SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report: July 10, 1996
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6961 16-0442930
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (703) 284-6000
ITEM 5. OTHER EVENTS
In conformity with the requirements of the Integrated Disclosure
system, Gannett Co., Inc. ("Gannett") has elected to file this Report on
Form 8-K certain exhibits and certain information required under Article 11
of regulation S-X in connection with the sale of the Company's outdoor
advertising business to Outdoor Systems, Inc. The Company announced that it has
entered into an agreement to sell its outdoor advertising business. A press
release announcing this transaction is attached as an exhibit and is
incorporated in this report by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Pro forma financial information.
(1) Unaudited pro forma consolidated condensed balance sheet as of
March 31, 1996 and the unaudited pro forma consolidated condensed statements
of operations for the year ended December 31, 1995 and the three months ended
March 31, 1996 (filed as an exhibit hereto).
(c) Exhibits.
See Exhibit Index for list of exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GANNETT CO., INC.
Dated: July 10, 1996
By: /s/Thomas L. Chapple
-----------------------
Thomas L. Chapple,
Senior Vice President,
General Counsel and Secretary
Exhibit Index
Exhibit
Number Title or Description
- ----- --------------------
99-1 Unaudited pro forma consolidated condensed
balance sheet as of March 31, 1996 and the
unaudited pro forma consolidated condensed
statements of earnings for the year ended
December 31, 1995 and the three month period
ended March 31, 1996.
99-2 Press release dated July 9, 1996.
99-3 Asset Purchase Agreement.
Exhibit 99-1
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements give effect to the
exchange of approximately $690 million in cash by Outdoor Systems, Inc. for
substantially all of Gannett Co., Inc.'s outdoor advertising business. The
transaction involves the sale of assets of certain of the Company's outdoor
subsidiaries and the sale of stock of certain other outdoor subsidiaries.
The unaudited pro forma balance sheet presents the financial position of
Gannett as of March 31, 1996, assuming that the proposed sale had occurred as
of that date. Such pro forma information is based on the historical balance
sheet of the Company at March 31, 1996.
As required by rule 11-02 of regulation S-X, the unaudited pro forma
statements of income have been prepared assuming that the proposed sale
occurred as of the beginning of the earliest period presented. The unaudited
pro forma statements of income reflect the historical results of operations for
Gannett for its fiscal year ended 1995 and first three months of 1996. The 1995
statement also includes the eleven month pro forma effect of the Company's 1995
acquisition of Multimedia, as discussed in note 2 to the financial statements
filed with the Company's 1995 Annual Report on Form 10-K.
The unaudited pro forma financial statements give effect to certain pro
forma adjustments which are described in the notes to these statements.
Nonrecurring charges related to the transaction are not reflected in the
unaudited pro forma financial statements because they are insignificant.
The unaudited pro forma data is presented for informational purposes only
and is not necessarily indicative of the results of operations or financial
position which would have been achieved had this transaction been completed as
of the date indicated, nor is it necessarily indicative of Gannett's future
results of operations or financial position.
The unaudited pro forma financial statements should be read in conjunction
with the historical financial statements of the Company, including the related
notes thereto.
GANNETT CO., INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1996
Sale of
Outdoor Pro Forma Pro Forma
(In thousands) Gannett Business Adjustments Balance Sheet
ASSETS
Cash and marketable securities $ 50,876 $ (195) $ 50,681
Accounts receivable, net 518,173 (46,311) 471,862
Inventories 119,162 (1,128) 118,034
Prepaid expenses and other current assets 110,629 (20,581) 90,048
--------- ------- ------- ---------
Total Current Assets 798,840 (68,215) 730,625
Property, plant and equipment, net 2,066,809 (138,160) 1,928,649
Other assets 3,573,046 (19,688) 3,553,358
--------- ------- ------- ---------
Total Assets $6,438,695 $(226,063) $6,212,632
========= ======= ======= =========
LIABILITIES & SHAREHOLDERS EQUITY
Current maturities of long-term debt $ 123 $ 0 $ 123
Accounts payable and current portion of
film contracts payable 231,019 (11,345) 219,674
Accrued expenses and other current liabilities 341,022 (9,193) 331,829
Dividends payable 49,222 0 49,222
Income taxes 83,909 0 83,909
--------- ------- -------- ---------
Total Current Liabilities 705,295 (20,538) 684,757
Deferred income taxes 322,244 (6,879) 315,365
Long-term debt, less current portion 2,769,474 0 $(499,758)(1) 2,269,716
Postretirement medical and life
insurance liabilities 306,710 0 306,710
Other long-term liabilities 138,640 (259) 138,381
Total Shareholders' equity 2,196,332 (198,387) 499,758 (1) 2,497,703
--------- ------- -------- ---------
Total Liabilities and Shareholders' Equity $6,438,695 $(226,063) $ 0 $6,212,632
========= ======= ======== =========
See accompanying notes to Unaudited Pro Forma Financial Statements.
GANNETT CO., INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
Sale of Pro Forma
(In thousands except Outdoor Pro Forma Statement
per share data) Gannett Business Adjustments of Income
NET OPERATING REVENUES:
Newspapers $ 786,302 $ 786,302
Broadcasting 141,688 141,688
Cable 47,208 47,208
Other 128,962 $(51,131) 77,831
--------- ------ ---------
Total Operating Revenues 1,104,160 (51,131) 1,053,029
--------- ------ ---------
OPERATING COSTS:
Total operating expenses, exclusive of
depreciation & amortization 828,837 (49,701) 779,136
Depreciation 53,135 (4,194) 48,941
Amortization of intangible assets 24,277 (194) 24,083
--------- ------ ---------
Total Operating Expenses 906,249 (54,089) 852,160
--------- ------ ---------
Total Operating Income (loss) 197,911 2,958 200,869
--------- ------ ---------
NON-OPERATING INCOME (EXPENSE)
Interest expense (39,528) $6,847 (1) (32,681)
Other income (expense) (1,583) (1,583)
--------- ------ ----- ---------
Total Non-operating (41,111) 6,847 (34,264)
--------- ------ ----- ---------
Income Before Income Taxes 156,800 2,958 6,847 166,605
Provision for/benefit of Income Taxes (67,450) (1,154) (2,670)(2) (71,274)
--------- ------ ----- ---------
Net Income $ 89,350 $ 1,804 $4,177 $ 95,331
========= ====== ===== =========
Net Income Per Share $0.64 $0.01 $0.03 $0.68
Average Number of Outstanding Shares 140,680 140,680 140,680 140,680
See accompanying notes to Unaudited Pro Forma Financial Statements.
GANNETT CO., INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
Sale of Pro Forma
(In thousands except Multimedia Outdoor Pro Forma Statement
per share data) Gannett Pro forma (*) Subtotal Business Adjustments of Income
NET OPERATING REVENUES:
Newspapers $3,088,423 $150,684 $3,239,107 $3,239,107
Broadcasting 466,187 144,412 610,599 610,599
Cable 15,061 159,581 174,642 174,642
Other 437,065 153,832 590,897 $(253,841) 337,056
--------- ------- --------- ------- ---------
Total Operating Revenues 4,006,736 608,509 4,615,245 (253,841) 4,361,404
--------- ------- --------- ------- ---------
OPERATING COSTS:
Total operating expenses, exclusive of
depreciation & amortization 2,944,898 374,623 3,319,521 (209,201) 3,110,320
Depreciation 159,657 53,473 213,130 (15,900) 197,230
Amortization of intangible assets 50,298 48,059 98,357 (776) 97,581
--------- ------- --------- ------- ---------
Total Operating Expenses 3,154,853 476,155 3,631,008 (225,877) 3,405,131
--------- ------- --------- ------- ---------
Total Operating Income 851,883 132,354 984,237 (27,964) 956,273
--------- ------- --------- ------- ---------
NON-OPERATING INCOME (EXPENSE)
Interest expense (52,175) (154,570) (206,745) $29,486 (1) (177,259)
Other income (expense) 3,754 417 4,171 4,171
--------- ------- --------- ------- ------ ---------
Total Non-operating (48,421) (154,153) (202,574) 29,486 (173,088)
--------- ------- --------- ------- ------ ---------
Income Before Income Taxes 803,462 (21,799) 781,663 (27,964) 29,486 783,185
Provision for/benefit of Income Taxes (326,200) (7,600) (333,800) 10,906 (11,500)(2) (334,394)
--------- ------- --------- ------- ------ ---------
Net Income $ 477,262 $(29,399) $ 447,863 $ (17,058) $17,986 $ 448,791
========= ======= ========= ======= ====== =========
Net Income Per Share $3.41 ($0.21) $3.20 ($0.12) $0.13 $3.21
Average Number of Outstanding Shares 139,968 139,968 139,968 139,968 139,968 139,968
* In December, 1995, the Company completed the acquisition of Multimedia, Inc
("Multimedia"). The amounts in this column reflect the estimated results of
operations of the Company and its subsidiaries as though the Multimedia
acquisition was made at the beginning of the year in which the transaction was
consummated along with the related costs of financing the acquisition and the
additional goodwill and depreciation expense associated with the purchase.
Refer to note 2 of the Company's financial statements filed with its 1995
Annual Report on Form 10-K for more information concerning this acquisition.
See accompanying notes to Unaudited Pro Forma Financial Statements.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The unaudited pro forma balance sheet has been prepared to reflect the sale
of the Company's outdoor advertising business for an aggregate price of
approximately $690 million in cash.
The unaudited pro forma balance sheet presents the financial position
of the Company as of March 31, 1996 assuming that the transaction occurred as of
that date. Such pro forma information is based on the historical balance sheet
of Gannett as of March 31, 1996, adjusted for the effects of the sale.
As required by rule 11-02 of regulation S-X, the unaudited pro forma statements
of income have been prepared assuming that the proposed sale occurred as of the
beginning of the earliest period presented. The unaudited pro forma statements
of income reflect the historical results of operations for Gannett for its
fiscal year ended 1995 and first three months of 1996. The 1995 pro forma
statement of income also includes the eleven month pro forma effect of the
Company's 1995 acquisition of Multimedia, as presented in note 2 to the
financial statements filed with the Company's 1995 Annual Report on Form 10-K.
The Company believes that the assumptions used in preparing the unaudited pro
forma financial statements provide a reasonable basis for presenting all of the
significant effects of the sale and that the pro forma adjustments give effect
to those assumptions in the unaudited pro forma financial statements.
Note 2 - Pro forma Adjustments
A. Pro forma adjustments to the unaudited condensed balance sheet are made to
reflect the following:
(1) Adjustment to reflect the pay down of long-term debt from the after-tax
proceeds of the sale. The proceeds are reduced by the tax on the estimated
gain on sale of the business, using a combined federal and state tax rate
of 39%.
B. Pro forma adjustments to the March 31, 1996 unaudited condensed statement of
income are made to reflect the following:
(1) Reduction in interest expense due to pay down of long-term debt from the
after-tax proceeds of the sale. The rate used to calculate the reduction
in interest expense is based on the weighted average rate paid by Gannett
for commercial paper during the three-month period ended March 31, 1996.
(2) Record income tax effect of pro forma adjustment described in item 1.
C. Pro forma adjustments to the December 31, 1995 unaudited condensed combined
statement of income are made to reflect the following:
(1) Reduction in interest expense due to pay down of long-term debt from net
proceeds of the sale. The rate used to calculate the reduction in interest
expense is based on the weighted average rate paid by Gannett for
commercial paper during the Company's fiscal year ended December 31, 1995.
(2) Record income tax effect of pro forma adjustment in item 1.
NEWS RELEASE GANNETT
FOR IMMEDIATE RELEASE Tuesday, July 9, 1996
ARLINGTON, Va. and PHOENIX, Ariz. -- Outdoor Systems, Inc.
and Gannett Co., Inc. have entered into an agreement for the
purchase of Gannett's Outdoor Division, the largest Outdoor
company in North America, for a purchase price of approximately
$690 million. The announcement was made today by Arte Moreno,
president and CEO of Outdoor Systems and John J. Curley,
chairman, president and CEO of Gannett.
The boards of directors of both companies have unanimously
approved the transaction. Closing is expected to occur as soon
as regulatory approvals are obtained.
Outdoor Systems will also acquire an option to purchase
Gannett's Outdoor operations in Houston, Texas in a subsequent
transaction.
"We are extremely pleased to be able to acquire Gannett's
Outdoor operations," Moreno said. "This acquisition expands our
geographic diversification throughout the United States and
Canada, and enhances our position as a leader in the out-of-home
advertising industry."
Curley said, "We are delighted that Outdoor Systems, one of
the USA's premier outdoor companies, will be acquiring Gannett's
Outdoor operations. The sale of our Outdoor Division provides an
opportunity for Gannett to focus its attention on our core
businesses, including the new properties we acquired in the
Multimedia transaction in 1995. In addition, proceeds from the
sale of the Outdoor Division will be used to pay down debt
Gannett incurred in connection with the Multimedia transaction.
We wish the employees of the Outdoor Division well and know that
Outdoor Systems will be a good owner of the Outdoor Division."
Gannett is a nationwide news and information company that
publishes 92 daily newspapers, including USA TODAY, and USA
WEEKEND, a newspaper magazine. Gannett also has entertainment
programming, operates 15 television stations, 11 radio stations,
cable television systems in five states and alarm security
services.
# # #
____________________________________________________________________________
For more information: Office of Public Affairs
Gannett Co., Inc.
1100 Wilson Blvd., Arlington, VA 22234
(703) 284-6038
Mimi Feller, Senior Vice President of Public Affairs
and Government Relations, Gannett, Co., Inc.
1100 Wilson Blvd., Arlington, VA 22234
Office: (703) 284-6046 Home: (202) 363-4335
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
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
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
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
-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
-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 to
-4-
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.
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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").
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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:
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(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).
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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
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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
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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
(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;
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(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
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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
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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
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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
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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
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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.
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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
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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
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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 agreements
listed in Schedule 3.7 have been amended, modified or terminated
or whether the Division has entered into Transit or PCS
-20-
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
-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
-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;
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(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.
-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
-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,
-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.
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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
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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.
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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
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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.
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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
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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
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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
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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
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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.
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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.
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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
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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
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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:
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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.
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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
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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.
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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.
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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
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(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
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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
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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,
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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.
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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.
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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
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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
