UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1994
Commission file number 1-5128
Meredith Corporation
(Exact name of registrant as specified in its charter)
Iowa 42-0410230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1716 Locust Street, Des Moines, Iowa 50309-3023
(Address of principal executive offices) (ZIP Code)
515 - 284-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1994
Common Stock, $1 par value 10,145,338
Class B Stock, $1 par value 3,564,186
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Part I. FINANCIAL INFORMATION
Item I. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Assets September 30 June 30
(in thousands) 1994 1994
- ---------------------------------- ------------ --------
Current Assets:
Cash and cash equivalents $ 36,455 $ 37,957
Marketable securities 10,139 12,178
Receivables, net 111,571 75,856
Inventories 33,695 34,962
Supplies and prepayments 19,285 18,509
Subscription acquisition costs 102,283 111,567
Film rental costs 10,228 7,239
-------- --------
Total Current Assets 323,656 298,268
-------- --------
Property, Plant and Equipment (at cost) 235,200 231,158
Less accumulated depreciation (109,538) (106,503)
-------- --------
Net Property, Plant and Equipment 125,662 124,655
-------- --------
Deferred Film Rental Costs 6,397 3,874
Deferred Subscription Acquisition Costs 71,528 70,108
Other Assets 26,904 24,562
Goodwill and Other Intangibles
(at original cost less accumulated amortization) 328,236 343,000
-------- --------
Total Assets $ 882,383 $ 864,467
======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Liabilities and Stockholders' Equity September 30 June 30
(in thousands) 1994 1994
- ------------------------------------ ------------ -------
Current Liabilities:
Current portion of long-term indebtedness $ 8,916 $ 11,178
Current portion of long-term film rental contracts 10,535 6,683
Accounts payable 31,165 35,984
Accrued taxes and expenses, other 62,368 55,022
Unearned subscription revenues 145,884 152,952
Deferred income taxes 18,010 18,560
-------- --------
Total Current Liabilities 276,878 280,379
Long-Term Indebtedness 126,462 126,822
Long-Term Film Rental Contracts 8,150 4,118
Unearned Subscription Revenues 102,341 95,407
Deferred Income Taxes 36,729 37,011
Other Deferred Items 31,322 24,966
-------- --------
Total Liabilities 581,882 568,703
-------- --------
Minority Interests 37,364 38,003
-------- --------
Stockholders' Equity:
Series Preferred Stock, par value $1 per share
Authorized 5,000,000 shares; none issued. -- --
Common Stock, par value $1 per share
Authorized 50,000,000 shares; issued and outstanding
10,123,030 at September 30 and 10,119,165 at
June 30 (net of treasury shares, 5,835,816 at
September 30 and 5,763,328 shares at June 30) 10,123 10,119
Class B Stock, par value $1 per share, convertible
to Common Stock
Authorized, issued and outstanding
3,582,439 shares at September 30 and
3,601,932 at June 30 3,582 3,602
Retained earnings 254,198 246,917
Unearned compensation (4,766) (2,877)
-------- --------
Total Stockholders' Equity 263,137 257,761
-------- --------
Total Liabilities and Stockholders' Equity $ 882,383 $ 864,467
======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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Consolidated Statements of Earnings (Unaudited)
Meredith Corporation and Subsidiaries
Three Months Ended September 30 1994 1993 *
- ----------------------------------------------------------------------------
($ in thousands, except per share)
Revenues (less returns and allowances):
Advertising $ 83,980 $ 73,349
Circulation 62,951 61,754
Consumer books 24,182 20,257
All other 29,034 26,931
--------- ---------
Total Revenues 200,147 182,291
--------- ---------
Operating Costs and Expenses:
Production, distribution and editorial 82,565 77,045
Selling, general and administrative 95,422 84,742
Depreciation and amortization 8,573 8,619
--------- ---------
Total Operating Costs and Expenses 186,560 170,406
--------- ---------
Income from Operations 13,587 11,885
Interest income - IRS settlement 8,554 --
Interest income 549 432
Interest expense (2,816) (2,815)
Minority interests 675 548
--------- ---------
Earnings before Income Taxes 20,549 10,050
Income taxes 9,877 6,606
--------- ---------
Net Earnings $ 10,672 $ 3,444
========= =========
Net Earnings Per Share $ 0.77 $ 0.24
========= =========
Dividends Paid Per Share $ 0.18 $ 0.16
========= =========
Average Number of Shares Outstanding 13,829,000 14,568,000
========= =========
* Reclassified to conform with current-year presentation.
See accompanying Notes to Interim Consolidated Financial Statements.
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Consolidated Statements of Cash Flows (Unaudited)
Meredith Corporation and Subsidiaries
For the Three Months Ended September 30 1994 1993 *
- ----------------------------------------------------------------------------
(in thousands)
Cash Flows from Operating Activities:
Net earnings $ 10,672 $ 3,444
Adjustments to Reconcile Net Earnings to
Net Cash Provided (Used) by Operating Activities:
Depreciation and amortization 8,573 8,619
Amortization of film contract rights 6,582 5,936
(Decrease) increase in deferred income taxes (832) 1,238
(Increase) in receivables (35,715) (7,149)
Decrease (increase) in inventories 1,267 (2,784)
(Increase) in supplies and prepayments (776) (311)
Decrease in deferred subscription
acquisition costs 7,864 5,119
Incr (decr) in accounts payable and accruals 2,527 (26,687)
(Reductions) to unearned subscription revenues (134) (2,287)
Additions (reductions) to other deferred items 6,356 (2,404)
--------- ---------
Net cash provided (used) by operating activities 6,384 (17,266)
Cash Flows from Investing Activities: --------- ---------
Redemption of marketable securities 2,039 9,344
(Additions) to property, plant, and equipment (6,133) (4,489)
Reduction to other assets 8,288 1,257
--------- ---------
Net cash provided by investing activities 4,194 6,112
Cash Flows from Financing Activities: --------- ---------
Increase in short-term debt -- 18,000
Long-term indebtedness retired (2,622) (61)
Payments for film rental contracts (4,162) (4,238)
Proceeds from common stock issued 926 707
Purchase of company shares (3,759) (16,417)
Dividends paid (2,463) (2,329)
--------- ---------
Net cash (used) by financing activities (12,080) (4,338)
--------- ---------
Net (decrease) in cash and cash equivalents (1,502) (15,492)
Cash and cash equivalents at beginning of year 37,957 18,569
--------- ---------
Cash and Cash Equivalents at End of Period $ 36,455 $ 3,077
========= =========
* Reclassified to conform with current-year presentation.
See accompanying Notes to Interim Consolidated Financial Statements.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management, all adjustments, which are of a
normal recurring nature and necessary for a fair presentation of the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the entire year.
The Company adopted AICPA Statement of Position ("SOP") 93-7 "Reporting on
Advertising Costs" as required on July 1, 1994. In October 1994, the Company
became aware of a proposed practice bulletin issued by the AICPA Accounting
Standards Executive Committee subject to approval by the Financial Accounting
Standards Board ("FASB"). This practice bulletin interprets SOP 93-7 by
stating that only "primary" revenues (as defined in the proposed practice
bulletin) should be considered when determining probable future revenues.
(Under SOP 93-7, probable future revenues are used in determining the amount of
direct response advertising costs that can be capitalized.) The Company
currently considers advertising revenues, defined as "secondary" revenues in
the proposed practice bulletin, in this determination. This practice bulletin,
if approved by the FASB, is expected to be effective for companies on the later
of December 31, 1994 or the date SOP 93-7 is adopted. The Company cannot
quantify the effect of this practice bulletin on its financial statements at
this time. However, if the practice bulletin is approved by the FASB in its
proposed form, Company management anticipates that it will be required to
record the cumulative effect of this proposed change in accounting principle.
This change is expected to have a material effect on the Company's statement of
financial position (including stockholders' equity) and net earnings for fiscal
1995 but no material effect is anticipated on fiscal 1995 operating earnings.
2. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 34 and 32 percent respectively are under the LIFO
method at September 30, 1994 and June 30, 1994.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
September 30 June 30
1994 1994
-------- --------
($ in thousands)
Raw materials $14,242 $15,366
Work in process 12,648 13,132
Finished goods 16,124 15,086
-------- --------
43,014 43,584
Reserve for LIFO cost valuation (9,319) (8,622)
-------- --------
Total $33,695 $34,962
======== ========
3. Internal Revenue Service ("IRS") Settlement
The Company recognized interest income in the first quarter of fiscal 1995 of
$8,554,000 (pre-tax) related to the settlement of its 1986 through 1990 tax
years. Federal income tax deficiency notices from the IRS related to those tax
years were contested by the Company in United States Tax Court in fiscal 1993.
These tax deficiency notices were primarily related to the Company's
acquisition of Ladies' Home Journal magazine in January 1986. In March 1994,
the Company received a favorable decision from the Tax Court. The appeal
period with respect to this decision expired on September 16, 1994. The
Company also recognized a benefit of approximately $9 million which reduced the
goodwill recorded in connection with the Ladies' Home Journal acquisition. The
benefit of this reduction will be realized over the remaining life of the
goodwill. The Company recorded a receivable from the IRS in the first quarter
related to these issues of approximately $18 million.
4. Acquisition
On August 19, 1994, Meredith Corporation announced that it had reached an
agreement to acquire the assets of WSMV-TV, an NBC affiliate in Nashville,
Tennessee, from Cook Inlet Television Partners. The Company will pay $159
million for WSMV-TV and plans to finance the acquisition with cash and bank
debt. The acquisition is expected to close in January 1995, pending Federal
Communications Commission and other regulatory approvals.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
5. Derivative Financial Instruments
The Company adopted Statement of Financial Accounting Standards No. 119
"Disclosure About Derivative Financial Instruments and Fair Value of Financial
Instruments" in the first quarter of fiscal 1995. The Company has a
subsidiary, Meredith/New Heritage Strategic Partners, L.P. ("Strategic
Partners") in which it has an indirect ownership interest of approximately 70
percent. Strategic Partners entered into a Swap Rate Agreement (the
"Agreement") on September 1, 1992 for $90 million of the debt outstanding under
its loan agreement with 10 banks. The Agreement is in effect through September
1, 1995 and established that Strategic Partners would receive payment based on
the six-month LIBOR interest rate, reset semi-annually, and make payments at
the fixed interest rate of 7.1 percent. The purpose of the Agreement is to
reduce interest rate risk by fixing the interest rate on $90 million of
Strategic Partners' debt. (Total debt outstanding under Strategic Partners'
term loan agreement was $135 million at September 30, 1994.) The fixed rate
payable, including the applicable margin (as defined in the underlying loan
agreement) is approximately 8.6 percent. This rate is accrued and charged to
interest expense through the term of the Agreement. Remaining payments under
the Agreement are $793,000 on March 1, 1995 and payment to or from Strategic
Partners on September 1, 1995 based on the six-month LIBOR interest rate on
March 1, 1995. The current value of the Agreement as of November 9, 1994, is
$779,000 for the March 1, 1995 payment and $165,000 for the September 1, 1995
payment. The Agreement was entered into for a purpose other than trading.
Strategic Partners' management believes there is no market risk or significant
credit risk associated with the Agreement.
6. Contingencies
Reference is made to part II - OTHER INFORMATION, Item 1, Legal Proceedings of
this Form 10-Q for the quarterly period ended September 30, 1994.
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
First Quarter Fiscal 1994-95 Compared With First Quarter Fiscal 1993-94
Meredith Corporation net earnings for the quarter ended September 30, 1994 were
$10,672,000, or 77 cents per share. Net earnings included post-tax interest
income from the IRS of $4,747,000, or 34 cents per share, primarily related to
the favorable resolution of the Ladies' Home Journal tax case. Excluding that
one-time benefit, earnings were $5,925,000, or 43 cents per share, an increase
of more than 70 percent from prior-year first quarter earnings of $3,444,000,
or 24 cents per share. All of the Company's operating groups, except cable,
contributed to increased earnings, as did a lower effective tax rate. Tax
expense in the prior-year quarter included a nine cent per share charge for the
impact of the increase in the federal corporate tax rate on the Company's
deferred tax liabilities. Two cents of the increase in comparable earnings per
share resulted from fewer shares outstanding due to the Company's share
repurchase program.
The Company recognized interest income in the first quarter of $8,554,000 (pre-
tax) related to the settlement of its 1986 through 1990 tax years. Federal
income tax deficiency notices from the Internal Revenue Service for those tax
years were contested in United States Tax Court in fiscal 1993. These tax
deficiency notices were primarily related to the Company's acquisition of
Ladies' Home Journal magazine in January 1986. In March 1994, the Company
received a favorable decision from the Tax Court. The appeal period, with
respect to this decision, expired on September 16, 1994. In addition to the
interest income reported above, the Company recognized a benefit of
approximately $9 million which reduced the goodwill recorded in connection with
the Ladies' Home Journal acquisition. The benefit of this reduction will be
realized over the remaining life of the goodwill.
Revenues for the three months ended September 30, 1994 were $200,147,000, a ten
percent increase from prior-year first quarter revenues of $182,291,000.
Increased advertising revenues in the Magazine and Broadcast Groups and higher
sales volumes in the Book Group were the most significant factors in the
increase. Revenues by segment were as follows:
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Revenues by Segment
Three Months Ended September 30 1994 1993
-------------------------------------------------------------------
Publishing $155,069 $139,865
Broadcast 25,983 24,608
Real Estate 6,293 4,910
Cable 12,814 12,914
Less: Inter-segment revenue (12) (6)
-------- --------
Total revenues $200,147 $182,291
======== ========
Income from operations was $13,587,000 in the first quarter, a 14 percent
increase from the prior-year first quarter. The operating margin rose slightly
from 6.5 percent of net revenues in the fiscal 1994 first quarter to 6.8
percent in the current quarter. The following table shows the percentage of
revenues each major expense classification represented in the current and prior
year quarter:
Expenses as Percentage of Revenues
Three Months Ended September 30 1994 1993
- ------------------------------------------------------------------------
Production, distribution and editorial (PD&E) 41.3% 42.3%
Selling, general and administrative (SG&A) 47.7% 46.5%
Depreciation and amortization 4.3% 4.7%
PD&E expenses declined as a percentage of revenues due to increased advertising
revenues in the Broadcast Group.
SG&A expenses increased approximately one percent of revenues compared to the
prior-year first quarter. (However, when compared to the 1994 fiscal year,
SG&A expenses were unchanged as a percentage of revenues.) The primary factor
in the increase from the prior-year first quarter was the reversal of accrued
music license fees in the Broadcast Group in the first quarter of fiscal 1994.
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A discussion of results by segment follows:
Publishing: Revenues in the Magazine Group increased nine percent from the
prior-year first quarter primarily due to increased advertising revenues from a
24 percent increase in advertising pages. Most of the group's titles reported
higher ad pages and revenues. Better Homes and Gardens and Ladies' Home
Journal, the Company's two largest circulation titles, recorded advertising
pages gains of 18 and 16 percent, respectively. Other titles with ad page
gains in excess of 20 percent included Traditional Home, Country Home,
Successful Farming and WOOD. Magazine Group circulation revenues were up four
percent from the prior year primarily due to subscription revenues on new
titles, including Crayola Kids and Better Homes and Gardens Craft & Wear.
The Magazine Group reported record first quarter operating profits, up 11
percent from the prior-year period largely due to the strong performances of
Better Homes and Gardens and Ladies' Home Journal. Both of these magazines
increased profits more than 25 percent compared to the fiscal 1994 first
quarter primarily due to higher advertising revenues. Other titles that
improved significantly from the prior-year quarter included Successful Farming,
Golf For Women and Country Home, which benefited from increased ad revenues,
and Better Homes and Gardens American Patchwork & Quilting which posted
favorable subscription results. Current quarter profits were held down by
higher new title start-up and testing costs and expansion in the custom
publishing area.
Book Group revenues increased 16 percent from the prior-year first quarter due
to higher sales volumes in the retail marketing and direct mail operations.
Operating results for the Group also showed substantial improvement.
Continuing the trend of recent quarters, the improvement was led by strong
performances in the retail marketing and book club operations. Increased sales
of backlist titles were the primary factor in a 14 percent increase in retail
marketing's profits. Improvement in the book clubs' performance largely
reflected increased sales volume per member and lower product return rates in
Better Homes and Garden Crafts Club, the largest of the Company's five book
clubs. Craftways' operating results lagged behind the prior-year first quarter
due to lower circulation nets for Cross Stitch & Country Crafts. Despite
revenue growth, direct mail operating results also fell short of the prior year
quarter due to higher promotion costs.
Revenues and profits from the Company's licensing agreement with Wal-Mart
Stores, Inc., also contributed to the improvement in first quarter Publishing
segment results. Better Homes and Gardens Garden Centers opened in more than
2,000 stores nationwide in January 1994.
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Paper and postage are significant and essential expenses in the Publishing
segment. Paper prices, which have been relatively stable over the past year,
increased approximately seven percent on October 1, 1994. The increase in price
indicates a tightening of the paper market. While the Company does not expect
to experience a shortage of paper in the foreseeable future, the current tight
market could lead to further price increases in fiscal 1995. In addition, a
postal rate increase is expected early in calendar 1995. The amount of the
increase is subject to the determination of the United States Postal Rate
Commission.
Broadcast: Increases in local and national advertising revenues led to a
significant profit increase for the Broadcast Group. Advertising revenues of
its five currently owned stations increased 27 percent compared with the prior-
year first quarter. Increased market demand for advertising led to higher spot
rates. The revenue increase at KPHO, the Company's television station in
Phoenix, also reflected its affiliation with the CBS network effective
September 10, 1994. Broadcast Group profits increased 58 percent from
comparable fiscal 1994 first quarter earnings. This comparison with prior-year
results excludes a favorable adjustment to accrued music license fees and the
operating results of two stations since sold. All of the stations, except
KPHO, reported higher profits primarily due to the revenue increases. Lower
programming expenses also contributed to most of the stations' improved
performances. Profits at KPHO were virtually even with the prior-year first
quarter as start-up costs associated with the CBS affiliation offset its
revenue gains. The CBS affiliation is expected to have a favorable long-term
effect on the revenues and profits of KPHO.
As previously announced, the Company plans to purchase WSMV-TV, an NBC
affiliate serving the Nashville, Tennessee market. The Federal Communications
Commission has granted initial approval of the sale which is expected to close
in January 1995.
Real Estate: First quarter revenues jumped 28 percent in the Real Estate Group
due to higher transaction fee revenues and increased product and publication
sales volumes. The increase in transaction fees, which are generated by
members' sales volumes, reflected continued strength in existing home sales.
Group profits also exceeded the prior-year first quarter, primarily due to the
revenue increases. The improvement was partially offset by expenses related to
the restructuring of a marketing agreement with an outside party.
Cable Television: Revenues declined slightly in the Company's cable television
operations despite continued subscriber growth at both the North Dakota and
Minnesota systems, of which the Company indirectly owns approximately 70
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percent. Lower average revenue per subscriber, a result of government re-
regulation of cable pricing, led to the revenue decline. Rate re-regulation
was also the primary factor in the decline in operating profits before interest
expense. After interest expense, the cable television operations experienced a
net loss in the quarter.
Other: Interest expense, which relates primarily to the cable operations'
debt, was virtually unchanged from the prior year. Interest income (not
including interest income from the IRS settlement) increased primarily due to
additional cash available for investment generated from fiscal 1994 cash flows.
Corporate nonoperating expenses increased due to higher administrative expenses
and one-time favorable adjustments in the prior-year quarter.
The decrease in the effective tax rate, from 66 percent in the fiscal 1994
first quarter to 48 percent in the current quarter, primarily reflected the
negative impact of the increase in the federal corporate tax rate in fiscal
1994. The prior-year first quarter provision included the impact of the rate
increase on the Company's deferred tax liabilities. The Company's effective
tax rate also benefited from increased earnings in the current quarter, which
lessened the effect of non-deductible items on the overall tax rate.
Liquidity and Capital Resources
Cash and cash equivalents decreased by $1,502,000 in the current quarter to
$36,455,000 at September 30, 1994. This compares to a decrease of $15,492,000
in the fiscal 1994 first quarter. The difference was primarily the result of
increased cash provided by operating activities in the current quarter due to
higher earnings and a smaller decline in accounts payable and accruals. The
larger decline in accounts payable and accruals in the prior-year first quarter
resulted from a large contribution to a Company pension plan and payments for
paper purchased in June 1993 in anticipation of a July 1993 price increase.
The increase in accounts receivable from June 30, 1994 reflects the refund
expected from the IRS in settlement of the Company's 1986 through 1990 tax
years. The change in cash used by financing activities reflects prior-year
cash provided by short-term debt, net of higher spending for Company share
repurchases.
In the quarter ended September 30, 1994, $3.8 million was spent for the
repurchase of Company common stock. This compares with spending of $16.4
million for shares in the prior first quarter. As of September 30, 1994,
approximately 194,000 shares may be repurchased under an exisiting
authorization by the Board of Directors. The status of the repurchase program
is reviewed at each quarterly Board of Directors meeting.
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Long-term debt was incurred by Meredith/New Heritage Strategic Partners, L.P.
("Strategic Partners"), in conjunction with Strategic Partners' acquisition of
North Central Cable Communications Corporation on September 1, 1992. At
September 30, 1994, $135 million was owed under the term loan agreement
Strategic Partners has with ten banks. The first payment of $2.6 million, due
under the loan agreement, was made by Strategic Partners on September 30, 1994.
The loan agreement requires Strategic Partners to meet certain operating and
financial tests. At September 30, 1994, Strategic Partners failed to meet the
required financial ratios related to operating cash flow. In light of
Strategic Partners' efforts to sell its assets in part or in whole, the banks
have waived compliance with the affected covenants and their rights and
remedies under the loan agreement as a result of the defaults for the quarter
ended September 30, 1994. In addition, Strategic Partners is currently working
with the banks to amend the current loan amortization schedule. Without an
amendment (or the sale of its assets in part or whole), the operating cash
flows of Strategic Partners may not provide sufficient funds to meet the
payment terms of the loan agreements. Strategic Partners' debt is non-recourse
to Meredith Corporation.
Capital expenditures in fiscal 1995 are expected to increase by approximately
ten percent over fiscal 1994 levels. This growth will primarily result from
increased spending at the Company's television station in Phoenix to facilitate
increased news programming and upgrade other receiving and transmission
equipment related to its recent CBS affiliation. Other planned spending
includes continued investment in new and upgraded computer networks. The
Company also intends to enter into a lease agreement for office space in New
York City, which will allow consolidation of all New York City employees in one
location to achieve reduced occupancy costs in the future. This project is
expected to cost approximately $10 million with spending to occur primarily in
fiscal 1996. In addition, the Company plans to spend approximately $36 million
in fiscal 1996 through 1998 for a new office building and related improvements
in Des Moines. The Company has made no other material commitments for capital
expenditures.
The planned purchase of WSMV-TV for $159 million will be financed with cash and
bank debt.
At this time, management expects that cash on hand, plus internally-generated
cash flow, will provide funds for capital expenditures, cash dividends and
other operational cash needs for foreseeable periods. Short-term lines of
credit will be used on an as-needed basis for short-term working capital needs.
The Company does not expect the need for any long-term source of cash to meet
working capital requirements.
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The Company adopted AICPA Statement of Position ("SOP") 93-7 "Reporting on
Advertising Costs" as required on July 1, 1994. In October 1994, the Company
became aware of a proposed practice bulletin issued by the AICPA Accounting
Standards Executive Committee subject to approval by the Financial Accounting
Standards Board ("FASB"). This practice bulletin interprets SOP 93-7 by
stating that only "primary" revenues (as defined in the proposed practice
bulletin) should be considered when determining probable future revenues.
(Under SOP 93-7, probable future revenues are used in determining the amount of
direct response advertising costs that can be capitalized.) The Company
currently considers advertising revenues, defined as "secondary" revenues in
the proposed practice bulletin, in this determination. This practice bulletin,
if approved by the FASB, is expected to be effective for companies on the later
of December 31, 1994 or the date SOP 93-7 is adopted. The Company cannot
quantify the effect of this practice bulletin on its financial statements at
this time. However, if the practice bulletin is approved by the FASB in its
proposed form, Company management anticipates that it will be required to
record the cumulative effect of this proposed change in accounting principle.
This change is expected to have a material effect on the Company's statement of
financial position (including stockholders' equity) and net earnings for fiscal
1995 but no material effect is anticipated on fiscal 1995 operating earnings.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company contested federal income tax deficiency notices for its 1986
through 1990 tax years primarily related to the acquisition of Ladies' Home
Journal magazine in United States Tax Court in a trial ended October 6, 1992.
On March 14, 1994, the Company received a favorable decision from the Tax
Court. The appeal period, available to the Internal Revenue Service, of this
decision, expired on September 16, 1994. The Company has no remaining exposure
to the $12 million potential tax cost previously reported. (See Note 3 to the
Interim Consolidated Financial Statements for the quarter ended September 30,
1994 for a description of the effect of this settlement on the Company's
financial statements.)
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
( 2) Plan of Acquisition - Asset Purchase Agreement by and between Cook
Inlet Television Partners, L. P. and Cook Inlet Television License
Partners, L. P. and Meredith Corporation dated August 19, 1994
(11) Statement re computation of per share earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed on August 22, 1994, announcing the proposed
acquisition of WSMV-TV in Nashville by the Company in January 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEREDITH CORPORATION
Registrant
(Larry D. Hartsook)
Larry D. Hartsook
Vice President - Finance
(Principal Financial and
Accounting Officer)
Date: November 14, 1994
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Index to Exhibits
Exhibit
Number Item
------- -------------------------------------------------------
2 Plan of Acquisition - Asset Purchase Agreement by and
between Cook Inlet Television Partners, L. P. and Cook
Inlet Television License Partners, L. P. and Meredith
Corporation dated August 19, 1994
11 Statement re computation of per share earnings
27 Financial Data Schedule
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Exhibit 2
---------
====================================================
ASSET PURCHASE AGREEMENT
by and between
COOK INLET TELEVISION PARTNERS, L.P.
and
COOK INLET TELEVISION LICENSE PARTNERS, L.P.
and
MEREDITH CORPORATION
dated as of
August 19, 1994
====================================================
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INDEX
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Number
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ARTICLE I
Certain Definitions
Section 1.1. "Action" . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. "Act III Lease" . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. "Affiliate" . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4. "Agreement" . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5. "Applicable Environmental Laws" . . . . . . . . . . . . 3
Section 1.6. "Asset Purchase" . . . . . . . . . . . . . . . . . . . 3
Section 1.7. "Assets" . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.8. "Assignment and Assumption Agreement . . . . . . . . . 3
Section 1.9. "Assumed Liabilities" . . . . . . . . . . . . . . . . . 3
Section 1.10. "Base Purchase Price" . . . . . . . . . . . . . . . . . 3
Section 1.11. "Business Condition" . . . . . . . . . . . . . . . . . 3
Section 1.12. "Buyer" . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.13. "Buyer Indemnified Parties" . . . . . . . . . . . . . . 3
Section 1.14. "Buyer's Financial Statements" . . . . . . . . . . . . 4
Section 1.15. "CITPH's Indemnification Escrow Agreement" . . . . . . 4
Section 1.16. "Claims" . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.17. "Closing" . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.18. "Closing Certificates" . . . . . . . . . . . . . . . . 4
Section 1.19. "Closing Date" . . . . . . . . . . . . . . . . . . . . 4
Section 1.20. "Code" . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.21. "Collection Period" . . . . . . . . . . . . . . . . . . 4
Section 1.22. "Commissions" . . . . . . . . . . . . . . . . . . . . . 4
Section 1.23. "Communications Act" . . . . . . . . . . . . . . . . . 4
Section 1.24. "Consideration" . . . . . . . . . . . . . . . . . . . . 4
Section 1.25. "Contract" . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.26. "Covered Liabilities" . . . . . . . . . . . . . . . . . 4
Section 1.27. "Cut Off Time" . . . . . . . . . . . . . . . . . . . . 5
Section 1.28. "Deed . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.29. "Deposit" . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.30. "Discrepancy Statement" . . . . . . . . . . . . . . . . 5
Section 1.31. "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.32. "ERISA Affiliate" . . . . . . . . . . . . . . . . . . . 5
Section 1.33. "Escrow Agent" . . . . . . . . . . . . . . . . . . . . 5
Section 1.34. "Escrow Agreement" . . . . . . . . . . . . . . . . . . 6
Section 1.35. "Escrow Deposit A" . . . . . . . . . . . . . . . . . . 6
Section 1.36. "Escrow Deposit B" . . . . . . . . . . . . . . . . . . 6
Section 1.37. "Excluded Assets" . . . . . . . . . . . . . . . . . . . 6
Section 1.38. "FCC" . . . . . . . . . . . . . . . . . . . . . . . . . 6
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Section 1.39. "FCC Application" . . . . . . . . . . . . . . . . . . . 6
Section 1.40. "FCC Authorizations" . . . . . . . . . . . . . . . . . 6
Section 1.41. "FCC Consent" . . . . . . . . . . . . . . . . . . . . . 6
Section 1.42. "Final Order" . . . . . . . . . . . . . . . . . . . . . 6
Section 1.43. "Final Order Date" . . . . . . . . . . . . . . . . . . 7
Section 1.44. "Financial Statements" . . . . . . . . . . . . . . . . 7
Section 1.45. "FTC" . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.46. "Government Authority" . . . . . . . . . . . . . . . . 7
Section 1.47. "Hazardous Substance" . . . . . . . . . . . . . . . . . 7
Section 1.48. "HSR Act" . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.49. "Leased Property" . . . . . . . . . . . . . . . . . . . 7
Section 1.50. "Liabilities" . . . . . . . . . . . . . . . . . . . . . 7
Section 1.51. "Licenses" . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.52. "Liens" . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.53. "NBC" . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.54. "NBC Contract" . . . . . . . . . . . . . . . . . . . . 9
Section 1.55. "1989 Survey" . . . . . . . . . . . . . . . . . . . . . 9
Section 1.56. "Non-Assumed Liabilities" . . . . . . . . . . . . . . . 9
Section 1.57. "Objectionable Title Matters" . . . . . . . . . . . . . 9
Section 1.58. "Other Contracts" . . . . . . . . . . . . . . . . . . . 10
Section 1.59. "Permitted Assigns" . . . . . . . . . . . . . . . . . . 10
Section 1.60. "Permitted Liens" . . . . . . . . . . . . . . . . . . . 10
Section 1.61. "Person" . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.62. "Program Contracts" . . . . . . . . . . . . . . . . . . 11
Section 1.63. "Projections" . . . . . . . . . . . . . . . . . . . . . 11
Section 1.64. "Prorations Certificates" . . . . . . . . . . . . . . . 11
Section 1.65. "Real Property" . . . . . . . . . . . . . . . . . . . . 11
Section 1.66. "Real Property Leases" . . . . . . . . . . . . . . . . 11
Section 1.67. "Retained Liabilities" . . . . . . . . . . . . . . . . 11
Section 1.68. "Returns" . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.69. "Sealed Files" . . . . . . . . . . . . . . . . . . . . 11
Section 1.70. "Seller" . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1.71. "Seller Indemnified Parties" . . . . . . . . . . . . . 11
Section 1.72. "Station Employee Benefit Plans" . . . . . . . . . . . 12
Section 1.73. "Station Employees" . . . . . . . . . . . . . . . . . . 12
Section 1.74. "Station" . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.75. "Station's Business" . . . . . . . . . . . . . . . . . 12
Section 1.76. "Taxes" . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.77. "Taxing Authority" . . . . . . . . . . . . . . . . . . 13
Section 1.78. "TeleRep Contract" . . . . . . . . . . . . . . . . . . 13
Section 1.79. "Title Commitment" . . . . . . . . . . . . . . . . . . 13
Section 1.80. "Title Company" . . . . . . . . . . . . . . . . . . . . 13
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Section 1.81. "Title Policy" . . . . . . . . . . . . . . . . . . . . 13
Section 1.82. "Tower Leases" . . . . . . . . . . . . . . . . . . . . 13
Section 1.83. "Trade Agreements" . . . . . . . . . . . . . . . . . . 13
Section 1.84. "Updated Survey" . . . . . . . . . . . . . . . . . . . 13
Section 1.85. "WCC" . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.86. "WCC's Indemnification Escrow Agreement" . . . . . . . 13
ARTICLE II
Sale of Assets; Closing
Section 2.1. Assets to Be Acquired . . . . . . . . . . . . . . . . . 14
Section 2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . 18
Section 2.3. Assumption of Liabilities . . . . . . . . . . . . . . . 21
Section 2.4. Retained Liabilities . . . . . . . . . . . . . . . . . 24
Section 2.5. Consideration . . . . . . . . . . . . . . . . . . . . . 24
Section 2.6. Closing Proration and Adjustment . . . . . . . . . . . 26
Section 2.7. Additional Closing Deliveries . . . . . . . . . . . . . 31
Section 2.8. Time and Place of Closing . . . . . . . . . . . . . . . 36
Section 2.9. Assignment by Buyer . . . . . . . . . . . . . . . . . . 37
Section 2.10. Control of Station . . . . . . . . . . . . . . . . . . 37
Section 2.11. Accounts Receivable . . . . . . . . . . . . . . . . . . 37
Section 2.12. Trade Agreements . . . . . . . . . . . . . . . . . . . 39
ARTICLE III
Representations and Warranties of Seller
Section 3.1. Partnership Status; Authorization; etc. . . . . . . . . 40
Section 3.2. Financial Statements . . . . . . . . . . . . . . . . . 42
Section 3.3. Undisclosed Liabilities . . . . . . . . . . . . . . . . 43
Section 3.4. FCC Authorizations . . . . . . . . . . . . . . . . . . 43
Section 3.5. Ownership and Condition of Assets . . . . . . . . . . . 45
Section 3.6. Real Properties . . . . . . . . . . . . . . . . . . . . 45
Section 3.7. Absence of Certain Changes or Events . . . . . . . . . 50
Section 3.8. Litigation; Orders . . . . . . . . . . . . . . . . . . 52
Section 3.9. Intellectual Property . . . . . . . . . . . . . . . . . 53
Section 3.10. Licenses, Approvals, Other
Authorizations, Consents, Reports, etc. . . . . . . . . 54
Section 3.11. Labor Matters . . . . . . . . . . . . . . . . . . . . . 54
Section 3.12. Compliance with Laws . . . . . . . . . . . . . . . . . 55
Section 3.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . 55
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Section 3.14. Material Contracts . . . . . . . . . . . . . . . . . . 56
Section 3.15. Consents . . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.16. No Defaults . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.17. Environmental Matters . . . . . . . . . . . . . . . . . 61
Section 3.18. Compensation . . . . . . . . . . . . . . . . . . . . . 71
Section 3.19. Disclosure . . . . . . . . . . . . . . . . . . . . . . 72
Section 3.20. Brokers, Finders, etc. . . . . . . . . . . . . . . . . 73
Section 3.21. Projections . . . . . . . . . . . . . . . . . . . . . . 73
Section 3.22. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE IV
Representations and Warranties of Buyer
Section 4.1. Incorporation; Authorization; etc. . . . . . . . . . . 74
Section 4.2. Brokers, Finders, etc. . . . . . . . . . . . . . . . . 76
Section 4.3. Approvals, Other Consents, Reports, etc. . . . . . . . 76
Section 4.4. FCC Qualifications . . . . . . . . . . . . . . . . . . 76
Section 4.5. Buyer's Financial Capacity . . . . . . . . . . . . . . 77
Section 4.6. NBC Affiliate Qualifications . . . . . . . . . . . . . 78
Section 4.7. Litigation . . . . . . . . . . . . . . . . . . . . . . 78
Section 4.8. Disclosure . . . . . . . . . . . . . . . . . . . . . . 78
Section 4.9. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE V
Covenants of Seller Pending the Closing Date
Section 5.1. Maintenance of Business . . . . . . . . . . . . . . . . 80
Section 5.2. Organization, Good Will, Promotion . . . . . . . . . . 83
Section 5.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 5.4. Access to Facilities, Files and Records . . . . . . . . 84
Section 5.5. Representations and Warranties . . . . . . . . . . . . 85
Section 5.6. Application for Commission Consent . . . . . . . . . . 85
Section 5.7. Request for NBC Consent . . . . . . . . . . . . . . . . 87
Section 5.8. Third-Party Consents . . . . . . . . . . . . . . . . . 87
Section 5.9. Notice of Proceedings . . . . . . . . . . . . . . . . . 87
Section 5.10. Confidential Information . . . . . . . . . . . . . . . 88
Section 5.11. Consummation of Agreement . . . . . . . . . . . . . . . 89
Section 5.12. Notice of Certain Developments . . . . . . . . . . . . 89
Section 5.13. HSR Act . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 5.14. Exclusive Dealing . . . . . . . . . . . . . . . . . . . 90
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Section 5.15. Public Announcements . . . . . . . . . . . . . . . . . 91
Section 5.16. Updated Schedules . . . . . . . . . . . . . . . . . . . 92
Section 5.17. Delivery of Updated Survey; Objectionable
Title Matters; Title Matters Indemnity . . . . . . . . 92
Section 5.18. No Inconsistent Action . . . . . . . . . . . . . . . . 93
Section 5.19. Post-Closing Covenants . . . . . . . . . . . . . . . . 94
ARTICLE VI
Covenants of Buyer Pending the Closing Date
Section 6.1. Application for Commission Consent . . . . . . . . . . 94
Section 6.2. Request for NBC Consent . . . . . . . . . . . . . . . 95
Section 6.3. Confidential Information . . . . . . . . . . . . . . . 96
Section 6.4. Consummation of Agreement . . . . . . . . . . . . . . . 97
Section 6.5. Notice of Proceedings . . . . . . . . . . . . . . . . . 98
Section 6.6. HSR Act . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 6.7. Representations and Warranties . . . . . . . . . . . . 99
Section 6.8. Public Announcements . . . . . . . . . . . . . . . . . 99
Section 6.9. No Inconsistent Action . . . . . . . . . . . . . . . . 99
Section 6.10. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 100
Section 6.11. Financial Reports . . . . . . . . . . . . . . . . . . . 100
Section 6.12. Buyer's Financing . . . . . . . . . . . . . . . . . . . 101
Section 6.13. Updated Schedules . . . . . . . . . . . . . . . . . . . 101
Section 6.14. Post-Closing Covenants . . . . . . . . . . . . . . . . 101
ARTICLE VII
Employee Matters
Section 7.1. Employee Benefit Plans . . . . . . . . . . . . . . . . 103
Section 7.2. Buyer's Employment of Station Employees . . . . . . . . 104
ARTICLE VIII
Tax Matters
Section 8.1. General . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.2. Tax Allocation of Consideration . . . . . . . . . . . . 106
Section 8.3. Tax Indemnification by Seller . . . . . . . . . . . . . 106
Section 8.4. Tax Indemnification by Buyer . . . . . . . . . . . . . 106
Section 8.5. Refunds . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.6. Cooperation and Exchange of Information . . . . . . . . 107
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ARTICLE IX
Conditions to the Obligations of Seller to Close
Section 9.1. Representations, Warranties, Covenants . . . . . . . . 108
Section 9.2. Proceedings . . . . . . . . . . . . . . . . . . . . . . 109
Section 9.3. Opinion of Counsel . . . . . . . . . . . . . . . . . . 109
Section 9.4. FCC Consent . . . . . . . . . . . . . . . . . . . . . . 109
Section 9.5. HSR Act . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 9.6. NBC Contract . . . . . . . . . . . . . . . . . . . . . 110
Section 9.7. Environmental Audit Process . . . . . . . . . . . . . . 110
ARTICLE X
Conditions to the Obligations of Buyer to Close
Section 10.1. Representations, Warranties, Covenants . . . . . . . . 110
Section 10.2. Proceedings . . . . . . . . . . . . . . . . . . . . . . 111
Section 10.3. Opinion of Counsel . . . . . . . . . . . . . . . . . . 111
Section 10.4. Damage to the Assets . . . . . . . . . . . . . . . . . 112
Section 10.5. FCC Consent . . . . . . . . . . . . . . . . . . . . . . 112
Section 10.6. No Material Adverse Change . . . . . . . . . . . . . . 112
Section 10.7. Consents . . . . . . . . . . . . . . . . . . . . . . . 113
Section 10.8. HSR Act . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 10.9. NBC Contract . . . . . . . . . . . . . . . . . . . . . 114
Section 10.10. Environmental Audit Process . . . . . . . . . . . . . . 114
ARTICLE XI
Survival; Indemnification
Section 11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . 114
Section 11.2 Indemnification by Buyer or Seller . . . . . . . . . . 116
Section 11.3 Third-Party Claims . . . . . . . . . . . . . . . . . . 117
Section 11.4 Bulk Sales Indemnity . . . . . . . . . . . . . . . . . 118
Section 11.5 Limit on Indemnification . . . . . . . . . . . . . . . 119
Section 11.6 Environmental Claims . . . . . . . . . . . . . . . . . 122
Section 11.7 Security for Seller's Indemnification Liabilities . . . 123
ARTICLE XII
Termination
Section 12.1. Termination . . . . . . . . . . . . . . . . . . . . . . 125
Section 12.2. Procedure and Effect of Termination . . . . . . . . . . 126
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ARTICLE XIII
Miscellaneous
Section 13.1. Counterparts . . . . . . . . . . . . . . . . . . . . . 127
Section 13.2. Governing Law . . . . . . . . . . . . . . . . . . . . . 127
Section 13.3. Entire Agreement . . . . . . . . . . . . . . . . . . . 127
Section 13.4. Expenses . . . . . . . . . . . . . . . . . . . . . . . 128
Section 13.5. Transfer Taxes, Fees, and Similar Charges . . . . . . . 128
Section 13.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . 129
Section 13.7. Successors and Assigns . . . . . . . . . . . . . . . . 130
Section 13.8. Headings; Definitions . . . . . . . . . . . . . . . . . 130
Section 13.9. Amendments and Waivers . . . . . . . . . . . . . . . . 131
Section 13.10. Interpretation; Absence of Presumption . . . . . . . . 131
Section 13.11. Severability . . . . . . . . . . . . . . . . . . . . . 132
Section 13.12. Further Assurances . . . . . . . . . . . . . . . . . . 132
Section 13.13. Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . 132
Section 13.14. Risk of Loss . . . . . . . . . . . . . . . . . . . . . 133
Section 13.15. Efforts to Cure Conditions . . . . . . . . . . . . . . 133
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SCHEDULES
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Schedule 2.1(a) FCC Authorizations
Schedule 2.1(b) Personal Property
Schedule 2.1(c) Real Property and Leased Property
Schedule 2.1(d) Non-Program Barter Agreements
Schedule 2.1(e) Program Contracts
Schedule 2.1(f) Other Contracts
Schedule 2.1(g) Registered Trademarks
Schedule 2.1(l) Licenses
Schedule 2.2(n) Miller Condos
Schedule 2.3A Permitted Liens
Schedule 2.3B Assumed Liabilities
Schedule 3.1 Other Ventures of Seller
Schedule 3.2 Financial Statements
Schedule 3.3 Undisclosed Liabilities
Schedule 3.5 Ownership and Condition of Assets;
Liens Other Than Permitted Liens
Schedule 3.6 Third Party Interests; Non-Compliance
with Laws; Notices
Schedule 3.7 Absence of Changes or Other Events
Schedule 3.8 Litigation; Orders
Schedule 3.9 Intellectual Property
Schedule 3.10(b) Registrations, Filings, etc.
Schedule 3.11 Labor Matters; Employee List
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Schedule 3.13 Insurance
Schedule 3.14(c) Construction or Capital Contracts
Schedule 3.14(d) Advertising Performance Guarantees
Schedule 3.17 Environmental Matters
Schedule 3.18 Compensation
Schedule 4.3 Licenses, Approvals, Other Authori-
zations, Consents, Reports, etc.
Schedule 4.4 Buyer's FCC Qualifications
Schedule 4.5 Buyer's Financial Capacity
Schedule 4.7 Buyer's Litigation
Schedule 7.1(a) Employee Benefit Plans
Schedule 8.2 Tax Allocation of Consideration
Schedule 9.3 Opinion of Buyer's Counsel
Schedule 9.3 Opinion of Buyer's Communications
Counsel
Schedule 10.3 Opinions of Seller's Counsel
Schedule 10.3 Opinion of Seller's Communications
Counsel
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<PAGE>
EXHIBITS
--------
Exhibit 2.5(a) Form of Preclosing Escrow Agreements
Exhibit 11.7A Form of WCC's Indemnification Escrow
Agreement
Exhibit 11.7B Form of CITPH's Indemnification Escrow
Agreement
Exhibit 11.7C Form of CIRI Guaranty
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<PAGE>
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of August 19,
1994, is by and between Cook Inlet Television Partners, L.P. ("CITP"), a
limited partnership organized under the laws of Tennessee, and Cook Inlet
Television License Partners, L.P. ("CITLP"), a limited partnership organized
under the laws of Tennessee (together "Seller"), and Meredith Corporation, a
corporation organized under the laws of Iowa ("Buyer").
WHEREAS, CITLP is the licensee of television station WSMV-TV, Channel
4, Nashville, Tennessee (the "Station"), pursuant to certain authorizations
issued by the FCC, and CITP is the owner or lessee of the non-FCC license
assets used in connection with the operation of the Station, and together they
operate the Station pursuant to the FCC Authorizations.
WHEREAS, Seller desires to assign and transfer the FCC Authorizations
for the Station and sell, assign and transfer the assets and business of the
Station as described below, and Buyer desires to acquire the Station, the FCC
Authorizations, and the assets and business of the Station, and to assume
certain liabilities, as described below, all on the terms described in this
Agreement.
NOW THEREFORE, in consideration of the premises and the representa-
tions, warranties, covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I
---------
Certain Definitions
-------------------
As used in this Agreement the following terms shall have the following
respective meanings:
Section 1.1. "Action" shall mean any action, suit, arbitration,
inquiry, proceeding or investigation by or pending or threatened before any
Government Authority and the threatened party has received notice or otherwise
has knowledge thereof.
Section 1.2. "Act III Lease" shall have the meaning set forth in
Section 2.6(h).
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<PAGE>
Section 1.3. "Affiliate" shall mean, with respect to any person, any
other person that directly, or through one or more intermediaries, controls, is
controlled by or is under common control with such first person, and, if such a
person is an individual, any member of the immediate family (including parents,
spouse and children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any person who is controlled by any such member or trust. As used in this
definition, "control" (including, with correlative meanings, "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
Section 1.4. "Agreement" shall have the meaning set forth in the
first paragraph hereof.
Section 1.5. "Applicable Environmental Laws" shall have the meaning
set forth in Section 3.17(a)(i).
Section 1.6. "Asset Purchase" shall mean the consummation of the
transactions described in Section 2.1.
Section 1.7. "Assets" shall have the meaning set forth in Section
2.1.
Section 1.8. "Assignment and Assumption Agreement" shall have the
meaning set forth in Section 2.7(a)(v)(A).
Section 1.9. "Assumed Liabilities" shall have the meaning set forth
in Section 2.3.
Section 1.10. "Base Purchase Price" shall mean One Hundred Fifty-Nine
Million Dollars ($159,000,000).
Section 1.11. "Business Condition" shall mean the assets, liabilities,
results of operations and business condition (financial or otherwise) of the
Station's Business.
Section 1.12. "Buyer" shall have the meaning set forth in the first
paragraph hereof and shall include any Permitted Assigns of Buyer.
Section 1.13. "Buyer Indemnified Parties" shall have the meaning set
forth in Section 11.2(b).
Section 1.14. "Buyer's Financial Statements" shall have the meaning
set forth in Section 4.5(b).
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Section 1.15. "CITPH's Indemnification Escrow Agreement" shall have
the meaning set forth in Section 11.7.
Section 1.16. "Claims" shall have the meaning set forth in Section
2.2(i).
Section 1.17. "Closing" shall mean the consummation of the Asset
Purchase in accordance with Section 2.8.
Section 1.18. "Closing Certificates" shall have the meaning set forth
in Section 2.6(c).
Section 1.19. "Closing Date" shall mean the date on which the Closing
is completed.
Section 1.20. "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
Section 1.21. "Collection Period" shall have the meaning set forth in
Section 2.11.
Section 1.22. "Commissions" shall have the meaning set forth in
Section 2.11.
Section 1.23. "Communications Act" shall mean the Communications Act
of 1934, as amended.
Section 1.24. "Consideration" shall have the meaning set forth in
Section 2.5(b).
Section 1.25. "Contract" shall have the meaning set forth in Section
2.1(c).
Section 1.26. "Covered Liabilities" shall mean any and all debts,
losses, liabilities, claims, damages, obligations (including those arising out
of any Action, such as any settlement or compromise thereof or judgment or
award therein), and any reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and expenses incurred in defending any Action).
Section 1.27. "Cut Off Time" shall mean 12:01 AM Nashville time on the
Closing Date.
Section 1.28. "Deed" shall have the meaning set forth in Section
2.7(a)(v)(B).
Section 1.29. "Deposit" shall have the meaning set forth in Section
2.5(a).
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Section 1.30. "Discrepancy Statement" shall have the meaning set forth
in Section 2.6(d).
Section 1.31. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.32. "ERISA Affiliate" shall mean, with respect to any
entity, trade or business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
Section 1.33. "Escrow Agent" shall have the meaning set forth in
Section 2.5(a) and Section 11.7.
Section 1.34. "Escrow Agreement" shall have the meaning set forth in
Section 2.5(a).
Section 1.35. "Escrow Deposit A" shall have the meaning set forth in
Section 11.7.
Section 1.36. "Escrow Deposit B" shall have the meaning set forth in
Section 11.7.
Section 1.37. "Excluded Assets" shall have the meaning set forth in
Section 2.2.
Section 1.38. "FCC" shall mean the Federal Communications Commission.
Section 1.39. "FCC Application" shall mean the application or
applications that Seller and Buyer must file with the FCC regarding its consent
to the assignment of the FCC Authorizations pursuant to Sections 5.6 and 6.1
hereof.
Section 1.40. "FCC Authorizations" shall have the meaning set forth in
Section 2.1(a).
Section 1.41. "FCC Consent" shall mean action by the FCC, or by its
staff pursuant to delegated authority, granting the FCC Application.
Section 1.42. "Final Order" shall mean the FCC Consent (i) which has
not been vacated, reversed, stayed, set aside, annulled or suspended, (ii) with
respect to which no timely administrative or judicial appeal, request for stay
or petition for rehearing, reconsideration or review by any party or by the FCC
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on its own motion, is pending, and (iii) as to which the time for filing any
such appeal, request, petition, or similar document or for the reconsideration
or review by the FCC on its own motion under the Communications Act, the rules
and regulations of the FCC, and the pertinent judicial rules has expired.
Section 1.43. "Final Order Date" shall mean the date on which the FCC
Consent shall have become a Final Order.
Section 1.44. "Financial Statements" shall have the meaning set forth
in Section 3.2.
Section 1.45. "FTC" shall mean the Federal Trade Commission.
Section 1.46. "Government Authority" shall mean any government or
state (or any subdivision thereof), whether domestic, foreign or multinational
(including European Union), or any agency, authority, bureau, commission,
department or similar body or instrumentality thereof, or any governmental
court or tribunal.
Section 1.47. "Hazardous Substance" shall have the meaning set forth
in Section 3.17(a)(ii).
Section 1.48. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Section 1.49. "Leased Property" shall have the meaning set forth in
Section 3.6(b).
Section 1.50. "Liabilities" shall mean, as to any person or entity,
all debts, adverse claims, liabilities and obligations, direct, indirect,
absolute, contingent or otherwise, of such person or entity, whether accrued,
vested or otherwise, whether in contract, tort, strict liability or otherwise
and whether or not actually reflected, or required by generally accepted
accounting principles to be reflected, in such person's or entity's balance
sheets or other books and records, including (i) obligations arising under any
law, rule or regulation of any Government Authority or imposed by any court or
any arbitrator of any kind; (ii) obligations arising in connection with
products sold by, or in connection with services provided by, or under,
contracts, agreements (whether written or oral), leases, commitments or
undertakings of, such person or entity; (iii) all indebtedness or liability of
such person or entity for borrowed money, or for the purchase price of property
or services (including trade obligations); (iv) all obligations of such person
or entity as lessee under leases, capital or other; (v) liabilities of such
person or entity in respect of plans covered by Title IV of the Employee
Retirement Income Security Act of 1974, as amended, or otherwise arising in
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respect of plans for employees or former employees or their respective families
or beneficiaries; (vi) reimbursement obligations of such person or entity in
respect of letters of credit; (vii) all obligations of such person or entity
arising under acceptance facilities; (viii) all liabilities of other persons or
entities directly or indirectly guaranteed, endorsed (other than for collection
or deposit in the ordinary course of business) or discounted with recourse by
such person or entity or with respect to which the person or entity in question
is otherwise directly or indirectly liable; (ix) all obligations secured by any
lien on property of such person or entity, whether or not the obligations have
been assumed; (x) all other items which have been or in accordance with
generally accepted accounting principles would be, included in determining
total liabilities on the liability side of the balance sheet of such person or
entity; and (xi) any and all other obligations of such person or entity.
Section 1.51. "Licenses" shall have the meaning set forth in Section
3.10(a).
Section 1.52. "Liens" shall have the meaning set forth in Section
2.3(a).
Section 1.53. "NBC" shall mean the NBC Television Network, a Division
of National Broadcasting Company, Inc.
Section 1.54. "NBC Contract" shall mean the affiliation agreement
between NBC and Seller for the Station, dated June 24, 1994.
Section 1.55. "1989 Survey" shall have the meaning set forth in
Section 3.6(b).
Section 1.56. "Non-Assumed Liabilities" shall have the meaning set
forth in Section 2.3(a).
Section 1.57. "Objectionable Title Matters" shall have the meaning set
forth in Section 5.17.
Section 1.58. "Other Contracts" shall have the meaning set forth in
Section 2.1(f).
Section 1.59. "Permitted Assigns" shall mean (a) an assignee of Buyer
to which Seller has given its prior written consent to assignment, or (b) a
wholly-owned subsidiary of Buyer, provided in the case of any such assignment:
(i) the representations and warranties set forth in Article IV will be true and
correct after such assignment as if such assignee were Buyer, with only such
changes as are required to recognize the state of organization and legal form
(corporate or partnership) of such assignee; (ii) such assignee agrees in
writing to be bound by all covenants, agreements, terms and conditions of this
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Agreement that bind Buyer hereunder; (iii) Buyer is not released from any of
its obligations hereunder; and (iv) such assignment will not hinder or delay
the filing of the FCC Application as required by Section 6.1, or if such
assignment is made after the filing of such FCC Application, the assignment
will not hinder or delay the processing and grant of the application including
not hinder or delay due to the requirement for filing any new FCC Application
or any amendment to the already pending FCC Application that requires or
results in the assignment by the FCC of a new application number.
Section 1.60. "Permitted Liens" shall have the meaning set forth in
Section 2.3(a).
Section 1.61. "Person" shall mean any individual, corporation,
partnership, joint venture, trust, unincorporated organization, other form of
business or legal entity or Government Authority.
Section 1.62. "Program Contracts" shall have the meaning set forth in
Section 2.1(e).
Section 1.63. "Projections" shall have the meaning set forth in
Section 3.21.
Section 1.64. "Prorations Certificates" shall have the meaning set
forth in Section 2.6(b).
Section 1.65. "Real Property" shall have the meaning set forth in
Section 3.6(a).
Section 1.66. "Real Property Leases" shall have the meaning set forth
in Section 3.6(a).
Section 1.67. "Retained Liabilities" shall have the meaning set forth
in Section 2.4.
Section 1.68. "Returns" shall mean returns, reports and forms required
to be filed with any domestic or foreign taxing authority.
Section 1.69. "Sealed Files" shall have the meaning set forth in
Section 2.1(j).
Section 1.70. "Seller" shall have the meaning set forth in the first
paragraph hereof.
Section 1.71. "Seller Indemnified Parties" shall have the meaning set
forth in Section 11.2(a).
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Section 1.72. "Station Employee Benefit Plans" shall have the meaning
set forth in Section 7.1(a).
Section 1.73. "Station Employees" shall have the meaning set forth in
Section 7.1(a).
Section 1.74. "Station" shall have the meaning set forth in the second
paragraph hereof.
Section 1.75. "Station's Business" shall mean the businesses currently
conducted by the Station, taken as a whole, including the Assets and operations
thereof and the Assumed Liabilities, except for the Excluded Assets and
Retained Liabilities, to be sold or assumed pursuant to this Agreement.
Section 1.76. "Taxes" shall mean (i) all taxes (whether federal,
state, local or foreign) based upon or measured by income and any other tax
whatsoever, including gross receipts, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, employment,
unemployment, environmental (including taxes under Code Section 59A), Social
Security (or similar), disability, alternative or add-on minimum, estimated,
excise, or property taxes, together with any interest or penalties imposed with
respect thereto and (ii) any obligations under any agreements or arrangements
with respect to any Taxes described in clause (i) above.
Section 1.77. "Taxing Authority" shall mean any Government Authority
having jurisdiction over the assessment, determination, collection, or other
imposition of Tax.
Section 1.78. "TeleRep Contract" shall mean that certain contract
dated December 5, 1988, between TeleRep, Incorporated ("TeleRep") and Gillett
Broadcasting of Tennessee, Inc. ("Gillett"), as amended October 30, 1992, by
agreement between TeleRep and CITP, a true and complete copy of which has
previously been provided by Seller to Buyer.
Section 1.79. "Title Commitment" shall have the meaning set forth in
Section 3.6(b).
Section 1.80. "Title Company" shall mean Chicago Title Insurance
Company.
Section 1.81. "Title Policy" shall have the meaning set forth in
Section 2.7(a)(vii).
Section 1.82. "Tower Leases" shall have the meaning set forth in
Section 3.6(a).
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Section 1.83. "Trade Agreements" shall mean agreements for the sale of
advertising time by the Station to advertisers for consideration other than
cash or programming.
Section 1.84. "Updated Survey" shall have the meaning set forth in
Section 5.17.
Section 1.85. "WCC" shall have the meaning set forth in Section 11.7.
Section 1.86. "WCC's Indemnification Escrow Agreement" shall have the
meaning set forth in Section 11.7.
ARTICLE II
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Sale of Assets; Closing
-----------------------
Section 2.1. Assets to Be Acquired. Subject to the satisfaction or
waiver in writing of the conditions set forth herein and to the other terms,
conditions and provisions hereof, at the Closing, Seller shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire,
accept and pay for, all of Seller's right, title and interest in all of the
properties, assets and other rights (excluding the Excluded Assets) owned or
leased by, or licensed to, Seller on the Closing Date and used or useful in the
Station's Business without regard to where located (collectively, the
"Assets").
The Assets shall include but not be limited to the following:
(a) all licenses, permits and other authorizations issued by the FCC
to Seller with respect to the Station (the "FCC Authorizations"), including
those set forth on Schedule 2.1(a), and all applications therefor, together
with any renewals, extensions, or modifications thereof and additions thereto;
(b) all equipment, machinery, vehicles, furniture, fixtures,
transmitting towers, transmitters, antennae, office materials and supplies,
spare parts and other tangible personal property of every kind and description
owned as of the date of this Agreement by Seller and used or useful in
connection with the Station's Business, including those set forth on Schedule
2.1(b), and any additions, improvements, replacements and alterations thereto
made between the date of this Agreement and the Closing Date, but excluding
items replaced in the ordinary course of business between the date of this
Agreement and the Closing Date;
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(c) all land, leaseholds, easements and other interests of every kind
and description in real property, buildings, towers, and antennae, and
improvements thereon owned, leased or used or useful by Seller in the Station's
Business, including those set forth on Schedule 2.1(c), and those acquired
between the date hereof and the Closing Date by Seller as permitted by Section
5.1 of this Agreement;
(d) all orders and agreements now existing, or entered into in the
ordinary course of business between the date hereof and the Closing Date, for
the sale of advertising time on the Station for cash (and all such agreements
entered into after the date of this Agreement in the ordinary course of
business or as permitted by Section 5.1 of this Agreement) to the extent the
foregoing have not been performed as of the Closing Date, and all Trade
Agreements listed on Schedule 2.1(d) (and all such agreements entered into
between the date of this Agreement and the Closing Date as permitted by Section
5.1 of this Agreement) to the extent not performed as of the Closing Date;
(e) all film and program licenses and contracts, listed on Schedule
2.1(e), under which Seller is authorized to broadcast film product or programs
on the Station, to the extent not fully performed as of the Closing Date,
including all cash and non-cash (barter) program licenses and contracts, and
the program licenses and contracts for the Station entered into between Cook
Inlet Television, Inc., a Tennessee corporation wholly owned and controlled by
CITP, and King World Productions, Inc., that are listed on Schedule 2.1(e),
which Seller shall cause Cook Inlet Television, Inc., to assign to Buyer at
Closing (collectively, the "Program Contracts"), and any other such program
licenses and contracts that are entered into between the date of such Schedule
and the Closing Date in accordance with Section 5.1 hereof. As used in this
Agreement, "contract" means any agreement, arrangement, commitment, or under-
standing, written or oral, expressed or implied, to which the Station or Seller
with respect to the Station is a party or is bound;
(f) all contracts listed on Schedule 2.1(f), together with all such
contracts that will have been entered into in the ordinary course of business
of the Station between the date of such Schedule and the Closing Date as
permitted by Section 5.1 of this Agreement, to the extent not performed as of
the Closing Date (collectively, "Other Contracts");
(g) all trademarks, service marks, patents, trade names, jingles,
slogans, logotypes, and other similar intangible assets owned or used by Seller
in connection with the Station's Business as of the date hereof, including
Seller's rights to use the call letters WSMV and any related names and phrases
and those registered trademarks set forth on Schedule 2.1(g), and those
acquired between the date hereof and the Closing Date;
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(h) all programs and programming materials and elements of whatever
form or nature owned by Seller and used in connection with the Station's
Business as of the date hereof, whether recorded on tape or any other substance
or intended for live performance, and whether completed or in production, and
all related common-law and statutory copyrights owned by or licensed to any
Seller and used in connection with the Station's Business, together with all
such programs, materials, elements, and copyrights acquired between the date
hereof and the Closing Date, to the extent assignable to Buyer by Seller;
(i) all FCC logs and other records that relate to the operation of the
Station, including the Station's Public Inspection File;
(j) all files, books and other records of Seller, including all
written technical information, data, specifications, research and development
information, engineering drawings, manuals, computer programs, tapes and
software relating to the Station's Business, other than account books of
original entry (copies of which shall be provided to Buyer) and other than
duplicate copies of such files and records, if any, that are maintained at the
headquarters offices of Seller or any direct or indirect parent of Seller for
tax and accounting purposes and other than files, books and records relating
solely to court proceedings and the settlement thereof as to which Seller is
under a legal or contractual obligation of confidentiality (the "Sealed
Files");
(k) all of Seller's goodwill in and going concern value of the
Station;
(l) all franchises, approvals, permits, licenses, orders,
registrations, certificates, variances and similar rights obtained from
governments and governmental agencies relating to the Station's Business set
forth on Schedule 2.1(l);
(m) all claims, causes of action, choses in action, rights of
recovery, rights of setoff, rights of recoupment, deposits, reserves and
prepaid expenses (other than those relating to Excluded Assets or to
Liabilities which are not Assumed Liabilities), which shall be prorated or
adjusted as provided in Section 2.6;
(n) the NBC Contract; and
(o) security deposits with respect to Assumed Liabilities.
Section 2.2. Excluded Assets. Notwithstanding anything to the
contrary herein, all of Seller's right, title and interest in all of the
following properties, assets and other rights (the "Excluded Assets") shall be
excluded from the Assets:
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(a) all Accounts Receivable except as provided by Section 2.11 hereof;
(b) all books and records that Seller is required by law to retain,
and all payables records and invoices, provided that, at Buyer's request,
Seller shall provide Buyer at Buyer's expense with copies of such records
covering the period that Seller was licensee of the Station and prior periods
if in Seller's possession;
(c) all books, records, and other intangible assets related solely to
Seller's internal partnership matters and headquarters operations and not
related to the operation of the Station;
(d) copies of business records included in the Assets that are
reasonably required by Seller in order to permit Seller to prepare any tax
return or other filing or report to be made with any Taxing Authority after the
Closing Date;
(e) any assets of any Station Employee Benefit Plan or any other
employee benefit plan and any rights under any plan or agreement relating to
employee benefits, employment or compensation to be retained by Seller in
accordance with the provisions of Article VI;
(f) any rights of Seller or the Station which are contingent on the
satisfaction of Liabilities that are Retained Liabilities;
(g) any assets of Seller or the Station which are related to any
Retained Liabilities, except for tangible assets essential to the operation of
the Station;
(h) all cash, bank deposits, certificates of deposit, securities,
letters of credit, cash equivalents, trade deposits, or other similar items
except for security deposits for Assumed Liabilities;
(i) all rights, demands, claims, Actions and causes of action (whether
for personal injuries or property, consequential or other damages of any kind)
(collectively, "Claims") which Seller or the Station may have on, or after, the
date hereof, against any Government Authority for refund or credit of any type
with respect to Seller's Taxes;
(j) all Claims which Seller or the Station may have against any person
with respect to, or which are related to, any Retained Liabilities or Excluded
Assets;
(k) all Contracts of insurance, except for any rights that may be
assigned pursuant to Sections 10.4 and 13.14(a) hereof;
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(l) the names "CITP," "Cook Inlet Television Partners, L.P.,"
"CIRTLP," "Cook Inlet Television License Partners, L.P.," and "Cook Inlet" and
any derivatives thereof;
(m) the License Agreement between the Station and Central Tennessee
Broadcasting, Inc., licensee of WXMT, Channel 30, Nashville, dated May 20,
1992, as altered and modified by that certain letter dated February 3, 1994,
for the program "Scene at Nine" and the Station's claims thereunder; and
(n) the Miller Condos more particularly described in Schedule 2.2(n).
Section 2.3. Assumption of Liabilities. (a) The Assets shall be
sold and conveyed to Buyer free and clear of all liens, claims, mortgages,
security interests, pledges, charges and encumbrances of any nature whatsoever
(collectively, "Liens") except liens set forth on Schedule 2.3A hereto
(collectively, "Permitted Liens"). On and after the Closing Date, Buyer will
assume and discharge only those Liabilities of Seller relating to the Assets or
the Station's Business which shall be specified in detail on Schedule 2.3B
hereto (collectively, the "Assumed Liabilities"). Except as set forth in this
Section 2.3, Buyer will assume no other Liabilities (including any Liabilities
or Actions alleging or relating to any tort, product liability, environmental
liability, taxes, or breach of contract or otherwise seeking damages, and no
Liabilities relating to the Excluded Assets (the Liabilities of Seller which
are not assumed pursuant to this Agreement are hereinafter collectively
referred to as the "Non-Assumed Liabilities")) in connection with the Assets,
the Station's Business or the transaction contemplated hereby.
(b) Without limiting the generality of Section 2.3(a) and
notwithstanding any other provision hereof, each of the following is a
Non-Assumed Liability of Seller which Buyer does not assume:
(i) any obligation of Seller created by this Agreement;
(ii) any Liabilities to the extent that the existence thereof is
materially inconsistent with, or the amount thereof materially exceeds the
amount represented in, any of Seller's representations and warranties in this
Agreement or any Schedule or certificate delivered pursuant hereto (for
purposes of this subsection (ii) a material amount is an individual amount in
excess of $25,000 or an amount of $100,000 in the aggregate);
(iii) any Liability of Seller arising from indebtedness for
borrowed money or long-term debt of Seller;
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(iv) any Liability of Seller arising from or in connection with,
the conduct of the Station's Business or the ownership of the Station or the
Assets by Seller prior to the consummation of the transactions contemplated
hereby at the Closing, including any such Liabilities arising by reason of any
violation or claimed violation by Seller, by acts or events or omissions
arising or occurring prior to the Closing, of any federal, state, local or
foreign law, rule, regulation, ordinance or any requirement of any Government
Authority, other than any such Liability which Buyer has expressly assumed as
an Assumed Liability;
(v) any Liability of Seller for Taxes owed to any Taxing
Authority for periods before the Closing Date;
(vi) any Liability against which Seller is insured, to the extent
of such insurance;
(vii) any Liability of Seller arising out of or related to past,
present or future litigation involving Seller, if the facts on which the
relevant cause of action is based occurred before the Closing;
(viii) any Liability in respect of any contract or agreement to
which Seller is a party or beneficiary which is not a contract subject to
assignment and assumption by Buyer;
(ix) any Liability of Seller in connection with environmental
matters except to the extent limited by Section 3.17 and Article XI hereof;
(x) any Liability of Seller or any partner of Seller arising from
any claim or Action brought by or on behalf of any present or former holder of
any debt or equity security of Seller or by any lender to Seller, including any
Liability arising from any indemnification, reimbursement or advance in
connection therewith;
(xi) any liability under any Station Employee Benefit Plan; and
(xii) any Liability of Seller which is not an Assumed Liability
under Section 2.3(a).
Notwithstanding any provision herein to the contrary, Buyer shall not
assume or become liable in any manner for any Liability of Seller, and Seller
shall remain responsible for any and all Liabilities of Seller, other than the
Assumed Liabilities.
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Section 2.4. Retained Liabilities. Seller shall retain, and shall
continue to be responsible after the Closing Date for, the "Retained
Liabilities," which term shall mean all Liabilities of the Seller and the
Station's Business which are not Assumed Liabilities including, without
limitation, the Non-Assumed Liabilities.
Section 2.5. Consideration. (a) Simultaneously with entering into
this Agreement, Buyer shall pay to Wells Fargo Bank, N.A., which shall serve as
escrow agent ("Escrow Agent") under the Escrow Agreement of even date herewith
in substantially the form of Exhibit 2.5(a) ("Escrow Agreement"), the sum of
Seven Million Dollars ($7,000,000) (which amount plus accrued interest shall be
referred to as the "Deposit"). The Deposit shall be held and disbursed by the
Escrow Agent pursuant to the terms and conditions of the Escrow Agreement.
(b) Subject to the terms and conditions hereof and to the provisions
of this Section 2.5, at the Closing, Buyer shall (i) pay to Seller an amount
equal to the Base Purchase Price, less the Deposit and less the sum of Twelve
Million Dollars ($12,000,000), as required to be adjusted at the Closing
pursuant to the provisions of Section 2.6, by wire transfer to the account
specified in writing by Seller, (ii) pay the sum of Twelve Million Dollars
($12,000,000) to other escrow accounts at Wells Fargo Bank, N.A., as the escrow
agent under WCC's Indemnification Escrow Agreement and CITPH's Indemnification
Escrow Agreement as provided in Section 11.7 hereof, (iii) cause the Escrow
Agent to pay to Seller the Deposit, by wire transfer to the account specified
in writing by Seller, and (iv) assume the Assumed Liabilities (collectively the
"Consideration").
(c) Unless Seller is in material default under this Agreement, if
Seller terminates this Agreement pursuant to Section 12.1(b)(i) of this
Agreement because of Buyer's material default in the observance or in the due
and timely performance of its covenants or agreements under Sections 4.4,
4.5(a), 4.6, 6.1, 6.2, 6.6, 6.9 (other than the first sentence thereof), 6.10
or 6.12 hereof, or if Buyer defaults in the performance of its obligation to
close under this Agreement, Seller shall be entitled to (a) the Deposit without
proof of damages to Seller, plus (b) indemnification pursuant to Article XI
hereof in the additional amount of Seven Million Dollars ($7,000,000) provided
Seller proves damages to it in excess of the amount of the Deposit, plus (c)
Seller's court costs and reasonable attorneys' fees incurred by Seller in
enforcing its rights to the Deposit hereunder, provided Seller prevails in its
enforcement efforts. As a condition to its right to such amounts, Seller shall
not be required to have tendered the Assets specified in Section 2.1 of this
Agreement but shall be required only to demonstrate that it is willing and able
to do so and to perform its other closing obligations in all material respects.
If this Agreement is terminated for any reason other than as provided in the
first sentence of this Section 2.5(c), the Deposit shall be returned to Buyer.
Buyer shall be entitled to its court costs and reasonable attorneys' fees
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incurred by Buyer in enforcing its rights to the return of the Deposit
hereunder, provided Buyer prevails on the return of the Deposit.
Section 2.6. Closing Proration and Adjustment. (a) On the Closing
Date, the Consideration shall be either increased or decreased, by the
adjustments called for under the following subparagraphs (b) and (c) of this
Section 2.6. Final adjustments to the Consideration shall be made after the
Closing Date pursuant to the provisions of this Section 2.6.
(b) Except as otherwise expressly provided for in this Section 2.6,
all income and expenses arising from the Station's Business shall be prorated
between Buyer and Seller as of the Closing Date in accordance with generally
accepted accounting principles and the principles that (i) Seller shall receive
all revenues and all refunds to Seller and deposits of Seller held by third
parties (except for security deposits with respect to Assumed Liabilities) and
shall be responsible for all expenses and costs allocable to the conduct of the
Station's Business for the period prior to the Closing Date and (ii) Buyer
shall receive all revenues and shall be responsible for all costs and expenses
allocable to the conduct of the Station's Business on the Closing Date and for
the period thereafter. Such prorations shall include: (r) commissions and
runover in accordance with the TeleRep Contract; (s) all FCC License,
Regulatory or other annual fees; (t) all ad valorem, real and personal property
taxes and assessments (but excluding Taxes arising by reason of the transfer of
the Assets as contemplated hereby, which shall be paid as set forth in Section
13.5 of this Agreement), which taxes shall be prorated on the due date basis
(however, although current installments of assessments shall be prorated
between Buyer and Seller as of the Closing Date, subsequent unpaid installments
of assessments, if any, shall be assumed by Buyer); (u) business and license
fees; (v) wages and salaries of employees (including accruals for bonuses,
commissions and vacation pay, but no accrual for sick pay); (w) charges for
utilities, water/sewer and natural gas; (x) time sales agreements (but
excluding prorations or adjustments relating to Trade Agreements and barter
agreements which shall be handled and paid as set forth in Section 2.12
hereof); (y) property and equipment rentals; and (z) all other income and
expenses attributable to the ownership and operation of the Station's Business.
For the purpose of determining the prorations and adjustments required pursuant
to this Section 2.6(b), Seller shall deliver to Buyer, not less than three (3)
business days prior to the Closing Date, certificates (the "Prorations
Certificates"), to be signed at Closing by appropriate officers of Seller after
due inquiry by such officers, which specifies Seller's good faith determination
of the dollar amount of the prorations and adjustments under this Section
2.6(b) as of the Closing Date. At Closing, the Consideration payable to Seller
under Section 2.5 hereof shall be decreased to the extent Seller owes Buyer
funds or increased to the extent Buyer owes Seller funds, based upon the amount
set forth in the Prorations Certificates.
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(c) Within sixty (60) days after the Closing Date, Seller shall
deliver to Buyer certificates (the "Closing Certificates") to be signed by
appropriate officers of Seller after due inquiry by such officers, setting
forth any proposed changes (in accordance with the principles set forth in
subparagraph (b) above) in adjustments or payments made at the Closing pursuant
to subparagraphs (b) and (c) of this Section 2.6.
(d) If Buyer shall conclude that the Closing Certificates do not
accurately reflect the changes to be made to the adjustments made as of the
Closing pursuant to subparagraphs (b) or (c) of this Section 2.6, Buyer shall,
within thirty (30) days after its receipt of Seller's Closing Certificates,
furnish Seller with a written statement setting forth, with appropriate
supporting documentation, any discrepancy or discrepancies believed to exist
(the "Discrepancy Statement"). If Buyer notifies Seller of its acceptance of
Seller's Closing Certificate, or if Buyer otherwise fails to deliver a
Discrepancy Statement within the thirty (30) day period specified in the
immediately preceding sentence, Seller's determination of the Consideration in
the Closing Certificates shall be conclusive and binding on the parties as of
the last day of such thirty (30) day period.
(e) Seller and Buyer shall attempt jointly and in good faith to
resolve by mutual agreement any discrepancy within thirty (30) days after
receipt by Seller of Buyer's Discrepancy Statement, which resolution, if
achieved, shall be binding upon all parties to this Agreement and not subject
to dispute or review. If Seller and Buyer cannot resolve the discrepancy to
their mutual satisfaction within such thirty (30) day period, and if the amount
in dispute exceeds $100,000 Buyer and Seller shall, within the following ten
(10) days, jointly designate a "Big Six" independent public accounting firm
(other than KPMG Peat Marwick) to be retained to review the Closing
Certificates together with Buyer's Discrepancy Statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Seller on the one hand and Buyer on the other hand. Such
firm shall report its conclusions in writing to Buyer and Seller as soon as
practicable (but in any event within forty-five (45) days and such conclusions
as to adjustments pursuant to subparagraphs (b) and (c) of this Section 2.6
shall be conclusive and binding on all parties to this Agreement and not
subject to dispute or review.
(f) If, as a result of the final determination of adjustments pursuant
to this Section 2.6, (i) Buyer is determined to owe an amount to Seller, Buyer
shall pay such amount thereof to Seller, in immediately available funds, within
five (5) days of the date of such final determination, and (ii) if Seller is
determined to owe an amount to Buyer, Seller shall pay the such excess to
Buyer, in immediately available funds, within five (5) days of the date of such
final determination.
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(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 "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.
(h) Notwithstanding any other provision of this Agreement, (i) Buyer
shall be entitled to receive as part of the Closing Proration and Adjustment
the full amount of the $250,000 Extension Payment due January 1, 1995, under
Paragraph 1(b)(iii) of the Amendment dated October 30, 1992, to the TeleRep
Contract, (ii) Buyer shall be responsible for payment of the full amount of any
refund of rent that may be due to the Lessee pursuant to the Lease Agreement
dated January 12, 1983, between Gillett Broadcasting Company of Tennessee, as
Lessor, and Reel Broadcasting Company, Inc., as Lessee (predecessor to Act III
Broadcasting, Inc.) (the "Act III Lease"), (iii) Seller shall be responsible
for paying all 1994 employment year bonuses and Buyer shall be responsible for
paying any employment year bonuses for later years, and (iv) the balance of the
remaining Station financial obligation to Ralph Emery shall be a proration
adjustment in favor of Buyer.
Section 2.7 Additional Closing Deliveries. (a) In addition to the
other things required to be done hereby, at the Closing, Seller shall deliver,
or cause to be delivered, to Buyer the following:
(i) certificates dated the Closing Date and validly executed on
behalf of Seller to the effect that the conditions set forth in Article X have
been satisfied;
(ii) a copy of the partnership resolution of Seller and
resolutions of the board of directors of the partners of Seller, or consents or
similar enabling document of any non-corporate partner of Seller, authorizing
the execution, delivery and performance hereof by Seller, and where appropriate
a certificate of any such corporate secretary or assistant secretary, dated as
of the Closing Date, that such resolutions were duly adopted and are in full
force and effect;
(iii) the opinions of Seller's counsel required by Section 10.3;
(iv) certified copies of the Certificate of Existence for CITP
and CITLP;
(v) duly executed instruments of conveyance and transfer, in form
and substance reasonably satisfactory to counsel to Buyer, effecting the sale,
transfer, assignment and conveyance of the Station's Business to Buyer,
including, but not limited to, the following:
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(A) a duly executed assignment and assumption agreement;
(B) a special warranty deed of the type customarily used for
the conveyance of commercial real estate in Tennessee (the "Deed") in
recordable form with covenants of further assurance and right to convey,
conveying fee simple title to the Real Property;
(C) assignment of the Real Property Leases and the Tower
Leases;
(D) assignments of the FCC Authorizations;
(E) bill of sale; and
(F) all consents pursuant to Section 10.7; provided, however,
that where a third party requires as a condition for granting a consent that it
be provided with evidence that the Buyer has assumed the relevant contract or
that the Closing has occurred, Seller shall not be required to deliver to Buyer
such consent until after the Closing, but instead will deliver a letter from
such third party stating that its consent will be granted upon receipt of
evidence that Buyer has assumed the relevant contract or that the Closing has
occurred;
(vi) an affidavit to the effect that neither Seller is a "foreign
person" within the meaning of Section 1445 of the Internal Revenue Code of
1986;
(vii) an ALTA Form Owner's Title Insurance Policy (October 1992)
issued by the Title Company (the "Title Policy") insuring Buyer in an amount no
greater than $10,000,000 (the determination of such amount to be made in
Buyer's reasonable discretion) with respect to the Real Properties, containing
(i) a zoning endorsement insuring the zoning of the Real Properties for their
current uses; and (ii) an access endorsement insuring access to the Real
Properties from public roadways, and, (iii) no exceptions but the following
(such exceptions being included in the definition of "Permitted Liens" under
this Agreement):
(A) Metropolitan Government of Nashville and Davidson County,
Tennessee real property taxes for the current year (a lien but not yet due and
payable);
(B) a 5-foot easement for public utilities along the
southerly line of Lots No. 27 and 33, inclusive of the premises granted the
City of Nashville, by John B. Cowden, Trustee, of record in Book 1638, page
632, in the Register's Office for Davidson County, Tennessee (the "Register's
Office");
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(C) Memorandum of Lease by and between WSM, Incorporated, and
Gillett Broadcasting of Tennessee, Inc., of record in Book 5815, page 192, in
the Register's Office;
(D) Memorandum of Option to Lease between Gillett
Broadcasting of Tennessee and Reel Broadcasting Company, Inc., of record in
Book 5970, page 950, in the Register's Office, and Memorandum of Lease between
such parties, of record in Book 6006, page 660, in the Register's Office;
(E) Rights of Vanderbilt University (WRVU Radio Station) and
the Federal Bureau of Investigation under existing leases (unrecorded);
(F) agreements, covenants, conditions, restrictions and
easements contained in deed of record in Book 7860, page 416, in the Register's
Office, and easements of record in Book 7860, page 442, and Book 7860, page
451, in the Register's Office;
(G) all matters shown on the Survey and an exception to any
insurance coverage concerning the amount of acreage of the Real Properties;
(H) Lease Agreement, dated October 1, 1993, between Cook
Inlet Television Partners, L.P. and Edmund Lagan being Nashville Repeater
Association (unrecorded);
(I) Lease Agreement, dated November 21, 1991, between Cook
Inlet Television Partners, L.P. and Cromwell Group Inc. (unrecorded); and
(J) easements, rights-of-way, encroachments, restrictions,
conditions, encumbrances and other imperfections or irregularities of title
which, individually or in the aggregate, do not, in Buyer's reasonable opinion,
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the Station's Business;
(viii) an assignment of all registered trademarks included in the
Assets in form acceptable for recording by the U.S. Patent and Trademark
Office; and
(ix) such other documents as may reasonably be requested by
Buyer's counsel.
(b) In addition to the payment of the Consideration in accordance with
Section 2.5 and the other things required to be done hereby, at the Closing,
Buyer shall deliver, or cause to be delivered, to Seller the following:
(i) certificates dated the Closing Date and validly executed on
behalf of Buyer to the effect that the conditions set forth in Article IX have
been satisfied;
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(ii) a copy of the resolutions of the board of directors of
Buyer, or similar enabling document, authorizing the execution, delivery and
performance hereof by Buyer, and a certificate of its secretary or assistant
secretary, dated as of the Closing Date, that such resolutions were duly
adopted and are in full force and effect;
(iii) duly executed assignment and assumption agreement;
(iv) the opinions of Buyer's counsel required by Section 9.3;
(v) certified copies of the articles of incorporation, by-laws,
and good standing certificates of the Buyer;
(vi) if not previously delivered to Seller, all other
certificates, documents, instruments and writings required pursuant hereto to
be delivered by or on behalf of Buyer at or before the Closing; and
(vii) such other documents as may be reasonably requested by
Seller's counsel.
Section 2.8. Time and Place of Closing. The Closing shall take place
on a business day that is within ten (10) business days after the Final Order
Date provided that all conditions specified in Articles IX and X hereof shall
be satisfied or waived by the party entitled to waive such condition, and
provided further that the Closing shall not take place earlier than January 5,
1995. Buyer shall designate the Closing Date by giving Seller, on or after the
Final Order Date, at least five (5) business days prior written notice of such
Closing Date. The Closing shall take place on the Closing Date at 10:00 A.M.,
Washington, D.C. time, at the offices of Covington & Burling, 1201 Pennsylvania
Avenue, N.W., Washington, D.C. 20044, or at such other time and place as the
parties shall agree. If necessary to assure that the Closing does not occur
before January 5, 1995, Buyer and Seller shall request the FCC to extend the
period within which the parties may close pursuant to the FCC Consent.
Section 2.9. Assignment by Buyer. Meredith Corporation may designate
a Permitted Assign to acquire the Station's Business at the Closing upon
execution of the documentation necessary to effect such assignment. All
references herein to "Buyer" shall be deemed to refer to such assignee
("Assignee"), and such Assignee shall have the same rights and obligations as
Meredith Corporation under this Agreement. Any such assignment shall not
relieve Meredith Corporation of any of its obligations under the Agreement as
assigned.
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Section 2.10. Control of Station. Prior to Closing, Buyer shall not
directly or indirectly, control, supervise or direct, or attempt to control,
supervise or direct, the operations of the Station or the Station's Business.
Such operations shall be the sole responsibility of Seller and, subject to the
provisions of Section 5.1, shall be in its complete discretion.
Section 2.11. Accounts Receivable. All Accounts Receivable of Seller
arising out of operations of the Station prior to the Cut-Off Time shall remain
the property of Seller. Seller hereby authorizes Buyer to collect such
receivables for the account of Seller for a period of one hundred eighty (180)
days after the Closing Date ("Collection Period"). Within fifteen (15)
business days after the Closing Date, Seller shall deliver to Buyer a complete
and detailed statement of each account receivable, including a statement
showing all commissions due on such receivables, if any (the "Commissions").
Within ten (10) business days after the end of each calendar month during the
Collection Period, Buyer shall pay to Seller all amounts collected by Buyer
during the preceding calendar month on account of Seller's accounts receivable,
together with an itemized listing of each receivable collected, less any
Commissions which may be due and paid by Buyer in accordance with the statement
provided by Seller. All accounts not collected by Buyer shall be returned to
Seller at the end of the Collection Period, and Buyer shall have no further
responsibility therefor. Buyer, in its collection efforts, shall not be
required to refer any of Seller's accounts to a collection agency or an
attorney for collection or use any extraordinary means of collection and shall
not assign, pledge or grant a security interest in the accounts to any third
party, claim a security interest or other right in and to such accounts (except
as provided in this Section 2.11), or compromise, settle, or adjust any account
without receiving the written approval of Seller. Seller shall initiate no
litigation or similar action with respect to these accounts receivable until
the expiration of the Collection Period. All payments received by Buyer from a
customer of the Station which has an account receivable which is being
collected by Buyer for Seller, and which also has other accounts with Buyer for
the Station, shall be applied by Buyer in payment of the accounts for the
Station in order of the date of invoice until Seller's accounts with that
customer are paid in full, except if the customer disputes its particular
account with Seller (in which event payment may be applied to Buyer's
accounts), or designates the invoice to which the payment should be applied.
During the Collection Period, Seller shall make no direct solicitation of
payment of the Accounts Receivable.
Section 2.12. Trade Agreements. Schedule 2.1(d) lists all Trade
Agreements as of the date of this Agreement. Buyer shall assume as of the
Closing Date the Trade Agreements listed in Schedule 2.1(d) which have not yet
been performed, together with those Trade Agreements entered into between the
date hereof and the Closing Date in accordance with Section 5.1 of this
Agreement. Liabilities and obligations under Trade Agreements shall be
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prorated in favor of Buyer to the extent that the liability of the Station for
air time under such agreements as of the Cut-Off Time exceeds by $5,000 the
fair market value of the goods and services to be received by Buyer with
respect to the Station after the Closing under such agreements, plus the fair
market value of the Station's inventory of goods and services that have been
received by the Station prior to the Cut-Off Time and assigned to Buyer
hereunder. The liability of the Station for unperformed time as of the Cut-Off
Time shall be valued according to the Station's rate card as of the date of
this Agreement. Buyer shall not be obligated to make any proration in favor of
Seller with respect to Trade Agreements, notwithstanding that the fair market
value of goods and services to be received by Buyer exceeds the liability for
unperformed time. Proration procedures with respect to Trade Agreements and
any disagreements concerning them shall be handled in accordance with the
procedures in Section 2.6(c) through (f) hereof.
ARTICLE III
-----------
Representations and Warranties of Seller
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Partnership Status; Authorization; etc. (a) Each of
CITP and CITLP is a limited partnership duly organized, validly existing, duly
qualified to do business in, and in good standing under the laws of the State
of Tennessee and is not required to be qualified in any other jurisdiction in
connection with the Station's Business. Seller has all necessary partnership
power and authority to carry on the Station's Business as it is now being
conducted, and to own, lease and operate the Assets owned, leased and being
operated by them, and to enter into and consummate the transactions
contemplated by this Agreement. Except as disclosed on Schedule 3.1, Seller is
not a participant in any joint venture or partnership with any other person or
entity with respect to the Station's Business.
(b) Each of CITP and CITLP has all necessary power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement and the performance of Seller's
obligations hereunder have been duly and validly authorized by all necessary
partnership action on the part of Seller and no other partnership proceedings
or actions on the part of Seller, or its partners is necessary therefor. The
execution, delivery and performance by Seller of this Agreement will not (i)
violate any provision of the partnership agreement or certificate of limited
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partnership of either CITP or CITLP, (ii) violate in any material respect any
provision of, or be an event that is (or with the passage of time will result
in) a material violation of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, or result in the imposition of any Lien
upon or the creation of a security interest in any of the Assets pursuant to,
any material mortgage, Lien, lease, agreement, instrument, order, arbitration
award, judgment, injunction or decree to which Seller is a party or by which it
is bound, or (iii) violate or conflict in any material respect with any
statute, rule or regulation applicable to Seller or any of its properties or
assets or any other material restriction of any kind or character to which
Seller is subject. This Agreement has been duly executed and delivered by
Seller, and, assuming the due execution and delivery hereof by Buyer, this
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether in equity or at law).
(c) Upon consummation of the Asset Purchase at the Closing, as
contemplated by this Agreement, Seller will deliver to Buyer good title to the
Assets free and clear of any Liens, except for Permitted Liens.
Section 3.2. Financial Statements. (a) Schedule 3.2 contains true
and complete copies of the audited balance sheet for the Station and the
related statements of operations, changes in partners' equity and cash flow of
the Station's Business as at December 31, 1993 (the "Financial Statements").
The Financial Statements have been prepared in accordance with United States
generally accepted accounting principles consistently applied by Seller.
(b) The balance sheet included in the Financial Statements fairly and
in all material respects presents the financial position of the Station's
Business as of its date, and the statements of operations and cash flows
included in the Financial Statements fairly and in all material respects
present the results of operations and the cash flows of the Station's Business
for the periods set forth therein.
Section 3.3. Undisclosed Liabilities. Except as disclosed in
Schedule 3.3, and except as reflected, reserved against or otherwise disclosed
in the Financial Statements (including the notes thereto), Seller did not have,
at December 31, 1993, any Liabilities affecting the Station's Business that
would be required to be reflected on the Financial Statements in accordance
with United States generally accepted accounting principles consistently
applied by Seller and which were not so reflected.
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Section 3.4. FCC Authorizations. CITLP is the holder of all rights
in and to the FCC Authorizations listed in Schedule 2.1(a), which FCC
Authorizations expire on the respective dates set forth on Schedule 2.1(a).
Schedule 2.1(a) sets forth a true and complete list of any and all pending
applications filed with the FCC by CITLP relating to the Station, true and
complete copies of which have been delivered by CITLP to Buyer. The FCC
Authorizations listed on Schedule 2.1(a) constitute all of the licenses and
authorizations required under the Communications Act, or the current rules,
regulations, and policies of the FCC for, and/or used in, the business and
operation of the Station as currently operated, except as noted on Schedule
2.1(a). The FCC Authorizations are in full force and effect, they are not
materially impaired by any act or omission of Seller or the officials of Seller
named in Section 13.10 hereof, and Seller has no knowledge that they are
impaired by any act or omission of any other partners, employees or agents of
Seller. Seller has no knowledge of any pending or threatened action by or
before the FCC to revoke, cancel, rescind, modify, or refuse to renew in the
ordinary course any of the FCC Authorizations. Seller has no knowledge of any
pending investigation, by or before the FCC, or any order to show cause, notice
of violation, notice of apparent liability, or notice of forfeiture or
complaint by, before or with the FCC against Seller or any of its partners or
affiliates with respect to the Station, other than investigations or other
proceedings affecting the broadcasting industry generally, nor does Seller have
knowledge that any of the foregoing are threatened. In all material respects,
the Station is operating in compliance with the FCC Authorizations, the
Communications Act, and the current rules, regulations, and policies of the
FCC. Seller has filed all material reports, forms and statements required to
be filed by Seller with the FCC. Except as disclosed in Schedules 2.1(a) and
2.1(l), there are no other material licenses, permits or authorizations from
Government Authorities that are required for the lawful conduct of the business
and operations of the Station as currently conducted. Seller has no knowledge
of any facts, conditions or events relating to Seller or the Station that would
disqualify Seller as assignor of the FCC Authorizations as provided in this
Agreement or from consummating the transactions contemplated herein within the
times contemplated herein.
Section 3.5. Ownership and Condition of Assets. Except as otherwise
set forth on Schedule 3.5, as of the Closing Date Seller will own or lease all
assets or their replacements used in or for the operation of the Station in the
manner operated by Seller on the date hereof. The tangible assets included in
the Assets and the improvements on the Leased Property owned or leased by
Seller included in the Assets are in good operating condition and repair for
the purposes for which they are currently used by Seller. The Assets include
all assets necessary for the conduct of the Station's Business. Except as set
forth on Schedule 3.5, Seller has, and will deliver to Buyer at Closing, good
and marketable title to the tangible and intangible assets and personal
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property included in the Assets, and all such assets and personal property are
free and clear of all Liens of any nature whatsoever except for (i) Permitted
Liens and (ii) the Liens set forth on Schedule 3.5, all of which Liens set
forth on Schedule 3.5 shall be discharged and removed prior to or on the
Closing Date.
Section 3.6. Real Properties. (a) Schedule 2.1(c) sets forth (i) a
list and legal description of all real properties or interests in real property
(including any easements) owned by Seller used in the Station's Business
(individually, a "Real Property" and collectively, the "Real Properties"), (ii)
each lease or other agreement under which Seller leases as a lessee or has
rights in any real property used in the Station's Business (the "Real Property
Leases"), and (iii) each lease or other agreement under which Seller leases as
a lessor to a third party any portion of the Real Properties (the "Tower
Leases"). Except as set forth on Schedule 2.1(c), Seller does not own or hold
any real property or any option to acquire any real property or interest
therein to be used in the Station's Business. Seller has delivered to Buyer
true and complete copies of the Real Property Leases and the Tower Leases.
There are no amendments or modifications to any of the Real Property Leases or
the Tower Leases, except as set forth on Schedule 2.1(c). The Real Properties
and the real estate subject to the Real Property Leases include all real
property or real property interests necessary for the conduct of the Station's
Business
(b) Seller has and will deliver to Buyer at Closing good and
marketable title to all of the Real Properties and has a valid and subsisting
leasehold interest in all the real property which is the subject of each of the
Real Property Leases (individually, a "Leased Property" and collectively, the
"Leased Properties"), free and clear of all Liens of any nature whatsoever,
except for (i) the Liens set forth on Schedule 3.5, all of which shall be
discharged and removed prior to or on the Closing Date and (ii) Permitted
Liens. Each of the Real Property Leases is a legal, valid and binding
agreement of the Seller and, to the knowledge of Seller, of the other parties
thereto and is enforceable in accordance with its terms except as limited by
bankruptcy, insolvency, reorganization and similar laws affecting the
enforcement of creditors' rights or contractual obligations generally.
Schedule 2.1(c) describes and sets forth copies of any policies insuring
Seller's title or leasehold interest in the Real Properties or the Leased
Properties, as applicable, including the amounts thereof. Schedule 2.1(c) also
sets forth a copy of a title insurance commitment issued by the Title Company
concerning the Real Properties (the "Title Commitment"). Seller has delivered
to Buyer a true and complete copy of the survey of the Real Properties prepared
by Gresham, Smith and Partners, last revised May 22, 1989 (the "1989 Survey")
and any other surveys, plans and maps in Seller's possession relating to the
Real Properties or the Leased Properties. Except for Permitted Liens and as
set forth on Schedule 3.6, none of the Real Properties or the Leased Properties
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is subject to any lease, sublease, license or other agreement in which Seller
grants to any other person any right to the use, occupancy or enjoyment of the
Real Properties or the Leased Properties or any part thereof.
(c) No event has occurred under any of the Real Property Leases that,
with the lapse of time or the giving of notice or both, would constitute a
default by Seller thereunder or, to Seller's knowledge, any landlord
thereunder, and there are no offsets thereunder claimed by Seller or, to
Seller's knowledge, by any other party thereto.
(d) Except as set forth on Schedule 2.1(c), no consents are expressly
required by the terms of either the Real Property Leases or the Tower Leases
for the transfer and assignment by Seller to Buyer of the Real Property Leases
or the Tower Leases. Seller is not obligated to pay any leasing or brokerage
commission relating to any Real Property Lease or any Tower Lease or any
renewal thereof.
(e) Except as set forth on Schedule 3.6, the Real Properties and all
structures and appurtenances thereto owned by Seller comply in all material
respects with all applicable laws, ordinances and regulations, rules,
regulations, orders and permits of any Government Authority, except for non-
compliance that would not have a material adverse effect, and no written notice
of violation of any such laws, rules, regulations, orders or permits has been
received by Seller or, to the knowledge of Seller, has been issued by any
Government Authority with respect to any Real Property or Leased Property, nor,
to Seller's knowledge, is there any investigation with respect to any such
violations, the basis for which has not been cured.
(f) To Seller's knowledge, there are (i) no actual or pending
impositions or assessments for public improvements with respect to any Real
Property or Leased Property for which Seller would be liable, and (ii) no
improvements constructed or planned that would be paid for by means of public
assessments upon any Real Property or Leased Property for which Seller would be
liable. Seller has not received any actual notice of and, to Seller's
knowledge, there is no pending, threatened or contemplated condemnation
proceeding affecting any Real Property or Leased Property or any part thereof
or of any sale or any disposition of any Real Property or any Leased Property
or any portion thereof in lieu of condemnation.
(g) On the Closing Date, no assets used in the Station's Business by
Seller will be located on any real property not included in the Real Properties
or leased by Seller under the Real Property Leases, except for such portable or
mobile equipment as may be in use by, or under the control of, Station
personnel at other locations.
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(h) All buildings and improvements owned by Seller included within the
Real Property and any premises leased by Seller pursuant to a Real Property
Lease are in good condition, working order and repair (ordinary wear and tear
excepted). All water, gas, electrical, utility, telecommunication, sanitary
and storm sewage lines and systems and other similar systems located on the
Real Properties or servicing the premises leased pursuant to the Real Property
Leases are operating and are sufficient to enable the Real Properties and
Leased Properties to be used and operated in all material respects in the
manner currently being used and operated by Seller.
(i) Each Real Property and each Leased Property has access or a valid
easement to a public right of way. To the knowledge of Seller, the current use
by Seller of each of the Real Properties and the Leased Properties is in
compliance with applicable zoning laws, except for non-compliance that would
not have a material adverse effect;
(j) Seller has delivered, or promptly after the date hereof will
deliver, to Buyer with respect to each Real Property, true and complete copies
of (i) real estate and personal property tax bills since 1990, and (ii) current
water, electricity, natural gas and sewer bills issued to Seller.
(k) Seller is not a "foreign person" or a "foreign corporation" as
such terms are defined in Section 1445 of the Internal Revenue Code of 1986, as
amended.
Section 3.7. Absence of Certain Changes or Events. Except as
disclosed on Schedule 3.7, since December 31, 1993, Seller has not, with
respect to the Station's Business:
(a) incurred any Liability, except (i) trade or business obligations
or liabilities incurred in the ordinary course of business, (ii) obligations
under any contracts or commitments made in the ordinary course of business,
(iii) sales, income, franchise, ad valorem, severance and windfall profit taxes
and assessments accruing or becoming payable in the ordinary course of
business, and (iv) as expressly permitted elsewhere in this Agreement;
(b) disposed of or acquired any material assets or business related to
or used in the Station's Business or cancelled any debts or claims related to
the Station's Business except in the ordinary course of business;
(c) suffered any extraordinary losses or any material damage,
destruction or other casualty losses with respect to any of the Assets, or
waived any rights of substantial value;
(d) entered into any material transaction other than in the ordinary
course of business;
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(e) conducted its business in any manner materially inconsistent with
its past practices;
(f) had any material adverse change in Business Condition;
(g) given any promise, assurance or guaranty of the payment, discharge
or fulfillment of any obligation of any other person or entity;
(h) sold or disposed of or otherwise divested itself of the ownership,
possession, custody and control of any of the Station's books and records of
any nature which, in accordance with sound business practices, are retained for
a period of time after their use, creation or receipt;
(i) transferred to any partner or any affiliate of any partner any
right, property or interest which is necessary or useful in the operation of
the Station's Business; or
(j) engaged in any transaction which gives rise to an intercompany
receivable, payable or loan between Affiliates of Seller and the Station.
Section 3.8. Litigation; Orders. Except as disclosed in Schedule
3.8, as of the date hereof, Seller has no knowledge of any lawsuits, actions,
administrative or arbitration or other proceedings or governmental
investigations pending or threatened against Seller that would reasonably be
expected to have a material adverse effect on the Station's Business, or its
value, or result in any material adverse change in the Assumed Liabilities, or
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith and, to the best knowledge of Seller, no basis for
such suits, actions, proceedings or investigations exists. Except as disclosed
in Schedule 3.8, as of the date hereof, there are no judgments or outstanding
orders, injunctions, decrees, forfeitures, stipulations or awards (whether
rendered by a court or administrative agency, or by arbitration) (i) with
respect to the FCC Authorizations, or (ii) against the Station's Business that
would reasonably be expected to, individually or in the aggregate, have a
material adverse effect on the Business Condition, or (iii) that would,
individually or in the aggregate, prohibit the consummation of the transactions
contemplated hereby.
Section 3.9. Intellectual Property. Schedule 2.1(g) sets forth a
correct and complete list of all registered copyrights, trademarks, service
marks, patents, trade names and logotypes owned by Seller with respect to the
Station or under which Seller or the Station is licensed or franchised, all of
which are, except as set forth on Schedule 3.9, valid, in good standing and
uncontested. Except as set forth on Schedule 3.9, Seller possesses adequate
rights, licenses or other authority to use all call letters, copyrights,
patents, trademarks, service marks and trade names necessary to conduct the
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Station's Business. Except as set forth on Schedule 3.9, Seller has not
received any notice with respect to any alleged infringement or unlawful or
improper use of any copyright, patent, trademark, service mark, trade name, or
other intangible property right owned or alleged to be owned by others and used
in connection with the Station. Except as disclosed in Schedule 3.9, Seller
has no knowledge that any partner or employee of Seller has any interest in any
copyright, patent, trademark, trade name, logotype, jingle, slogan, process,
invention or formula used in connection with the Station apart from such
person's interest in Seller and apart from Excluded Assets. Except as
disclosed in Schedule 3.9, Seller has not granted any licenses or other rights
to any copyright, patent, trademark, trade name, logotype, jingle or slogan
used in connection with the Station.
Section 3.10. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc. (a) Schedule 2.1(l) includes all material licenses, permits,
franchises and other authorizations of any Government Authority (other than FCC
Authorizations) possessed by or granted to Seller in connection with the
Station's Business (the "Licenses"). Except as disclosed in Schedule 2.1(l),
all such Licenses are in full force and effect. As of the date hereof except
as disclosed in Schedule 2.1(l), Seller has no knowledge that any proceeding is
pending or threatened seeking the revocation or limitation of any of the
Licenses that, individually or in the aggregate, would reasonably be expected
to have a material adverse effect on the Business Condition.
(b) Schedule 3.10(b) lists all material registrations, filings,
applications, notices, consents, approvals, orders, qualifications and waivers
required to be made, filed, given or obtained by Seller with, to or from any
person in connection with the consummation of this Agreement except for those
that are specifically covered by Sections 5.3, 5.6, 5.7 and 5.13 hereof.
Section 3.11. Labor Matters. Schedule 3.11 lists, as of the date
hereof, all collective bargaining agreements with labor unions or associations
representing employees of the Station. As of the date hereof, no material work
stoppage against the Station is pending or, to Seller's knowledge, threatened,
and no such stoppage has occurred during the last two (2) years. Except as set
forth in Schedule 3.11, as of the date hereof, the Station is not involved in
or, to Seller's knowledge, threatened with any labor dispute, arbitration,
lawsuit or administrative proceeding relating to labor matters (including,
without limitation, employment discrimination, wrongful discharge, defamation,
breach of contract or other matters relating to Station employees) involving
the employees of the Station, and the Station has not been involved in any such
matters during the last two (2) years. Schedule 3.11 lists all employees of
the Station.
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Section 3.12. Compliance with Laws. To the knowledge of Seller, the
conduct of the Station's Business complies with all federal, state and local
statutes, laws, regulations, ordinances, rules or decrees applicable thereto,
except for non-compliance that would not have a material adverse affect.
Section 3.13. Insurance. The material properties and assets of Seller
which are used or useful in the Station's Business are insured pursuant to the
insurance coverage provided under the insurance policies set forth on Schedule
3.13. Set forth on Schedule 3.13 is a true, correct and complete schedule of
all insurance policies or binders of insurance or programs of self-insurance
which relate to the Station's Business. Except as set forth on Schedule 3.13,
the coverage under each such policy and binder is in full force and effect, and
no notice of cancellation or nonrenewal with respect to, or disallowance of any
claim under, any such policy or binder has been received by Seller. Except as
set forth on Schedule 3.13, Seller has no knowledge of any facts or the
occurrence of any event which reasonably might form the basis of any claim
against Seller relating to the Station's Business covered by any of the
policies or binders set forth on Schedule 3.13, which claim Seller has reason
to believe will materially increase the insurance premiums payable under any
such policy or binder. There are no other parties having an interest under
such policies. Except as set forth on Schedule 3.13 there are no current
claims by Seller under any such policy nor are there any insured losses of
which Seller has knowledge for which claims have not been made.
Section 3.14. Material Contracts. (a) Schedules 2.1(d), 2.1(e),
2.1(f) and 3.6 set forth, as of the respective dates set forth thereon, true
and complete lists of the following, as to which the Station or Seller with
respect to the Station is a party:
(i) television network affiliation agreements;
(ii) Trade Agreements of more than $10,000 individually and
$30,000 in the aggregate;
(iii) barter obligations or commitments to suppliers of
programming;
(iv) sales agency or advertising representation contracts of more
than $25,000;
(v) licenses and contracts under which Seller is authorized to
broadcast on the Station film or taped programming supplied by others
(including all commitments which are not yet the subject of executed license
agreements), including all cash and non-cash (barter) arrangements;
(vi) leases of personal property which involve annual payments of
more than $10,000 individually or $25,000 in the aggregate;
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(vii) contracts not made in the ordinary and usual course of
business;
(viii) guaranties or accommodations;
(ix) any contracts which are not terminable without penalty upon
notice of thirty (30) days or less or which require payments during the period
prior to cancellation of more than $10,000 individually or $25,000 in the ag-
gregate;
(x) consulting or similar contracts;
(xi) any other contract involving any payment to or by the
Station in excess of $10,000 individually or $75,000 in the aggregate, except
for contracts evidencing advertising time sales to advertisers or advertising
agencies for cash on standard terms which are not otherwise required to be
listed.
(b) Each of the contracts listed in Schedules 2.1(d), 2.1(e), 2.1(f)
and 3.6 is valid and is in full force and effect and to Seller's knowledge
there is no material default by Seller with respect thereto. Except as
otherwise indicated on Schedule 2.1(f), Seller has provided Buyer with true and
complete copies of all of the contracts listed in Schedules 2.1(d), 2.1(e),
2.1(f) and 3.6 or a written description of the material terms of all material
oral contracts or other contracts of which copies do not exist of which Seller
has knowledge. The aggregate annual payments under all contracts listed on
Schedule 2.1(f) as contracts for which no copy has been provided or an
incomplete copy has been provided do not exceed $25,000.
(c) Except as listed on Schedule 3.14(c), Seller is not a party to any
contracts for construction or the purchase of capital improvements or leases of
personal property which, if purchased, would constitute a capital improvement
with respect to the Station's Business on the date hereof, and except as listed
on Schedule 3.14(c) on the Closing Date will not be a party to any such
contract which has not been fully performed and paid for.
(d) Except as listed on Schedule 3.14(d), Seller is not a party to any
agreement which obligates it to provide advertising time on the Station on or
after the Closing Date as a result of the failure of the Station to satisfy
specified ratings or audience share guarantees or similar representations or
warranties with respect to any advertising broadcast by the Station before the
Closing Date.
(e) Except as set forth in Schedules 2.1(c), (d), (e) and (f), 3.5 and
3.6, Seller is not a party to, nor bound by, nor are any of its properties
(other than Leased Properties) with respect to the Station's Business subject
to:
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(i) any contract which (x) has not been entered into or received
in the ordinary course of Seller's business and which is not consistent with
prior practice of Seller, or (y) involves payment of more than $10,000
individually or more than $25,000 in the aggregate or which is not cancelable
upon notice given on or after the Closing Date within thirty (30) days after
the date of such notice;
(ii) any contract for the employment of an officer or employee or
former officer or employee pursuant to which payments may be required to be
made at any time following the date hereof;
(iii) any mortgage, pledge or other form of secured indebtedness
for borrowed money;
(iv) any debentures, notes or installment obligations, other than
accounts payable arising in the ordinary course of Station's Business, or other
instruments for or relating to any borrowing of money by Seller;
(v) any guaranty of any obligation for borrowings or otherwise,
excluding endorsements made for collection, and other guaranties;
(vi) any agreement or arrangement for the sale or lease of any of
its assets (other than sales of advertising time to advertisers for cash);
(vii) any contract pursuant to which it is or may be obligated to
make payments, contingent or otherwise, exceeding $10,000 individually or
$25,000 in the aggregate, on account of or arising out of the prior acquisition
of the Station's Business, or all or substantially all of the assets or stock
of other companies or any division thereof;
(viii) any contract with any labor union; or
(ix) any other contract, agreement or other instrument not
entered into in the ordinary course of business which is material to the
Station's Business and not excluded by reason of the provisions of clauses
(i) through (viii), inclusive, of this subsection.
Section 3.15. Consents. Except for any required premerger
notification and related filings with the FTC and the Department of Justice
pursuant to the HSR Act or any filings with the FCC, no consent, approval,
authorization or order of (or registration or filing with) any Government
Authority or other third party is required in connection with the execution,
delivery or performance by Seller of this Agreement or in connection with the
transactions contemplated hereby (including transfer of any or all of the
Assets), other than those listed on Schedules 2.1(c), 2.1(d), 2.1(e) and 2.1(f)
and Schedule 3.10(b) and the consent of NBC under the NBC Contract.
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Section 3.16. No Defaults. Seller has not received notice of any
default nor does it have knowledge that it is in default in any material
respect under any agreement (including any note, loan or borrowing agreement),
commitment, arrangement, lease, insurance policy or other instrument relating
to the Station's Business to which it is a party, or to or by which it may be
subject or bound, or under which it or the Station's Business receives
benefits. To the knowledge of Seller, there is no event which, with the lapse
of time or giving of notice, or both, would constitute such a default; each of
the foregoing agreements, commitments, arrangements, leases, insurance policies
and other instruments is the legal, valid and binding obligation of each of the
respective parties thereto, enforceable in accordance with their terms except
as may be limited by bankruptcy, insolvency, reorganization and similar laws
affecting the enforcement of creditors' rights or contractual obligations
generally, and no defenses, offsets or counterclaims have been asserted by any
party thereto in connection therewith nor has Seller waived any substantial
right with respect thereto.
Section 3.17. Environmental Matters. (a) For purposes of this Section
3.17, the following definitions shall be applicable:
(i) "Applicable Environmental Laws" shall mean any and all laws,
statutes, regulations, and judicial interpretations thereof of the United
States, of any state in which the Assets, or any portion thereof, or the
Station's Business, are located, and of any other government or
quasi-government authority having jurisdiction, that relate to the prevention,
abatement and elimination of pollution and/or protection of the environment,
including, but not limited to, the federal Comprehensive Environmental
Response, Compensation, and Liability Act, the Resource Conservation and
Recovery Act, the Clean Water Act, the Clean Air Act, the Safe Drinking Water
Act, the Toxic Substances Control Act, and the Hazardous Materials
Transportation Act, together with all state statutes serving any similar or re-
lated purposes, as in effect on or before the Closing Date.
(ii) "Hazardous Substance" means any substance now or hereafter
designated pursuant to Section 307(a) and 311(b)(2)(A) of the federal Clean
Water Act, 33 USCA Sections 1317(a), 1321(b)(2)(A), Section 112 of the federal
Clean Air Act, 42 USCA Section 3412, Section 3001 of the federal Resource
Conversation and Recovery Act, 42 USCA Section 6921, Section 7 of the federal
Toxic Substances Control Act, 15 USCA Section 2606, or Section 101(14) and
Section 102 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 USCA Sections 9601(14), 9602, as amended by the Superfund
Amendments and Reorganization Act of 1986.
(b) Seller has supplied to Buyer a copy of the report for each
environmental inspection or audit that it has caused to be conducted with
respect to the Assets as listed on Schedule 3.17.
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(c) (i) Since the date of their acquisition by Seller, the Assets
have been used by Seller for its current business operations and for no other
purposes and at no time during that period have the Assets been used by the
Seller for the treatment, storage or disposal of Hazardous Substances in
violation of Applicable Environmental Laws or as a landfill or other solid or
hazardous waste disposal site. Seller has no knowledge that prior to its
acquisition of the Assets the Assets were used for the treatment, storage or
disposal of Hazardous Substances in violation of Applicable Environmental Laws
or as a landfill or other solid or hazardous waste disposal site.
(ii) To the Seller's knowledge, except as set forth in Schedule
3.17, there are no underground storage tanks on the Real Property.
(iii) Except as set forth on Schedule 3.17, Seller has no
knowledge that any of the improvements owned or used by Seller on the Real
Property contain any asbestos, or that any equipment owned or used by Seller on
the Real Property contains any polychlorinated biphenyls.
(iv) Seller has no knowledge that any material contamination
exists on or under the Real Property and Assets, or affecting any natural
resources therein that would constitute a material violation of or non-
compliance with any Applicable Environmental Law.
(v) Seller has no knowledge that Seller, the Assets, or the
Station's Business are not in material compliance with all Applicable
Environmental Laws.
(vi) Except as set forth on Schedule 3.17, Seller has no
knowledge of any agreements, consent orders, decrees, judgments, license or
permit conditions, or other directives of Government Authorities directed to
Seller, that are based on or arise out of Applicable Environmental Laws and
relate to the future use of the Assets or the Station's Business or that
require any material change in the present conditions of the Assets or the
Station's Business.
(vii) Except as set forth on Schedule 3.17, Seller has no
knowledge of any Actions, suits, claims or proceedings seeking money damages,
injunctive relief, remedial action or other remedy pending or threatened
relating to an alleged violation of or noncompliance with any Applicable
Environmental Laws; or the disposal, discharge or release of Hazardous
Substances by Seller, the Assets or the Station's Business or Seller's
ownership or use of the Assets or the Station's Business.
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(viii) Seller has given to pertinent Government Authorities all
notices required pursuant to Applicable Environmental Laws in connection with
the Station's Business. Except as listed on Schedule 3.17, Seller has not
prior to the date hereof received any 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 Government Authority in connection with ownership or operation
of the Station's Business.
(ix) To the Seller's knowledge, no consent or approval is needed
from any Government Authority under any Applicable Environmental Laws for the
transfer of the Assets from Seller to Buyer; and neither the execution of this
Agreement nor the closing of the transactions contemplated hereby will
materially violate any Applicable Environmental Laws.
(x) All necessary plans for development, applications, inspection
reports, certificates and other instruments required under Applicable
Environmental Laws to be filed by Seller in connection with the conduct of the
Station's Business on the Real Property have been filed with the appropriate
Government Authority and all permits, licenses, or other authorizations
necessary for the lawful conduct of the Station's Business in compliance with
all Applicable Environmental Laws have been obtained.
(d) Between the time of Seller's execution of this Agreement and the
time of Closing, Seller shall not take or permit any entity under its control
to take any actions that would result in the Assets being in violation of any
Applicable Environmental Laws, nor will Seller omit to take any action
necessary to prevent the Assets from becoming in violation of Applicable
Environmental Laws.
(e) (i) Subsequent to Seller's execution of this Agreement, Seller
shall give Buyer, and its agents and consultants, reasonable access during
Seller's normal business hours to: (y) the Assets and (z) Seller's personnel to
enable Buyer to conduct, at Buyer's sole expense, an environmental
investigation and/or audit as Buyer reasonably deems appropriate with regard to
compliance with Applicable Environmental Laws. Buyer shall give Seller
reasonable advance notice of its need for access for such investigation and/or
audit and Buyer and Seller shall cooperate to schedule and conduct such
investigations so as to minimize interference with the Station's Business and
to allow Buyer to complete such investigations promptly.
(ii) If Buyer determines through its environmental investigation
and/or audit or other due diligence activities that a condition with respect to
the Assets exists that constitutes a violation of Applicable Environmental
Laws, Buyer shall, by no later than November 15, 1994, provide Seller with a
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written notification identifying with specificity any such violation that the
Buyer believes exists and the basis for that belief, including copies of any
written reports prepared by the consultant who performed any environmental
investigation and/or audit for Buyer, together with a good faith estimate by
that consultant or an independent consultant retained by Buyer, of the
cumulative total costs of bringing the Assets into compliance with Applicable
Environmental Laws (including, without limitation, attorneys' and consultants'
fees, plan/design preparation costs, and removal, treatment, storage,
transportation, and disposal expenses). If Buyer fails to give timely notice
to Seller as required by this Section 3.17(e)(ii): (A) Seller shall have no
further obligations under this Agreement with respect to violations of
Applicable Environmental Laws other than its indemnity obligations under
Article XI; (B) all other provisions of this Agreement shall remain in full
force and effect without change; and (C) except pursuant to Article XI, Buyer
agrees to and does hereby release Seller from any obligations with respect to,
and waives any claims against Seller by reason of discovery of any violations
of Applicable Environmental Laws.
(iii) Within twenty (20) days after Seller's receipt of the
notification and information provided by Buyer pursuant to Section 3.17(e)(ii)
above, Seller may obtain and deliver to Buyer a good faith estimate by an
independent consultant retained by Seller of the cumulative total costs to
bring the Assets into compliance with Applicable Environmental Laws (including,
without limitation, attorneys' and consultants' fees, plan/design preparation
costs, and removal, treatment, storage, transportation, and disposal expenses).
Buyer shall have the right to review the good faith cost estimate.
(iv) If the cumulative total costs to bring the Assets into
compliance with Applicable Environmental Laws, as estimated by the independent
consultant retained by Seller (or as estimated by a consultant retained by
Buyer if Seller does not timely deliver to Buyer an estimate by an independent
consultant retained by Seller), is less than or equal to $750,000, Seller shall
take such remedial measures as it reasonably deems necessary to bring the
Assets into compliance with Applicable Environmental Laws within a reasonable
time under the circumstances (taking into consideration the type, nature,
location, and extent of the conditions causing the non-compliance, government
approvals, contractor schedules, and the like), and Closing shall proceed as
otherwise provided in this Agreement (with the Seller diligently pursuing and
completing the remedial work either before or after the Closing Date).
Seller's expenses in discharging its liability under this Agreement for such
remedial measures shall be considered to be an indemnification obligation that
is counted toward and subject to the $12 million overall limitation on Seller's
indemnification obligations as set forth in Article XI; provided, however,
Seller hereby agrees that its obligations under this Section 3.17(e)(iv) shall
not be subject to the $250,000 deductible otherwise applicable to Seller's
indemnification obligations as set forth in Article XI.
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(v) If the cumulative total costs to bring the Assets into compliance
with Applicable Environmental Laws, as estimated by the independent consultant
selected by Seller (or as estimated by a consultant retained by Buyer if Seller
does not timely deliver to Buyer an estimate by an independent consultant
retained by Seller), exceeds $750,000:
(A) Seller may, by written notice to Buyer, elect to bring the
Assets into compliance with Applicable Environmental Laws. In this case, (1)
Seller shall have liability under this Agreement for the cost of such remedial
measures as Seller reasonably deems necessary to bring the Assets into
compliance with Applicable Environmental Laws up to $750,000, (2) Buyer shall
have liability under this Agreement for the next $250,000 of additional costs
above $750,000 for such remedial measures, and (3) Seller shall have liability
under this Agreement for all additional costs for such remedial measures above
$1 million; provided, however, that Seller's expenses in discharging its
liability under this Agreement for such remedial measures shall be considered
to be an indemnification obligation that is counted toward and subject to the
$12 million limitation on Seller's indemnification obligations as set forth in
Article XI; or
(B) Seller may elect to give Buyer notice of termination in
accordance with Section 12.1(c), which notice shall become effective unless
Buyer delivers to Seller a written election (within twenty (20) business days
after the date of Seller's notice of termination) that Buyer will reimburse
Seller for the first $750,000 of costs for remedial measures the Seller
reasonably deems necessary for the Assets to achieve substantial compliance
with Applicable Environmental Laws. In this case, Seller shall then have
liability under this Agreement for costs for such remedial measures above
$750,000; provided, however, Seller's liability under this Agreement for such
remedial measures shall be considered to be an indemnification obligation that
is counted toward and subject to the $12 million limitation on Seller's
indemnification obligations as set forth in Article XI and Buyer's liability
under this Agreement for such remedial measures shall be considered to be an
indemnification obligation that is counted toward and subject to the $14
million limitation on Buyer's indemnification obligations as set forth in
Article XI. Neither Seller's nor Buyer's liability under this Section
3.17(e)(v)(B) shall be subject to the $250,000 deductible otherwise applicable
to indemnification obligations as set forth in Article XI.
(C) Notwithstanding anything to the contrary in Section
3.17(e)(v)(A), if the cumulative total costs to bring the Assets into
substantial compliance with Applicable Environmental Laws, as estimated by the
independent consultant retained by Buyer exceeds $12 million, Buyer may elect
to give Seller a notice of termination in accordance with Section 12.1 within
twenty (20) business days after Buyer's receipt of the estimate by its
independent consultant.
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(D) Notwithstanding anything to the contrary contained in this
Agreement, Buyer's obligation to pay or reimburse sums hereunder for remedial
measures shall not be, and shall not be deemed or construed to be, an admission
of liability by Buyer for any environmental non-compliance or violation.
(E) Buyer shall be timely advised about all remediation measures
undertaken pursuant to this Section 3.17.
(vi) Any election under Section 3.17(e)(v) shall be binding.
(vii) If Seller makes the election provided to it in Section
3.17(e)(v)(A), or Buyer makes the election provided to it in Section
3.17(e)(v)(B), Closing shall proceed as otherwise provided in this Agreement
(with the Seller diligently pursuing and completing the remedial work either
before or after the Closing Date). If Buyer fails timely to make the election
provided to it in Section 3.17(e)(v)(B) after Seller's notice of termination,
this Agreement shall be terminated immediately.
Section 3.18. Compensation. Except as set forth on Schedule 3.18,
since December 31, 1993, Seller has not entered into any employment or similar
contract with, or made any material increase in the compensation payable or to
become payable by it to, any employee of the Station's Business and has not
contributed or made any commitment to, or representation that it will,
contribute any amounts to any bonus or other employee benefits plan, severance
plan or collective bargaining agreement in respect of employees of the
Station's Business, other than as required by law or by the terms of any such
plan as in effect on December 31, 1993 and since December 31, 1993. Except as
required by law or by the terms of any such plan as in effect on December 31,
1993, Seller has not otherwise altered any employee benefits, severance plan or
collective bargaining agreement or the funding thereof, except as set forth on
Schedule 3.18.
Section 3.19. Disclosure. No representations or warranties by Seller
in this Agreement and no document, certificate, or other writing furnished or
to be furnished by Seller or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
contains or will contain any untrue or misleading statement of material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading. Originals or true and complete copies of all documents or
other written materials underlying items listed in the Schedules, including all
deeds, leases, mortgages, deeds of trust, security instruments, governmental
permits, trademarks rights of Seller, contracts, employee agreements and
licenses, have heretofore been furnished to Buyer in the form in which each of
such documents is in effect.
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Section 3.20. Brokers, Finders, etc. Seller has not employed any
broker, finder, consultant or other intermediary in connection with the
transactions contemplated hereby who would have a valid claim for a fee or
commission from Buyer in connection with such transactions.
Section 3.21. Projections. Projections were prepared by Seller and
previously delivered to Buyer covering the operations of the Station (the
"Projections"). Seller represents that the Projections (a) were prepared by
Seller's management in the ordinary course of business for purposes of
management's regular reporting to Seller's owners, and (b) represented as of
July 11, 1994, the good faith estimates of Seller's management of the likely
future performance of the Station in the light of facts and circumstances known
to management at the time. Buyer acknowledges that the Projections contain
only management's then best estimates of future performance by Station in the
listed categories and does not constitute any representation or agreement that
actual performance by the Station would match the projections.
Section 3.22. Bankruptcy. No insolvency proceedings of any character,
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Seller are pending or, to the knowledge of Seller, threatened, and Seller 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.
ARTICLE IV
----------
Representations and Warranties of Buyer
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
Section 4.1. Incorporation; Authorization; etc. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of Iowa and is, or on the Closing Date will be, duly qualified to do
business in and in good standing under the laws of the State of Tennessee and
is not required to be qualified in any other jurisdiction in connection with
its execution and performance of this Agreement. Buyer has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, the performance of
Buyer's obligations hereunder and the consummation of the transactions
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contemplated hereby by Buyer have been duly and validly authorized by the board
of directors of Buyer and no other corporate proceedings or actions on the part
of Buyer, its board of directors or stockholders are necessary therefor. The
execution, delivery and performance of this Agreement will not (i) violate any
provision of the charter or by-laws or similar organizational instrument of
Buyer or any of its Affiliates, (ii) violate in any material respect any
provision of, or be an event that is (or with the passage of time will result
in) a material violation of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, or result in the imposition of any Lien
upon or the creation of a security interest in any of Buyer's or any of its
Affiliates' assets or properties pursuant to, any material mortgage, Lien,
lease, agreement, instrument, order, arbitration award, judgment, injunction or
decree to which Buyer or any of its Affiliates is a party or by which Buyer or
any of its Affiliates is bound, or (iii) violate or conflict in any material
respect with any statute, rule or regulation applicable to Buyer, any of its
Affiliates or any of their properties or assets or any other material
restriction of any kind or character to which Buyer or any of its Affiliates is
subject, that, in the case of clauses (ii) and (iii), would, individually or in
the aggregate, have a material adverse effect on the assets or financial
condition of Buyer or would prevent the Asset Purchase. This Agreement has
been duly executed and delivered by Buyer, and, assuming the due execution
hereof by Seller, this Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether in equity
or at law).
Section 4.2. Brokers, Finders, etc. Buyer has not employed, and is
not subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who would
have a valid claim for a fee or commission from Seller in connection with such
transactions.
Section 4.3. Approvals, Other Consents, Reports, etc. Schedule 4.3
lists all registrations, filings, applications, notices, consents, approvals,
orders, qualifications or waivers of which Buyer has knowledge are required to
be made, filed, given or obtained by Buyer or any of its Affiliates with, to or
from any person in connection with the consummation of the Asset Purchase
except for those that are specifically covered by Sections 6.1 and 6.6 hereof.
Section 4.4. FCC Qualifications. Buyer has no knowledge of any facts
which, under the Communications Act or the existing rules, regulations and
policies of the FCC, would disqualify Buyer from becoming assignee of the FCC
Authorizations and purchasing the Assets or from consummating the transactions
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contemplated herein within the times contemplated herein, except as set forth
in Schedule 4.4. By way of illustration but not of limitation, Buyer does not
have (i) attributable interests under FCC Rule 73.3555 or the FCC's cross-
interest policy, or (ii) alien ownership prohibited by Section 310 of the
Communications Act, or (iii) characteristics not conforming to any other rule
or policy of the FCC that will hinder or delay the processing and grant of the
FCC Application or that will prevent the FCC Consent from becoming a Final
Order in time for the Closing to occur on or before May 31, 1995.
Section 4.5. Buyer's Financial Capacity. (a) On the Closing Date,
Buyer will have on hand or immediately available to it through bank loans or
otherwise all funds necessary to pay the Consideration in full. Buyer has no
knowledge of any fact, reason, circumstance or condition that would prevent
Buyer from having the funds necessary to pay the Consideration in full at the
Closing. Buyer has taken all action that is necessary and appropriate for it
to take as of the date of this Agreement to permit Buyer to have the financial
resources on hand to permit timely payment of the Consideration and
consummation of the transactions contemplated by this Agreement.
(b) Attached as Schedule 4.5 are true and complete copies of the
audited balance sheet of Buyer as of June 30, 1993, and the related statements
of operations and changes in financial position for the periods then ended
(including the notes to such statements) as submitted to the Securities and
Exchange Commission with Buyer's Form 10-K for the year ended June 30, 1993,
and Forms 10-Q for the periods ending September 30, 1993, December 31, 1993,
and March 31, 1994, respectively ("Buyer's Financial Statements"). Buyer's
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles consistently applied by Buyer. There
has been no material adverse change in the financial condition of Buyer since
the date of the most recent financial statements set forth in Schedule 4.5.
Section 4.6. NBC Affiliate Qualifications. Buyer has no knowledge of
any facts which would cause NBC to withhold its consent to the assignment of
the NBC Contract from Seller to Buyer as contemplated by subparagraph 11(a) of
the NBC Contract.
Section 4.7. Litigation. Except as set forth in Schedule 4.7, as of
the date hereof, Buyer has no knowledge of any lawsuits, actions,
administrative or arbitration or other proceedings or governmental
investigations pending or threatened against Buyer which question the validity
of this Agreement or, any action taken or to be taken in connection herewith
and to the best knowledge of Buyer, no basis for such suits, actions,
proceedings or investigations exists.
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Section 4.8. Disclosure. No representations or warranties by Buyer
in this Agreement and no document, certificate, or other writing furnished or
to be furnished by Buyer or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
contains or will contain any untrue or misleading statement of material fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading. Originals or true and complete copies of all documents or
other written materials underlying items listed in the Schedules, have
heretofore been furnished to Seller in the form in which each of such documents
is in effect, and will not be modified in any material respect prior to the
Closing Date without Seller's prior written consent.
Section 4.9. Bankruptcy. No insolvency proceedings of any character,
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Buyer are pending or, to the knowledge of Buyer, 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.
ARTICLE V
---------
Covenants of Seller Pending the Closing Date
--------------------------------------------
Seller covenants and agrees that from the date hereof to and including
the Closing Date:
Section 5.1. Maintenance of Business. Seller shall continue to carry
on the Station's Business, maintain and repair its facilities and equipment,
maintain its inventory of supplies, parts and other materials and keep its
books of account, records, and files, in each case in the ordinary course of
business consistent with past practice. Seller shall continue to operate the
Station in accordance with the terms of the FCC Authorizations and in
compliance in all material respects with all applicable laws and FCC rules and
regulations. Seller will promptly execute and file any necessary applications
for renewal of the FCC Authorizations, and timely file with the FCC all
required reports and pay all required annual and regulatory fees for the
operation of the Station. 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 Station which are filed between the date of this
Agreement and the Closing Date. Seller will maintain in full force and effect
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through the Closing Date property damage, liability, and other insurance with
respect to the Assets and the Station's Business providing coverage against
such risks and in at least the amounts as provided by the insurance policies
currently maintained by Seller to the extent reasonably available to Seller.
On or before the Closing Date, Seller shall accrue all items subject to
proration pursuant to Section 2.6 hereof.
Prior to the Closing Date, except as otherwise permitted by this
Section 5.1, Seller will not, without the prior written consent of Buyer:
(a) sell, lease, transfer, or agree to sell, lease, or transfer any
Assets except in the ordinary course of business and having an individual value
of less than $10,000 or an aggregate value of less than $25,000, and not
replaced with a substantially equivalent asset;
(b) enter into, renew, amend or modify any contract of employment,
collective bargaining agreement or other labor contract, permit any increases
or changes in the compensation or benefits of any employees of the Station
(including bonuses) or otherwise hire any employee, except for annual salary
increases in the ordinary course of business not exceeding 5% of the
compensation previously paid to such person and except as otherwise required by
existing agreements and applicable law;
(c) except in the ordinary course of business, enter into, renew,
renegotiate, modify, amend, or terminate any existing time sales contracts with
respect to the Station or incur any receivables;
(d) enter into, renew, amend or modify any contract, license or other
agreement under which Seller is authorized to broadcast programming on the
Station unless any such contract will be and is fully performed and satisfied
by Seller prior to the Closing Date, or enter into, renew, amend or modify any
program barter transaction which requires the furnishing of advertising time on
the Station or any payments at any time on or after the Closing Date for
programming broadcast before the Closing Date;
(e) apply to the FCC for any construction permit that would materially
restrict the Station's present operations, or make any material change in the
Station's buildings, leasehold improvements, or fixtures; or
(f) sell, assign or create any right, title or interest in or to the
Real Property or the Real Property Leases;
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(g) enter into, renew, amend or modify any contract, license or other
agreement unless any such contract requires the payment by or on behalf of the
Station of consideration consisting of no more than $15,000 individually or
$50,000 in the aggregate for all such contracts and will be subject to
termination or be fully performed and satisfied prior to the one (1) year
anniversary thereof;
(h) cancel, amend or permit the cancellation of any insurance policies
without replacement by equivalent or superior coverage;
(i) create, assume or permit to exist any Liens other than Permitted
Liens;
(j) made any assignment for the benefit of creditors or take any
action in contemplation of or which would constitute the basis for the
institution of insolvency proceedings of any character, including without
limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary; or
(k) enter into, renew, amend or modify any Trade Agreement that is not
to be fully performed by December 31, 1994.
Whenever pursuant to subsections (a) through (k) above Seller shall
request the Consent of Buyer, the request shall be sent in writing via
facsimile to Buyer in accordance with Section 13.6. Unless Buyer gives or
denies its written consent by the end of the fifth business day after the
request for consent is transmitted to Buyer, Buyer's written consent will be
presumed to have been given as of that deadline.
At Seller's discretion, on or prior to the Closing Date, Seller shall
perform and pay all of its pre-Closing Liabilities under the contracts included
in the Assets, so that all payments required to be made pursuant to such
contracts as of the Closing Date shall have been made on or prior to the
Closing Date except to the extent any unpaid Liabilities are included in
calculating adjustments to the Consideration pursuant to Section 2.6.
Section 5.2. Organization, Good Will, Promotion. Seller (a) shall
use best efforts to preserve the business organization of the Station intact,
retain substantially as at present the Station's employees, and preserve the
goodwill of the Station's suppliers, customers and others having business
relations with it and (b) shall make expenditures for promotion of the Station
in the ordinary course of business consistent with past practices.
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Section 5.3. Reports. Seller will provide Buyer with copies of each
of the following with respect to the Station between the date hereof and the
Closing Date: (a) all year-end and quarterly financial statements or reports,
including the Station's balance sheet and related statement of income and cash
flows and any related notes and schedules; (b) all monthly financial statements
and monthly trade and/or barter statements; (c) weekly sales reports; (d)
monthly accounts receivable aging reports; and (e) if requested by Buyer, any
other internal operating reports and statements related to the Station which
are prepared by Seller in the ordinary course of business. Seller agrees to
provide the foregoing to Buyer within thirty (30) days after the end of the
applicable year or period in the case of year-end and quarterly financial
statements, and within twenty (20) days after the end of each month in the case
of monthly financial statements.
Section 5.4. Access to Facilities, Files and Records. Upon the
request of Buyer with reasonable notice, Seller shall from time to time give,
or cause to be given, to the officers, employees, accountants, counsel, and
representatives of Buyer (i) reasonable access during normal business hours to
all facilities, property, accounts, books, bank statements, deeds, title
papers, insurance policies, licenses, agreements, contracts, commitments,
records and files of every character (other than the Sealed Files), equipment,
machinery, fixtures, furniture, vehicles, notes and accounts payable and
receivable, and inventories related to the Station, and (ii) all such other
information concerning the affairs of the Station as Buyer may request. Buyer
may interview the employees of Seller during normal business hours at the
Station only upon individual arrangements made with Seller's Mr. Stephen C.
Hillard or Mr. Mark D. Adolph.
Section 5.5. Representations and Warranties. Seller shall give
detailed written notice to Buyer promptly upon learning of the occurrence of
any event that would cause or constitute a material breach by Seller or would
have caused a material breach by Seller had such event occurred or been known
to Buyer prior to the date hereof, of any representations or warranties of
Seller contained in this Agreement or in any Schedule referred to herein.
Section 5.6. Application for Commission Consent. As promptly as
practicable after the date of this Agreement, and in no event later than five
(5) business days after the date hereof, Seller will file such applications as
are required with the FCC requesting its written consent to the assignment of
the FCC Authorizations for the Station (and any extension or renewals thereof)
to Buyer; which applications shall be in form and substance acceptable for
filing with the FCC. Seller will diligently take, or cooperate in the taking
of, all steps that are necessary, proper, or desirable to expedite the
preparation of such applications and their prosecution to a favorable
conclusion. Seller will promptly provide Buyer with a copy of any pleading,
order, or other document served on it relating to such applications. Seller
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shall not have any obligation to satisfy any complainant or the FCC by taking
any steps which would have a material adverse effect upon Seller or upon any
affiliated entity, but neither the expense nor inconvenience to Seller of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse effect on Seller. If the FCC Consent imposes any condition on
Seller, Seller shall use its best efforts to comply with such condition;
provided, however, that Seller shall not be required to comply with any
condition that would have a material adverse effect upon it or any affiliated
entity. If reconsideration or judicial review is sought with respect to the
FCC Consent, if Seller is the party affected it shall vigorously oppose such
reconsideration or judicial review; provided, however, that nothing in this
Section 5.6 shall be construed to limit Seller's right to terminate this
Agreement pursuant to Article XII.
Section 5.7. Request for NBC Consent. Seller timely will take the
actions required of it by subparagraph 11(b) of the NBC Contract.
Section 5.8. Third-Party Consents. Seller will use reasonable
commercial efforts to obtain, or cause to be obtained, prior to the Closing
Date consents to the assignment to or assumption by Buyer of all licenses,
leases and other contracts and instruments and rights of Seller included in the
Assets that require, by their express terms, the consent of any third party by
reason of the transactions contemplated by this Agreement, which such consents
shall provide that Buyer is only assuming obligations which arise on and after
the Closing under licenses, leases, contracts and instruments. Seller will
also request estoppel certificates, in a form supplied by Buyer, which form
will conform with the requirements, if any, of the Real Property Leases or the
Tower Leases, from the landlords under the Real Property Leases or the lessees
under the Tower Leases, as designated by Buyer. Seller shall use reasonable
commercial efforts to cause any required consents to assignment of the Real
Property Leases to be in recordable form if the Real Property Lease itself is
recorded.
Section 5.9. Notice of Proceedings. Seller will promptly notify
Buyer in writing upon becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereunder, or upon receiving
any notice from any court or Government Authority of its intention to institute
an investigation into, or institute a suit or proceeding to restrain or enjoin
the consummation of this Agreement or such transactions, or to nullify or
render ineffective this Agreement or such transactions if consummated. Seller
will use reasonable commercial efforts to contest, defend and resolve any such
suit, proceeding or injunction brought against Seller, and to cause any
temporary restraining order or preliminary injunction against such consummation
to be lifted, promptly, so as to permit the consummation of the transactions
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contemplated hereby. Seller will notify Buyer promptly of any Action filed or
threatened against the Station or relating to the Station's Business or the
Assets.
Section 5.10. Confidential Information. Seller shall not, at any
time, disclose to third parties any confidential information either received
from Buyer or its agents in the course of investigating, negotiating, and
completing the transactions contemplated by this Agreement, or, following
Closing, any confidential information relating to the Assets. Nothing shall be
deemed to be confidential information that: (a) is known to Seller at the time
of its disclosure to Seller; (b) becomes publicly known or available other than
through disclosure by Seller; (c) is received by Seller from a third party not
actually known by Seller to be bound by a confidentiality agreement with or
obligation to Buyer; or (d) is independently developed by Seller.
Notwithstanding the foregoing provisions of this Section 5.10, Seller may
disclose such confidential information (i) to the extent required or deemed
advisable to comply with applicable laws, rules, regulations and legal process,
(ii) to its officers, directors, employees, representatives, financial
advisors, attorneys, accountants, and agents with respect to the transactions
contemplated hereby, and (iii) to any Government Authority in connection with
the transactions contemplated hereby. Seller agrees that if it discloses any
such confidential information to its officers, directors, employees or
representatives, Seller shall be responsible for any breach of this Section
5.10 by any such person or entity.
Section 5.11. Consummation of Agreement. Seller shall use all
commercially reasonable efforts to fulfill and perform all conditions and
obligations on its part to be fulfilled and performed under this Agreement, and
to cause the transactions contemplated by this Agreement to be fully carried
out.
Section 5.12. Notice of Certain Developments. Seller shall give
prompt written notice to Buyer (a) if the Assets shall have suffered damage on
account of fire, explosion or other cause of any nature which is sufficient to
prevent operation of the Station for four (4) continuous hours or more, (b) if
the regular broadcast transmission of the Station in the normal and usual
manner in which it heretofore has been operating is interrupted for a period of
four (4) continuous hours or more, and (c) if Seller receives notice of
termination under its lease agreement with American General Life and Accident
Insurance Company listed on Schedule 2.1(c).
Section 5.13. HSR Act. As soon as possible after the date hereof, but
in no event later than ten (10) business days after the filing of the FCC
Application, Seller shall cause the filing of all documents with the FTC and
the Department of Justice as is required to comply with the HSR Act and
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thereafter shall cause to be promptly furnished all materials thereafter
requested by any of the regulatory agencies having jurisdiction over such
filings.
Section 5.14. Exclusive Dealing. Prior to giving or receiving Notice
of Termination of this Agreement in accordance with Article XII hereof: (a)
Seller will not, directly or indirectly, through any director, officer, agent,
partner, shareholder or otherwise solicit, initiate or encourage submission of
offers or proposals from any person in respect of the purchase or other
acquisition, directly or indirectly, of all or a material portion of the Assets
or the Station's Business or any equity or other ownership interest in Seller,
or any merger, consolidation, business combination or equity investment
(directly or indirectly) with Seller or participate in any discussions or
negotiations regarding, or furnish to any other person, any information
regarding, or otherwise cooperate in any manner with, or assist or participate
in, facilitate or encourage, any effort or attempt by any other person with
respect to any of the foregoing; and (b) Buyer will not, directly or
indirectly, through any director, officer, agent, partner, shareholder or
otherwise solicit, initiate or encourage submission of offers or proposals from
any person in respect of the purchase or other acquisition by Buyer, directly
or indirectly, of all or a material portion of the assets, business or any
equity or other ownership interest in any television station in the Nashville
television market other than the Station, or any merger, consolidation,
business combination or equity investment (directly or indirectly) in or with
such other station or participate in any discussions or negotiations regarding,
or furnish to any other person, any information regarding, or otherwise
cooperate in any manner with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person with respect to any of the
foregoing.
Section 5.15. Public Announcements. Seller and Buyer shall agree upon
and release a joint press release announcing this Agreement. Seller may make a
separate announcement to the stockholders of Cook Inlet Region, Inc. Except
for the foregoing, Seller will not issue, or permit any agent or Affiliate to
issue, any press releases or otherwise make or permit any agent or Affiliate to
make, any public statements with respect to this Agreement and the transactions
contemplated hereby, except in each case with the prior written consent of
Buyer.
Section 5.16. Updated Schedules. Seller shall promptly disclose or
cause to be disclosed in writing to Buyer any information contained in Seller's
representations and warranties herein or any schedule or exhibit hereto which
is incomplete or incorrect because of an event occurring after the date of
delivery of such schedule.
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Section 5.17. Delivery of Updated Survey; Objectionable Title Matters;
Title Matters Indemnity. Seller shall cause the 1989 Survey to be revised and
updated to ALTA Category I survey standards and to be in form, quality and
content sufficient for the issuance of the Title Policy in the form required by
Section 2.7(a)(vii) (the "Updated Survey"). The Updated Survey shall be
delivered to Buyer no later than forty-five (45) days after the date of this
Agreement. Buyer shall, within fifteen (15) days after receipt of the Updated
Survey, give written notice to Seller setting forth any matters revealed by the
Updated Survey that would cause Seller to be unable to deliver to Buyer the
Title Policy in the form required by Section 2.7(a)(vii) (the "Objectionable
Title Matters"). Seller, at its sole cost, shall use commercially reasonable
efforts to resolve any such Objectionable Title Matters prior to the Closing.
If Seller is unable to resolve Objectionable Title Matters prior to the
Closing, such inability shall not be a default by Seller under this Agreement
or a breach by Seller of any representation, warranty, covenant or agreement of
Seller set forth in this Agreement, and Buyer shall, at the Closing, accept
conveyance of the Real Properties subject to any such remaining Objectionable
Title Matters and shall also accept delivery of the Title Policy containing
exceptions concerning any such remaining Objectionable Title Matters; provided,
however, that from and after the Closing, Seller shall continue, at its sole
cost, to use commercially reasonable efforts to resolve the remaining
Objectionable Title Matters, and, provided further, that Seller shall indemnify
and hold harmless any Buyer Indemnified Party from and against any and all
Covered Liabilities suffered, directly or indirectly, by any Buyer Indemnified
Party by reason of, or arising out of, the Objectionable Title Matters and such
indemnification shall not be subject to the $250,000 threshold for
indemnification under Section 11.5.
Section 5.18. No Inconsistent Action. Seller shall not take any
action which is materially inconsistent with its obligations under this
Agreement, or that would hinder or delay the consummation of the transactions
contemplated by this Agreement. Seller will not take any action that would
disqualify or impair Seller as an assignor of the FCC Authorizations or owner
and operator of the Station's Business.
Section 5.19. Post-Closing Covenants. After the Closing, Seller will
execute any further documents consistent with this Agreement, provide any
further reasonably available information, and take any other actions not
imposing significant financial or operational obligations in excess of the
other obligations imposed by this Agreement, upon the request of Buyer based
upon Buyer's reasonable determination that those actions are required to enable
Buyer to effectuate this Agreement.
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ARTICLE VI
----------
Covenants of Buyer Pending the Closing Date
-------------------------------------------
Buyer covenants and agrees that from the date hereof to and including
the Closing Date:
Section 6.1. Application for Commission Consent. As promptly as
practicable after the date of this Agreement, and in no event later than five
(5) business days after the date hereof, Buyer will complete and give to Seller
for filing with the FCC a fully executed copy of its portion of such
applications as are required by the FCC requesting its written consent to the
assignment of the FCC Authorizations for the Station (and any extension or
renewals thereof) to Buyer; which applications shall be in form and substance
acceptable for filing with the FCC. Buyer will diligently take, or cooperate
in the taking of, all steps that are necessary, proper, or desirable to
expedite the preparation of such applications and their prosecution to a
favorable conclusion. Buyer will promptly provide Seller with a copy of any
pleading, order, or other document served on it relating to such applications.
Buyer shall not have any obligation to satisfy any complainant or the FCC by
taking any steps which would have a material adverse effect upon Buyer or upon
any affiliated entity, but neither the expense nor inconvenience to Buyer of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse effect on Buyer. If the FCC Consent imposes any condition on
Buyer, Buyer shall use its best efforts to comply with such condition;
provided, however, that Buyer shall not be required to comply with any
condition that would have a material adverse effect upon it or any affiliated
entity. If reconsideration or judicial review is sought with respect to the
FCC Consent, if Buyer is the party affected it shall vigorously oppose such
reconsideration or judicial review; provided, however, that nothing in this
Section 6.1 shall be construed to limit Buyer's right to terminate this
Agreement pursuant to Article XII.
Section 6.2. Request for NBC Consent. Buyer timely, diligently and
thoroughly will take the actions required of it by subparagraph 11(b) of the
NBC Contract, including executing Exhibit G to the NBC Contract, and will take
all commercially reasonable steps to demonstrate to NBC why NBC should consent
to the assignment of the NBC Contract from Seller to Buyer in accordance with
Paragraph 11 of the NBC Contract. If required by NBC under subparagraph 11(c)
of the NBC Contract, Buyer hereby agrees to be bound, for one or the other of
the two alternative periods of time for Buyer to assume and be bound by the NBC
Contract as specified in subparagraph 11(c) of the NBC Contract. Buyer also
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hereby agrees to be bound by the provisions of subparagraph 11(c) of the NBC
Contract with respect to NBC's right to extend the term of the NBC Contract in
connection with any assignments/transfers after the initial assignment to Buyer
contemplated by this Agreement.
Section 6.3. Confidential Information. Without Seller's express
written consent, Buyer shall not, at any time prior to the Closing Date,
disclose to third parties any confidential information received from Seller or
its agents in the course of investigating, negotiating, and performing the
transactions contemplated by this Agreement. Nothing shall be deemed to be
confidential information that: (a) is known to Buyer at the time of its
disclosure to Buyer; (b) becomes publicly known or available other than through
disclosure by Buyer; (c) is received by Buyer from a third party not actually
known by Buyer to be bound by a confidentiality agreement with or obligation to
Seller; or (d) is independently developed by Buyer. Notwithstanding the
foregoing provisions of this Section 6.3, Buyer may disclose such confidential
information (i) to the extent required or deemed advisable to comply with
applicable laws, rules, regulations and legal process, (ii) to its officers,
directors, employees, representatives, financial advisors, attorneys,
accountants, agents and potential sources of financing with respect to the
transactions contemplated hereby, (iii) to its affiliates and related entities,
and (iv) to any Government Authority in connection with the transactions
contemplated hereby. Buyer agrees that if it discloses any such confidential
information to its officers, directors, employees, representatives, financial
advisors, attorneys, accountants, agents or potential sources of financing,
Buyer shall be responsible for any breach of this Section 6.2 by any such
person or entity.
Section 6.4. Consummation of Agreement. Buyer shall use all
commercially reasonable efforts to fulfill and perform all conditions and
obligations on its part to be fulfilled and performed under this Agreement, and
to cause the transactions contemplated by this Agreement to be fully carried
out. Buyer agrees to cooperate with Seller in connection with obtaining
consents to the assignment to or assumption by Buyer of the Assets, including
the licenses, leases and other contracts included therein, and to execute such
assumption instruments with respect to the Assumed Liabilities as may be
required in connection with obtaining such consents, to supply available
information reasonably requested by any third party whose consent is required
in connection with the transactions contemplated hereby or whose consent is
required to the assignment of Program Contracts; provided, however, that
nothing herein shall be deemed to require Buyer to make any payments to obtain
such consents, to assume any Liabilities other than the Assumed Liabilities or
to make any representations or warranties to any person other than the
representations and warranties by Seller set forth in any license, lease,
contract or instrument (other than those with Affiliates) and other than to
assume the Assumed Liabilities.
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Section 6.5. Notice of Proceedings. Buyer will promptly notify
Seller in writing upon becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereunder, or upon receiving
any notice from any court or Government Authority of its intention to institute
an investigation into, or institute a suit or proceeding to restrain or enjoin,
the consummation of this Agreement or such transactions, or to nullify or
render ineffective this Agreement or such transactions if consummated. Buyer
will use reasonable commercial efforts to contest, defend and resolve any such
suit, proceeding or injunction brought against Buyer, and to cause any
temporary restraining order or preliminary injunction against such consummation
to be lifted promptly, so as to permit the consummation of the transactions
contemplated hereby.
Section 6.6. HSR Act. As soon as possible after the date hereof, but
in no event later than ten (10) business days after the filing of the FCC
Application, Buyer shall cause the filing of all documents with the FTC and the
Department of Justice as is required to comply with the HSR Act and shall
thereafter cause to be furnished all materials thereafter requested by any of
the regulatory agencies having jurisdiction over such filings.
Section 6.7. Representations and Warranties. Buyer shall give
detailed written notice to Seller promptly upon learning of the occurrence of
any event that would cause or constitute a material breach by Buyer or would
have caused a material breach by Buyer had such event occurred or been known to
Buyer prior to the date hereof, of any representations or warranties of Buyer
contained in this Agreement or in any Schedule referred to herein.
Section 6.8. Public Announcements. Buyer and Seller shall agree upon
and release a joint press release announcing this Agreement. Buyer will not
issue, or permit any agent or Affiliate to issue, any press releases or
otherwise make or permit any agent or Affiliate to make, any public statements
with respect to this Agreement and the transactions contemplated hereby, except
in each case with the prior written consent of Seller.
Section 6.9. No Inconsistent Action. Buyer shall not take any action
which is materially inconsistent with its obligations under this Agreement, or
that would hinder or delay the consummation of the transactions contemplated by
this Agreement. Buyer will not take any action that would disqualify or impair
Buyer as an assignee of the FCC Authorizations or owner and operator of the
Station's Business. By way of illustration but not of limitation, Buyer shall
not have attributable interests under FCC Rule 73.3555, the FCC's cross-
interest policy or any other rule or policy that will hinder or delay the
processing and grant of the FCC Application or that will prevent the FCC
Consent from becoming a Final Order in time for the Closing to occur on or
before May 31, 1995.
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Section 6.10. Bankruptcy. Buyer shall not make any assignment for the
benefit of creditors or take any action in contemplation of or which would
constitute the basis for the institution of insolvency proceedings of any
character, including without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary.
Section 6.11. Financial Reports. After the date of this Agreement,
Buyer shall provide Seller a true copy of each of Buyer's Form 10-Q or Form
10-K, as the case may be, together with the balance sheet and the related
statements of operations and changes in financial position for the fiscal
period then ended (including the notes to such statements), as submitted, or to
be submitted, to the SEC with such Form 10-Q or Form 10-K within five (5)
business days after Buyer has filed such Form 10-Q or Form 10-K with the SEC.
Section 6.12. Buyer's Financing. Buyer diligently and timely will
take, or cause to be taken, all necessary or appropriate actions and otherwise
will use its best efforts to maintain its financial capacity to acquire the
Station by Buyer from Seller as provided by this Agreement. Buyer shall give
Seller immediate written notice describing any material adverse change in its
financial capacity to acquire the Station as provided by this Agreement.
Section 6.13. Updated Schedules. Buyer shall promptly disclose or
cause to be disclosed in writing to Seller any information contained in Buyer's
representations and warranties herein or any schedule or exhibit hereto which
is incomplete or incorrect because of an event occurring after the date of
delivery of such schedule.
Section 6.14. Post-Closing Covenants.
(a) Commencing as of the Cut-Off Time, Buyer shall provide all Station
employees with group health insurance coverage which (i) shall not be subject
to any waiting period on eligibility for any benefit, and (ii) shall not
exclude coverage for any preexisting condition that, except for its
preexistence, would otherwise be covered under such health insurance.
(b) Buyer agrees to make available to Seller after Closing any
records, files, documents, and correspondence of the Station that are
reasonably determined by Seller to be necessary or appropriate in connection
with the filing of any report with a governmental agency or the prosecution or
defense of any claim, legal action, counterclaim, suit, arbitration,
governmental investigation, or other legal, administrative, or tax proceeding,
to which Seller is a party. Buyer further agrees to cooperate with Seller in
making available for testimony on behalf of Seller or consultation with Seller
any employees of the Station whose testimony or consultation is reasonably
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determined by Seller to be necessary or appropriate in connection with any
claim, legal action, counterclaim, suit, arbitration, governmental
investigation, or other legal, administrative, or tax proceeding. Buyer shall
provide Seller with adequate opportunity for inspection of the Station by any
representative of the Internal Revenue Service in connection with any review of
Seller's tax returns. Seller shall reimburse Buyer for any expenses incurred
pursuant to this Section 6.14, including a reimbursement for the time of any of
Buyer's employees, including any employees of the Station. Seller shall
exercise its rights under this Section 6.14 so as not unreasonably to interfere
with or disrupt the operations of the Station.
(c) After the Closing Date, at least thirty (30) days prior to
discarding or destroying any books or records relating to the Station's
Business being sold hereunder, Buyer shall give Seller notice of its intended
action and an opportunity for Seller to retain at its expense any of the books
or records proposed to be discarded or destroyed by Buyer.
(d) After the Closing, Buyer will execute any further documents
consistent with this Agreement, provide any further reasonably available
information, and take any other actions not imposing significant financial or
operational obligations in excess of the other obligations imposed by this
Agreement, upon the request of Seller based upon Seller's reasonable
determination that those actions are required to enable Seller to effectuate
this Agreement.
ARTICLE VII
-----------
Employee Matters
----------------
Section 7.1. Employee Benefit Plans.
(a) Schedule 7.1(a) lists all material compensation and benefit plans,
contracts and arrangements (other than routine administrative procedures or
government-required programs) in effect as of the date hereof including all
pension, profit sharing, savings and thrift, bonus, incentive or deferred
compensation, severance pay and medical and life insurance plans in which any
current or former employees of the Station's Business or their respective
dependents (collectively, "Station Employees") participate (collectively,
"Station Employee Benefit Plans"). Copies of all plan documents, summary plan
descriptions, trust agreements, employee handbooks and other written material
relating to the Station Employee Benefit Plans have been delivered or made
available to Buyer.
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(b) Seller does not now sponsor, maintain, contribute to or have an
obligation to contribute to, and has not at any time since January 1, 1989,
sponsored, maintained, contributed to or been obligated to contribute to, any
single employer, multiple employer or multiemployer pension plan subject to the
provisions of Section 302 or Title IV of ERISA or Section 412 or 4971 of the
Code or, except with respect to Ralph Emery, any employee welfare benefit plan
(as defined in Section 3(l) of ERISA) providing benefits to former Station
employees, other than as required by Section 4980B of the Code. No Liability
currently exists, and under no circumstances could Seller or any of its ERISA
Affiliates incur any Liability pursuant to the provisions of Title I, II or IV
of ERISA or Section 412, 4971 or 4980B of the Code that could become a
Liability of Buyer after the consummation of the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, neither
Seller nor any of its ERISA Affiliates has engaged in any transaction described
in Section 4069 or Section 4204 of ERISA.
Section 7.2. Buyer's Employment of Station Employees. Buyer agrees
to assume all employment agreements with Seller's employees, as listed on
Schedule 2.1(f) or hereafter entered into in accordance with Section 5.1 hereof
that are in effect on the Closing Date, and to employ each person who is
employed by Seller in connection with the Station on the Closing Date as an
employee of Buyer after the Closing Date in position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities comparable to those held and exercised by such person on the
Closing Date; provided, however, that this shall not prevent Buyer from making
such employment decisions after Closing as it deems appropriate. Buyer agrees
to indemnify and hold harmless Seller from and against any loss, damage or
expense (including reasonable attorney's fees) suffered by Seller resulting or
arising from or relating to facts with respect to the employment, including but
not limited to the discharge or other termination of employment, of any Station
employee by Buyer from and after the Closing Date, or any employment agreement
assumed by Buyer hereunder, occurring after the Closing.
ARTICLE VIII
------------
Tax Matters
-----------
Section 8.1. General. Seller has filed or will file with all
appropriate Taxing Authorities all required Returns for the Station's Business
through the Closing Date and all taxes owed by Seller for the Station's
Business through the Closing Date have been paid or will be paid, except for
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those contested in good faith or believed in good faith not to be due and
payable. There are no liens on any of the Assets that arose in connection with
any failure (or alleged failure) to pay any tax related to the Station's
Business.
Section 8.2. Tax Allocation of Consideration. The Parties agree to
allocate the Consideration among the Assets for all financial accounting and
Tax purposes in accordance with the allocation schedule attached hereto as
Schedule 8.2. Seller and Buyer agree that for federal, state and local tax
purposes they shall report the sale and purchase of the Assets contemplated by
this Agreement in accordance with such allocation.
Section 8.3. Tax Indemnification by Seller. Seller shall be liable
for, and shall hold Buyer harmless from and against any and all Taxes with
respect to the Station's Business or the Assets attributable to the period
ending on or before the Closing Date.
Section 8.4. Tax Indemnification by Buyer. Buyer shall be liable
for, and shall hold Seller harmless from and against any and all Taxes with
respect to the Station attributable to the period after the Closing Date.
Section 8.5. Refunds. (a) Seller shall be entitled to any refunds or
credits of Taxes with respect to the Station's Business attributable to the
period on or before the Closing Date.
(b) Buyer shall be entitled to any refunds or credits of Taxes with
respect to the Station attributable to the period ending after the Closing
Date.
Section 8.6. Cooperation and Exchange of Information. (a) As soon as
practicable following Seller's written request, from and after the Closing
Date, Buyer shall provide Seller with such cooperation and shall deliver to
Seller such information and data concerning the pre-Closing operations of the
Station's Business and such other information and data concerning the post-
Closing operations of the Station that might affect Seller's liability for
Taxes with respect to pre-Closing operations, and make available such
knowledgeable employees of the Station's Business as Seller may request,
including providing the information and data required by Seller's customary tax
and accounting questionnaires, in order to enable Seller to complete and file
all Returns which it may be required to file with respect to the operations and
business of the Station's Business through the Closing Date or to respond to
audits by any Taxing Authorities with respect to such operations and to
otherwise enable Seller to satisfy its internal accounting, tax and other
legitimate requirements.
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(b) Buyer and Seller and their respective Affiliates shall cooperate
in the preparation of all Returns relating in whole or in part to the period
ending on or before the Closing Date that are required to be filed after such
date. Such cooperation shall include, but not be limited to, furnishing prior
years' Returns or return preparation packages illustrating previous reporting
practices or containing historical information relevant to the preparation of
such Returns, and furnishing such other information within such party's
possession requested by the party filing such Returns as is relevant to their
preparation.
ARTICLE IX
----------
Conditions to the Obligations of Seller to Close
------------------------------------------------
The obligations of Seller under this Agreement are subject to Buyer's
performance of all of its obligations under this Agreement to be performed
prior to Closing, including without limitation the fulfillment of the following
conditions prior to or at the Closing Date (any of which may be waived at the
option of Seller):
Section 9.1. Representations, Warranties, Covenants. (a) Each of the
representations and warranties of Buyer contained in this Agreement shall have
been true and accurate as of the date when made and shall be deemed to be made
again on and as of the Closing Date and shall be true and accurate in all
material respects on the Closing Date;
(b) Buyer shall have performed and complied with each and every
covenant and agreement required by this Agreement to be performed or complied
with by it prior to or at the Closing Date in all material respects, and shall
be standing ready to deliver the Consideration and the Assignment and
Assumption Agreement;
(c) Buyer shall have delivered to Seller a certificate of an officer
of Buyer, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 9.1(a); and
(d) Buyer shall have delivered to Seller a certificate of an officer
of Buyer, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 9.1(b).
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Section 9.2. Proceedings. (a) No order to restrain, prohibit, or
enjoin the consummation of this Agreement or the transactions contemplated
hereby shall have been issued; and (b) no Government Authority shall have
instituted any Action or proceeding seeking to restrain, prohibit, or enjoin
this Agreement or the transactions contemplated hereby.
Section 9.3. Opinion of Counsel. Seller shall have received an
opinion or opinions of Buyer's counsel identified in Schedule 9.3, each dated
the Closing Date, as to the matters set forth in Schedule 9.3 hereto, in form
and substance reasonably satisfactory to Seller and its counsel.
Section 9.4. FCC Consent. The FCC Consent shall have been granted
and shall have become a Final Order and shall contain no condition that has or,
in Seller's good faith judgment, will have a material adverse effect upon
Seller.
Section 9.5. HSR Act. The waiting period under the HSR Act shall
have expired or been terminated with respect to the transactions contemplated
hereby and there shall not be outstanding any order of a court restraining the
transactions contemplated hereby or thereby.
Section 9.6. NBC Contract. NBC shall have given or be presumed to
have given its consent to the assignment of the NBC Contract from Seller to
Buyer.
Section 9.7. Environmental Audit Process. Buyer and Seller shall
have completed in timely fashion the environmental investigation and/or audit
process and made the elections available to them under Section 3.17(e) hereof.
ARTICLE X
---------
Conditions to the Obligations of Buyer to Close
-----------------------------------------------
The obligations of Buyer under this Agreement are subject to Seller's
performance of all of its obligations under this Agreement to be performed
prior to the Closing, including without limitation the fulfillment of the
following conditions prior to or at the Closing Date (any of which may be
waived at the option of Buyer):
Section 10.1. Representations, Warranties, Covenants. (a) Each of the
representations and warranties of Seller contained in this Agreement shall have
been true and accurate as of the date when made and, except for representations
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and warranties that specify a particular date (including "the date hereof") in
the applicable provision (which shall have been true and accurate on such
date), shall be deemed to be made again on and as of the Closing Date, and
shall be true and accurate in all material respects on the Closing Date;
(b) Seller shall have performed and complied with each and every
covenant and agreement required by this Agreement to be performed or complied
with by Seller prior to or at the Closing Date in all material respects, and
shall be standing ready to deliver to Buyer the instruments conveying the
Assets to Buyer;
(c) Seller shall have delivered to Buyer a certificate of an officer
of Seller, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 10.1(a); and
(d) Seller shall have delivered to Buyer a certificate of an officer
of Seller, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 10.1(b).
Section 10.2. Proceedings. (a) No order to restrain, prohibit, or
enjoin the consummation of this Agreement or the transactions contemplated
hereby shall have been issued; and (b) no Government Authority shall have
instituted any Action or proceeding seeking to restrain, prohibit, or enjoin
this Agreement or the transactions contemplated hereby.
Section 10.3. Opinion of Counsel. Buyer shall have received an
opinion or opinions of Seller's counsel identified on Schedule 10.3, each dated
the Closing Date, as to the matters set forth in Schedule 10.3 hereto, in form
and substance reasonably satisfactory to Buyer and its counsel.
Section 10.4. Damage to the Assets. The Assets shall not have
suffered damage on account of fire, explosion, or other cause of any nature
that is sufficient to prevent operation of the Station or the transmission of
the signal for the Station at a level that is at least seventy-five percent
(75%) of its authorized effective radiated power for more than three (3) days;
provided that if Buyer elects to waive the condition set forth in this Section
10.4 and consummate the Closing, then Buyer shall be entitled to collect and
receive on behalf of Seller or Seller shall pay over to Buyer the proceeds of
any insurance payable to Seller on account of such damages which have not been
applied to the repair thereof, in each case other than proceeds payable or
received pursuant to business interruption or loss of income policies in
respect of any period prior to the Closing.
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Section 10.5. FCC Consent. The FCC Consent shall have been granted
and shall have become a Final Order and shall contain no condition that has or,
in Buyer's good faith judgment, will have a material adverse effect upon Buyer
or the operation of the Station by Buyer.
Section 10.6. No Material Adverse Change. There shall not have been a
material adverse change after the date of this Agreement in the Business
Condition of the Station. The following events or conditions, by way of
illustration and not of limitation, shall not constitute a material adverse
change within the meaning of this Agreement: (a) termination of the employment
of the Station's current General Manager or General Sales Manager; (b) failure
of the Station to extend the current agreement with King World Productions,
Inc., for The Oprah Winfrey Show (License Period 9/5/84-9/1/95) listed on
Schedule 2.1(e) or to enter into a new or replacement agreement for that
program; (c) changes in the governmental regulatory requirements affecting the
Station in the following areas: (i) spectrum tax, (ii) ownership limits, (iii)
television advertising, (iv) high definition television, and (v) cable must
carry; or (d) entry of new television service delivery systems, such as direct
broadcast satellite service or video dial tone service in the Nashville
television market.
Section 10.7. Consents. Seller shall have obtained and delivered to
Buyer on or prior to the Closing, in form and substance reasonably satisfactory
to Buyer, (a) any consents to the assignment to Buyer of the Real Property
Leases marked by asterisks on Schedule 2.1(c), (b) any consents to the
assignment to Buyer of any material easements or other interests in real
property marked by asterisks on Schedule 2.1(c), and (c) any consents to the
assignment to Buyer of the Program Contracts, Trademarks or Other Contracts
marked by asterisks on Schedules 2.1(d), 2.1(e), 2.1(f) and 2.1.(g) and (d) the
consent of NBC to assignment of the NBC Contract to Buyer.
Section 10.8. HSR Act. The waiting period under the HSR Act shall
have expired or been terminated with respect to the transactions contemplated
hereby and there shall not be outstanding any order of a court restraining the
transactions contemplated hereby or thereby.
Section 10.9. NBC Contract. NBC shall have given or be presumed to
have given its consent to the assignment of the NBC Contract from Seller to
Buyer.
Section 10.10. Environmental Audit Process. Buyer and Seller shall
have completed in timely fashion the environmental investigation and/or audit
process and made the elections available to them under Section 3.17(e) hereof.
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ARTICLE XI
----------
Survival; Indemnification
-------------------------
Section 11.1 Survival. Except for the obligations of Buyer and Seller
to provide indemnifications under this Agreement, all representations,
warranties covenants and agreements of the parties contained in this Agreement
or in any Schedule hereto, or any certificate, document or other instrument
delivered in connection herewith shall survive the Closing only until the first
anniversary of the Closing; provided, however, that (a) the representations and
warranties contained in Section 3.17 shall survive until the second anniversary
of the Closing, (b) the representations and warranties contained in Sections
3.1, 3.20, 4.1, 4.2 and Article VIII shall survive until the third anniversary
of the Closing, and (c) those covenants or agreements that contemplate or may
involve actions to be taken or obligations in effect after the Closing shall
survive in accordance with their terms. No Action or proceeding may be
brought with respect to any of the representations and warranties, or any of
the covenants or agreements, unless written notice thereof, setting forth in
reasonable detail the claimed misrepresentation or breach of warranty or breach
of covenant or agreement, shall have been delivered to the party alleged to
have breached such representation or warranty or such covenant or agreement
prior to the date of termination of such representation or warranty or covenant
or agreement. All obligations of Buyer or Seller to provide indemnification
under this Agreement shall survive the Closing Date until: (a) with respect to
a claimed breach of a representation or warranty or covenant or agreement, the
end of the survival period for the representation or warranty or covenant or
agreement claimed to be breached, or (b) with respect to any other ground for
indemnification set forth in Section 5.17, 8.3, 8.4, 11.2 or 11.4, the third
anniversary of the Closing Date, or (c) with respect to any ground for
indemnification set forth in Section 11.6 hereof, the second anniversary of the
Closing Date. Indemnification pursuant to this Article and pursuant to
Sections 5.17, 8.3 and 8.4 shall be the exclusive remedy for any breach of
representations and warranties or of any covenant or agreement in this
Agreement by either party.
Section 11.2 Indemnification by Buyer or Seller. (a) From and after
the Closing Date, Buyer shall indemnify and hold harmless Seller, Seller's
Affiliates, each of their respective partners, directors, officers, employees
and agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Seller Indemnified Parties") from and against
any and all Covered Liabilities suffered, directly or indirectly, by any Seller
Indemnified Party by reason of, or arising out of, (i) any breach of
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representation or warranty made by Buyer pursuant to this Agreement and any
statements made in any certificate or schedule delivered pursuant to this
Agreement, (ii) any failure by Buyer to perform or fulfill any of its covenants
or agreements set forth in this Agreement, (iii) any failure by Buyer to pay,
perform or discharge any Assumed Liabilities specifically assumed by Buyer
under this Agreement, and (iv) any Liabilities arising out of the Station's
Business after the Closing (excluding those Liabilities arising out of Excluded
Assets not included in the Assumed Liabilities).
b) From and after the Closing Date, Seller shall indemnify and hold
harmless Buyer, Buyer's Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors
and assigns of any of the foregoing (collectively, the "Buyer Indemnified
Parties") from and against any and all Covered Liabilities suffered, directly
or indirectly, by any Buyer Indemnified Party by reason of, or arising out of,
(i) any breach of representation or warranty made by Seller pursuant to this
Agreement and any statements made in any certificate or schedule delivered
pursuant this Agreement, (ii) any failure by Seller to perform or fulfill any
of its covenants or agreements set forth in this Agreement, (iii) any failure
by Seller to pay, perform or discharge any Liabilities of Seller or the Station
not assumed by Buyer pursuant to this Agreement and any other Liabilities of
the Station or Seller relating to any period prior to the Closing other than
Liabilities arising as a result of violations of Applicable Environmental Laws,
indemnification for which shall be governed by Section 11.6 hereof, or (iv) any
litigation, proceeding, or claim by any third party relating to the Station's
Business prior to the Closing Date (except to the extent, and only to the
extent, such litigation, claim or proceeding relates (A)to a period after the
Closing or (B) to a violation of Applicable Environmental Laws which is to be
governed by Section 11.6 hereof).
Section 11.3 Third-Party Claims. If a claim by a third party is made
against an indemnified party (i.e., a Seller Indemnified Party or a Buyer
Indemnified Party), and if such indemnified party intends to seek indemnity
with respect thereto under this Article, such indemnified party shall promptly
notify the indemnifying party in writing of such claims setting forth such
claims in reasonable detail. The indemnifying party shall have forty-five (45)
days after receipt of such notice to undertake, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
indemnified party shall cooperate with it in connection therewith; provided,
however, that the indemnified party may participate in such settlement or
defense through counsel chosen by such indemnified party, provided that the
fees and expenses of such counsel shall be borne by such indemnified party.
The indemnified party shall not pay or settle any claim which the indemnifying
party is contesting. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that in such
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event it shall waive any right to indemnity therefor by the indemnifying party.
If the indemnifying party does not notify the indemnified party within
forty-five (45) days after the receipt of the indemnified party's notice of a
claim of indemnity hereunder that it elects to undertake the defense thereof,
the indemnified party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
Section 11.4 Bulk Sales Indemnity. As an inducement to Buyer to waive
compliance with the provisions of any applicable bulk transfer laws, Seller
covenants and agrees to pay and discharge when due all Liabilities relating to
the Station's Business and/or the Assets except the Assumed Liabilities.
Seller further agrees to indemnify and hold Buyer harmless from and indemnify
Buyer against any and all Covered Liabilities, including any claims made by
creditors, with respect to non-compliance with any bulk transfer law except to
the extent that such claims are Assumed Liabilities or result from Buyer's
failure to pay, when due, the Assumed Liabilities.
Section 11.5 Limit on Indemnification. Neither Seller nor Buyer shall
have any indemnification obligation to the other under Section 5.17, 8.3, 8.4,
11.2, 11.4 or 11.6, except upon compliance by the other party with the
provisions of this Article XI. Except as provided in Section 2.5(c),
Indemnification shall be due only to the extent of the loss or damage actually
suffered, reduced by any offsetting or related tax benefit, by any asset or
service received, and by any recovery from any insurer or other third party.
Neither party shall be required to indemnify the other party under this Article
XI or under Article VIII or Section 5.17 unless written notice of a claim under
this Article XI or Article VIII or Section 5.17 was received by the party
within the pertinent survival period specified in Section 11.1 of this
Agreement. Notwithstanding any other provision of this Agreement to the
contrary:
(a) no Indemnified Party shall be entitled to assert a claim for
indemnification against an Indemnifying Party under Section 8.3, 8.4, 11.2,
11.4 or 11.6 hereof unless and until the aggregate amount of all liabilities
for which the Indemnified Party claims indemnification under such Sections
exceeds $250,000, in which event the Indemnifying Party shall be liable for
amounts only in excess of such aggregate of $250,000; provided, however, that
Seller hereby agrees that its obligations under Section 5.17 hereof shall not
be subject to the foregoing $250,000 deductible;
(b) the aggregate indemnification obligations of Seller for claims
made by the Buyer Indemnified Parties prior to the first anniversary of the
Closing Date under this Agreement, including, without limitation, under
Sections 5.17, 8.3, 11.2, 11.4 and 11.6 hereof, shall not exceed an amount
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<PAGE>
equal to (i) $12.0 million, minus (ii) the sum of (A) any amounts expended by
Seller pursuant to Section 3.17 hereof for environmental remediation and (B)
any amounts expended by Seller under Section 5.17 hereof to resolve
Objectionable Title Matters;
(c) the aggregate indemnification obligations of Seller for claims
made subsequent to the first anniversary of the Closing Date and prior to the
second anniversary of the Closing Date by the Buyer Indemnified Parties under
this Agreement, including, without limitation, under Sections 5.17, 8.3, 11.2,
11.4 and 11.6 hereof, shall not exceed an amount equal to (i) $6.0 million,
minus (ii) the amount by which (A) the aggregate amount of the claims made by
the Buyer Indemnified Parties prior to the first anniversary of the Closing
Date, plus (B) any amounts expended by Seller pursuant to Section 3.17 hereof
for environmental remediation, plus (C) any amounts expended by Seller under
Section 5.17 hereof to resolve Objectionable Title Matters, exceed $6.0
million;
(d) the aggregate indemnification obligations of Seller for claims
made subsequent to the second anniversary of the Closing Date by the Buyer
Indemnified Parties under this Agreement, including, without limitation, under
Section 8.3 hereof, shall not exceed an amount equal to (i) $1.0 million, minus
(ii) the amount by which (A) the aggregate amount of the claims made by the
Buyer Indemnified Parties prior to the second anniversary of the Closing Date,
plus (B) any amounts expended by Seller pursuant to Section 3.17 hereof for
environmental remediation, plus (C) any amounts expended by Seller under
Section 5.17 hereof to resolve Objectionable Title Matters, exceed $11.0
million; and
(e) the aggregate indemnification obligations of Buyer for claims made
by the Seller Indemnified Parties under this Agreement, including, without
limitation, under Sections 8.4 and 11.2 hereof, shall not exceed an amount
equal to $14.0 million (which shall include the amount of the Deposit).
Section 11.6 Environmental Claims. (a) Notwithstanding anything to
the contrary in this Article XI and subject to the limitation set forth in
Section 11.5 hereof:
(i) Seller agrees to release and indemnify Buyer against any claims
made within two (2) years after the Closing Date arising from any violation of
or non-compliance with any Applicable Environmental Law where it can be
determined by a preponderance of the evidence that the violation or act or
omission resulting in non-compliance occurred prior to the Closing Date;
(ii) Seller and Buyer agree that Seller and Buyer each shall pay 50
percent of all costs incurred by Seller and Buyer, including but not limited to
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<PAGE>
reasonable attorney's fees and environmental consultant fees and expenses,
incurred by Seller and Buyer in responding to, defending or resolving any
claims made within two (2) years after the Closing Date arising from any
violation of or non-compliance with any Applicable Environmental Law and
relating to the condition of the Assets, where it cannot be determined by a
preponderance of the evidence that the violation or act or omission resulting
in non-compliance occurred prior to the Closing Date or after the Closing Date;
and
(iii) Seller shall have no obligation to Buyer for any claims, no
matter when arising or made, that arise from Buyer's violation of or non-
compliance with any Applicable Environmental Law and relating to the condition
of the Assets.
Section 11.7 Security for Seller's Indemnification Liabilities. To
secure payment after Closing of Seller's indemnification liabilities hereunder,
if any become due, Buyer shall on the Closing Date pay by wire transfer to
Wells Fargo Bank as escrow agent ("Escrow Agent") (a) under WCC's
Indemnification Escrow Agreement in substantially the form of Exhibit 11.7A
("WCC's Indemnification Escrow Agreement"), the sum of Six Million Dollars
($6,000,000) ("Escrow Deposit A"), and (b) under CITPH's Indemnification Escrow
Agreement in substantially the form of Exhibit 11.7B ("CITPH's Indemnification
Escrow Agreement"), the sum of Six Million Dollars ($6,000,000) ("Escrow
Deposit B"). Escrow Deposit A shall be to secure payment to Buyer of the
indemnification liabilities, if any, of WCC Television Partners, L.P. ("WCC"),
one of the two general partners in CITP. Escrow Deposit B shall be to secure
payment to Buyer of the indemnification liabilities, if any, of CITP Holdings,
Inc. ("CITPH"), the other general partner in CITP. Buyer agrees that (a) the
collective indemnification obligations of Seller, WCC and CITPH under this
Article XI shall be subject to the limitations set forth in Section 11.5
hereof, (b) the indemnification obligations of WCC, in its capacity as a
general partner of CITP, to Buyer hereunder shall not at any time exceed $6.0
million in the aggregate, and (c) the indemnification obligations of CITPH, in
its capacity as a general partner of CITP, to Buyer hereunder shall not at any
time exceed $6.0 million in the aggregate. Buyer also agrees that if WCC and
CITPH shall be obligated to indemnify Buyer with respect to any claim arising
hereunder, CITPH and WCC each shall be liable for only 50% of the amount of any
such claim. Escrow Deposit A and Escrow Deposit B shall be held and disbursed
pursuant to the terms and conditions of WCC's Indemnification Escrow Agreement
and CITPH's Indemnification Escrow Agreement, respectively. Escrow Deposit B
may be paid out to CITPH upon the submission to Escrow Agent of a Guaranty
Agreement in the amount of Six Million Dollars ($6,000,000) (or such lesser
amount as shall remain in Escrow Deposit B at the time of such submission)
executed and delivered by Cook Inlet Region, Inc., in form and substance
substantially as set forth in Exhibit 11.7C hereto. Buyer shall not be
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<PAGE>
required to accept the Guaranty Agreement unless Cook Inlet Region, Inc.,
supplies evidence reasonably satisfactory to Buyer, that it then has sufficient
financial capacity to meet its obligations under the Guaranty Agreement. If
the amount held by the Escrow Agent in Escrow Deposit A pursuant to WCC's
Indemnification Escrow Agreement shall at any time exceed fifty percent (50%)
of Seller's then existing maximum remaining indemnification obligations
hereunder (as limited by Section 11.5 hereof), then the Escrow Agent shall be
obligated to, and shall, immediately pay such excess amount to WCC. Similarly,
if the amount held by the Escrow Agent in Escrow Deposit B pursuant to CITPH's
Indemnification Escrow Agreement shall at any time exceed fifty percent (50%)
of Seller's then existing maximum remaining indemnification obligations
hereunder (as limited by Section 11.5 hereof), then the Escrow Agent shall be
obligated to, and shall, immediately pay such excess amount to CITPH.
ARTICLE XII
-----------
Termination
-----------
Section 12.1. Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual consent of Seller and Buyer;
(b) by either Seller or Buyer, if the party seeking to terminate is
not in material default or breach of this Agreement, upon written notice to the
other upon the occurrence of any of the following:
(i) if, on or prior to the Closing Date, the other party defaults
in any material respect in the observance or in the due and timely performance
of any of its covenants or agreements contained herein, provided the non-
defaulting party has first given to the defaulting party written notice of its
alleged default and such default is not cured by the earlier of the Closing
Date or thirty (30) business days after receipt of the notice of default; or
(ii) If the FCC dismisses or denies the FCC Application or any
part thereof or designates any part of it for a trial-type hearing; or
(iii) if there shall be in effect any final judgment, final
decree or order that would prevent or make unlawful the Closing; or
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<PAGE>
(iv) if the Closing has not occurred by the close of business on
May 31, 1995, and if the failure to consummate the Asset Purchase on or before
such date did not result from the failure by the party seeking termination of
this Agreement to fulfill any undertaking or commitment provided for herein
that is required to be fulfilled by it prior to Closing; or
(v) if NBC does not give, or is not presumed to have given, its
consent under subparagraph 11(b) of the NBC Contract by the time specified
therein.
(c) by either party, upon written notice to the other, if either party
elects to terminate pursuant to Section 3.17.
Section 12.2. Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of Seller and Buyer pursuant to
Section 12.1, and the transactions contemplated hereby shall be abandoned
without further action by the parties hereto, except that the provisions of
Section 2.5(c), Section 5.9, Section 5.10, Section 6.3, this Section 12.2 and
Section 13.6 shall survive the termination of this Agreement. Termination of
this Agreement under Section 12.1 shall not relieve any party hereto of its
liability under this Agreement for any breach of this Agreement. If this
Agreement is terminated as provided herein, all filings, applications and other
submissions made hereunder shall, to the extent practicable, be withdrawn from
the persons to which they were made.
ARTICLE XIII
------------
Miscellaneous
-------------
Section 13.1. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed and
manually signed counterparts subsequently are delivered.
Section 13.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
reference to the choice of law principles thereof.
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<PAGE>
Section 13.3 Entire Agreement. This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersede any and all prior agreements, arrangements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein. Except for Sections 11.2 and 11.3,
which are intended to benefit, and to be enforceable by, any of the Seller
Indemnified Parties and the Buyer Indemnified Parties, as the case may be, this
Agreement is not intended to confer upon any person not a party hereto (and
their successors and assigns) any rights or remedies hereunder.
Section 13.4. Expenses. Except as expressly set forth in this
Agreement, whether or not the Asset Purchase is consummated, all legal and
other costs and expenses incurred in connection with the negotiation,
preparation and performance of this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.
Section 13.5. Transfer Taxes, Fees, and Similar Charges.
Notwithstanding Section 13.4, all costs of transferring from Seller to Buyer
the Assets and the Station's Business in accordance with this Agreement,
including: (a) FCC and other governmental filing or grant fees (but excluding
any regulatory or other annual fees to be prorated in accordance with Section
2.6(b)), (b) any excise, sales, use or personal property taxes related to the
transactions and (c) all costs related to the transfer of the Real Properties
and the Leased Properties and the issuance of the Title Policy, including but
not limited to recordation, transfer, stamp and documentary taxes, charges and
fees, fees for the preparation of the Deed, settlement agent or Title Company
fees, filing costs, the premium for the Title Policy and related title work,
and the cost of the Updated Survey shall be divided equally between Buyer and
Seller.
Section 13.6. Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to
Seller shall be addressed to:
Cook Inlet Television Partners, L.P.
Cook Inlet Television License Partners, L.P.
c/o Cook Inlet Communications, Inc.
1800 Avenue of the Stars
Suite 450
Los Angeles, California 90067
Attention: Mr. Stephen C. Hillard
Vice President
(310) 556-1866
Fax: (310) 556-2752
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<PAGE>
with a copy to:
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
Attention: Edgar F. Czarra, Jr., Esq.
(202) 662-5318
Fax: (202) 778-5318 or (202) 662-6291
or at such other address and to the attention of such other person as Seller
may designate by written notice to Buyer. Notices to Buyer shall be addressed
to:
Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309-3023
Attention: Mr. William T. Kerr
(515) 284-2591
Telecopy Number: (515) 284-3933
with a copy to:
Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309-3023
Attention: Thomas L. Slaughter, Esq.
(515) 284-3056
Telecopy Number: (515) 284-3828
or at such other address and to the attention of such other person as Buyer may
designate by written notice to Seller.
Section 13.7. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 13.8. Headings; Definitions. The Section, Article and other
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated. All capitalized terms defined
herein are equally applicable to both the singular and plural forms of such
terms.
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<PAGE>
Section 13.9. Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or complied with. The waiver
by any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
Section 13.10. Interpretation; Absence of Presumption. (a) For the
purposes hereof, (i) words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other
genders as the context requires, (ii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation," unless
the context otherwise requires or unless otherwise specified, (iv) the word
"or" shall not be exclusive, (v) provisions shall apply, when appropriate, to
successive events and transactions, and (vi) "knowledge" shall mean (A) when
used with respect to Seller, actual knowledge on the part of Stephen C. Hillard
or Mark D. Adolph or the General Manager, the Controller, the Operations
Manager, the General Sales Manager, the News Director, or the Chief Engineer of
the Station, and (B) when used with respect to Buyer, actual knowledge on the
part of William T. Kerr, Phillip A. Jones, Larry D. Hartsook, and Thomas L.
Slaughter.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 13.11. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 13.12. Further Assurances. Seller and Buyer agree that, from
time to time, whether before, at or after the Closing Date, each of them will,
and will cause their respective Affiliates to, execute and deliver such further
instruments of conveyance and transfer and take such other action as may be
necessary to carry out the purposes and intents hereof.
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<PAGE>
Section 13.13. Bulk Sales Laws. Subject to the provisions of Section
11.4 hereof, Buyer hereby waives compliance by Seller, in connection with the
transactions contemplated hereby, with the provisions of any applicable bulk
sales law.
Section 13.14. Risk of Loss. The risk of loss or damage to any of the
Assets prior to the Cut-Off Time shall be upon Seller. Seller shall repair,
replace and restore to its prior condition any material damage to or loss of
any material Station Asset as soon as possible. All other repairs,
replacements and restorations shall be completed as soon as practicable by
Seller, or for Seller's account, whether before or after Closing. If Seller is
unable or fails to restore or replace a lost or damaged material Asset prior to
the Closing Date, Buyer may elect (a) to consummate the transactions
contemplated by this Agreement on the Closing Date, in which event Seller shall
assign to Buyer at Closing Seller's rights under any insurance policy or pay
over to Buyer all proceeds of insurance covering such Asset's damage,
destruction or loss, or (b) delay the Closing Date until a date within fifteen
(15) business days after Seller gives written notice to Buyer of completion of
the restoration or replacement of such Asset. If the delay in the Closing Date
under this Section 13.14 would cause the Closing to occur at any time after the
period permitted by the FCC Consent, Seller and Buyer shall file an appropriate
request with the FCC for an extension of time within which to complete the
Closing.
Section 13.15. Efforts to Cure Conditions. If any event should occur,
either within or without the control of any party hereto, which would prevent
fulfillment of the conditions upon the obligations of any party to consummate
the transactions contemplated by this Agreement, the parties shall use
reasonable commercial efforts to cure the event as expeditiously as possible.
Each party shall use reasonable commercial efforts to cause the fulfillment at
the earliest practicable date of all of the conditions to the obligations of
the other party to consummate the sale and purchase under this Agreement.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
BUYER:
MEREDITH CORPORATION
By: /s/ Larry D. Hartsook
Name: Larry D. Hartsook
Title: Vice President - Finance
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<PAGE>
SELLER:
COOK INLET TELEVISION PARTNERS, L.P.
By: CITP Holdings, Inc.,
its Controlling General Partner
By: /s/ Mark D. Adolph
Name: Mark D. Adolph
Title: Vice President
COOK INLET TELEVISION LICENSE PARTNERS, L.P.
By: Cook Inlet Television Partners, L.P.,
its Controlling General Partner
By: CITP Holdings, Inc.,
its Controlling General Partner
By: /s/ Mark D. Adolph
Name: Mark D. Adolph
Title: Vice President
- 73 -
Exhibit 11
----------
MEREDITH CORPORATION
Computation of Primary and Fully Diluted Per
Common Share Earnings - Treasury Stock Method
For the Three Months Ended September 30, 1994 and 1993
(Unaudited)
Weighted average number of shares
1994 1993
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average number of shares
outstanding in thousands 13,684 13,684 14,488 14,488
Dilutive effect of unexercised
stock options in thousands 145 145 80 80
------ ------ ------ ------
Total 13,829 13,829 14,568 14,568
====== ====== ====== ======
Primary and fully
diluted earnings per common share
1994 1993
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Earnings from continuing
operations $ .77 $ .77 $ .24 $ .24
----- ----- ----- -----
Net earnings per share $ .77 $ .77 $ .24 $ .24
===== ===== ===== =====
Note: Primary - Based on average market prices.
Fully Diluted - Based on the higher of the average market price
or the market price at September 30 of each
year.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at September 30, 1994 and the Consolidated Statement
of Earnings for the three months ended September 30, 1994 of Meredith
Corporation and Subsidiaries AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<CASH> 36,455
<SECURITIES> 10,139
<RECEIVABLES> 130,968
<ALLOWANCES> 19,397
<INVENTORY> 33,695
<CURRENT-ASSETS> 323,656
<PP&E> 235,200
<DEPRECIATION> 109,538
<TOTAL-ASSETS> 882,383
<CURRENT-LIABILITIES> 276,878
<BONDS> 126,462
<COMMON> 13,705
0
0
<OTHER-SE> 249,432
<TOTAL-LIABILITY-AND-EQUITY> 882,383
<SALES> 200,147
<TOTAL-REVENUES> 200,147
<CGS> 82,565
<TOTAL-COSTS> 82,565
<OTHER-EXPENSES> 8,573
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,816
<INCOME-PRETAX> 20,549
<INCOME-TAX> 9,877
<INCOME-CONTINUING> 10,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,672
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
