1
EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
AMONG
GANNETT CO., INC.,
COMBINED COMMUNICATIONS CORPORATION,
GANNETT TRANSIT, INC.,
SHELTER MEDIA COMMUNICATIONS, INC.,
GANNETT INTERNATIONAL COMMUNICATIONS, INC.
AND
OUTDOOR SYSTEMS, INC.
Dated July 9, 1996
2
SCHEDULES
1.1(a) Advertising Structures and Personal Property
1.1(b) Advertising Contracts
1.1(c) Real Property
1.1(d) Property Agreements
1.1(g) Accounts Receivable
1.1(i) Software
1.1(j) Pension Plans
1.2(d) Excluded Software
1.4 Balance Sheet Adjustment (as of 4/30/96)
3.7 Transit and PCS Agreements
3.10 Trademarks
3.11 Litigation and Compliance with Laws
3.13 Employees and Collective Bargaining Agreements
3.14 Changes
3.16 Environmental Matters
3.17 Capitalization of Mediacom
5.11 Possible Acquisitions
EXHIBITS
A - Promissory Note and Guaranty
B - Opinion of Buyer's Counsel
C - Opinion of Sellers' Counsel
D - Option
3
TABLE OF CONTENTS
ARTICLE 1 Sale of Assets and Terms of Payment . . . . . . . . . . . . 2
1.1 Transfer of Assets . . . . . . . . . . . . . . . . . . . . 2
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Consideration . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Time and Place of Closing . . . . . . . . . . . . . . . . . 15
ARTICLE 3 Representations and Warranties of Sellers . . . . . . . . . 15
3.1 Organization; Good Standing . . . . . . . . . . . . . . . . 16
3.2 Authority Relative to this Agreement . . . . . . . . . . . 16
3.3 Financial Statements . . . . . . . . . . . . . . . . . . . 17
3.4 Business Since the Balance Sheet Date . . . . . . . . . . . 17
3.5 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 19
3.7 Transit and PCS Agreements . . . . . . . . . . . . . . . . 19
3.8 Licenses and Authorizations . . . . . . . . . . . . . . . . 20
3.9 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.10 Trademarks . . . . . . . . . . . . . . . . . . . . . . . . 21
3.11 Litigation and Compliance with Laws . . . . . . . . . . . . 22
3.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.13 Employees . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.16 Environmental Laws . . . . . . . . . . . . . . . . . . . . 25
3.17 Capitalization of NY Subways and Mediacom . . . . . . . . . 26
3.18 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 4 Representations and Warranties of Buyer . . . . . . . . . . 27
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . 27
4.2 Authority Relative to this Agreement . . . . . . . . . . . 27
4.3 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5 Covenants of Sellers Pending the Closing Date . . . . . . . 28
5.1 Maintenance of Business . . . . . . . . . . . . . . . . . . 29
5.2 Organization, Goodwill . . . . . . . . . . . . . . . . . . 29
5.3 Further Information . . . . . . . . . . . . . . . . . . . . 29
5.4 Representations and Warranties . . . . . . . . . . . . . . 30
5.5 Notice of Proceedings . . . . . . . . . . . . . . . . . . . 30
5.6 Bulk Sales Indemnity . . . . . . . . . . . . . . . . . . . 31
5.7 Consummation of Agreement . . . . . . . . . . . . . . . . . 31
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.9 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . . . . . 31
5.10 Interim Financial Statements . . . . . . . . . . . . . . . 32
5.11 Other Acquisitions . . . . . . . . . . . . . . . . . . . . 32
5.12 Due Diligence; Revised Schedules . . . . . . . . . . . . . 32
5.13 Transit Agreement Consents . . . . . . . . . . . . . . . . 33
4
ARTICLE 6 Covenants of Buyer Pending the Closing Date . . . . . . . . 34
6.1 Representations and Warranties . . . . . . . . . . . . . . 34
6.2 Corporate Action . . . . . . . . . . . . . . . . . . . . . 34
6.3 Notice of Proceedings . . . . . . . . . . . . . . . . . . . 34
6.4 Consummation of Agreement . . . . . . . . . . . . . . . . . 35
6.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.6 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . . . . . 36
6.7 Letters of Credit; Sureties . . . . . . . . . . . . . . . . 36
ARTICLE 7 Conditions to the Obligations of Sellers . . . . . . . . . 37
7.1 Representations, Warranties, Covenants . . . . . . . . . . 37
7.2 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 37
7.3 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . 38
7.4 Receipt of Documents . . . . . . . . . . . . . . . . . . . 39
ARTICLE 8 Conditions to the Obligations of Buyer . . . . . . . . . . 39
8.1 Representations, Warranties, Covenants . . . . . . . . . . 40
8.2 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Damage to the Assets . . . . . . . . . . . . . . . . . . . 42
8.4 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . 42
8.5 Receipt of Documents . . . . . . . . . . . . . . . . . . . 43
ARTICLE 9 Indemnification . . . . . . . . . . . . . . . . . . . . . . 44
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.2 Indemnification of Buyer . . . . . . . . . . . . . . . . . 44
9.3 Indemnification of Sellers . . . . . . . . . . . . . . . . 45
9.4 Notice of Claims . . . . . . . . . . . . . . . . . . . . . 46
9.5 Defense of Third Party Claims . . . . . . . . . . . . . . . 47
9.6 Settlements . . . . . . . . . . . . . . . . . . . . . . . . 48
9.7 Determination of Responsibility for Loss and Expense
for Environmental Claims . . . . . . . . . . . . . . . . . 48
9.8 Buyer's Knowledge . . . . . . . . . . . . . . . . . . . . . 49
9.9 Sellers' Knowledge . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 10 Miscellaneous Provisions . . . . . . . . . . . . . . . . . 49
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 49
10.2 Employees and Employee Benefits . . . . . . . . . . . . . . 50
10.3 Imprints; Madison Avenue Lease . . . . . . . . . . . . . . 53
10.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . 54
10.5 Data Processing Services . . . . . . . . . . . . . . . . . 54
10.6 Access to Records . . . . . . . . . . . . . . . . . . . . . 54
10.7 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . 55
10.8 Further Assurances and Consents . . . . . . . . . . . . . . 56
10.9 Waiver of Compliance . . . . . . . . . . . . . . . . . . . 57
10.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 58
10.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 59
10.13 Confidential Information; Public Announcements . . . . . . 59
10.14 No Third Party Rights . . . . . . . . . . . . . . . . . . . 59
10.15 Option for Mission Road and other Office and
Production Facilities . . . . . . . . . . . . . . . . . . . 60
10.16 Entire Agreement; Amendments . . . . . . . . . . . . . . . 60
5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated as of July 9,
1996, and is among GANNETT CO., INC., a Delaware corporation having its
principal place of business in Arlington, Virginia, COMBINED COMMUNICATIONS
CORPORATION, an Arizona corporation having its principal place of business in
Arlington, Virginia, GANNETT TRANSIT, INC., a Delaware corporation having its
principal place of business in Arlington, Virginia, SHELTER MEDIA
COMMUNICATIONS, INC., a California corporation having its principal place of
business in Los Angeles, California, and GANNETT INTERNATIONAL COMMUNICATIONS,
INC. ("GICI"), a Delaware corporation having its principal place of business in
Wilmington, Delaware (each of the foregoing entities individually is a "Seller"
and collectively are the "Sellers"), and OUTDOOR SYSTEMS, INC., a Delaware
corporation having its principal place of business in Phoenix, Arizona
("Buyer"). Gannett Co., Inc. owns all the issued and outstanding capital
stock of New York Subways Advertising Co., Inc. ("NY Subways"), an Arizona
corporation having its principal place of business in New York, New York. GICI
owns all the issued and outstanding capital stock of Mediacom Inc.
("Mediacom"), a Canadian corporation having its principal place of business in
Toronto, Canada.
As used herein, "Gannett" means Gannett Co., Inc. and GICI, and
"Shares" means all of the issued and outstanding capital
6
-2-
stock of NY Subways and Mediacom. The Sellers other than Gannett are referred
to herein as "Asset Sellers."
Sellers, NY Subways and Mediacom, respectively, own and operate
Outdoor advertising, transit and shelter operations, including billboards,
posters, bulletins, street furniture (such as newstands and kiosks), subway and
other transit advertising structures in and around Chicago, IL; Denver, CO; New
Haven, CT; Detroit, MI; Flint, MI; Grand Rapids, MI; Kansas City, MO; New York,
NY; Rochester, NY; Philadelphia, PA; St. Louis, MO; and in various locations in
California, New Jersey and Canada being all of the locations (other than
Houston, Texas) where such Outdoor advertising, transit and shelter operations
are conducted by Sellers, NY Subways or Mediacom (the "Division").
Gannett desires to sell and Buyer desires to purchase all of the
Shares. Asset Sellers desire to sell and Buyer desires to purchase
substantially all of the assets of the Division owned by them as a going
concern. Based upon the representations, warranties and agreements made by
each party to the other in this Agreement, the parties have agreed to
consummate the sale of the Division on the terms contained herein.
ARTICLE 1 Sale of Assets and Terms of Payment
1.1 Transfer of Assets. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date (as defined in Section 2.1
hereof) (i) Gannett will sell, convey or cause to be conveyed, and deliver to
Buyer, and Buyer will purchase from
7
-3-
Gannett all of the Shares, and (ii) Asset Sellers will sell, convey or cause to
be conveyed, and deliver to Buyer, and Buyer will purchase and accept from
Asset Sellers the assets and properties of Asset Sellers, tangible or
intangible, of every kind and description used by Asset Sellers in connection
with the business and operations of the Division as a going concern (the
Outdoor advertising businesses conducted by Asset Sellers, NY Subways and
Mediacom are referred to herein as the "Business" and the assets to be conveyed
by Asset Sellers are referred to as the "Assets"), but excluding the Excluded
Assets described in Section 1.2. The Assets include the following:
(a) all advertising displays and structures and other
tangible personal property, inventory, assets and
equipment owned by Asset Sellers, including without
limitation those listed in Schedule 1.1(a) (which
Schedule shall be delivered prior to Closing);
(b) all contracts, agreements and similar documents of
any nature that relate to the Assets, including
without limitation employment contracts; collective
bargaining agreements; vehicles; equipment and other
personal property leases; and all agreements for the
sale of advertising or advertising services and the
renting of space on Outdoor, transit and shelter
advertising displays, including without limitation
those advertising contracts listed in Schedule
1.1(b), those PCS agreements listed in Schedule 3.7,
and those collective bargaining agreements listed in
Schedule 3.13;
(c) all real property of Asset Sellers, including without
limitation the real property listed in Schedule
1.1(c) (which Schedule shall be delivered prior to
Closing);
(d) all leases, licenses, easements and other agreements
allowing Asset Sellers to place or construct Outdoor
advertising displays on the property of any third
party, including rights
8
-4-
to locations on which structures have not yet been
built, including without limitation those listed in
Schedule 1.1(d) (which Schedule shall be delivered
prior to Closing);
(e) all of Asset Sellers' right, title and interest in
and to all licenses, permits, transit agreements
("Transit Agreements") and other governmental
authorizations (and applications therefor) used for
the Business, including without limitation those
Transit Agreements listed in Schedule 3.7;
(f) all trademarks, service marks and tradenames,
(including registrations and applications for
registration of any of the foregoing), trade secrets,
advertiser lists, and other intangible rights and
interests owned by Asset Sellers and used in
connection with the Business, including without
limitation those listed in Schedule 3.10;
(g) all accounts receivable of Asset Sellers in existence
on the Closing Date, including without limitation
those listed in Schedule 1.1(g);
(h) all files and other records of any nature available
at the Division's operating units or the Division's
headquarters (excluding files and other records at
Gannett's corporate headquarters that (i) Gannett
Co., Inc. determines are sensitive business materials
or which would not be useful to Buyer or (ii) Buyer
otherwise receives copies of) relating solely to the
Business;
(i) software related to the computer programs used in the
operations of the Business owned by Asset Sellers and
transferable under applicable license agreements
including, without limitation those listed on
Schedule 1.1(i);
(j) all of Sellers' right, title and interest in and to
the pension plan(s) in effect for Canadian employees
("Canadian Plan") and the assets of any pension plans
sponsored by a Seller pursuant to a collective
bargaining agreement ("Union Plans") (the Canadian
Plan and the Union Plans are listed on Schedule
1.1(j));
(k) cash on hand and in banks and other cash items of
Asset Sellers; and
(l) all of Sellers' goodwill in and going concern value
of the Division.
9
-5-
1.2 Excluded Assets. The following assets relating to the
Business shall be retained by Sellers and shall not be sold, assigned or
transferred to Buyer (the "Excluded Assets"):
(a) claims by Sellers with respect to the Excluded Assets
or liabilities not assumed by Buyer hereunder,
including without limitation claims for tax refunds,
claims related to condemnation proceedings in
existence as of April 30, 1996, and counterclaims
with respect to obligations and liabilities not being
assumed by Buyer hereunder;
(b) all contracts of insurance except for contracts of
insurance to which Mediacom is a party;
(c) any assets related to employee benefit plans of any
nature, including pension plans, except for the
Canadian Plan and the Union Plans and Gannett's
401(k) Plan as set forth in Section 10.2;
(d) software related to computer programs used in
corporate-wide financial or accounting functions or
used in the business of Gannett and its affiliates
generally or not transferable under applicable
license agreements, including without limitation the
software listed in Schedule 1.2(d) (which Schedule
shall be delivered prior to Closing);
(e) the names "Combined Communications Corporation,"
"Gannett," or any variants of either of them;
(f) any stock other than the Shares, or any assets owned
directly or indirectly by Sellers or their affiliates
that are not used exclusively in the Business;
(g) Gannett's lease and all furniture, fixtures and
equipment located at 535 Madison Avenue, New York, NY
(the "Madison Avenue Lease"); and
(h) the real property located at Mission Road, Los
Angeles, CA (the "Mission Road Parcel").
10
-6-
1.3 Liabilities.
(a) Buyer shall assume, discharge and perform the liabilities
and obligations of the Division, including:
(i) all liabilities and obligations under the
contracts and agreements assigned to Buyer which are described
in Subsections 1.1(b), (d), (e) and (i) above;
(ii) all other liabilities and obligations incurred
in the ordinary course of the Business or disclosed to Buyer
in the Schedules to this Agreement;
(iii) except as provided in Section 1.3(b)(vi), all
liability under any litigation, proceeding or claim of any
nature by any person or entity arising out of the ordinary
course of the Business or disclosed to Buyer;
(iv) all liabilities of Buyer related to employees
described in Section 10.2, and all liabilities and obligations
under the Canadian Plan and the Union Plans (other than any
withdrawal liability attributable to a multiemployer plan) and
the Gannett Co., Inc. 401(k) Plan to the extent contemplated
by Section 10.2; and
(v) all liabilities of the Division reflected on the
Closing Date Balance Sheet.
(b) Buyer does not assume and will not be liable for the
following liabilities or obligations of Sellers, NY Subways or
Mediacom with respect to the Division:
11
-7-
(i) any liability under any contract of insurance
except for insurance contracts to which Mediacom is a party;
(ii) except as described in Section 10.2, any
liability to any employee or former employee of the Division,
including under any of Sellers' employee benefit plans;
(iii) any liability for federal, state, local or
foreign government taxes based on the net income of any
Seller, and any such liability of NY Subways or Mediacom for
periods prior to the Closing Date;
(iv) any liability arising out of the Madison Avenue
Lease;
(v) any liability arising out of the Mission Road
Parcel;
(vi) any liability with respect to claims by third
parties which are covered by insurance policies of Sellers and
arise from occurrences prior to the Closing Date;
(vii) any liability arising out of the redemption of
Mediacom shares owned by Mediacom minority shareholders (as
defined in Section 3.17); or
(viii) any liability or obligation not described in
Section 1.3(a).
12
-8-
To the extent Buyer or its affiliates pay, with respect to NY Subways
or Mediacom, any of the liabilities described in this Section 1.3(b), Sellers
shall reimburse Buyer.
1.4 Consideration. Subject to the conditions contained in this
Agreement, and in consideration of the sale of the Assets and the Shares, Buyer
will pay on the Closing Date the sum of Six Hundred Forty Million Dollars
($640,000,000) (the "Purchase Price") subject to adjustment as provided herein.
The parties agree to negotiate a mutually agreeable allocation of the Purchase
Price within 60 days after Closing. Buyer and Sellers agree to be bound by
such allocation and to file tax returns and reports and not to take any
position with any tax authority which is inconsistent with such allocation
unless required to do so in accordance with a final determination by a tax
authority.
Simultaneously with the execution of this Agreement, Buyer shall
deliver to Sellers a deposit (the "Deposit") consisting of (i) cash in the
amount of Twelve Million Dollars ($12,000,000) and (ii) the promissory note
("Note") of Buyer in the principal amount of Three Million Dollars ($3,000,000)
payable in full on July 29, 1996, in the form attached as Exhibit A, and
guaranteed by William S. Levine. The Deposit shall be (i) returned to Buyer if
Buyer is unable to close under this Agreement solely as a result of Sellers'
breach of this Agreement or is unable to close under this Agreement as a result
of the action of a third party within the control of Sellers, (ii) retained by
Sellers if the
13
-9-
Closing does not occur solely as a result of Buyer's breach of this Agreement
or as a result of the action of a third party within the control of Buyer and
(iii) split equally between Buyer and Sellers if Buyer is unable to close under
this Agreement as a result of the action of a third party completely outside
the control of either Seller or Buyer. For purposes of this Section, the
actions or inaction of governmental agencies shall be deemed to be outside the
control of a party, but the actions or inaction of Buyer's lending institutions
shall be deemed to be within the control of Buyer. If the Deposit is split
prior to July 29, 1996 as provided in clause (iii) above, the Note and Four
Million Five Hundred Thousand Dollars ($4,500,000) would be returned to Buyer.
If the Deposit is split after payment of the Note on July 29, 1996, $6,000,000
would be returned to Buyer and $1,500,000 would be returned to the entity or
person that paid the Note. Sellers shall credit the Deposit towards the
Purchase Price at Closing.
The Purchase Price shall be paid by wire transfer of immediately
available funds on the Closing Date. The adjustments to the Purchase Price
pursuant to this Section 1.4 shall be paid as described in Section 1.4(c).
All amounts described in this Agreement or in any Schedules hereto are
expressed in U.S. dollars.
(a) Balance Sheet Adjustment. Sellers and Buyer agree that
the Purchase Price will be adjusted as of the Closing Date as follows:
If on the Closing Date the Division's current assets on a consolidated
basis exceed total
14
-10-
liabilities by more than $1.00, the Purchase Price will be increased
by the amount of such excess. If on the Closing Date the Division's
total liabilities exceed current assets by more than $1.00, the
Purchase Price will be reduced by the amount of such excess. As of
April 30, 1996 the adjustment would increase the Purchase Price by
$42,479,409 as shown on Schedule 1.4. In computing this balance sheet
adjustment, the balance sheet shall be prepared in accordance with the
historical accounting practices of the Division, and in accordance
with the following:
(i) Current assets for purposes of this balance sheet
adjustment shall include:
(A) all security deposits and any other
refundable deposits for the Division that are
transferable to Buyer;
(B) all inventory items and all prepaid
items, including without limitation prepaid leases,
prepaid franchise fees (regardless of the length of
the term of the underlying obligation), and other
prepaid items that the Division has expensed in
accordance with its historical accounting practices
to the extent Buyer obtains remaining future value;
(C) (i) all fixed assets acquired after April
30, 1996 and (ii) the total purchase price of
acquisitions consummated after April 30, 1996
15
-11-
(other than acquisitions for which Buyer's consent is
required but not granted under Section 5.11), net of
cash received by Sellers from the sale of assets
after April 30, 1996;
(D) all long-term accounts receivable;
(E) the right to reimbursement from New York
City for expenses incurred but not previously
recorded as a receivable in connection with the
"Brand Train" in New York City; and
(F) cash on hand and in banks and other cash
items of the Division.
(ii) all intercompany and affiliate liabilities,
debts and/or receivables will be excluded from the balance
sheet or treated as shareholders' equity except for Mediacom's
liability of Ten Million One Hundred Thirty-Three Thousand,
Three Hundred Forty Dollars ($10,133,340) to Gannett
International Communications, Inc. (the "Mediacom Note"),
which Buyer will cause Mediacom to pay on the Closing Date
immediately after Closing; provided, however, that if Buyer
determines that payment of the Mediacom Note would create a
tax liability for Buyer or Mediacom, Buyer may elect (such
election to be made no later than three business days prior to
the Closing Date) not to cause Mediacom to pay the Mediacom
Note, in which event the Mediacom Note would be cancelled and
the current liabilities of the
16
-12-
Division would be decreased by $10,133,340 (thereby increasing
net working capital by that amount);
(iii) all deferred taxes will be excluded from the
balance sheet or treated as shareholders' equity;
(iv) all accounts receivable of the Division shall be
net of the historical reserve for bad debts, rebates, refunds
and adjustments for accounts receivable. Buyer and Sellers
agree that such reserve shall be in lieu of any other
adjustment related to claims or disputes of any nature related
to accounts receivable; and
(v) total liabilities shall include accrued and
unpaid vacation, but shall exclude any environmental liability
for which Buyer is responsible under Section 9.7.
(b) Prorations. In computing the balance sheet adjustment,
the following proration method will be used, and the balance sheet
adjustment in Section 1.4(a) will be adjusted to reflect the
prorations described in this Section 1.4(b). All items of expense and
revenue directly relating to the Business shall be prorated between
Sellers and Buyer as of the close of business on the Closing Date.
Items to be prorated shall include without limitation power and
utility charges, personal property taxes and real property taxes,
lease rents and other prepaid items, and trade and barter
transactions. Revenues and expenses will
17
-13-
be recognized using the Division's historical recognition practices;
provided, however, that revenues derived from Outdoor postings will be
prorated, where appropriate, based on the number of days of posting
before and after the Closing Date. Except as otherwise provided in
this Agreement, Buyer shall be responsible for all expenses incurred
and shall be entitled to all revenues earned in connection with the
Division after the Closing Date. Except as otherwise provided in this
Agreement, Sellers shall be responsible for all expenses incurred and
shall be entitled to all revenues earned in connection with the
Division through the Closing Date. (For example, wages, commissions
and other employee compensation for periods through the Closing Date
will either be paid by Sellers or recorded as a liability on the
Closing Date Balance Sheet.)
Sellers agree to furnish Buyer with any documents or records
in Sellers' possession that may be needed for Buyer to confirm the
adjustment and prorations in this Section 1.4.
This Section 1.4(b) shall not be interpreted so as to provide
a double payment or double credit to Seller or Buyer for any item in
the calculation of the Preliminary Balance Sheet or the Closing Date
Balance Sheet.
(c) Balance Sheet Adjustment Payment. On the Closing Date,
Sellers shall, to the extent practicable, make the adjustments to the
Purchase Price specified in this
18
-14-
Section 1.4. Sellers shall prepare and provide to Buyer a
consolidated balance sheet of the Division as of the close of business
on the last day of the accounting period immediately preceding the
Closing Date, using all available financial data (the "Preliminary
Balance Sheet"). Within 90 days after the Closing Date, Sellers will
prepare and provide to Buyer an adjusted balance sheet of the Division
as of the close of business on the Closing Date, and reflecting the
items to be adjusted and prorated pursuant to this Section 1.4 and
showing the recalculation of adjustments to the Purchase Price
pursuant to the Preliminary Balance Sheet (the "Closing Date Balance
Sheet"). On the 120th day after the Closing Date, all required
refunds or payments under this Section 1.4 shall be made on the basis
of the Closing Date Balance Sheet.
If any dispute arises over any amount to be refunded or paid
under this Section 1.4 (whether pursuant to the Preliminary Balance
Sheet or the Closing Date Balance Sheet), such refund or payment shall
nonetheless be promptly made to the extent such amount is not in
dispute. If any such dispute cannot be resolved by the parties, it
shall be referred to a mutually satisfactory independent public
accounting firm of national stature that has not been employed by any
party for the two years preceding the Closing Date. The determination
of such firm shall be conclusive and binding on each party. The fees
of such firm
19
-15-
shall be paid fifty percent (50%) by Sellers and fifty percent (50%)
by Buyer.
ARTICLE 2 The Closing
2.1 Time and Place of Closing. The closing (the "Closing") of the
sale and purchase of the Assets and the Shares shall be held in the offices of
Gannett at 1100 Wilson Boulevard, Arlington, Virginia 22234 on the date (the
"Closing Date") that is the later of (i) the first Friday or Monday after a
period of three business days following the expiration (including early
termination) of the waiting period provided under the Hart-Scott-Rodino Act; or
(ii) the earlier of August 15 or the first Friday or Monday after a period of
three business days following (A) the completion of a tender offer by Buyer for
those certain Senior Notes due 2003 issued pursuant to an Indenture between
Buyer and United Trust Co. of New York ("Notes") or (B) the defeasance of such
Notes; or at such other time and place as shall be mutually agreed upon by the
parties.
ARTICLE 3 Representations and Warranties of Sellers
Sellers jointly and severally represent and warrant to Buyer as
follows. For purposes of this Agreement, "Material Adverse Effect" shall mean
a material adverse effect on the Business or Assets of the Division taken as a
whole. The inclusion of any item in this Agreement or on a Schedule hereto
shall not be deemed an acknowledgment that such item is material or did not
20
-16-
occur in the ordinary course of the Business or would be reasonably likely to
result in a Material Adverse Effect.
3.1 Organization; Good Standing. Each Seller, NY Subways and
Mediacom are corporations duly organized, validly existing and in good standing
under the laws of the state or country of its incorporation. Each Seller, NY
Subways and Mediacom have the full power and authority to own and operate their
assets and carry on their business as now being conducted and are qualified to
do business in the states or provinces in which they presently conduct
business.
3.2 Authority Relative to this Agreement. Each Seller has the
full corporate power, authority and legal right to execute and deliver this
Agreement and to carry out the transactions and perform its obligations
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate and shareholder action. This Agreement
has been duly and validly executed and delivered by each Seller and constitutes
a legal, valid and binding obligation of each Seller enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting the rights of creditors
generally.
21
-17-
3.3 Financial Statements. Sellers have furnished to Buyer the
unaudited financial statements of the Division (the "Financial Statements") for
the period ending April 30, 1996 (the "Balance Sheet Date") including the
following schedules attached to the letter from Gannett to Buyer dated May 29,
1996 (the "May 29 Letter"): Consolidating Balance Sheet (4/30/96); Gannett
Outdoor Consolidated Financials (including for all entities) 1993-1996 (not
reflecting cash flow adjustments per Schedule B of the May 29 Letter); and
Gannett Outdoor Consolidated Financials (including for all entities) for
Periods 1-4, 1995 and 1996. The Financial Statements, and the interim
Financial Statements to be furnished to Buyer pursuant to Section 5.10, were
and will be prepared in accordance with the books and records regularly
maintained by Sellers with respect to the Division, are correct and complete
and fairly present, and will fairly present, in all material respects the
results of operations of the Division for the periods covered thereby in
conformity with the historical accounting practices of the Division applied
consistently for such periods. Sellers make no representation, however,
regarding the collectability of the Division's accounts receivable, or the
projected revenues of or financial prospects for the Division.
3.4 Business Since the Balance Sheet Date. To Sellers' knowledge,
since the Balance Sheet Date, the Business has been conducted in the ordinary
course and in substantially the same manner as before the Balance Sheet Date,
except for matters which
22
-18-
would not be reasonably likely to result in a Material Adverse Effect.
For purposes of this Agreement, the phrase "to Sellers' knowledge"
means (i) as of the date hereof, Sellers' knowledge based solely on files
available for review at Gannett's corporate offices, without any inquiry or
investigation of files maintained at the Division's operating units or at the
Division's headquarters or elsewhere, and (ii) as of the Closing Date, Seller's
knowledge based solely on its knowledge under clause (i) above and on the
inquiry and investigation described in Section 5.12.
3.5 No Defaults. The execution, delivery and performance of this
Agreement by each Seller will not (a) conflict with or result in any breach of
any provision of the Articles of Incorporation or bylaws of any Seller, NY
Subways or Mediacom, (b) violate any law, statute, rule, regulation, order,
injunction or decree of any federal, state, local or foreign governmental
authority or agency applicable to any Seller, NY Subways or Mediacom or any of
the Assets, where such conflict, breach or violation would be reasonably likely
to result in a Material Adverse Effect, or (c) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any
contract, note, bond, mortgage or other instrument or obligation relating to
the Business or to which the Assets may be subject (other than any leases,
easements, license agreements or similar
23
-19-
agreements for the right to use space and other than any Transit Agreement or
any contract, note, bond, mortgage or other instrument or obligation related
thereto), where such default would be reasonably likely to result in a Material
Adverse Effect.
3.6 Undisclosed Liabilities. To Sellers' knowledge, the Division
has no obligation or liability of any nature which is normally shown on a
balance sheet prepared in accordance with the historical practices of the
Division which is not reflected or reserved against in the Financial Statements
(or if not, will be so reflected or reserved on the Closing Date Balance Sheet)
and which is reasonably likely to result in a Material Adverse Effect. No
representation or warranty made by Sellers in this Agreement, and no statement
made in any Financial Statement, certificate, document, exhibit or schedule
furnished or to be furnished in connection with the transactions herein
contemplated contains or will contain, as of the date delivered or made, any
untrue statement of fact which would be reasonably likely to result in a
Material Adverse Effect.
3.7 Transit and PCS Agreements. To Sellers' knowledge, Schedule
3.7 contains a list of the Transit Agreements and personal communication
systems ("PCS") agreements included in the Business. To Sellers' knowledge,
there are no existing defaults, events of default or other events under the
Transit and PCS agreements listed in Schedule 3.7 which, with or without notice
or lapse of time or both, would constitute a default or an event of default
under any of such agreements and which would be reasonably likely to result in
a Material Adverse Effect. Sellers are not aware whether the Transit and PCS
24
-20-
agreements listed in Schedule 3.7 have been amended, modified or terminated or
whether the Division has entered into Transit or PCS agreements not listed in
Schedule 3.7.
For purposes of this Agreement, the phrase "Sellers are not aware"
means that Sellers are not aware of the matter in question based (i) as of the
date hereof, solely on files available for review at Gannett's corporate
offices, without any inquiry or investigation of files maintained at the
Division's operating units or at the Division's headquarters or elsewhere, and
(ii) as of the Closing Date, solely on files described in clause (i) above and
files actually reviewed by Sellers as a result of the inquiry and investigation
described in Section 5.12.
Sellers shall use all reasonable efforts to cooperate with Buyer in
obtaining consents to the assignment of the Transit Agreements, but the
availability of consents to such assignments shall not be a condition to
Buyer's obligation to close under this Agreement.
3.8 Licenses and Authorizations. The Division is subject to
federal, state, local and foreign laws, rules and regulations governing the
receipt of permits for the placement, size and
25
-21-
location of Outdoor advertising structures and displays. Sellers, NY Subways
and Mediacom have all necessary permits, licenses and governmental
authorizations required for the conduct of the Business as presently conducted,
except where the failure to have any such permit, license or governmental
authorization would not be reasonably likely to result in a Material Adverse
Effect. The Division's operating units observe the Outdoor Advertising
Association of America code restricting the placement of Outdoor advertising
displays for the sale of alcohol or tobacco products within 500 feet of
schools, churches, and playgrounds.
3.9 Title. Sellers, NY Subways and Mediacom own and have good and
valid marketable title to all real property and personal property included in
the Business and sold hereunder, free and clear of all security interests,
mortgages, deeds of trust, pledges, conditional sales agreements, charges,
liens and encumbrances, except for liens for taxes not yet due and payable, and
except for encumbrances which would not be reasonably likely to result in a
Material Adverse Effect. The Shares, the Assets and the Excluded Assets
include all the property and rights used by Sellers in the Business of the
Division.
3.10 Trademarks. To Sellers' knowledge, Schedule 3.10 contains a
list of all trademarks, service marks and tradenames used in the Business and
sold hereunder (the "Rights"). To
26
-22-
Sellers' knowledge, the registrations (if any) for the Rights are valid, in
good standing and uncontested. Sellers possess adequate rights, licenses or
other authority to use all Rights necessary to conduct the business of the
Division as presently conducted, except where the failure to possess such
Rights would not be reasonably likely to result in a Material Adverse Effect.
Sellers are not aware of any notice with respect to any alleged infringement or
unlawful or improper use of any Rights by others, or with respect to any claims
that any Rights are owned or alleged to be owned by others.
3.11 Litigation and Compliance with Laws. Except for matters (i)
that have occurred in the ordinary course of the Business, (ii) which would not
be reasonably likely to result in a Material Adverse Effect, (iii) shown on
Schedule 3.11, or (iv) described in Section 3.16:
(a) the Division has not been operating under or subject to,
or in default with respect to, any order, writ, injunction, judgment
or decree of any court or federal, state, local or foreign
governmental authority or agency;
(b) neither Sellers, NY Subways or Mediacom nor any of their
respective officers or agents has received any inquiry, written or
oral, from any such authority concerning the Business during the
12-month period prior to the date of this Agreement;
27
-23-
(c) there is no litigation or proceeding pending by or
against, or threatened against, the Division or any of the Sellers; and
(d) Sellers, NY Subways and Mediacom have complied with all
laws, by-laws, regulations, orders or decrees applicable to the
Division, including zoning and land use laws and regulations, and the
present uses by such parties of the assets of the Division do not
violate or fail to comply with any such laws, regulations, orders or
decrees in any material respect, and there is no basis for any claim
for compensation or damage or other legal or equitable relief from any
violation of the foregoing.
3.12 Taxes. Sellers, NY Subways and Mediacom have filed, or caused
to be filed, or have filed extensions for, all federal, state, local and
foreign tax returns required to be filed by them with respect to the Business
and have paid, or made provisions for the payment of (a) all taxes due for the
periods covered by such returns, except such accrued and unpaid taxes for which
appropriate accruals have been made in the Financial Statements, and (b) all
deficiencies assessed as a result of any examination of such returns.
3.13 Employees. To Sellers' knowledge, Schedule 3.13 lists the
Division's full-time employee count by department and the collective bargaining
agreements in place for the Division.
28
-24-
Except as disclosed on Schedule 3.13, no Seller is a party to any employment
contract or collective bargaining agreement or any other labor agreement
covering or relating to any of the employees of the Division, and neither
Seller, NY Subways nor Mediacom has recognized or received a demand for
recognition of any collective bargaining representative with respect to the
Division. To Sellers' knowledge, no labor strike, slow-down or work stoppage
is pending or threatened with respect to the Division.
3.14 Changes. Except for matters (i) that have occurred in the
ordinary course of the Business, (ii) which would not be reasonably likely to
result in a Material Adverse Effect, (iii) shown on Schedule 3.14, or (iv) that
are permitted under Section 5.11, to Sellers' knowledge, since the Balance
Sheet Date, neither Sellers, NY Subways nor Mediacom have (a) mortgaged,
pledged or subjected to a lien or any other encumbrance, any of the assets of
the Division, or incurred liabilities affecting the Business; (b) sold or
transferred any material asset used or useful in the business of the Division;
(c) made any loans, advances or capital contributions to, or investments in,
any person or entity in connection with the Business (other than cash advances
to employees, officers or directors for reimbursable expenses); (d) authorized
or made any capital expenditures or commitment or contract for any capital
improvements in connection with the Business; or (e) suffered any
29
-25-
loss, damage or casualty with respect to any asset of the Division.
3.15 Brokers. There is no broker or finder or other person who
would have any valid claim against Buyer for a commission or brokerage fees in
connection with this Agreement or the transactions contemplated hereby as a
result of any agreement, understanding or action by any Seller, NY Subways or
Mediacom.
3.16 Environmental Laws. Except for matters (i) that have occurred
in the ordinary course of the Business, (ii) which would not be reasonably
likely to result in a Material Adverse Effect, or (iii) shown on Schedule 3.16,
to Sellers' knowledge:
(a) the Division is in compliance with all applicable
environmental laws and regulations;
(b) no release, emission or discharge into the environment of
hazardous or toxic substances or waste has occurred in connection with
the Business or is presently occurring which would result in liability
under the Comprehensive Environmental Response, Compensation and
Liability Act or similar state laws or which are in excess of
permitted levels or reportable quantities under any applicable
environmental law or regulation; and
(c) the Division has not received any written notice of
investigation or been operating under or subject to, or in default
with respect to, any order, writ, injunction,
30
-26-
judgment or decree of any court or federal, state, local or foreign
governmental authority or agency with respect to any applicable
environmental law or regulation.
3.17 Capitalization of NY Subways and Mediacom. The Shares consist
of (i) with respect to NY Subways, 100,000 shares of common stock, par value
$1.00 per share, of which 200 shares are outstanding as of the date hereof and
(ii) with respect to Mediacom, those shares described in Schedule 3.17 (which
Schedule shall be delivered prior to Closing). All of the Shares have been
duly authorized, validly issued and are fully paid and non-assessable. There
is no existing option, warrant, call, commitment or other security or agreement
of any kind to which NY Subways or Mediacom or Gannett is a party requiring,
and there are no convertible securities of NY Subways or Mediacom outstanding
which upon conversion would require, the issuance of any additional shares of
capital stock of NY Subways or Mediacom or other securities convertible into
shares of capital stock or any debt or equity security of NY Subways or
Mediacom of any kind. The final redemption of a limited, non-controlling
number of Mediacom shares formerly owned by third parties (the "Mediacom
minority shareholders") has not been completed, however. Gannett is the record
and beneficial owner of the Shares, free and clear of any and all encumbrances.
Gannett's delivery of the Shares to Buyer will convey to Buyer good and
marketable title to all the Shares, free and clear of any and all encumbrances.
31
-27-
3.18 Pension Plans. The Canadian Plan, the Union Plans and the
Gannett Co., Inc. 401(k) Plan are in compliance with applicable law and the
terms of such plans, except for any noncompliance which would not have a
Material Adverse Effect. Sellers, NY Subways and Mediacom either are current
in their obligations to make contributions to such plans, or such obligations
will be reflected on the Closing Date Balance Sheet. Neither Sellers, Mediacom
nor NY Subways is subject to any penalty or other tax arising from the
operation of such plans. Neither the Sellers, NY Subways nor Mediacom has made
any partial or complete withdrawal from any multiemployer pension plan covering
any employees of the Division that would result in a withdrawal liability to NY
Subways or Mediacom.
ARTICLE 4 Representations and Warranties of Buyer
Buyer represents and warrants to Sellers as follows:
4.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Authority Relative to this Agreement. Buyer has the full
corporate power, authority and legal right to execute and deliver this
Agreement and to carry out the transactions and perform its obligations
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
32
-28-
authorized by all necessary corporate and shareholder action. This Agreement
has been duly and validly executed and delivered by Buyer and constitutes a
legal, valid and binding obligation of Buyer, enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting the rights of creditors
generally.
4.3 No Defaults. The execution, delivery and performance of this
Agreement by Buyer will not (a) materially conflict with or result in any
breach of any provision of the Articles of Incorporation or bylaws of Buyer,
(b) violate any law, statute, rule, regulation, order, injunction or decree of
any federal, state or local governmental authority or agency applicable to
Buyer.
4.4 Brokers. There is no broker or finder or other person who
would have any valid claim against Sellers for a commission, brokerage or fees
in connection with this Agreement or the transactions contemplated hereby as a
result of any agreement, understanding or action by Buyer except for Dennis
Brush, whose fees will be paid by Buyer.
33
-29-
ARTICLE 5 Covenants of Sellers Pending the Closing Date
Sellers covenant and agree that from the date hereof to and including
the Closing Date and thereafter with respect to Sections 5.6 and 5.13:
5.1 Maintenance of Business. Sellers shall continue, and shall
cause NY Subways and Mediacom to continue to carry on the business of the
Division, maintain its plant and equipment and keep its books of account,
records and files in substantially the same manner as heretofore in the
ordinary course.
5.2 Organization, Goodwill. Sellers will cause the Division
substantially to preserve (i) its business organization intact, and (ii) the
goodwill of its suppliers, customers and others having business relations with
it.
5.3 Further Information. At the request of Buyer, Sellers shall
from time to time give or cause to be given to Buyer and its representatives
all information concerning the affairs of the Division as Buyer may reasonably
request, provided that such information shall be limited to information
available at Gannett's corporate headquarters until such time as Sellers have
informed the Division's executives of this Agreement or have made a public
announcement or issued a press release concerning the transactions contemplated
herein, whichever is earlier. In connection with any due diligence review of
the Business or the Assets at any time, however, Buyer may not have access to
34
-30-
Division's employees or plants without Sellers' prior written consent.
5.4 Representations and Warranties. Sellers shall give written
notice to Buyer promptly upon the occurrence of, or promptly upon Sellers'
becoming aware of the existence of or the impending or threatened occurrence
of, any event which would cause or constitute a breach or which would have
caused or constituted a breach, had such event occurred or been known to
Sellers prior to the date hereof, of any of their representations or warranties
contained in this Agreement as updated pursuant to Section 5.12.
5.5 Notice of Proceedings. Sellers will promptly notify Buyer in
writing upon becoming aware of any order or decree or receiving any complaint
praying for an order or decree restraining or enjoining the consummation of
this Agreement or the transactions contemplated hereunder or that would be
reasonably likely to result in a Material Adverse Effect, or upon receiving any
notice from any governmental department, court, agency or commission of its
intention to institute an investigation into, or institute any action 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.
35
-31-
5.6 Bulk Sales Indemnity. As an inducement to Buyer to waive
compliance with the provisions of any applicable bulk transfer laws, Sellers
covenant that all debts, obligations and liabilities of Sellers not expressly
assumed by Buyer under this Agreement will be promptly paid and discharged by
Sellers as and when they become due and payable. Sellers further agree to hold
Buyer harmless from all Loss and Expense (as defined in Section 9.2) suffered
by Buyer by reason of Sellers' non-compliance with any applicable bulk
transfer law.
5.7 Consummation of Agreement. Subject to the provisions of
Section 10.1, Sellers shall use all reasonable efforts to perform and fulfill
all conditions and obligations on their part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated by this
Agreement shall be fully carried out.
5.8 Expenses. Sellers shall bear and punctually pay for all of
their expenses incurred in connection with the transactions contemplated by
this Agreement, including without limitation accounting and legal fees.
5.9 Hart-Scott-Rodino Act. As soon as possible after the
execution of this Agreement, but in no event later than three business days
thereafter, Sellers shall prepare and file all documents with the Federal Trade
Commission and the United States
36
-32-
Department of Justice as are required to comply with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and all documents relating to
the Canadian filing, if any, and shall promptly furnish all materials and
information thereafter requested by any of the regulatory agencies having
jurisdiction over such filings.
5.10 Interim Financial Statements. Sellers shall deliver to Buyer
unaudited interim balance sheets and statements of revenue and expense of the
Division substantially in the form of the Financial Statements promptly after
the close of each of the Division's accounting periods that occurs between the
Balance Sheet Date and the Closing Date.
5.11 Other Acquisitions. Sellers shall not, and shall not permit
NY Subways or Mediacom to, enter into any acquisition agreement for the
purchase of assets with a net purchase price of more than $1 million per
transaction, including without limitation those described in Schedule 5.11,
without the consent of Buyer, which shall not be unreasonably withheld,
conditioned or delayed.
5.12 Due Diligence; Revised Schedules. Sellers shall conduct
reasonable due diligence to confirm Sellers' representations, warranties,
covenants and agreements hereunder. Sellers shall provide Buyer with revised
Schedules reflecting
37
-33-
information obtained from the Division after execution of this Agreement and
prior to Closing. In connection therewith, Sellers will request appropriate
information from the Division's executives and general managers. Sellers shall
review all such information obtained to determine whether additional inquiry is
required.
5.13 Transit Agreement Consents. Sellers shall cooperate with
Buyer in seeking any necessary consents to the transfer of the Transit
Agreements listed in Schedule 3.7. In the event a municipal consent is
required and is not obtainable prior to the Closing Date, Sellers shall
cooperate with Buyer to restructure the proposed transfer and the relationship
between Sellers and Buyer in order to accomplish the same business, financial
and risk allocation objectives as would be accomplished under a transfer as
contemplated by this Agreement without breaching the terms of any such
agreement; provided, however, that Buyer shall assume the risk of claims,
losses, liabilities, costs or expenses arising out of any restructured
arrangement and, if no such arrangement is reasonably possible, Buyer and
Sellers shall nevertheless execute transfer documentation to effect the
transfers contemplated by this Agreement at mutually agreeable times but not
later than six (6) months after the Closing Date for all such transfers.
Sellers may elect to extend the six-month period if they determine, in their
sole discretion, that
38
-34-
there is a reasonable prospect for reaching a satisfactory restructured
arrangement in the near future.
ARTICLE 6 Covenants of Buyer Pending the Closing Date
The Buyer covenants and agrees that from the date hereof to and
including the Closing Date:
6.1 Representations and Warranties. Buyer shall give written
notice to Sellers promptly upon the occurrence of, or promptly upon Buyer's
becoming aware of the impending or threatened occurrence of, any event which
would cause or constitute a breach, or which would have caused or constituted a
breach, had such event occurred or been known to Buyer prior to the date
hereof, of any of the representations or warranties contained in this Agreement.
6.2 Corporate Action. Buyer will take all necessary corporate and
other action required of it to carry out the transactions contemplated by this
Agreement.
6.3 Notice of Proceedings. Buyer will promptly notify Sellers in
writing upon becoming aware of any default or event of default, or any
condition or event which, with or without notice or lapse of time or both,
would constitute a default or event of default under any of its existing
financing agreements, or any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this Agreement or
39
-35-
the transactions contemplated hereunder, or upon receiving any notice from any
governmental department, court, agency or commission of its intention to
institute an investigation into, or institute any action 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.
6.4 Consummation of Agreement. Subject to the provisions of
Section 10.1, Buyer shall use all reasonable efforts to perform and fulfill all
conditions and obligations on its part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this Agreement
shall be fully carried out.
6.5 Expenses. Buyer shall bear and punctually pay for all of its
expenses incurred in connection with the transactions contemplated by this
Agreement, including without limitation (a) accounting and legal fees, (b) all
expenses of any title insurance Buyer elects to obtain covering the real
property included in the Assets, (c) any sales or transfer taxes arising from
transfer of the Assets or Shares to Buyer, including any real estate transfer
tax payable in connection with the transfer to Buyer of any real property or
leasehold interests, and (d) the Hart-Scott-Rodino filing fee.
40
-36-
6.6 Hart-Scott-Rodino Act. As soon as possible after the
execution of this Agreement, but in no event later than three business days
thereafter, Buyer shall prepare and file all documents with the Federal Trade
Commission and the United States Department of Justice as are required to
comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and all documents relating to the Canadian filing, if any, and shall
promptly furnish all materials and information thereafter requested by any of
the regulatory agencies having jurisdiction over such filings. In furtherance
of the foregoing, Buyer covenants to take all necessary and proper steps to
dispose of its Denver Outdoor operations.
6.7 Letters of Credit; Sureties. Effective as of the Closing Date
Buyer shall have (a) obtained a release of Sellers from all obligations or
agreements for letters of credit, bonds, surety arrangements and all guarantees
or similar assurances which give rise to a liability of Sellers for obligations
related to the Business, and Buyer shall have replaced all such agreements held
by third parties or (b) delivered to Sellers separate letters of credit, bonds
and/or other surety arrangements which provide complete and total indemnity for
such obligations of Seller that are not released, which arrangements must be in
form acceptable to Sellers.
41
-37-
ARTICLE 7 Conditions to the Obligations of Sellers
The obligations of Sellers under this Agreement are, at the option of
Sellers, subject to the fulfillment of the following conditions prior to or at
the Closing Date:
7.1 Representations, Warranties, Covenants.
(a) All representations and warranties of Buyer contained in
this Agreement and in any statement, certificate, schedule or other
document delivered by Buyer pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall have been
true and accurate in all material respects as of the date when made
and shall be deemed to be made again at and as of the Closing Date and
shall then be true and accurate in all material respects; and
(b) Buyer shall have substantially 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.
7.2 Proceedings. No action or proceeding shall have been
instituted or threatened against any of the parties to this Agreement before
any court or governmental department, agency or commission to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated hereby; and neither Buyer nor
Sellers
42
-38-
shall have received written notice from any court or governmental department,
agency or commission of its intention to (a) institute any action or proceeding
to restrain or enjoin or nullify or render ineffective this Agreement or such
transactions if consummated, or (b) commence any investigation (other than a
routine letter of inquiry, including a routine Civil Investigation Demand) into
the consummation of this Agreement and the transactions contemplated hereby,
which in the reasonable opinion of Sellers would make it inadvisable to
consummate such transactions; provided that in the event an investigation is
instituted, this Agreement may not be abandoned by the Sellers for a period of
30 days from the date notice of institution thereof is first received by either
Sellers or Buyer (but consummation hereof shall be delayed during such period),
and may not be abandoned pursuant to this Section 7.2 thereafter except upon
advice of counsel to Sellers that there is a reasonable probability that such
an investigation may result in an action or proceeding of the type described in
the second clause of this Section 7.2.
7.3 Hart-Scott-Rodino. The waiting period under the Hart-
Scott-Rodino Act shall have expired, appropriate Canadian approval shall have
been obtained, if required, and there shall not be outstanding any order of a
court restraining the transactions contemplated hereby or imposing on any
Seller any conditions with respect to disposition of any of the Assets or
43
-39-
Shares, or any conditions that could affect any of the Sellers' properties or
businesses not covered by this Agreement.
7.4 Receipt of Documents. Sellers shall have received at the
Closing:
(a) funds equal to the Purchase Price;
(b) an assumption agreement, pursuant to which Buyer shall
assume Sellers' liabilities and obligations as provided in Section 1.3;
(c) a release, in form and substance satisfactory to Sellers,
evidencing Sellers' release from their obligations under the Transit
Agreements and the cancellation of any related bonds, letters of
credit or deposits, or if despite Buyer's best efforts such releases
have not been obtained, Buyer shall deliver a letter of credit to
Sellers, in amount, form and substance satisfactory to Sellers, as
security for any continuing obligations of Sellers under the Transit
Agreements; and
(d) an opinion of Powell, Goldstein, Frazer & Murphy, counsel
to Buyer, in the form attached as Exhibit B.
ARTICLE 8 Conditions to the Obligations of Buyer.
The obligations of Buyer under this Agreement are, at the option of
Buyer, subject to the fulfillment of the following conditions prior to or at
the Closing Date:
44
-40-
8.1 Representations, Warranties, Covenants.
(a) All representations and warranties of Sellers contained in
this Agreement and in any statement, certificate, schedule or other
document delivered by Sellers pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall have been
true and accurate as of the date when made and shall be deemed to be
made again at and as of the Closing Date and shall then be true and
accurate (taking into account (i) all modifications to the Schedules
to this Agreement pursuant to Section 5.12 and (ii) the definitions of
the phrases "to Sellers' knowledge" and "Sellers are not aware" as
provided in Sections 3.4 and 3.7, respectively);
(b) Sellers shall have substantially performed and complied
with each and every covenant and agreement required by this Agreement
to be performed or complied with by them prior to or at the Closing
Date; and
(c) There shall have been no changes in the Business or Assets
since the Balance Sheet Date resulting in a Material Adverse Effect,
other than matters arising in the ordinary course of the Business.
The word "changes" as used in this Section 8.1(c) also includes any
items included on the Revised Schedules which were not on the
Schedules delivered upon execution of this Agreement.
45
-41-
8.2 Proceedings. No action or proceeding shall have been
instituted or threatened against any of the parties to this Agreement, before
any court or governmental department, agency or commission to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated hereby; and neither Buyer nor
Sellers shall have received written notice from any court or governmental
department, agency or commission of its intention to (a) institute any action
or proceeding to restrain or enjoin or nullify or render ineffective this
Agreement or such transactions if consummated, or (b) commence any
investigation (other than a routine letter of inquiry, including a routine
Civil Investigation Demand) into the consummation of this Agreement and the
transactions contemplated hereby, which in the reasonable opinion of Buyer
would make it inadvisable to consummate such transactions; provided that in the
event an investigation is instituted, this Agreement may not be abandoned by
the Buyer for a period of 30 days from the date notice of institution thereof
is first received by either Sellers or Buyer (but consummation hereof shall be
delayed during such period), and may not be abandoned pursuant to this Section
8.2 thereafter except upon advice of counsel to Buyer that (i) there is a
reasonable probability that such an investigation may result in an action or
proceeding of the type described in the second clause of this Section 8.2, and
(ii) that such an investigation is not based in
46
-42-
whole or in part on Buyer's failure to dispose of its Denver operations.
8.3 Damage to the Assets. If on the Closing Date the real or
personal properties used in the Division shall have suffered damage on account
of fire, explosion or other cause of any nature, but such damage has not
resulted in a Material Adverse Effect, Buyer shall complete the purchase
hereunder and collect and receive on behalf of Sellers the proceeds of any
insurance payable to Sellers on account of the damage. If such damage has
resulted in a Material Adverse Effect, Buyer shall have the right at its
election (i) to complete the purchase hereunder and collect and receive on
behalf of Sellers the proceeds of any insurance payable to Sellers on account
of the damage or (ii) to terminate this Agreement by providing written notice
to Sellers specifying the Material Adverse Effect, and upon such termination
Buyer and Sellers shall be released from any liability under this Agreement.
8.4 Hart-Scott-Rodino. The waiting period under the Hart-
Scott-Rodino Act shall have expired, and appropriate Canadian approval shall
have been obtained, if required, and there shall not be outstanding any order
of a court restraining the transactions contemplated hereby.
47
-43-
8.5 Receipt of Documents. Buyer shall have received at the
Closing:
(a) such limited warranty deeds with respect to office or
production facilities and otherwise quitclaim deeds (without specific
legal descriptions but otherwise in form and substance reasonably
satisfactory to Buyer) sufficient to transfer all of Sellers' interest
in the real property included in the Assets;
(b) a bill of sale for all personal property included in the
Assets;
(c) an opinion of Kristin H. Kent, counsel to Sellers, in the
form attached as Exhibit C (in rendering the opinion called for by
this section, Ms. Kent may rely on the opinions of other counsel
satisfactory to her with respect to any matters involving the laws of
any jurisdiction other than New York and Virginia);
(d) an assignment of all of Sellers' right, title and interest
to all contracts, leases, licenses and permits used in the Business;
(e) a receipt for the Purchase Price;
(f) certificates duly endorsed (or with powers of attorney
attached) representing all of the Shares;
(g) the Option in the form attached as Exhibit D; and
(h) revised Schedules pursuant to Section 5.12.
48
-44-
ARTICLE 9 Indemnification
9.1 Survival. The several representations, warranties, covenants
and agreements of Sellers and Buyer contained in or made pursuant to this
Agreement shall be deemed to have been made on the Closing Date, shall survive
the Closing Date and shall remain operative and in full force and effect for a
period of one year after the Closing Date, except that (i) the representations
contained in Sections 3.9, 3.11, 3.16 and 3.18 shall survive for a period of
three years after the Closing Date, and (ii) the representations, warranties,
covenants and agreements contained in Sections 3.2, 3.12, 3.17, 4.2, 6.7,
9.2(c), 9.3(c), 9.3(d) and 9.3(e) shall survive for the time limit imposed by
the statute of limitations applicable to any claim for which indemnity is
sought.
9.2 Indemnification of Buyer. Sellers agree that they shall
indemnify and hold Buyer harmless from and against any and all damages, claims,
losses, expenses, costs, obligations and liabilities, including without
limitation liabilities for reasonable attorneys' fees and disbursements ("Loss
and Expense"), suffered by Buyer by reason of:
(a) any breach of representation or warranty made by Sellers
pursuant to this Agreement;
(b) any failure by Sellers to perform or fulfill any of their
respective covenants or agreements set forth in this Agreement; and
49
-45-
(c) any failure by Sellers to pay or perform when due any of
their respective liabilities or obligations arising out of or related
to the Division which have not been assumed by Buyer hereunder;
provided, however, that Sellers will not be responsible for any Loss or Expense
until the cumulative aggregate amount of such Loss or Expense results in a
Material Adverse Effect, in which case Sellers shall then be liable for all
such Loss or Expense; provided further that Sellers shall be liable for
retained tax liabilities under Section 1.3(b)(iii), retained Mediacom minority
shareholder liabilities under Section 1.3(b)(vii), and any balance sheet
adjustment refund due Buyer under Section 1.4 without regard to a Material
Adverse Effect, and provided further that Buyer shall not be entitled to
include in Loss or Expense any claims related to accounts receivable.
9.3 Indemnification of Sellers. Buyer agrees that it shall
indemnify and hold Sellers harmless from and against any and all Loss and
Expense suffered by Sellers by reason of:
(a) any material breach of representation or warranty made by
Buyer pursuant to this Agreement;
(b) any material failure by Buyer to perform or fulfill any
of its covenants or agreements set forth in this Agreement;
(c) any failure by Buyer to pay or discharge on or after the
Closing Date any liabilities or obligations
50
-46-
assumed by Buyer hereunder, or any obligations of Buyer under Sections
1.4, 6.7 or 10.2;
(d) any liabilities or obligations arising out of the Transit
Agreements on or after the Closing Date or any liabilities or
obligations of Buyer under Section 5.13; and
(e) any liability with respect to claims by third parties
asserted after the Closing Date which arise from occurrences prior to
the Closing Date but only to the extent that the Loss and Expense is
not reimbursed by insurance policies of Sellers.
9.4 Notice of Claims. If Gannett Co., Inc. (on behalf of any
Seller) or Buyer believes that it has suffered or incurred any Loss and Expense
(the "Indemnified Party"), it shall notify the other party (the "Indemnifying
Party") promptly in writing and within the applicable time period specified in
Section 9.1, describing such Loss and Expense, the amount thereof if known, and
the method of computation of such Loss and Expense, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such Loss and Expense shall have occurred. The amount of the
Loss and Expense set forth in the notice shall not be a limitation on any claim
for the actual amount of such Loss and Expense, however.
If the Indemnifying Party does not object in writing to an
indemnification notice claim within 45 days after receiving notice, the
Indemnified Party shall be entitled to recover
51
-47-
promptly from the Indemnifying Party the amount of such claim, but such
recovery shall not be deemed to limit the amount of any additional
indemnification to which the Indemnified Party may be entitled pursuant to this
Article 9. If the Indemnifying Party asserts that it has an indemnification
obligation in a lesser amount than claimed, the Indemnified Party shall
nevertheless be entitled to recover promptly from the Indemnifying Party the
lesser amount, without prejudice to the Indemnified Party's claim for the
difference.
9.5 Defense of Third Party Claims. If any action at law or in
equity is instituted by a third party (a "Claim") with respect to which any of
the parties intends to claim a Loss and Expense under this Article 9, such
party shall promptly notify the Indemnifying Party of such Claim. The
Indemnifying Party shall have the right to conduct and control any Claim
through counsel of its own choosing, but the Indemnified Party may, at its
election, participate in the defense of any such Claim at its sole cost and
expense. If the Indemnifying Party does not notify the Indemnified Party
within ten (10) days after receipt of the notice specified in this Section 9.5
that it is defending any such Claim, then the Indemnified Party may defend such
Claim and settle such Claim, through counsel of its own choosing, and recover
from the Indemnifying Party the amount of such settlement or of any judgment
and the costs and expenses of such defense,
52
-48-
including, but not limited to, reasonable attorneys' fees and disbursements.
Notwithstanding the foregoing, the failure by a party to abide by
these terms and conditions shall not affect the other party's obligations to
indemnify such party against Loss and Expense under this Article 9.
9.6 Settlements. No settlement made by an Indemnifying Party
shall be binding on the Indemnified Party unless the proposed settlement has
been approved in writing in advance by the Indemnified Party. The Indemnifying
Party will give the Indemnified Party at least fifteen (15) days' notice of any
proposed settlement or compromise of any Claim it is defending. If the
Indemnified Party unreasonably rejects the proposed settlement or compromise,
it shall be obligated to assume the defense of and full and complete liability
and responsibility for such Claim.
9.7 Determination of Responsibility for Loss and Expense for
Environmental Claims. Notwithstanding the provisions of Sections 9.2 and 9.3,
but subject to the provisions of Section 10.15, Buyer and Sellers have agreed
to allocate responsibility for environmental matters as follows:
(a) Sellers are responsible for Loss or Expense for
environmental claims (i) arising out of circumstances, actions,
omissions or events occurring or existing prior to
53
-49-
the Closing Date that were not (or are not) in the ordinary course of
the Business, except for those matters disclosed in Schedule 3.16 and
(ii) related to the Mission Road Parcel; and
(b) Buyer is responsible for Loss or Expense for
environmental claims arising out of (i) those matters disclosed in
Schedule 3.16 and (ii) circumstances, actions, omissions or events,
whether occurring or existing before or after the Closing Date, that
were (or are) in the ordinary course of the Business.
9.8 Buyer's Knowledge. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall Sellers be liable to Buyer from
and after the Closing Date for any matter of which Buyer had knowledge on or
before the Closing Date.
9.9 Sellers' Knowledge. Notwithstanding anything to the contrary
contained herein, any information that is communicated to Sellers by Buyer in
writing on or before the Closing Date becomes Sellers' knowledge as used herein.
ARTICLE 10 Miscellaneous Provisions
10.1 Termination. This Agreement may be terminated by Sellers or
Buyer at any time prior to the Closing Date (a) by the mutual consent of
Sellers and Buyer; or (b) by Sellers if any of the conditions in Article 7 have
not been met by the time
54
-50-
required and have not been waived; or (c) by Buyer if any of the conditions in
Article 8 have not been met by the time required and have not been waived; or
(d) upon notice to the other party if, without fault on the part of the
notifying party, the Closing has not taken place by September 30, 1996. In the
event of any termination pursuant to this Section 10.1, each party shall
deliver to the other upon request all documents, work papers and other
materials furnished by the other relating to the transactions contemplated
hereby, or shall destroy all such materials. A termination pursuant to this
Section 10.1 shall not relieve either party of liability it would otherwise
have for a breach of this Agreement.
10.2 Employees and Employee Benefits.
(a) Buyer agrees to hire all of the Division's active
employees upon Closing except for six senior managers of the Division
("Senior Managers") to be mutually agreed upon by the parties. For
purposes of this Section, "active employees" shall include only those
current employees who are actively working immediately prior to the
Closing Date or who are on sick leave, vacation, short-term disability
or authorized leave of absence of six months or less. Buyer shall be
responsible for and shall pay for all compensation, benefits and other
payments due to all active employees of the Division who accept
Buyer's offer of employment to become employed by Buyer after the
Closing Date pursuant to
55
-51-
this transaction ("Hired Employees"). With respect to active
employees of the Division (other than the Senior Managers) as of the
day preceding the Closing Date who are not employed by Buyer after the
Closing Date pursuant to this transaction, Buyer agrees to assume the
following liabilities and obligations: (i) severance liabilities in
accordance with a severance policy of one week of salary for every
full year of employment with the Division (or Gannett Co., Inc. or any
of its affiliates) prior to the Closing Date (with a minimum of four
weeks of salary and a maximum of twenty-six weeks of salary) (the
"Severance Policy"), (ii) all obligations under federal, state or
foreign plant closing statutes including the WARN Act, (iii) Sellers'
medical insurance costs relating to COBRA coverage, and (iv) employee
benefit obligations of Mediacom, or arising under the laws of Canada
or any of its governmental agencies or divisions. Buyer also agrees
to provide medical insurance coverage to all Hired Employees,
beginning on the Closing Date, with coverage to be effective without
any waiting period and without any exclusions for pre-existing
conditions.
(b) Sellers shall be responsible for and shall pay for (i)
all compensation, benefits and other payments due to all employees and
former employees of the Division prior to the Closing Date, (ii) all
compensation and benefits due to the Senior Managers before and after
the Closing Date, (iii) all
56
-52-
benefits payable to employees who retired from the Division prior to
the Closing Date, and (iv) all benefits payable to employees who are
not considered "active employees" immediately prior to the Closing
Date.
(c) On the Closing Date, Sellers shall transfer and assign or
cause to be transferred and assigned to Buyer all of the pension plan
assets of the Canadian Plan and the Union Plans, and Buyer shall
assume all of the obligations and liabilities to employees under such
plans and Buyer shall become the plan sponsor. Sellers shall retain
the pension plan assets and liabilities to all employees who
participate in the Gannett Co., Inc. Retirement Plan.
(d) Buyer has established a qualified employee benefit plan
and trust under Section 401(k) of the Internal Revenue Code ("Buyer's
Plan"). On the Closing Date or within 90 days thereafter, Sellers
shall transfer to the Buyer's Plan all of the assets in the Gannett
Co., Inc. 401(k) Plan ("Gannett 401(k) Plan") held for the accounts of
employees of the Division hired by Buyer, and Buyer shall assume the
liabilities of the Sellers and of the Gannett 401(k) Plan to the
employees whose accounts are so transferred. The assets shall be
liquidated and transferred in cash unless the parties agree in writing
to the transfer of all or any portion of the assets in kind. Buyer's
Plan shall preserve the accrued benefits of such employees as of the
transfer date. Buyer shall identify all employees whose accounts
57
-53-
shall be transferred at least 30 days prior to the proposed transfer.
Buyer shall indemnify and hold Sellers and the Gannett 401(k) Plan
harmless from all Loss and Expense under Section 9.3(c) in connection
with any 401(k) claims asserted with respect to the Gannett 401(k)
Plan by employees whose assets were transferred.
(e) Buyer agrees to maintain the Severance Policy for the
benefit of all Hired Employees for a period of at least six months
following the Closing Date and, in determining any benefits
thereunder, shall credit a Hired Employee with service for employment
with the Division prior to the Closing Date.
10.3 Imprints; Madison Avenue Lease. Buyer agrees by not later
than 6 months after the Closing Date to remove from all advertising displays,
vehicles and equipment included in the Assets all imprints containing the
tradenames retained by Sellers as Excluded Assets. Until the earlier of
removal or the conclusion of the 6-month period described above, Sellers agree
that Buyer may display Sellers' tradenames on the imprints of the Business.
Buyer agrees that the Division shall not occupy the space currently
used by the Division under the Madison Avenue Lease, beginning on the Closing
Date.
58
-54-
10.4 Risk of Loss. Material risk of loss or damage to the Assets
to be transferred hereunder by fire or other casualty prior to the Closing Date
shall be borne by Sellers, and on and after the Closing Date shall be borne by
Buyer.
10.5 Data Processing Services. Sellers agree that for a period of
60 days following the Closing Date Buyer may continue to use the data
processing services made available to the Division by Sellers and their
affiliated entities, at the same levels of service as presently provided, at a
cost of $15,000. Within 30 days after the Closing Date, Sellers will advise
Buyer of the service fee (which service fee shall include, among other things,
all of Sellers' direct and indirect costs for the services) and terms that
would be applicable to continuation of the data processing services arrangement
after the initial 60-day period. If Buyer does not elect to accept Sellers'
terms, then the availability of data processing services will cease at the end
of the initial 60-day period.
10.6 Access to Records. For the period beginning on the Closing
Date and ending when all of Sellers' tax years through 1996 are closed by the
IRS and the Canadian tax authorities, Buyer will retain, and make available to
Sellers as Sellers reasonably request, all files and records related to the
Division prior to the Closing Date. No such records shall be destroyed by
Buyer after that time without Buyer's first offering them to
59
-55-
Sellers. Buyer shall permit Sellers' representatives full access to and use of
the records of the Division as may be deemed appropriate by such
representatives for the purpose of preparing the balance sheet adjustments
referenced in Section 1.4(c). Sellers shall notify Buyer when all of Sellers'
tax years through 1996 are closed by the IRS and the Canadian tax authorities.
Buyer shall, and shall cause Mediacom to, cooperate with Sellers in connection
with the reporting or filing of any form, report, return or other documents
related to periods of time for which Sellers may be responsible under this
Agreement.
10.7 Tax Returns. Gannett shall remain solely responsible to file
or cause to be filed all U.S. federal, state and local tax returns required to
be filed by or on behalf of NY Subways, and all Canadian federal, provincial
and local tax returns required to be filed by or on behalf of Mediacom and its
subsidiaries, covering any period of time ending prior to or on the Closing
Date, and to pay all taxes due for the periods covered by such returns, except
such accrued and unpaid taxes not yet due for which appropriate accruals have
been made in the Closing Date Balance Sheet. Gannett shall be entitled to any
refund of taxes attributable to such returns and periods. Buyer shall remain
solely responsible to file or cause to be filed all U.S. federal, state and
local tax returns required to be filed by or on behalf of NY Subways, and all
Canadian federal, provincial and local tax returns required to be filed by or
on behalf of
60
-56-
Mediacom and its subsidiaries, covering any period of time that begins on the
date after the Closing Date, and to pay all taxes due for the periods covered
by such returns. For U.S. federal consolidated return purposes, the income or
loss of NY Subways shall be allocated to Gannett for the period up to and
including the Closing Date, and to Buyer for the period after the Closing Date,
by closing the books of NY Subways as of the close of business on the Closing
Date. Buyer shall not be permitted to make an election under Section 338(g) of
the Internal Revenue Code (U.S.) for Mediacom or any of its subsidiaries
without the prior approval of Gannett. Neither Mediacom nor any of its
subsidiaries shall effect any extraordinary transactions that would cause an
adverse tax consequence for Gannett until after 1996 without the prior approval
of Gannett.
10.8 Further Assurances and Consents. From time to time after the
Closing Date, without further consideration (a) Sellers and Buyer will execute
and deliver, or cause to be executed and delivered, such documents as the other
may reasonably request in order to effect the transactions contemplated herein
and to effectively vest in Buyer good title to the Assets or the Shares, and
(b) Sellers agree to use reasonable efforts to cooperate with Buyer to obtain
any necessary third party consents or approvals to the assignment or transfer
to Buyer of any contracts, leases, licenses and permits included in the Assets;
provided, however, that Sellers shall not be required to make any payments or
incur
61
-57-
any obligations to any third parties in connection with the obtaining of any
such consents or approvals.
10.9 Waiver of Compliance. Any failure of any of the parties to
comply with any obligation, representation, warranty, covenant, agreement or
condition herein may be waived by the other party only by a written instrument
signed by the party granting the waiver. Any such waiver or failure to insist
upon strict compliance with a term of this Agreement shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure to
comply.
10.10 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered by hand or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to Sellers, to:
Douglas H. McCorkindale, Vice Chairman
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
Fax No. 703/558-4634
62
-58-
With a copy to:
Thomas L. Chapple, Esq., Senior Vice President
and General Counsel
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
Fax No. 703/558-3897
(b) If to Buyer, to:
Mr. Arthur R. Moreno, President and CEO
Outdoor Systems Advertising
2502 North Black Canyon Highway
Phoenix, Arizona 85009
Fax No. 602/433-2482
With a copy to:
William B. Shearer, Jr., Esq.
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Fax No. 404/572-6999
10.11 Assignment. This Agreement and all of its terms shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns. This Agreement shall not be assigned by either party,
except that (i) Sellers may assign or transfer this Agreement to any affiliate
or subsidiary of Gannett Co., Inc., and (ii) Buyer may assign its rights under
this Agreement as collateral security under financing agreements entered into
by Buyer for the purpose of obtaining the funds required for the Purchase
Price. In the event of any permitted assignment by Sellers or Buyer hereunder,
any such assignee shall be bound by all the terms and conditions set forth in
this Agreement, and no such assignment shall release Sellers or Buyer from
their obligations and liabilities hereunder.
63
-59-
10.12 Governing Law. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Delaware without
reference to its choice of law principles or the laws of any other state.
10.13 Confidential Information; Public Announcements. The parties
agree that the Non-Disclosure Agreement between Gannett Co., Inc. and Buyer
dated May 29, 1996 (the "Non-Disclosure Agreement") remains in full force and
effect and shall survive the execution and delivery of this Agreement.
No public announcement (including an announcement to employees) or
press release concerning the transactions provided for herein shall be made by
Gannett Co., Inc. (on behalf of any Seller) or by Buyer without the prior
written approval of the other party. In no event shall any party disclose the
Purchase Price unless such disclosure is required by law, except that Buyer or
Sellers may disclose the Purchase Price to Buyer's lenders and investors and to
the Securities and Exchange Commission.
10.14 No Third Party Rights. Nothing in this Agreement shall be
deemed to create any right on the part of any person or entity not a party to
this Agreement, except that Buyer may assign its rights under this Agreement as
collateral security under financing agreements entered into by Buyer for the
purpose of obtaining the funds required for the Purchase Price.
64
-60-
10.15 Option for Mission Road and other Office and Production
Facilities.
(a) At any time prior to the fifth business day preceding the
Closing Date, Buyer may elect by written notice to Sellers that it
shall include the Mission Road property in the Assets, in
consideration for the assumption by Buyer of all Loss or Expense
related thereto without any change in the Purchase Price or the
balance sheet adjustments pursuant to Section 1.4 above.
(b) At any time prior to the fifth business day preceding the
Closing Date, Buyer may elect by written notice to Sellers to exclude
any office or production facility ("Excluded Facility") from the real
property that would otherwise be included in the Assets. In such
event, notwithstanding the provisions of Section 9.7, any such
Excluded Facility shall be an Excluded Asset under Section 1.2 above
and Sellers shall remain responsible for all Loss or Expense related
to the Excluded Facility. There shall be no reduction in the Purchase
Price or the balance sheet adjustments pursuant to Section 1.4 to
reflect the exclusion of the Excluded Facility from the Assets.
10.16 Entire Agreement; Amendments. This Agreement, including the
Exhibits and Schedules hereto and the Non-Disclosure Agreement, embodies the
entire agreement and understanding of the parties in respect of the subject
matter
65
-61-
hereof and supersedes all prior agreements and understandings between the
parties. This Agreement may not be amended except in a writing signed by both
parties.
Sellers and Buyer have caused this Agreement to be signed by their
duly authorized officers as of the date first above written.
SELLERS: BUYER:
GANNETT CO., INC. OUTDOOR SYSTEMS, INC.
By: /s/Douglas H. McCorkindale By: /s/William S. Levine
------------------------------- -------------------------------
Douglas H. McCorkindale William S. Levine
Vice Chairman Chairman
GANNETT INTERNATIONAL
COMMUNICATIONS, INC.
By: /s/Douglas H. McCorkindale
-------------------------------
Douglas H. McCorkindale
President
COMBINED COMMUNICATIONS
CORPORATION
By: /s/Douglas H. McCorkindale
-------------------------------
Douglas H. McCorkindale
President
GANNETT TRANSIT, INC.
By: /s/Douglas H. McCorkindale
-------------------------------
Douglas H. McCorkindale
Vice President
SHELTER MEDIA COMMUNICATIONS, INC.
By: /s/Douglas H. McCorkindale
-------------------------------
Douglas H. McCorkindale
Vice President
66
EXHIBIT A
PROMISSORY NOTE
$3,000,000 July 9, 1996
Arlington, Virginia
FOR VALUE RECEIVED, Outdoor Systems, Inc., a Delaware corporation (the
"Maker"), HEREBY PROMISES TO PAY to the order of Gannett Co., Inc., a Delaware
corporation (the "Seller"), at the Seller's office at 1100 Wilson Boulevard,
Arlington, Virginia 22234 (or such other address as Seller shall notify Maker
in writing), in lawful money of the United States and in immediately available
funds, the principal sum of Three Million Dollars ($3,000,000), without
interest, pursuant to Section 1.4 of the Asset Purchase Agreement among Gannett
Co., Inc., Combined Communications Corporation, Gannett Transit, Inc., Shelter
Media Communications, Inc., and Gannett International Communications, Inc.
("Sellers") and Maker dated as of July 9, 1996 (the "Agreement").
This Note is issued pursuant to the terms of the Agreement. Terms
defined in the Agreement are used herein with their defined meanings.
This Note is guaranteed by a Guaranty made by William S. Levine,
personally dated as of July 9, 1996, (a copy of which is attached hereto as
Exhibit A) and the holder of this Note is entitled to the benefits thereof.
Payment of principal due hereunder will be made in one payment due in
immediately available funds on July 29, 1996; provided however that payment
will not be due, and this Note will be canceled, only if the Agreement is
terminated prior to July 29, 1996 and such termination is (a) for reasons
beyond the control of Maker, or (b) for reasons attributable solely to Sellers
as described in paragraph 1.4 of the Agreement.
If any of the following events ("Events of Default") shall occur:
(a) Maker shall fail to pay principal under this Note when
due; or
(b) Maker shall: (i) apply for, or consent to the
appointment of a receiver, trustee or liquidator of Maker, (ii) make a general
assignment for the benefit of creditors, or (iii) file a voluntary petition in
bankruptcy, or a petition or an answer seeking an arrangement with creditors or
to take advantage of any insolvency law or an answer admitting the material
allegations, or a petition is filed against Maker in any bankruptcy or
insolvency proceedings, or if action shall be taken
67
by the Maker for the purpose of affecting any of the foregoing; or (iv) an
order, judgment or decree shall be entered, without the application, approval
or consent of Maker by any court of competent jurisdiction, approving a
petition seeking bankruptcy of Maker, or approving a receiver or trustee of
Maker or of all or a substantial part of assets of Maker, and such order,
judgment or decree shall continue unstayed and in effect ninety (90)
consecutive days;
then, in the case of an Event of Default other than one of the type
referred to in clause (b) above, the Seller may, by notice to the Maker, (i)
declare the entire outstanding Note forthwith due and payable, whereupon the
Note shall become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived by the Maker; or (ii) pursue any other remedy available to it
under the Agreement or otherwise; and in the case of the occurrence of an Event
of Default of the type referred to in clause (b) above, the entire outstanding
Note shall be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by
Maker. After an Event of Default, interest shall accrue at the rate of fifteen
percent (15%) per annum or such lesser rate as equals the maximum rate
permitted by law and interest shall be due and payable upon demand.
Maker agrees that this Note shall be binding upon Maker and its
successors and assigns.
Maker promises to pay all costs of collection, including reasonable
attorneys' fees, upon default in the payment of the principal amount of this
Note at the payment date, as herein provided, whether suit be brought or not.
In the event any one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Note, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein or
therein.
This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought. Notices and other communications
hereunder shall be given in the same manner as set forth in the Agreement.
68
This Note shall be interpreted in accordance with the laws of the
Commonwealth of Virginia.
OUTDOOR SYSTEMS, INC.
By:
----------------------------------
William S. Levine
Chairman
69
EXHIBIT A (to the Promissory Note)
GUARANTY
THIS GUARANTY, dated as of July 9, 1996, is made by WILLIAM S. LEVINE,
an individual residing at 2737 Arizona Biltmore Circle #18, Phoenix, Arizona
85016 ("Guarantor"), for the benefit of Gannett Co., Inc., a corporation having
its principal place of business at 1100 Wilson Boulevard, Arlington, Virginia
22234 ("Obligee").
Obligee and Outdoor Systems, Inc., a Delaware corporation having its
principal place of business in Phoenix, Arizona ("OSI"), have entered into an
Asset Purchase Agreement, dated July 9, 1996 (the "Asset Purchase Agreement")
pursuant to which Obligee is selling to OSI certain of the assets of Obligee
and several of its affiliate companies. In connection with such sale, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor covenants as follows:
1. Guarantor guarantees to Obligee the prompt payment of any and all
amounts due to Obligee under the Promissory Note delivered pursuant to Section
1.4 of the Asset Purchase Agreement. Guarantor also agrees to be liable to
Obligee for any payments made by OSI or Guarantor to Obligee that may
thereafter be recovered from Obligee for any reason whatsoever, including
without limitation as a preferential transfer or fraudulent conveyance under
the U.S. Bankruptcy Code or any applicable state law, together with any and
all costs and expenses which Obligee may incur in the defense against any such
claims, including without limitation reasonable attorney's fees and
disbursements. This Guaranty is a guaranty of payment and not of collection.
2. Obligee shall not be required to commence any action, suit or
proceeding to enforce its rights under any provision of the Promissory Note or
to pursue or exhaust any other rights or remedies which it may have against OSI
prior to making demand upon Guarantor for payment under the terms of this
Guaranty.
3. The liability of Guarantor under this Guaranty shall be direct,
immediate, absolute, continuing and unconditional, and shall not be subject to
any defense, claim, counterclaim, setoff, deduction, diminution, abatement,
recoupment, suspension, deferment or reduction which Guarantor, OSI or any
other person may have against Obligee or any other person.
4. Guarantor waives (i) notice of the acceptance of this Guaranty by
Obligee and of any action by Obligee in connection herewith, (ii) presentment
for payment, demand, protest, notice of protest and notice of dishonor, and
(iii) any other rules of suretyship law.
70
-2-
5. No delay or lack of diligence on the part of Obligee in exercising
any of its rights or remedies hereunder or under the Promissory Note and no
partial or single exercise of any such rights or remedies shall constitute or
be deemed to be a waiver of any of Obligee's rights under this Guaranty.
6. In the event that Guarantor shall advance or become obligated to
pay any sums pursuant to this Guaranty, or in the event that for any other
reason OSI shall hereafter become indebted to Guarantor, the amount of such
advance, obligation or indebtedness shall at all times be and remain subject
and subordinate to all amounts due and owing to Obligee under the Promissory
Note.
7. Upon payment under this Guaranty, Guarantor shall have a right of
subrogation with respect to the rights of Obligee under the Promissory Note and
then only to the extent of the amount paid. Notwithstanding any payments made
by Guarantor under this Guaranty, all other rights of subrogation and
participation are hereby expressly waived and released.
8. This Guaranty shall remain in full force and effect during the
term hereof notwithstanding (i) the invalidity or unenforceability of any of
the terms or provisions of the Promissory Note, (ii) the dissolution and
liquidation of OSI or Obligee, (iii) the death or legal incapacity of
Guarantor, (iv) the release or discharge, in whole or in part, of OSI or
Guarantor in any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding, or (v) any other
circumstances which might otherwise constitute a legal or equitable release or
discharge, in whole or in part, of OSI under the Promissory Note or a legal or
equitable release or discharge in whole or in part, of Guarantor under this
Guaranty.
9. Any notice, request or demand which Obligee is required to give to
Guarantor hereunder shall be in writing and shall be deemed to have been duly
given or made if delivered personally to Guarantor or if mailed to Guarantor by
registered or certified mail, return receipt requested, postage prepaid, at his
address set forth above or at such other address as Guarantor may designate by
written notice to Obligee.
10. This Guaranty may not be modified, amended or revoked without the
prior written consent of Obligee.
11. This Guaranty shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without giving effect to
its conflict of law rules.
12. Guarantor hereby expressly and irrevocably agrees and consents
that any action, suit or proceeding arising out of or
71
-3-
relating to this Guaranty may be instituted by Obligee in the courts of the
Commonwealth of Virginia and, by the execution and delivery of this Guaranty,
Guarantor expressly waives any objection which he may have now or hereafter to
the laying of venue in, or to the jurisdiction of, such courts in any such
action, suit or proceeding, and irrevocably submits generally and
unconditionally to the jurisdiction of such courts in any such action, suit or
proceeding.
13. This Guaranty shall be binding upon Guarantor and his executors,
administrators, distributees, legal representatives and fiduciaries and shall
inure to the benefit of Obligee, its successors and assigns.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
date first above written.
--------------------------------
William S. Levine