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EXHIBIT 99.2
OPTION
This Option (the "Option") is granted by Gannett Outdoor Co. of Texas,
Inc., a Texas corporation having its principal place of business in Houston,
Texas ("Texas Outdoor") to Outdoor Systems, Inc., a Delaware corporation having
its principal place of business in Phoenix, Arizona ("Buyer") pursuant to the
Asset Purchase Agreement dated July __, 1996 among Gannett Co., Inc.
("Gannett"), Buyer and others (the "Asset Purchase Agreement"). This Option is
granted in order to provide Buyer with an opportunity to seek the expiration of
the waiting period under the Hart-Scott-Rodino Act for the purchase of Texas
Outdoor independently of the transactions contemplated in the Asset Purchase
Agreement, and is subject to clearance under the Hart-Scott-Rodino Act.
OPTION. Texas Outdoor hereby grants to Buyer the option to acquire
the business of Texas Outdoor as a going concern for the purchase price of Ten
Million Dollars ($10,000,000) ("Texas Outdoor Purchase Price") subject to
adjustment. This Option shall expire unless exercised on or before the date
which is sixty (60) days after the Closing Date under the Asset Purchase
Agreement.
EXERCISE. This Option may be exercised by delivery on or before the
expiration date of Buyer's written notice of exercise to Texas Outdoor, c/o
Gannett Co., Inc., 1100 Wilson Boulevard, Arlington, Virginia 22234, Attention:
Douglas H. McCorkindale and the execution and delivery of the Asset Purchase
Agreement attached hereto as Exhibit A ("Houston Purchase Agreement").
Exercise of the Option shall constitute the binding commitment of Buyer to
acquire, and Texas Outdoor to transfer, all the assets of Texas Outdoor and of
Buyer to assume the liabilities of Texas Outdoor on the terms and conditions
contained in the Houston Purchase Agreement.
ASSIGNMENT. This Option shall not be assigned or otherwise
transferred by Buyer, and any purported assignment or transfer, directly or
indirectly, by contract, operation of law or otherwise, shall automatically
terminate this Option whether it occurs before or after exercise by Buyer.
Nothing herein shall prohibit Buyer from transferring the business of Texas
Outdoor immediately after the Closing as defined in the Houston Purchase
Agreement, but Sellers shall have no obligations to any purchaser from Buyer.
INCORPORATION BY REFERENCE. The provisions of Sections 5.9, 10.9,
10.10, 10.12, 10.14 and 10.15 of the Asset Purchase Agreement are incorporated
in this Option by reference and shall apply to the Option as though stated
herein.
Dated: July __, 1996 GANNETT OUTDOOR CO. OF TEXAS, INC.
By:
-----------------------------------
Title:
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EXHIBIT A
ASSET PURCHASE AGREEMENT
BETWEEN
GANNETT OUTDOOR CO. OF TEXAS, INC.
AND
OUTDOOR SYSTEMS, INC.
Dated July __, 1996
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TABLE OF CONTENTS
ARTICLE 1 Sale of Assets and Terms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Organization; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Business Since the Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 PCS Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.8 Licenses and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.11 Litigation and Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.16 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 4 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Adequate Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 5 Covenants of Seller Pending the Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Maintenance of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Organization, Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Notice of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Bulk Sales Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.10 Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 Covenants of Buyer Pending the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Notice of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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6.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Letters of Credit; Sureties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7 Conditions to the Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Representations, Warranties, Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Receipt of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 8 Conditions to the Obligations of Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Representations, Warranties, Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Damage to the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Receipt of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.6 Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.7 Determination of Responsibility for Loss and Expense for Environmental Claims . . . . . . . . . . . . . 38
9.8 Buyer's Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.9 Seller's Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 10 Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Employees and Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3 Imprints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.5 Data Processing Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.7 [Intentionally omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.8 Further Assurances and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.9 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.13 Confidential Information; Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.14 No Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.15 Option for Office and Production Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.16 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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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
1.2(d) Excluded Software
3.7 PCS Agreements
3.10 Trademarks
3.11 Litigation and Compliance with Laws
3.13 Employees
3.14 Changes
3.16 Environmental Matters
EXHIBITS
A - Opinion of Buyer's Counsel
B - Opinion of Seller's Counsel
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated as of July __,
1996, and is between GANNETT OUTDOOR CO. OF TEXAS, INC., a Texas corporation
having its principal place of business in Houston, Texas ("Seller") and OUTDOOR
SYSTEMS, INC., a Delaware corporation having its principal place of business in
Phoenix, Arizona ("Buyer").
This Agreement is executed in connection with Buyer's exercise of an
Option dated July __, 1996 granted by Seller pursuant to the Asset Purchase
Agreement (the "Division Agreement") among Gannett Co., Inc., Combined
Communications Corporation, Gannett Transit, Inc., Shelter Media
Communications, Inc. and Gannett International Communications, Inc.
(collectively, "Gannett") and Buyer dated July __, 1996, under which Gannett
agreed to sell the Division (as defined in the Division Agreement) to Buyer.
Seller owns and operates an Outdoor advertising business in the
Houston metropolitan area (the "Business").
Seller desires to sell and Buyer desires to purchase substantially all
of the assets of the Business 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 Business
on the terms contained herein.
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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)
Seller will sell, convey or cause to be conveyed, and deliver to Buyer, and
Buyer will purchase and accept from Seller the assets and properties of Seller,
tangible or intangible, of every kind and description used by Seller in
connection with the operations of the Business as a going concern (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 Seller, including without
limitation those listed in Schedule 1.1(a);
(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 advertising displays,
including without limitation those advertising
contracts listed in Schedule 1.1(b) and those PCS
agreements listed in Schedule 3.7;
(c) all real property of Seller, including without
limitation the real property listed in Schedule
1.1(c);
(d) all leases, licenses, easements and other agreements
allowing Seller to place or construct Outdoor
advertising displays on the property of any third
party, including rights to locations on which
structures have not yet been built, including without
limitation those listed in Schedule 1.1(d);
(e) all of Seller's right, title and interest in and to
all licenses, permits and other governmental
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authorizations (and applications therefor) used for
the Business;
(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 Seller and used in connection with
the Business, including without limitation those
listed in Schedule 3.10;
(g) all accounts receivable of Seller 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 headquarters of the Business located at Katy
Freeway, 1600 Studemont, Houston, Texas or the former
headquarters of the Division of Gannett Co.,
Inc.("GCI") located at 535 Madison Avenue, New York,
NY (excluding files and other records at GCI's
corporate headquarters that (i) GCI determines are
sensitive business materials 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 Seller and
transferable under applicable license agreements,
including without limitation those listed on Schedule
1.1(i);
(j) cash on hand and in banks and other cash items of
Seller; and
(k) all of Seller's goodwill in and going concern value
of the Business.
1.2 Excluded Assets. The following assets relating to the Business
shall be retained by Seller and shall not be sold, assigned or transferred to
Buyer (the "Excluded Assets"):
(a) claims by Seller 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
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counterclaims with respect to obligations and
liabilities not being assumed by Buyer hereunder;
(b) all contracts of insurance;
(c) any assets related to employee benefit plans of any
nature, including pension plans, except for GCI'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 GCI 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); and
(e) the names "Combined Communications Corporation,"
"Gannett," or any variants of either of them.
1.3 Liabilities.
(a) Buyer shall assume, discharge and perform the liabilities
and obligations of the Business, 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)(iv), 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;
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(iv) all liabilities of Buyer related to employees
described in Section 10.2 below; and
(v) all liabilities of the Business reflected on the
Closing Date Balance Sheet.
(b) Buyer does not assume and will not be liable for the
following liabilities or obligations of Seller with respect to the
Business:
(i) any liability under any contract of insurance;
(ii) except as described in Section 10.2 below, any
liability to any employee or former employee of the Business,
including under any of Seller's employee benefit plans;
(iii) any liability for federal, state, or local
government taxes based on the net income of Seller;
(iv) any liability with respect to claims by third
parties which are covered by insurance policies of Seller and
arise from occurrences prior to the Closing Date; or
(v) any liability or obligation not described in
Section 1.3(a) above.
1.4 Consideration. Subject to the conditions contained in this
Agreement, and in consideration of the sale of the Assets, Buyer will pay on
the Closing Date the sum of Ten Million Dollars ($10,000,000) (the "Purchase
Price") subject to adjustment as provided herein.
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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. Seller and Buyer agree that the
Purchase Price will be adjusted as of the Closing Date as follows: If
on the Closing Date the Business's current assets exceed total
liabilities by more than $1.00, the Purchase Price will be increased
by the amount of such excess. If on the Closing Date the Business's
total liabilities exceed current assets by more than $1.00, the
Purchase Price will be reduced by the amount of such excess. 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 Business that are
transferable to Buyer;
(B) all inventory items and all prepaid
items, including without limitation prepaid leases,
prepaid franchise fees (regardless of the
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length of the term of the underlying obligation), and
other prepaid items that the Business 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, net of
cash received by Seller from the sale of assets after
April 30, 1996;
(D) all long-term accounts receivable; and
(E) cash on hand and in banks and other cash
items of the Business.
(ii) all intercompany and affiliate liabilities,
debts and/or receivables will be excluded from the balance
sheet or treated as shareholders' equity;
(iii) all accounts receivable shall be net of the
historical reserve for bad debts, rebates, refunds and
adjustments for accounts receivable. Buyer and Seller 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
(iv) total liabilities shall include accrued and
unpaid vacation, but shall exclude any environmental liability
for which Buyer is responsible under Section 9.7.
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(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
Seller 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 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 Business after
the Closing Date. Except as otherwise provided in this Agreement,
Seller shall be responsible for all expenses incurred and shall be
entitled to all revenues earned in connection with the Business
through the Closing Date. (For example, wages, commissions and other
employee compensation for periods through the Closing Date will either
be paid by Seller or recorded as a liability on the Closing Date
Balance Sheet.)
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Seller agrees to furnish Buyer with any documents or records
in Seller's 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,
Seller shall, to the extent practicable, make the adjustments to the
Purchase Price specified in this Section 1.4. Seller shall prepare
and provide to Buyer a balance sheet of the Business 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,
Seller will prepare and provide to Buyer an adjusted balance sheet of
the Business 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.
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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 shall be paid fifty percent (50%) by Seller 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 shall be held in the offices of GCI at 1100
Wilson Boulevard, Arlington, Virginia 22234 on a date (to be selected by Buyer)
no later than 120 days after the closing date under the Division Agreement (the
"Closing Date") or at such other time and place as shall be mutually agreed
upon by the parties.
ARTICLE 3 Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows. For purposes of
this Agreement, "Material Adverse Effect" shall mean
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a material adverse effect on the Business or Assets that would have constituted
a Material Adverse Effect on the Division taken as a whole if the Business were
part of the Division. 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 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. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Seller has the full power and authority to own and operate its assets
and carry on its business as now being conducted and is qualified to do
business in Texas.
3.2 Authority Relative to this Agreement. 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 Seller and constitutes a
legal, valid and binding obligation of Seller enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy,
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insolvency or similar laws affecting the rights of creditors generally.
3.3 Financial Statements. Seller has furnished to Buyer the
unaudited financial statements of the Business (the "Financial Statements") for
the period ending April 30, 1996 (the "Balance Sheet Date"). 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 Seller with respect to the Business,
are correct and complete and fairly present, and will fairly present, in all
material respects the results of operations of the Business for the periods
covered thereby in conformity with the historical accounting practices of the
Business applied consistently for such periods. Seller makes no
representation, however, regarding the collectability of the Accounts
Receivable, or the projected revenues of or financial prospects for the
Business.
3.4 Business Since the Balance Sheet Date. To Seller's 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 would not be reasonably likely to result in a Material
Adverse Effect.
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For purposes of this Agreement, the phrase "to Seller's knowledge"
means Seller's knowledge based on files available for review at GCI's corporate
headquarters, GCI's 535 Madison Avenue office, and on information provided by
the Business's general manager pursuant to Seller's request for such
information.
3.5 No Defaults. The execution, delivery and performance of this
Agreement by Seller will not (a) conflict with or result in any breach of any
provision of the Articles of Incorporation or bylaws of Seller, (b) violate any
law, statute, rule, regulation, order, injunction or decree of any federal,
state or local governmental authority or agency applicable to Seller 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 agreements for the right to use space
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 Seller's knowledge, the Business has
no obligation or liability of any nature which is
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normally shown on a balance sheet prepared in accordance with the historical
practices of the Business 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 Seller 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 PCS Agreements. To Seller's knowledge, Schedule 3.7 hereto
contains a list of the personal communication systems ("PCS") agreements
included in the Business. To Seller's knowledge, there are no existing
defaults, events of default or other events under the 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.
Seller is not aware whether the PCS agreements listed in Schedule 3.7 have been
amended, modified or terminated or whether the Business has entered into PCS
agreements not listed in Schedule 3.7.
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For purposes of this Agreement, the phrase "Seller is not aware" means
that Seller is not aware of the matter in question based on files available for
review at GCI's corporate headquarters, GCI's 535 Madison Avenue office, and on
information provided by the Business's general manager pursuant to Seller's
request for such information.
3.8 Licenses and Authorizations. The Business is subject to federal,
state, and local laws, rules and regulations governing the receipt of permits
for the placement, size and location of Outdoor advertising structures and
displays. Seller has 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 Business observes 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. Seller owns and has 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
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taxes not yet due and payable, and except for encumbrances which would not be
reasonably likely to result in a Material Adverse Effect.
3.10 Trademarks. To Seller's knowledge, Schedule 3.10 contains a list
of all trademarks, service marks and tradenames used in the Business and sold
hereunder (the "Rights"). To Seller's knowledge, the registrations (if any)
for the Rights are valid, in good standing and uncontested. Seller possesses
adequate rights, licenses or other authority to use all Rights necessary to
conduct the business of the Business as presently conducted, except where the
failure to possess such Rights would not be reasonably likely to result in a
Material Adverse Effect. Seller is 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 below:
(a) the Business has not been operating under or subject to,
or in default with respect to, any order, writ,
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injunction, judgment or decree of any court or federal, state, local
or foreign governmental authority or agency;
(b) neither Seller nor any of its 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;
(c) there is no litigation or proceeding pending by or
against, or threatened against, the Business or Seller; and
(d) Seller has complied with all laws, by-laws, regulations,
orders or decrees applicable to the Business, including zoning and
land use laws and regulations, and the present uses by such parties of
the assets of the Business 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. Seller has 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 has 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.
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3.13 Employees. To Seller's knowledge, Schedule 3.13 lists the
Business's full-time employee count by department. Except as disclosed on
Schedule 3.13, Seller is not 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 Business, and Seller has not recognized or received a
demand for recognition of any collective bargaining representative with respect
to the Business. To Seller's knowledge, no labor strike, slow-down or work
stoppage is pending or threatened with respect to the Business.
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, or (iii) shown on Schedule 3.14, to
Seller's knowledge, since the Balance Sheet Date, Seller has not (a) mortgaged,
pledged or subjected to a lien or any other encumbrance, any of the Assets or
incurred liabilities affecting the Business; (b) sold or transferred any
material Asset used or useful in the Business; (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 loss, damage or casualty with respect to any
Asset.
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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 Seller.
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
Seller's knowledge:
(a) the Business 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 Business 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, 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.
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ARTICLE 4 Representations and Warranties of Buyer
Buyer represents and warrants to Seller 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
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,
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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 Seller 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.
4.5 Adequate Funds. Buyer has adequate available sources of funds
to pay the Purchase Price in full on the Closing Date, and there is no 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.
ARTICLE 5 Covenants of Seller Pending the Closing Date
Seller covenants and agrees that from the date hereof to and including
the Closing Date and thereafter with respect to Section 5.6:
5.1 Maintenance of Business. Seller shall continue to carry on the
Business, 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.
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5.2 Organization, Goodwill. Subject to any impact on the Business
resulting from the sale of the Division, Seller will cause the Business
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, Seller shall from
time to time give or cause to be given to Buyer and its representatives all
information concerning the affairs of the Business as Buyer may reasonably
request. In connection with any due diligence review of the Business or the
Assets at any time, however, Buyer may not have access to the Business's
employees or plant without Seller's prior written consent.
5.4 Representations and Warranties. Seller shall give written notice
to Buyer promptly upon the occurrence of, or promptly upon Seller's 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 Seller prior to
the date hereof, of any of its representations or warranties contained in this
Agreement.
5.5 Notice of Proceedings. Seller will promptly notify Buyer in
writing upon becoming aware of any order or decree or receiving any complaint
praying for an order or decree
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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.
5.6 Bulk Sales Indemnity. As an inducement to Buyer to waive
compliance with the provisions of any applicable bulk transfer laws, Seller
covenants that all debts, obligations and liabilities of Seller not expressly
assumed by Buyer under this Agreement will be promptly paid and discharged by
Seller as and when they become due and payable. Seller further agrees to hold
Buyer harmless from all Loss and Expense (as defined in Section 9.2) suffered
by Buyer by reason of Seller's non- compliance with any applicable bulk
transfer law.
5.7 Consummation of Agreement. Subject to the provisions of Section
10.1, Seller 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.
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5.8 Expenses. Seller shall bear and punctually pay for all of its
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 (3) business days
thereafter, Seller 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 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. Seller shall deliver to Buyer
unaudited interim balance sheets and statements of revenue and expense of the
Business substantially in the form of the Financial Statements promptly after
the close of each of the Business's accounting periods that occurs between the
Balance Sheet Date and the Closing Date.
ARTICLE 6 Covenants of Buyer Pending the Closing Date
Buyer covenants and agrees that from the date hereof to and including
the Closing Date:
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6.1 Representations and Warranties. Buyer shall give written notice
to Seller 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 Seller 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
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
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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 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.
6.6 Hart-Scott-Rodino Act. As soon as possible after the execution
of this Agreement, but in no event later than three (3) 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
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Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and shall
promptly furnish all materials and information thereafter requested by any of
the regulatory agencies having jurisdiction over such filings.
6.7 Letters of Credit; Sureties. Effective as of the Closing Date
Buyer shall have (a) obtained a release of Seller 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 Seller for obligations
related to the Business, and Buyer shall have replaced all such agreements held
by third parties or (b) delivered to Seller 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 Seller.
ARTICLE 7 Conditions to the Obligations of Seller
The obligations of Seller under this Agreement are, at the option of
Seller, 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
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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 Seller 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 Seller would make it inadvisable to
consummate such
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transactions; provided that in the event an investigation is instituted, this
Agreement may not be abandoned by Seller for a period of 30 days from the date
notice of institution thereof is first received by either Seller 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 Seller 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 and there shall not be outstanding any
order of a court restraining the transactions contemplated hereby or imposing
on Seller or any of Seller's affiliated companies any conditions with respect
to disposition of any of the Assets.
7.4 Receipt of Documents. Seller shall have received at the Closing:
(a) funds equal to the Purchase Price;
(b) an assumption agreement, pursuant to which Buyer shall
assume Seller's liabilities and obligations as provided in Section
1.3; and
(c) an opinion of Powell, Goldstein, Frazer & Murphy, counsel
to Buyer, in the form attached as Exhibit A.
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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:
8.1 Representations, Warranties, Covenants.
(a) All representations and warranties of Seller contained in
this Agreement and in any statement, certificate, schedule or other
document delivered by Seller 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;
(b) Seller 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; 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 (i) matters arising in the ordinary course of the Business
and (ii) any impact on the Business or Assets resulting from the sale
of the Division.
8.2 Proceedings. No action or proceeding shall have been instituted
or threatened against any of the parties to this
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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 Seller 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 Seller 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 whole or in part on Buyer's
failure to abide by any condition imposed on Buyer by any governmental
authority in connection with
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governmental approvals obtained by Buyer for its purchase of the Division.
8.3 Damage to the Assets. If on the Closing Date the real or
personal properties used in the Business 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 Seller the proceeds of any
insurance payable to Seller 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 Seller the proceeds of any insurance payable to Seller on account of
the damage or (ii) to terminate this Agreement by providing written notice to
Seller specifying the Material Adverse Effect, and upon such termination Buyer
and Seller 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 there shall not be outstanding any
order of a court restraining the transactions contemplated hereby.
8.5 Receipt of Documents. Buyer shall have received at the Closing:
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(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 Seller's 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 Seller, in the
form attached as Exhibit B (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 Seller's right, title and interest
to all contracts, leases, licenses and permits used in the Business;
and
(e) a receipt for the Purchase Price.
ARTICLE 9 Indemnification
9.1 Survival. The several representations, warranties, covenants and
agreements of Seller 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
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contained in Sections 3.9, 3.11 and 3.16 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, 4.2, 6.7, 9.2(c),
9.3(c) and 9.3(d) 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. GCI and Seller 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 Seller
pursuant to this Agreement;
(b) any failure by Seller to perform or fulfill any of its
covenants or agreements set forth in this Agreement; and
(c) any failure by Seller to pay or perform when due any of
its liabilities or obligations arising out of or related to the
Business which have not been assumed by Buyer hereunder;
provided, however, that Seller will not be responsible for any Loss or Expense
until the cumulative aggregate amount of such Loss or Expense, when aggregated
with any Loss or Expense incurred by Buyer under Section 9.2 of the Division
Agreement, results in a Material Adverse Effect, in which case Seller shall
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then be liable for all such Loss or Expense; provided further that Seller shall
be liable for retained tax liabilities under Section 1.3(b)(iii) 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 Seller. Buyer agrees that it shall indemnify
and hold Seller harmless from and against any and all Loss and Expense suffered
by Seller 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 assumed by Buyer
hereunder, or any obligations of Buyer under Sections 1.4, 6.7 or
10.2; and
(d) 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 Seller.
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9.4 Notice of Claims. If 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 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.
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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, 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
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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,
Buyer and Seller have agreed to allocate responsibility for environmental
matters as follows:
(a) Seller is responsible for Loss or Expense for
environmental claims arising out of circumstances, actions, omissions
or events occurring or existing prior to 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
(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 Seller be
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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 Seller's Knowledge. Notwithstanding anything to the contrary
contained herein, any information that is communicated to Seller by Buyer in
writing on or before the Closing Date becomes Seller's knowledge as used
herein.
ARTICLE 10 Miscellaneous Provisions
10.1 Termination. This Agreement may be terminated by Seller or
Buyer at any time prior to the Closing Date (a) by the mutual consent of Seller
and Buyer; or (b) by Seller if any of the conditions in Article 7 have not been
met by the time 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 the date which
is 120 days after the closing date under the Division Agreement. 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.
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10.2 Employees and Employee Benefits.
(a) Buyer agrees to hire all of the Business's active
employees upon Closing. 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 Business who accept Buyer's offer of employment to
become employed by Buyer after the Closing Date pursuant to this
transaction ("Hired Employees"). With respect to active employees of
the Business 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 Business (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 or state plant closing statutes including the WARN Act, and
(iii) Seller's medical insurance costs relating to COBRA coverage.
Buyer also agrees to provide medical insurance coverage to all Hired
Employees, beginning on the
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Closing Date, with coverage to be effective without any waiting period
and without any exclusions for pre-existing conditions.
(b) Seller shall be responsible for and shall pay for (i)
all compensation, benefits and other payments due to all employees and
former employees of the Business prior to the Closing Date, (ii) all
benefits payable to employees who retired from the Business prior to
the Closing Date, and (iii) all benefits payable to employees who are
not considered "active employees" immediately prior to the Closing
Date.
(c) Seller shall retain the pension plan assets and
liabilities to all employees who participate in the GCI 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,
Seller shall transfer to the Buyer's Plan all of the assets in the GCI
401(k) Plan ("GCI 401(k) Plan") held for the accounts of employees of
the Business hired by Buyer, and Buyer shall assume the liabilities of
the Seller and of the GCI 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
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employees as of the transfer date. Buyer shall identify all employees
whose accounts shall be transferred at least 30 days prior to the
proposed transfer. Buyer shall indemnify and hold Seller and the GCI
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 GCI
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 Business prior to the Closing Date.
10.3 Imprints. 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
Seller as Excluded Assets. Until the earlier of removal or the conclusion of
the 6-month period described above, Seller agrees that Buyer may display
Seller's tradenames on the imprints of the Business.
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 Seller, and on and after the Closing Date shall be borne by
Buyer.
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10.5 Data Processing Services. Seller agrees that for a period of 60
days following the Closing Date Buyer may continue to use the data processing
services made available to the Business by Seller and its affiliated entities,
at the same levels of service as presently provided, at no cost to Buyer.
Within 30 days after the Closing Date, Seller will advise Buyer of the service
fee (which service fee shall include, among other things, all of Seller's
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 Seller's 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 Seller's tax years through 1996 are closed by the IRS,
Buyer will retain, and make available to Seller as Seller reasonably requests,
all files and records related to the Business prior to the Closing Date. No
such records shall be destroyed by Buyer after that time without Buyer's first
offering them to Seller. Buyer shall permit Seller's representatives full
access to and use of the records of the Business as may be deemed appropriate
by such representatives for the purpose of preparing the balance sheet
adjustments referenced in Section 1.4(c). Seller shall notify Buyer when all
of Seller's tax years through 1996 are closed by the IRS.
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10.7 [Intentionally omitted]
10.8 Further Assurances and Consents. From time to time after the
Closing Date, without further consideration (a) Seller 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, and (b) Seller
agrees 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 Seller shall not be required to make any payments or
incur 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.
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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 Seller, to:
Douglas H. McCorkindale, Vice Chairman
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
Fax No. 703/558-4634
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
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successors and permitted assigns. This Agreement shall not be assigned by
either party, except that (i) Seller may assign or transfer this Agreement to
any affiliate or subsidiary of GCI, 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 Seller 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 Seller or Buyer from their
obligations and liabilities hereunder.
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 GCI 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
GCI (on behalf of Seller) or by Buyer without the prior written approval of the
other party. In no
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event shall any party disclose the Purchase Price unless such disclosure is
required by law, except that Buyer or Seller 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.
10.15 Option for Office and Production Facilities. 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.
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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 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.
Seller and Buyer have caused this Agreement to be signed by their duly
authorized officers as of the date first above written.
Seller: BUYER:
GANNETT OUTDOOR CO. OF OUTDOOR SYSTEMS, INC.
TEXAS, INC.
By: _________________________ By: _________________________
Thomas L. Chapple William S. Levine
Secretary Chairman
The undersigned is executing this Agreement for purposes of Section 9.2
only.
GANNETT CO., INC.
By: _________________________
Thomas L. Chapple
Senior Vice President and
Secretary