best Knowledge,
threatened impositions or assessments for public improvements with
respect to any Real Property for which Seller would be liable or
which would be a Lien on the Real Property, other than Permitted
Liens; (ii) no improvements constructed or, to Seller's Best
Knowledge, planned that would be paid for by means of public
assessments upon any Real Property for which Seller would be liable
or which would be a Lien on the Real Property; and (iii) no
completed, pending or, to Seller's Best Knowledge, threatened or
contemplated condemnation proceeding affecting any Real Property or
any part thereof or of any sale or any disposition of any Real
Property or any portion thereof in lieu of
condemnation.
(c) All
buildings, towers, fixtures, fittings, antenna and other
improvements owned or leased by Seller included within the Assets
are in good working order for the purposes for which they are
currently used by Seller (ordinary wear and tear excepted) and are
located on the Real Property.
(d) The
Real Property is accessible directly by a public right of way. The
current use by Seller of the Real Property is in compliance with
applicable zoning and land-use laws.
3.6
Tangible Personal Property
.
Schedule 3.6 lists
all items of Tangible Personal Property included in the Assets.
Seller owns and has good title to the Tangible Personal Property
listed thereon and none of the Tangible Personal Property is
subject to any conditional sale or other title retention agreement
or any Liens, except for Permitted Liens. All items of Tangible
Personal Property are in good operating condition (ordinary wear
and tear excepted). The
Tangible Personal Property included in the Assets includes all
tangible personal property used or useful in the business and
operation of the Stations.
3.7
Assumed Contracts
.
Schedule 3.7 includes
a complete list of all Assumed Contracts. Except as set forth
in
Schedule 3.7 ,
the Assumed Contracts constitute all Contracts used or useful in
the business and operation of the Stations. Seller has delivered or
made available to Buyer true, correct and complete copies of all
written Assumed Contracts listed on
Schedule 3.7 and
accurate descriptions of all oral Assumed Contracts listed
on
Schedule 3.7 .
Seller is not in default under any Assumed Contract (and no event
has occurred that with the giving of notice or passage of time, or
both, would constitute such a default) and, to Seller's Best
Knowledge, no other party to any such Assumed Contract is in
default thereunder (and, to Seller's Best Knowledge, no event has
occurred that with the giving of notice or passage of time, or
both, would constitute such a default). The Assumed Contracts (and
Excluded Contracts) constitute all of the contracts used or useful
in the business and operation of the Stations.
Schedule 3.7 includes
a complete list of all Excluded Contracts. Each
Assumed Contract is legal, valid, binding, enforceable and in full
force and effect.
3.8
Intangibles .
Schedule 3.8 is
a complete list of all of the Intangibles (exclusive of the FCC
Licenses). Seller has provided or made available to Buyer copies of
all documents establishing or evidencing the Intangibles listed
on
Schedule 3.8 .
Seller has not received any notice or demand alleging that Seller
or the Stations is infringing upon any trademarks, trade names,
service marks, service names, copyrights or similar intellectual
property rights owned by any other Person and, to Seller's Best
Knowledge, there is no basis for any such notice or demand.
The
Intangibles include all of the intangibles used or useful in the
business and operation of the Stations.
3.9
Financial Statements .
Attached hereto as
Schedule 3.9 are
true, correct and complete copies of the financial statements of
Seller with respect to its operation at the Stations as at December
31, 2007, the statement of income with respect to its operation at
the Stations as at and for the twelve (12) month period ended
December 31, 2007, and the balance sheet and statement of income
for the two months ended February 29, 2008 (collectively, the
“
Financial Statements ”).
Except as set forth on
Schedule 3.9 ,
the Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, and
present fairly in all material respects the financial condition of
Seller with respect to the Stations as at their respective dates
and the results of operations for the periods then
ended.
3.10
Taxes and Tax Returns .
All Tax Returns have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed and all Taxes shown on such Tax
Returns have been properly accrued or timely paid in full to the
extent such Taxes have become due. There are no Liens on any of the
Assets in connection with any failure (or alleged failure) to pay
any Tax related to the Stations.
3.11
Insurance .
Schedule 3.11 is
a true, correct and complete list of all insurance policies with
respect to the Stations. All policies of insurance listed in
Schedule 3.11 are
in full force and effect.
3.12
Personnel .
The written or oral contract of employment (“
Employee Contracts ”)
with any employee of Seller employed in connection with the
Stations (collectively, the “
Employees ”)
are listed and described in
Schedule 3.12 .
Seller is not a party to or subject to any collective bargaining
agreements with respect to the Stations and no labor union or other
collective bargaining unit represents or, to Seller's Best
Knowledge, claims to represent any of the employees of the
Stations. Except for those Employee Plans described on
Schedule 3.12 ,
Seller maintains no other Employee Plans for the benefit of the
Employees.
Schedule 3.12 includes
a true, correct and complete list of all Employees, and their
compensation (including bonuses) and accrued vacation and sick
days, if any (collectively, the “
Employee Benefits ”).
The
Employee Contracts, Employee Plans and Employee Benefits described
in
Schedule 3.12 are
Excluded Assets and Retained Liabilities.
3.13
Claims and Legal Actions .
There is no claim, legal action, counterclaim, suit, arbitration,
or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending, or to Seller's Best
Knowledge threatened, against Seller, the Assets or the
Stations.
3.14
Compliance with Laws .
Except
as otherwise set forth herein, and to Seller’s Best
Knowledge, Seller
is in compliance in
all material respects with
the FCC Licenses and all Applicable Law with respect to the
Stations.
3.15
Conduct of Business in Ordinary Course
.
Except as set forth on
Schedule 3.15 ,
from February 29, 2008 through the date of this Agreement, to
Seller's Best Knowledge, Seller's operation with respect to the
Stations has been in the ordinary course and Seller has
not:
(a) made
any sale, assignment, lease or other transfer of any of Seller's
properties other than in the normal course of business
with
suitable replacements being obtained therefore ;
(b) incurred
loss of, or injury to, any of the Assets or waived any rights of
material value;
(c) mortgaged,
pledged or subjected to any Lien any of its Assets, other than
Permitted Liens;
(d) made
any change in any method of accounting or accounting
practice;
(e) incurred
any liability except in the ordinary course of business or as
expressly permitted or disclosed elsewhere in this
Agreement;
(f) conducted
business and operation of the Stations in any manner inconsistent
with its past practices;
(g) transferred
to any Affiliate of Seller any right, property or interest which is
necessary or useful in the operation of the Stations;
or
(h) suffered
or incurred any event or circumstance that has had or would be
reasonably expected to result in a Material Adverse Effect on (i)
the ability of Seller to perform its obligations under this
Agreement or (ii) the Stations or the Assets.
3.16
Environmental Matters .
(a) Seller
has delivered to Buyer true, correct and complete copies of all
environmental assessments, reports, studies, and investigations
related to the Real Property that Seller has received or caused to
be conducted.
(b)
(i) To
Seller's Best Knowledge, no Hazardous Substances are located on or
under the Real Property.
(ii) There
are, to Seller's Best Knowledge, no underground storage tanks on
the Real Property and any removal by Seller of any underground
storage tanks which existed on the Real Property was pursuant to
and in compliance with the Applicable Environmental
Laws.
(iii) To
Seller's Best Knowledge, the equipment or improvements on the Real
Property do not contain any asbestos or polychlorinated biphenyls
that would constitute a violation of, or noncompliance with, any
Applicable Environmental Law.
(iv) Seller
is subject to no agreements, consent orders, decrees, judgments,
license or permit conditions or other directives of any
Governmental Authority or Person that are based on or arise out of
Applicable Environmental Laws and relate to the Assets or the
Stations.
(v) Seller
has given to pertinent Governmental Authorities all notices
required pursuant to Applicable Environmental Laws in connection
with the Stations and the Real Property. Seller has not received
any claim, order or notice of violation or noncompliance from, or
been the subject of any regulatory audit or investigation (other
than any periodic investigation or inspection of a routine nature)
by, any Governmental Authority or Person in connection with the
Stations and the Real Property that is based on or arise out of
Applicable Environmental Laws.
(vi) No
consent or approval is needed from any Governmental Authority under
any Applicable Environmental Laws for the transfer of the Assets
from Seller to Buyer. Neither the execution of this Agreement nor
the closing of the transactions contemplated hereby will violate
any Applicable Environmental Laws in any material
respect.
(vii) Seller's
ownership and operation of the Assets has been and is in compliance
with all Applicable Environmental Laws.
3.17
No Broker .
Except for Patrick Communications L.L.C., neither Seller nor any
other Person acting on its behalf has incurred any liability for
any finders' or brokers' fees or commissions in connection with the
transactions contemplated by this Agreement. Seller
shall pay all fees, expenses and commissions of Patrick
Communications L.L.C.
3.18
Transactions with Affiliates .
Except as set forth in
Schedule 3.18 ,
Seller is not a party, directly or indirectly, to any contract,
lease, arrangement or transaction which is material to the
Stations, whether for the purchase, lease or sale of property, for
the rendition of services or otherwise, with any Affiliate of
Seller, or any officer, director, employee, proprietor, partner or
shareholder of Seller and no such Person has any interest in or
right to any of the Assets. The terms and conditions of the
transactions involving Seller and any Affiliate of Seller which are
identified on
Schedule 3.18 are
described briefly therein.
3.19
Good Title Conveyed; Required Consents
.
Subject to the receipt of the FCC Consent and the Required
Consents, Seller has complete and unrestricted power and the
unqualified right to sell, transfer, assign, convey and deliver to
the Buyer, and upon consummation of the transaction contemplated by
this Agreement Buyer will acquire, good title to the Assets, and
good and marketable title to the Real Property, in each case free
and clear of all Liens other than Permitted Liens.
All
Required Consents are listed in
Schedule 3.19 .
Except as noted on
Schedule 3.19, Seller
is and always has been in sole and exclusive possession, and the
sole and exclusive owner of, the Assets, free and clear of any
restrictions on transfer, taxes, Liens, purchase rights, contracts,
commitments, equities, claims, or demands.
3.20
Assets of the Business .
The Assets, together with the Excluded Assets, comprise all of the
assets used and useful in the business and operation of the
Stations.
3.21
No Restrictions .
Other than as listed and described in
Schedule 3.21 ,
there are no Contracts or other arrangements to which Seller is a
party that prohibit or restrict (i) the Stations’ ability to
compete in any business anywhere in any geographic area, (ii) the
customers with which the Stations may do business, or (iii) the
prices the Stations may charge
3.22
Untrue Statements .
No statement by Seller contained in this Agreement (including the
Exhibits and Schedules hereto) and no written statement contained
in any certificates required to be delivered pursuant to or in
connection herewith contains or will contain any untrue statement
of a material fact, or is incomplete in any material
respect.
SECTION 4 -
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer
hereby represents and warrants to Seller as
follows:
4.1
Organization, Standing and Authority
.
Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Tennessee. Buyer is or as of Closing will be duly qualified to
conduct business in each jurisdiction in which such qualification
is necessary for Buyer to own the Assets and operate the Stations
and conduct the business of the Stations. Buyer has the requisite
power and authority to (a) execute, deliver and perform this
Agreement and consummate the transactions contemplated hereby, (b)
own the Assets, subject to obtaining the FCC Consent
,
and (c) hold the FCC Licenses, subject to obtaining the FCC
Consent.
4.2
Authorization and Binding Obligation
.
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Buyer have
been duly and validly authorized by all necessary action on the
part of Buyer. This Agreement has been duly executed and delivered
by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms,
except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of
equitable remedies.
4.3
Absence of Conflicting Agreements and Required
Consents .
Subject
to the receipt of the FCC Consent, the execution, delivery and
performance by Buyer of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the
lapse of time or both): (a) do not require the consent of any other
Person; (b) will not conflict with the Certificate of Incorporation
or the Bylaws of Buyer; and (c) will not conflict in any material
respect with, result in a material breach of or constitute a
material default under any Applicable Law or any material contract
or agreement to which Buyer is a party.
4.4
Buyer Qualifications .
To Buyer's Knowledge, no fact or circumstance exists relating to
the FCC qualifications of Buyer that (a) could reasonably be
expected to prevent or delay the FCC from granting the Assignment
Application or (b) would otherwise disqualify Buyer as the licensee
of the Stations.
4.5
Bankruptcy .
No insolvency proceedings of any character, including bankruptcy,
receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, affecting Buyer are pending
or, to Buyer's Best Knowledge, threatened, and Buyer has not made
any assignment for the benefit of creditors or taken any action in
contemplation of, or which would constitute the basis for, the
institution of such insolvency proceedings.
4.6
No Broker .
Neither Buyer nor any other Person acting on behalf of Buyer has
incurred any liability for any finders' or brokers' fees or
commissions in connection with this Agreement or the transactions
contemplated hereby.
4.7
Untrue Statements .
No statement by Buyer contained in this Agreement and no written
statement contained in any certificates required to be delivered
pursuant to or in connection herewith contains or will contain any
untrue statement of a material fact, or is incomplete in any
material respect.
4.8
Guaranty .
Henry
Luken, by his execution of this Agreement, hereby absolutely and
unconditionally guarantees the full performance by the Buyer of its
obligations concerning payment of the Purchase Price as set forth
under
Section 2.4, herein.
SECTION 5 -
OPERATION OF THE STATION PRIOR TO CLOSING
5.1
Generally .
(a) During
the period commencing on the date hereof and ending on the earlier
of the Closing Date or the Termination Date, Seller shall operate
and control the Stations in all material respects in the ordinary
course of business and refrain from any extraordinary transactions
(except where such conduct would conflict with the other covenants
set forth in this
Section 5.1 or
with Seller's other obligations under this Agreement) in all cases
in accordance with the covenants contained in this
Section 5 .
(b) Seller
shall maintain and repair the Assets, maintain inventory of
supplies, parts and other materials and keep books of account,
records and files, in each case in the ordinary course of business
consistent with past practice.
(c) Seller
shall continue to operate and control the FCC Licenses in
accordance with the terms thereof and in compliance with all
Applicable Law. Seller shall execute and file promptly all
necessary applications for renewal of the FCC Licenses and timely
file with the FCC all required reports and pay all required annual
regulatory fees for the operation of the Stations. Seller will
deliver to Buyer, within ten (10) Business Days after filing,
copies of any reports, applications or responses to the FCC related
to the Stations which are filed prior to the Closing
Date.
(d) Prior
to the Closing Date, except as otherwise permitted by any provision
of this
Section 5 ,
Seller shall not, without the prior written consent of
Buyer:
(i) incur
any receivables relating to the Stations other than in the ordinary
course of the Stations consistent with past practice, including,
without limitation, in respect of the amount and nature of such
receivables;
(ii) apply
to the FCC for or seek to amend any construction permit or other
pending application that would restrict the Stations’
operation or make any material change in the Stations' buildings,
leasehold improvements or fixtures that is not
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