<PAGE>
UNITED STATES
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: November 20, 1996
ARGYLE TELEVISION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-27000 74-2717523
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) dentification Number)
200 Concord Plaza, Suite 700, San Antonio, Texas 78216
(Address of principal executive offices)
(210) 828-1700
(Registrant's Telephone No.)
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ITEM 5. OTHER EVENTS.
------------
On November 20, 1996, the Company entered into a definitive agreement
with Gannett Co., Inc. ("Gannett") to exchange Argyle's WZZM-TV, the ABC
affiliate in Grand Rapids, Michigan, and WGRZ-TV, the NBC affiliate in Buffalo,
New York, for Gannett's WLWT-TV, the NBC affiliate in Cincinnati, Ohio, and
KOCO-TV, the ABC affiliate in Oklahoma City, Oklahoma. Gannett will also
receive $20 million in additional consideration from the Company. The
transaction is expected to close during the first quarter of 1997 and is subject
to the satisfactory completion of a due diligence period, approval of the
license transfers by the FCC and certain other conditions.
The markets, Designated Market Area ("DMA") size (in terms of
television households), network affiliations and other information for the
stations involved in this transaction are as follows:
TO ARGYLE FROM GANNETT
Call Letters Market DMA Size Channel Network
- ------------ ------ -------- ------- -------
WLWT Cincinnati, OH 29 5 NBC
KOCO Oklahoma City, OK 43 5 ABC
TO GANNETT FROM ARGYLE
Call Letters Market DMA Size Channel Network
- -------------- ------ -------- ------- -------
WZZM Grand Rapids, MI 38 13 ABC
WGRZ Buffalo, NY 39 2 NBC
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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a. Financial Statements.
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Not applicable.
b. Pro Forma Financial Information.
-------------------------------
Not applicable.
c. Exhibits.
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10.1 Asset Exchange Agreement, by and among Combined
Communications Corporation of Oklahoma, Inc., Multimedia
Entertainment, Inc., WZZM Argyle Television, Inc., Grand
Rapids Argyle Television, Inc., WGRZ Argyle Television,
inc. and Buffalo Argyle Television, Inc. dated November
20, 1996
20.1 Press Release issued November 20, 1996.
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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 hereunto duly authorized.
ARGYLE TELEVISION, INC.
Dated: November 27, 1996 By: /s/ Dean H. Blythe
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Dean H. Blythe, Vice President,
Secretary and General Counsel
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- -------- ----------- ----
<S> <C> <C>
10.1 Asset Exchange Agreement, by and among Combined ______
Communications Corporation of Oklahoma, Inc., Multimedia
Entertainment, Inc., WZZM Argyle Television, Inc., Grand Rapids
Argyle Television, Inc., WGRZ Argyle Television, inc. and Buffalo
Argyle Television, Inc. dated November 20, 1996
20.1 Press Release issued November 20, 1996. ______
</TABLE>
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EXHIBIT 10.1
ASSET EXCHANGE AGREEMENT
BY AND AMONG
COMBINED COMMUNICATIONS CORPORATION OF OKLAHOMA, INC.,
MULTIMEDIA ENTERTAINMENT, INC.,
WZZM ARGYLE TELEVISION, INC.,
GRAND RAPIDS ARGYLE TELEVISION, INC.
WGRZ ARGYLE TELEVISION, INC.
AND
BUFFALO ARGYLE TELEVISION, INC.
Dated: November 20, 1996
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
ARTICLE I. EXCHANGE OF ARGYLE TV STATIONS ASSETS
1.1 Transfer of Argyle TV Stations Assets............................ 3
1.2 Excluded Argyle TV Stations Assets............................... 4
1.3 Liabilities...................................................... 5
ARTICLE II. EXCHANGE OF GANNETT TV STATIONS ASSETS
2.1 Transfer of Gannett TV Stations Assets........................... 6
2.2 Excluded Gannett TV Stations Assets.............................. 7
2.3 Liabilities...................................................... 8
ARTICLE III. CONSIDERATION
3.1 Consideration.................................................... 8
3.2 Tax Allocations.................................................. 10
3.3 Prorations....................................................... 11
ARTICLE IV. THE CLOSING
4.1 Time and Place of Closing........................................ 13
4.2 Deliveries by Argyle............................................. 13
4.3 Deliveries by Gannett............................................ 14
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ARGYLE
5.1 Organization; Qualification...................................... 15
5.2 Authority Relative to this Agreement............................. 15
5.3 Financial Schedules.............................................. 16
5.4 Business Since the Argyle Balance Sheet Date..................... 16
5.5 No Defaults...................................................... 17
5.6 Undisclosed Liabilities.......................................... 17
5.7 Licenses and Authorizations...................................... 18
5.8 Compliance with FCC Regulations.................................. 20
5.9 Qualification as a Broadcast Licensee............................ 20
5.10 Condition and Adequacy of the Argyle TV Stations Assets.......... 20
5.11 Contracts and Arrangements....................................... 20
5.12 Title............................................................ 22
5.13 Call Letters; Trademarks......................................... 24
5.14 Litigation and Compliance with Laws............................ 25
5.15 Employees........................................................ 26
5.16 Taxes............................................................ 26
5.17 Instruments of Conveyance; Good Title............................ 28
5.18 Changes.......................................................... 28
5.19 Brokers.......................................................... 28
5.20 Environmental.................................................... 28
5.21 No Untrue Statement.............................................. 30
</TABLE>
(i)
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<TABLE>
<S> <C>
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF GANNETT
6.1 Organization; Qualification..................................... 30
6.2 Authority Relative to this Agreement............................ 30
6.3 Financial Schedules............................................. 31
6.4 Business Since the Gannett Balance Sheet Date................... 32
6.5 No Defaults..................................................... 32
6.6 Undisclosed Liabilities......................................... 33
6.7 Licenses and Authorizations..................................... 33
6.8 Compliance with FCC Regulations................................. 35
6.9 Qualification as a Broadcast Licensee.......................... 35
6.10 Condition and Adequacy of the Gannett TV Station Assets......... 35
6.11 Contracts and Arrangements...................................... 36
6.12 Title........................................................... 38
6.13 Call Letters; Trademarks........................................ 39
6.14 Litigation and Compliance with Laws............................. 40
6.15 Employees....................................................... 41
6.16 Taxes........................................................... 42
6.17 Instruments of Conveyance; Good Title........................... 43
6.18 Changes......................................................... 43
6.19 Brokers......................................................... 43
6.20 Environmental................................................... 44
6.21 No Untrue Statement............................................. 45
ARTICLE VII. MUTUAL COVENANTS OF ARGYLE AND GANNETT PENDING THE
CLOSING DATE
7.1 Maintenance of Business......................................... 45
7.2 Organization.................................................... 47
7.3 Access to Facilities, Files and Records......................... 47
7.4 Representations and Warranties.................................. 48
7.5 Corporate Action................................................ 48
7.6 Applications for FCC Consent.................................... 48
7.7 Consents........................................................ 49
7.8 Confidential Information........................................ 50
7.9 Consummation of Agreement....................................... 51
7.10 Notice of Proceedings........................................... 51
7.11 Hart-Scott-Rodino Act........................................... 51
7.12 Interim Financial Statements.................................... 52
ARTICLE VIII. CONDITIONS TO THE OBLIGATIONS OF ARGYLE
8.1 Representations, Warranties, Covenants.......................... 52
8.2 Proceedings..................................................... 53
8.3 FCC Authorizations.............................................. 54
8.4 Hart-Scott-Rodino............................................... 54
8.5 Opinion of Counsel.............................................. 54
8.6 Argyle's Board Approval......................................... 54
8.7 Damage to the Gannett TV Stations Assets........................ 55
8.8 Completion of Due Diligence..................................... 55
</TABLE>
(ii)
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<TABLE>
<S> <C>
ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF GANNETT
9.1 Representations, Warranties, Covenants.......................... 57
9.2 Proceedings..................................................... 58
9.3 FCC Authorizations.............................................. 59
9.4 Hart-Scott-Rodino............................................... 60
9.5 Opinion of Counsel.............................................. 60
9.6 Gannett Board Approval.......................................... 60
9.7 Damage to the Argyle TV Stations Assets......................... 60
9.8 Completion of Due Diligence..................................... 61
ARTICLE X. INDEMNIFICATION
10.1 Survival; Limitations........................................... 63
10.2 Indemnification of Gannett...................................... 64
10.3 Indemnification of Argyle....................................... 65
10.4 Notice of Claims................................................ 66
10.5 Defense of Third Party Claims................................... 67
ARTICLE XI. TERMINATION RIGHTS
11.1 Abandonment of Agreement........................................ 68
11.2 Liabilities Upon Abandonment.................................... 69
11.3 Unwind.......................................................... 69
ARTICLE XII. MISCELLANEOUS PROVISIONS
12.1 Expenses........................................................ 70
12.2 Environmental Studies........................................... 70
12.3 Employees and Employee Benefits................................. 71
12.4 Accounts Receivable............................................. 77
12.5 Further Assurances.............................................. 79
12.6 Schedules....................................................... 80
12.7 Waiver of Compliance............................................ 81
12.8 Notices......................................................... 81
12.9 Assignment...................................................... 82
12.10 Governing Law................................................... 82
12.11 Bulk Sales Law.................................................. 82
12.12 Control of the Stations......................................... 83
12.13 Public Announcements............................................ 83
12.14 Entire Agreement; Amendments.................................... 83
</TABLE>
(iii)
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SCHEDULES
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Schedule 1.1 Argyle TV Stations Tangible Personal Property
Schedule 2.1 Gannett TV Stations Tangible Personal Property
Schedule 3.2 Appraisal Value of Argyle TV Stations Assets and
Gannett TV Stations Assets
Schedule 5.7 Argyle TV Stations FCC Authorizations
Schedule 5.11 Argyle TV Stations Contracts
Schedule 5.12 Argyle TV Stations Owned Real Property
Schedule 5.13 Argyle TV Stations Rights
Schedule 5.14 Argyle TV Stations Litigation and Compliance with Laws
Schedule 5.15 Argyle TV Stations Employees; Salaries; Collective
Bargaining Agreements
Schedule 5.18 Changes Since Argyle Balance Sheet Date
Schedule 6.7 Gannett TV Stations FCC Authorizations
Schedule 6.11 Gannett TV Stations Contracts
Schedule 6.12 Gannett TV Stations Owned Real Property
Schedule 6.13 Gannett TV Stations Rights
Schedule 6.14 Gannett TV Stations Litigation and Compliance with Laws
Schedule 6.15 Gannett TV Stations Employees; Salaries; Collective
Bargaining Agreements
Schedule 6.18 Changes Since Gannett Balance Sheet Date
(iv)
<PAGE>
ASSET EXCHANGE AGREEMENT
This ASSET EXCHANGE AGREEMENT ("Agreement") is dated as of November 20,
1996, and is by and among Combined Communications Corporation of Oklahoma, Inc.
("Combined"), an Oklahoma corporation having its principal place of business in
Arlington, Virginia, Multimedia Entertainment, Inc. ("Multimedia"), a South
Carolina corporation having its principal place of business in Arlington,
Virginia (Combined and Multimedia are sometimes individually referred to herein
as a "Gannett Party" and collectively referred to herein as "Gannett" or the
"Gannett Parties"), and WZZM Argyle Television, Inc. ("WZZM Argyle"), a Nevada
corporation having its principal place of business in Reno, Nevada, Grand Rapids
Argyle Television, Inc. ("Grand Rapids Argyle"), a Delaware corporation having
its principal place of business in Grand Rapids, Michigan, WGRZ Argyle
Television, Inc. ("WGRZ Argyle"), a Nevada corporation having its principal
place of business in Reno, Nevada, and Buffalo Argyle Television, Inc. ("Buffalo
Argyle"), a Delaware corporation having its principal place of business in
Buffalo, New York (WZZM Argyle, Grand Rapids Argyle, WGRZ Argyle and Buffalo
Argyle are sometimes individually referred to herein as an "Argyle Party" and
collectively referred to herein as "Argyle" or the "Argyle Parties"). The
Gannett Parties are wholly-owned indirect subsidiaries of Gannett Co., Inc., a
Delaware corporation ("Gannett Parent") and the Argyle Parties are wholly-owned
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direct or indirect subsidiaries of Argyle Television, Inc., a Delaware
corporation ("Argyle Parent").
A. Combined is the licensee of and owns and operates television broadcast
station KOCO-TV in Oklahoma City, Oklahoma and Multimedia is the licensee of and
owns and operates television broadcast station WLWT-TV in Cincinnati, Ohio
(collectively the "Gannett TV Stations") pursuant to licenses, permits and other
authorizations ("Gannett TV Station FCC Authorizations") issued by the Federal
Communications Commission (the "FCC").
B. WZZM Argyle is the licensee of and Grand Rapids Argyle owns and
operates television broadcast station WZZM-TV in Grand Rapids, Michigan, and
WGRZ Argyle is the licensee of and Buffalo Argyle owns and operates television
broadcast station WGRZ-TV in Buffalo, New York (collectively the "Argyle TV
Stations") pursuant to licenses, permits and other authorizations ("Argyle TV
Station FCC Authorizations") issued by the FCC. The Argyle TV Station FCC
Authorizations and the Gannett TV Station FCC Authorizations are sometimes
collectively referred to herein as the "FCC Authorizations".
C. Gannett and Argyle desire to exchange ownership of the Gannett TV
Stations and the Argyle TV Stations, respectively (collectively referred to as
the "Stations") and their related assets, in a like-kind exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code") under
the terms and conditions set forth below.
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Based upon the representations and warranties made by Gannett and Argyle to
each other in this Agreement, the parties agree to consummate the exchange of
the Argyle TV Stations Assets and the Gannett TV Stations Assets (as those terms
are defined in Sections 1.1 and 2.1 below, respectively) on the terms contained
herein.
ARTICLE I. Exchange of Argyle TV Stations Assets
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1.1 Transfer of Argyle TV Stations Assets. Upon the terms and subject to
-------------------------------------
the conditions of this Agreement, on the Closing Date (as defined in Section 4.1
hereof) Argyle will exchange, assign, transfer, convey or cause to be conveyed,
and deliver to Gannett, and Gannett will acquire and accept from Argyle, the
assets and properties, tangible or intangible, of every kind and description
used or held for use by Argyle in connection with the business and operation of
the Argyle TV Stations (all such assets being referred to herein as the "Argyle
TV Stations Assets"), but excluding the Excluded Argyle TV Stations Assets
described in Section 1.2 below. The Argyle TV Stations Assets include, but are
not limited to, the following:
(a) All of Argyle's tangible personal property, assets and equipment
used or held for use in connection with the business and
operation of the Argyle TV Stations, including those listed in
Schedule 1.1, including any replacements and less any retirements
------------
or dispositions thereof in the ordinary course of business before
the Closing Date;
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(b) All real property owned by Argyle and used or held for use
primarily in connection with the business and operation of the
Argyle TV Stations as listed in Schedule 5.12;
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(c) All contracts, agreements and similar documents that relate to
the operation of the Argyle TV Stations, including, but not
limited to, trade or barter agreements (but excluding "bill
payer" trade agreements), programming and talent agreements,
together with all orders and agreements for the sale of
advertising relating to the Argyle TV Stations, including those
described in Schedule 5.11 hereto;
-------------
(d) All of Argyle's right, title and interest in and to all licenses
and other governmental authorizations related to the Argyle TV
Stations, including the Argyle TV Stations FCC Authorizations,
and all applications therefor, together with any renewals,
extensions or modifications thereof, including, those listed in
Schedule 5.7;
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(e) All intangible rights and interests issued to or owned by Argyle
and used in connection with the operation of the Argyle TV
Stations as described in Sections 5.7 and 5.13 below, including
those listed on Schedule 5.7 and Schedule 5.13 hereto; and
------------ -------------
(f) All files and other records (including FCC records) of Argyle
relating to the operation of the Argyle TV Stations (other than
duplicate copies of such files and records that are maintained in
the offices of Argyle's affiliates).
1.2 Excluded Argyle TV Stations Assets. The following assets relating to
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the business and operation of the Argyle TV Stations shall be retained by Argyle
and shall not be exchanged, assigned or transferred to Gannett (the "Excluded
Argyle TV Stations Assets"):
(a) All assets of Argyle not used or held for use primarily in
connection with the Argyle TV Stations;
<PAGE>
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(b) Claims by Argyle with respect to the Excluded Argyle TV Stations
Assets and liabilities not assumed by Gannett, including without
limitation claims for tax refunds and counterclaims with respect
to obligations and liabilities not being assumed by Gannett
hereunder;
(c) All contracts of insurance;
(d) All of Argyle's accounts receivable arising out of Argyle's
operation of the Argyle TV Stations;
(e) All employee benefit plans of any nature and their assets;
(f) Cash on hand and in banks and other cash items;
(g) All right, title and interest in the name "Argyle" or any
derivatives thereof; and
(h) All tangible personal property of Argyle disposed of or consumed
in the ordinary course of the operation of the Argyle TV Stations
as permitted under Section 7.1 below or with the consent of
Gannett between the date of this Agreement and the Closing Date.
1.3 Liabilities. The Argyle TV Stations Assets shall be exchanged,
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transferred and conveyed to Gannett free and clear of all liabilities, liens,
security interests and encumbrances of any kind, except for liens for property
taxes not yet due and payable and except for those liens listed on Schedules 1.1
-------------
and 5.12 hereto. Gannett shall assume and undertake to perform the obligations
- --------
of Argyle to be performed on or after the Closing Date under the agreements
referred to in Section 1.1(c) above but Gannett does not assume and will not be
liable for any other liability, obligation, claim, lien, security interest or
encumbrance of Argyle or the Argyle TV Stations.
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ARTICLE II. Exchange of Gannett TV Stations Assets
----------- --------------------------------------
2.1 Transfer of Gannett TV Stations Assets. Upon the terms and subject to
--------------------------------------
the conditions of this Agreement, on the Closing Date (as defined in Section 4.1
hereof) Gannett will exchange, assign, transfer, convey or cause to be conveyed,
and deliver to Argyle, and Argyle will acquire and accept from Gannett, the
assets and properties, tangible or intangible, of every kind and description
used or held for use by Gannett in connection with the business and operation of
the Gannett TV Stations (all such assets being referred to herein as the
"Gannett TV Stations Assets"), but excluding the Excluded Gannett TV Stations
Assets described in Section 2.2 below. The Gannett TV Stations Assets include,
but not to be limited to, the following:
(a) All of Gannett's tangible personal property, assets and equipment
used or held for use in connection with the business and
operation of the Gannett TV Stations, including those listed in
Schedule 2.1 hereto, including any replacements and less any
------------
retirements or dispositions thereof in the ordinary course of
business before the Closing Date;
(b) All real property owned by Gannett and used or held for use
primarily in connection with the business and operations of the
Gannett TV Stations as listed in Schedule 6.12;
-------------
(c) All contracts, agreements and similar documents that relate to
the operation of the Gannett TV Stations, including, but not
limited to, trade or barter agreements (but excluding "bill
payer" trade agreements), programming and talent agreements,
together with all orders and agreements for the sale of
advertising relating to the Gannett TV Stations, including those
described in Schedule 6.11 hereto;
-------------
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(d) All of Gannett's right, title and interest in and to all licenses
and other governmental authorizations related to the Gannett TV
Stations, including the Gannett TV Stations FCC Authorizations,
and all applications therefor, together with any renewals,
extensions or modifications thereof including those listed in
Schedule 6.7;
------------
(e) All intangible rights and interests to or owned by Gannett and
used in connection with the operation of the Gannett TV Stations
as described in Sections 6.7 and 6.13 below, including those
listed on Schedule 6.7 and Schedule 6.13 hereto; and
------------- -------------
(f) All files and other records (including FCC records) of Gannett
relating to the operation of the Gannett TV Stations (other than
duplicate copies of such files and records that are maintained in
the offices of Gannett's affiliates).
2.2 Excluded Gannett TV Stations Assets. The following assets relating to
-----------------------------------
the business and operation of the Gannett TV Stations shall be retained by
Gannett and shall not be
exchanged, assigned or transferred to Argyle (the "Excluded Gannett TV Stations
Assets"):
(a) All assets of Gannett not used or held for use primarily in
connection with the Gannett TV Stations;
(b) Claims by Gannett with respect to the Excluded Gannett TV
Stations Assets and liabilities not assumed by Argyle, including
without limitation claims for tax refunds and counterclaims with
respect to obligations and liabilities not being assumed by
Argyle hereunder;
(c) All contracts of insurance;
(d) All of Gannett's accounts receivable arising out of Gannett's
operation of the Gannett TV Stations;
(e) All employee benefit plans of any nature and their assets;
<PAGE>
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(f) Cash on hand and in banks and other cash items;
(g) All right, title and interest in the name "Gannett", "Multimedia"
or "Combined Communications Corporation" or any derivatives
thereof; and
(h) All tangible personal property of Gannett disposed of or consumed
in the ordinary course of the operation of the Gannett TV
Stations as permitted under Section 8.1 below or with the consent
of Argyle between the date of this Agreement and the Closing
Date.
2.3 Liabilities. The Gannett TV Stations Assets shall be transferred and
-----------
conveyed to Argyle free and clear of all liabilities, liens, security interests
and encumbrances, of any kind except for liens for property taxes not yet due
and payable and except for those liens listed on Schedules 2.1 and 6.12 hereto.
----------------------
Argyle shall assume and undertake to perform the obligations of Gannett to be
performed on or after the Closing Date under the agreements referred to in
Section 2.1(c) above but Argyle does not assume and will not be liable for any
liability, obligation, claim, lien, security interest or encumbrance of Gannett
or the Gannett TV Stations.
Article III. Consideration.
------------ -------------
3.1 Consideration. (a) In exchange for the Argyle TV Stations Assets and
-------------
the assumption of certain obligations of Argyle pursuant to Section 1.3 above,
Gannett shall, subject to Article IX below, at the Closing, deliver to Argyle
the Gannett TV Stations Assets.
<PAGE>
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(b) In exchange for the Gannett TV Stations Assets and the assumption
of certain obligations of Gannett pursuant to Section 2.3 above, Argyle shall,
subject to Article VIII below, at the Closing, deliver to Gannett the Argyle TV
Stations Assets, and Twenty Million Dollars ($20,000,000) in cash (the "Boot").
(c) (i) At the written request(s) of Gannett delivered at any time
between the date hereof and the date that is 45 days after the Closing Date, and
with Argyle's written consent, which shall not be unreasonably withheld, Argyle
shall cause WGRZ-TV and/or WZZM-TV (as specified by Gannett) to purchase assets
or pay film liabilities specified by Gannett with amounts up to $20,000,000 that
would otherwise be included in Boot. Argyle will deliver title to any assets so
purchased to Gannett on the Closing Date or, if the assets are purchased by
Argyle after the Closing Date, then no later than two business days after
Argyle's purchase.
(ii) Argyle shall deliver to Gannett copies of all purchase
orders and all other related documentation and shall use its best efforts to
deliver title to all assets purchased pursuant to Section 3.1(c)(i) no later
than 180 days after the Closing Date.
(iii) Assets purchased pursuant to Section 3.1(c)(i) shall be
included in the Argyle TV Stations Assets.
<PAGE>
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(iv) The amount of Boot shall be reduced by the amounts paid by
WGRZ-TV or WZZM-TV to third parties for film liabilities on or before the
Closing Date and for assets specified by Gannett under Section 3.1(c)(i) and
delivered by Argyle at the Closing. The amount of Boot as so reduced shall be
deposited by Argyle on the Closing Date in a mutually agreeable escrow account
that qualifies as a "qualified escrow account" under Treasury Regulations
(S)1.1031(k)-1(g)(3). Under the terms of the escrow agreement to be negotiated
in good faith by Gannett and Argyle, (A) Argyle will have the right to withdraw
funds from the escrow account to pay the purchase price of assets specified by
Gannett pursuant to Section 3.1(c)(i), and (B) Gannett will have the right to
receive, on the 181st day following the Closing Date, any remaining balance in
the escrow account. At the option of Gannett, the parties shall use a "qualified
intermediary" or a "qualified trust" as defined in the Treasury Regulations
under (S)1031 instead of a qualified escrow account. Argyle shall have no
obligation to purchase assets or pay film liabilities pursuant to this Section
3.1(c) in excess of $20,000,000.
3.2 Tax Allocations. Prior to the Closing Gannett and Argyle shall
---------------
allocate the Gannett TV Stations Assets and the Argyle TV Stations Assets among
exchange groups and, if applicable, a residual group as provided in Treasury
Regulations (S)1.1031(j)-1 and assign fair market values to each of the Gannett
TV Stations Assets and the Argyle TV Stations
<PAGE>
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Assets. For the purpose of such allocation, the Gannett TV Stations Assets and
Argyle TV Stations Assets shall include but not be limited to all tangible
personal property, real property and intangible property, including assets
purchased pursuant to Section 3.1(c). The fair market values of such assets
will be based on an appraisal of the assets by the valuation firm of Bond and
Pecaro, whose fees shall be paid equally by Gannett and Argyle. The allocation
of such assets among exchange groups and, if applicable, a residual group and
the assignment of fair market values to such assets shall be included on
Schedule 3.2, which shall be attached to this Agreement on or prior to the
- ------------
Closing Date. The parties agree not to voluntarily take any position
inconsistent with Schedule 3.2 and will prepare and file all returns and reports
------------
relating to the exchanges contemplated by this Agreement, including all federal,
state and local income tax returns, in a manner which is consistent with
Schedule 3.2.
- ------------
3.3 Prorations. (a) Prior to the Closing Date. Argyle shall be entitled
---------- -------------------------
to all income earned and be responsible for all expenses incurred in connection
with the business and operation of the Argyle TV Stations prior to the Closing
Date and in connection with the business and operation of the Gannett TV
Stations on or subsequent to the Closing Date. Gannett shall be entitled to all
income earned and be responsible for all expenses incurred in connection with
the business and operation of the Gannett TV Stations prior to the
<PAGE>
-12-
Closing Date, and in connection with the business or operation of the Argyle TV
Stations on or subsequent to the Closing Date. Items to be prorated hereunder
shall include, without limitation, power and utility charges, personal property
taxes and real property taxes, sick and vacation pay, wages, film payments,
license fees, lease payments, and the aggregate net value of trade or barter
agreements (other than "bill payer" trade agreements), and shall be prorated
based on the number of calendar days remaining in the relevant current payment
period in which the Closing Date occurs.
(b) Time for Payment. The proration and adjustments provided for in
----------------
this Section 3.3, to the extent practicable, shall be made on the Closing Date,
and the party owing any net amount shall pay that amount on the Closing Date. As
to those prorations and adjustments not capable of being ascertained on the
Closing Date, an adjustment and proration shall be made within 90 days of the
Closing Date, and payment shall be made at that time.
(c) Dispute Resolution. In the event of any disputes between Gannett
------------------
and Argyle as to such prorations, the amounts not in dispute shall nonetheless
be paid at the time provided in subsection (b) above, and such disputes shall be
determined by an independent certified public accountant mutually acceptable to
the parties whose determination shall be final, and the fees and expenses of
such accountant shall be borne equally by Argyle and Gannett.
<PAGE>
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ARTICLE IV. The Closing
---------- -----------
4.1 Time and Place of Closing. The closing (the "Closing") of the
-------------------------
exchange of the Argyle TV Stations Assets and the Gannett TV Stations Assets
shall be held in the offices of Gannett at 1100 Wilson Boulevard, Arlington,
Virginia 22234 at 10:00 a.m. (a) two (2) business days after the FCC consents to
the assignment of the FCC Authorizations contemplated herein have become
effective, or (b) such other time and place as shall be mutually agreed upon by
the parties (the "Closing Date").
4.2 Deliveries by Argyle. At the Closing, Argyle will deliver to Gannett
--------------------
the following:
(a) Bills of sale, deeds, assignments and other instruments of
transfer and conveyance transferring and assigning the Argyle TV
Stations Assets to Gannett, in form and substance satisfactory to
the parties, each in form and substance reasonably acceptable to
Gannett;
(b) Consents to assignment from third parties relating to the
Material Argyle TV Stations Contracts listed on Schedule 5.11
-------------
hereto, as well as any other consents obtained by Argyle;
(c) Opinions of Locke Purnell Rain Harrell, Argyle's corporate
counsel, and Wiley, Rein & Fielding, Argyle's FCC counsel, each
in form and substance reasonably acceptable to Gannett;
(d) An assumption agreement pursuant to which Argyle shall assume
Gannett's liabilities and obligations as provided in Section 2.3
hereof in form and substance reasonably acceptable to Gannett;
(e) Certificate, dated the Closing Date, of the Secretary of each
Argyle Party and Argyle Television, Inc. as to resolutions of the
Board of Directors of each Argyle Party and Argyle
<PAGE>
-14-
Television, Inc. relating to this Agreement and the transactions
contemplated hereby, each in form and substance reasonably
acceptable to Gannett;
(f) Certificate of an officer of each Argyle Party certifying the
fulfillment of the conditions set forth in Sections 9.1(a) and
9.1(b) below, each in form and substance reasonably acceptable to
Gannett;
(g) Funds equal to the Boot (to the extent not reduced pursuant to
Section 3.1(c); and
(h) Additional material as Gannett may reasonably request.
4.3 Deliveries by Gannett. At the Closing, Gannett will deliver to Argyle
---------------------
the following:
(a) Bills of sale, deeds, assignments and other instruments of
transfer and conveyance transferring and assigning the Gannett TV
Stations Assets to Argyle, in form and substance satisfactory to
the parties, each in form and substance reasonably acceptable to
Argyle;
(b) Consents to assignment from third parties relating to the
Material Gannett TV Stations Contracts listed on Schedule 6.11
-------------
hereto, as well as any other consents obtained by Gannett;
(c) Opinion of Kristin H. Kent, Gannett's corporate counsel, and Reed
Smith Shaw & McClay, Gannett's FCC counsel, each in form and
substance reasonably acceptable to Argyle;
(d) An assumption agreement pursuant to which Gannett shall assume
Argyle's liabilities and obligations as provided in Section 1.3
hereof in form and substance reasonably acceptable to Argyle;
(e) Certificate dated the Closing Date, of the Secretary of each
Gannett Party and Gannett Co., Inc. as to resolutions of the
Board of Directors of each Gannett Party and Gannett Co., Inc.
relating to this Agreement and the transactions
<PAGE>
-15-
contemplated hereby, each in form and substance reasonably
acceptable to Argyle;
(f) Certificate of an officer of each Gannett Party certifying the
fulfillment of the conditions set forth in Sections 8.1(a) and
8.1(b) below, each in form and substance reasonably acceptable to
Argyle; and
(g) Additional material as Argyle may reasonably request.
ARTICLE V. Representations and Warranties of Argyle
--------- ----------------------------------------
Argyle represents and warrants to Gannett as follows:
5.1 Organization; Qualification. WZZM Argyle and WGRZ Argyle are
---------------------------
corporations duly organized, validly existing and in good standing under the
laws of the State of Nevada. Grand Rapids Argyle and Buffalo Argyle are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each Argyle Party has the full power and
authority to own and operate its respective Argyle TV Station Assets and to
carry on the business operations of its respective Argyle TV Station as such
operations are now being conducted.
5.2 Authority Relative to this Agreement. Each Argyle Party has the full
------------------------------------
corporate power, authority and legal right to execute and deliver this Agreement
and to consummate the transactions and perform its respective obligations as
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been or will be duly
and validly authorized by all necessary corporate and shareholder action,
<PAGE>
-16-
and this Agreement has been duly and validly executed and delivered by each
Argyle Party and constitutes its respective legal, valid and binding obligation,
enforceable against it in accordance with its terms.
5.3 Financial Schedules. Argyle has furnished to Gannett (i) the
-------------------
unaudited financial statements of Argyle with respect to the Argyle TV Stations
for the fiscal year ended December 31, 1995 and the nine-month period ended
September 30, 1996 and (ii) unaudited balance sheets as of September 30, 1996
(the "Financial Schedules"). September 30, 1996 is the "Argyle Balance Sheet
Date". The Financial Schedules have been prepared from and are in accordance
with the books and records regularly maintained by Argyle with respect to the
Argyle TV Stations. No material adjustments of the Financial Schedules are
required for a fair presentation of the financial condition and the results of
the Argyle TV Stations' operations for the periods indicated. The Financial
Schedules are true and correct in all material respects. Argyle makes no
representations, however, about the future business or financial prospects of
the Argyle TV Stations for Gannett's intended purposes.
5.4 Business Since the Argyle Balance Sheet Date. Since the Argyle Balance
--------------------------------------------
Sheet Date: (a) the business of the Argyle TV Stations has been conducted in the
ordinary course of business and in substantially the same manner as it was
before the Argyle Balance Sheet Date, and (b) there have been no
<PAGE>
-17-
material adverse changes in the business, condition (financial or otherwise) or
results of the Argyle TV Stations' operations.
5.5 No Defaults. Except for matters set forth in Schedule 5.5 which shall
----------- ------------
be removed or released at or before Closing, the execution, delivery and
performance of this Agreement by each Argyle Party will not (a) conflict with
any provision of its respective Articles of Incorporation or bylaws, (b) result
in a default (or give rise to any right of termination, cancellation or
acceleration) under or conflict with any of the terms, conditions or provisions
of any Material Argyle TV Stations Contract (as defined in Section 5.11 below),
note, bond, mortgage or other instrument or obligation relating to the Argyle TV
Stations' business and to which any of the Argyle TV Stations Assets may be
subject, (c) violate any law, statute, rule, regulation, order, injunction or
decree of any federal, state or local governmental authority or agency
applicable to any Argyle Party or any of the Argyle TV Stations Assets, or (d)
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever on any of the Argyle TV Stations Assets.
5.6 Undisclosed Liabilities. Argyle has no obligation or liability to be
-----------------------
reflected or reserved against in any of the Financial Schedules which is not
fully reflected or reserved against in such Financial Schedules, and there is no
asserted
<PAGE>
-18-
or unasserted claim or contingent liability whether or not required to be
reflected or reserved against in the Financial Schedules.
5.7 Licenses and Authorizations. (a) As of the date of this Agreement,
---------------------------
WZZM Argyle and WGRZ Argyle are the holders of their respective Argyle TV
Stations FCC Authorizations listed in Schedule 5.7 to this Agreement. Argyle
------------
will deliver to Gannett true and complete copies of the Argyle TV Stations FCC
Authorizations. The Argyle TV Stations FCC Authorizations constitute all of the
licenses and authorizations required under the Communications Act of 1934, as
amended (the "Communications Act"), and the current rules, regulations, and
policies of the FCC for and/or used in the operation of the Argyle TV Stations
as now operated. The Argyle TV Stations FCC Authorizations are in full force and
effect and are unimpaired by any act or omission of any Argyle Party, or their
respective officers, directors, employees or agents. There is not now pending,
or to the knowledge of Argyle threatened, any action by or before the FCC to
revoke, cancel, rescind, modify or refuse to renew any of the Argyle TV Stations
FCC Authorizations, and there is not now pending, or to the knowledge of Argyle
threatened, issued or outstanding by or before the FCC, any investigation, Order
to Show Cause, Notice of Violation, Notice of Apparent Liability or Notice of
Forfeiture or complaint against Argyle or any of its affiliates with respect to
the Argyle TV Stations. In the
<PAGE>
-19-
event of any such action, or the filing or issuance of any such order, notice or
complaint against Argyle, or Argyle's learning of the threat thereof, Argyle
shall promptly notify Gannett of same in writing and shall take all reasonable
measures, at its expense, to contest in good faith or seek removal or rescission
of such action, order, notice or complaint.
(b) The Argyle TV Stations are operating in compliance in all material
respects with the Argyle TV Stations FCC Authorizations, the Communications Act
and the current rules, regulations and policies of the FCC. All material
reports, forms and statements required to be filed by Argyle with the FCC with
respect to the Argyle TV Stations since the grant of the last renewal of the
Argyle TV Stations FCC Authorizations have been filed and are complete and
accurate. Argyle has no reason to believe that the Argyle TV Stations FCC
Authorizations will not be renewed in the ordinary course.
(c) In addition to the Argyle TV Stations FCC Authorizations described
above, Schedule 5.7 to this Agreement lists all other licenses, permits and
------------
authorizations that are held by Argyle as of the date hereof that are required
for the conduct of the Argyle TV Stations' business operations, as presently
conducted, and which, if not present or not in full force and effect, would have
a material adverse effect on such business operations. All such licenses,
permits and
<PAGE>
-20-
authorizations are in full force and effect with no material violations of any
of them having occurred.
5.8 Compliance with FCC Regulations. The operation of the Argyle TV Stations
-------------------------------
and all of the Argyle TV Stations Assets are in compliance in all material
respects with (a) all applicable engineering standards required to be met under
applicable FCC rules, and (b) all other applicable rules, regulations,
requirements and policies of the FCC; there are no existing claims known to
Argyle to the contrary.
5.9 Qualification as a Broadcast Licensee. Argyle knows of no fact which
-------------------------------------
would, under existing law and the existing rules, regulations and practices of
the FCC, disqualify Argyle as (a) assignee of the Gannett TV Stations FCC
Authorizations listed in Schedule 6.7 to this Agreement, (b) owner and operator
------------
of the Gannett TV Stations. Argyle will take no action which it knows or has
reason to know would cause such disqualification.
5.10 Condition and Adequacy of the Argyle TV Stations Assets. The tangible
-------------------------------------------------------
assets included in the Argyle TV Stations Assets are in good operating condition
and repair, ordinary wear and tear excepted, and are adequate and suitable in
accordance with general industry practices for the purposes for which they are
currently used and intended to be used.
5.11 Contracts and Arrangements. (a) Schedule 5.11 hereto contains true and
-------------------------- -------------
complete lists of the following contracts (written or oral) included in the
Argyle TV Stations Assets,
<PAGE>
-21-
involving annual consideration of more than $10,000 (the "Material Argyle TV
Stations Contracts"):
(i) Any television network affiliation agreements;
(ii) Except for contracts that expire or are terminable without penalty
with thirty (30) days notice after the Closing Date, contracts
evidencing time sales to advertisers or advertising agencies;
(iii) Any trade or barter agreements;
(iv) Sales agency or advertising representation contracts which are not
terminable by Argyle without penalty upon notice of thirty (30) days
or less;
(v) Contracts for the future construction or purchase of capital
improvements, purchase of materials, supplies or equipment, or for the
sale of assets (other than broadcast time);
(vi) Employment contracts or consulting contracts not terminable by Argyle
without penalty upon notice of thirty (30) days or less;
(vii) Licenses or agreements under which Argyle is authorized to broadcast
on the Argyle TV Stations programming supplied by others;
(viii) Leases of real property including renewal options exercisable by any
other party thereto, ending more than thirty (30) days after the date
of this Agreement;
(ix) Leases of personal property which have a term, including renewal
options exercisable by any other party thereto, ending more than
thirty (30) days after the date of this Agreement; and
(x) Any other contract or lease not made in the usual and ordinary course
of business or not terminable by Argyle without liability upon not
more than thirty (30) days' written notice.
(b) Schedule 5.11 specifies those Material Argyle TV Stations Contracts
-------------
the assignment of which requires the consent of a third party. Provided that any
requisite consent
<PAGE>
-22-
to the assignment of Material Argyle TV Stations Contracts to Gannett is
obtained, each of the contracts and leases which is assigned to and assumed by
Gannett on the Closing Date is valid and in full force and effect.
(c) Subject to Argyle's obtaining all necessary third-party consents, each
Argyle Party has full legal power and authority to assign its respective rights
under the Material Argyle TV Stations Contracts to Gannett in accordance with
this Agreement, and such assignment shall not affect the validity,
enforceability and continuity of any of the Material Argyle TV Stations
Contracts. There is no existing default, event of default or other event under
any such Material Argyle TV Stations Contract or under any contracts being
assumed by Gannett hereunder which defaults in the aggregate would exceed
$50,000, which, with or without notice or lapse of time or both, would, in
reasonable likelihood, constitute a default or an event of default under any
such contracts, and Argyle has not received or given any notice of default under
any such contracts. Concurrent with the delivery of Schedule 5.11, Argyle will
-------------
provide Gannett with complete copies of all of the Material Argyle TV Stations
Contracts and, to the best of Argyle's knowledge, all other written contracts of
the Argyle TV Stations.
5.12 Title. (a) Schedule 5.12 lists all real property included in the Argyle
----- -------------
TV Stations Assets.
<PAGE>
-23-
(b) Schedule 5.11 lists all real property leased by each Argyle Party and
-------------
used in its respective Argyle TV Station's operation. Schedule 1.1 lists all
------------
tangible personal property included in the Argyle TV Stations Assets. Except as
set forth in Schedule 1.1 or Schedule 5.12, each Argyle Party owns and has good
-----------------------------
and valid title to its respective properties, free and clear of all security
interests, mortgages, pledges, conditional sales agreements, charges, liens and
encumbrances, except for liens for taxes not yet due and payable, and those
liens set forth on Schedule 1.1 or Schedule 5.12 to which Gannett reasonably
------------ -------------
objects and which shall be removed or released at or before Closing.
(c) No lien imposed under Section 401(a)(29) or Section 412(n) of the
Internal Revenue Code of 1986, as amended (the "Code"), Section 302(f) or
Section 4068 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or arising out of any action filed under ERISA Section 4301(b),
exists upon any Argyle TV Stations Assets. Neither Argyle nor any ERISA
Affiliate has terminated any employee pension benefit plan (within the meaning
of Section 3(2) of ERISA) subject to Title IV of ERISA (herein referred to as a
"Title IV Plan") under circumstances giving rise to, or that would give rise to
any actual or potential liability to the Pension Benefit Guaranty Corporation
("PGBC") or any other person. For purposes of this Section 5.12(c), "ERISA
Affiliate" means any member of any "controlled group of
<PAGE>
-24-
corporations" as defined by Section 414(b) of the Code that includes Argyle, any
member of any group of "trades or businesses under common control" as defined by
Section 414(c) of the Code that includes Argyle, or any member of any
"affiliated service group" as defined in Section 414(m) of the Code that
includes Argyle.
5.13 Call Letters; Trademarks. Schedule 5.13 to this Agreement sets forth a
------------------------ -------------
correct and complete list of all call letters, copyrights, trademarks, trade
names, service marks, jingles, slogans, logos and patents which are owned or
held for use by Argyle solely in connection with the business and operation of
the Argyle TV Stations and which are material to the financial condition of the
Argyle TV Stations Assets (the "Argyle TV Stations Rights"). The registrations
(if any) for the Argyle TV Stations Rights are valid, in good standing and
uncontested. Each Argyle Party possesses adequate rights, licenses or other
authority to use its respective Argyle TV Station Rights necessary to conduct
the business of its respective Argyle TV Station as presently conducted. Argyle
has not received any notice with respect to any alleged infringement or unlawful
or improper use of any Argyle TV Stations Rights owned or alleged to be owned by
others. No director, officer or employee of any Argyle Party or of any of their
respective affiliates has any interest in any Argyle TV Stations Right listed on
Schedule 5.13, all of which are free and clear of any lien, security interest,
- -------------
claim or encumbrance
<PAGE>
-25-
of any kind. No Argyle Party has granted any outstanding licenses or other
rights to any Argyle TV Stations Rights listed on Schedule 5.13, and no Argyle
-------------
Party has any knowledge of any infringement of any of the Argyle TV Stations
Rights.
5.14 Litigation and Compliance with Laws. Except as set forth on
-----------------------------------
Schedule 5.14: (a) no Argyle Party, with respect to its respective Argyle TV
- -------------
Station, has 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,
or local governmental authority or agency which has or could reasonably be
expected to have a materially adverse effect on the business, operations or
financial condition of its respective Argyle TV Station or on the consummation
of the transactions contemplated hereby; (b) no Argyle Party nor any of their
respective officers or agents has received any inquiry, written or oral, from
any such authority concerning the business, operations or financial condition of
its respective Argyle TV Station during the 12-month period prior to the date of
this Agreement which could reasonably be expected to have a materially adverse
effect on the business, operations or financial condition of such Argyle TV
Station or on the consummation of the transactions contemplated hereby; and (c)
there is no litigation pending by or against, or to any Argyle Party's knowledge
threatened against, any Argyle Party or the Argyle TV Stations related to or
affecting any of the Argyle TV Stations Assets. Except as disclosed in
<PAGE>
-26-
Schedule 5.14 and except for environmental matters described in Section 5.20
- -------------
below, each Argyle Party has complied in all material respects with all laws,
regulations, orders or decrees applicable to its respective Argyle TV Station,
and the present uses by each Argyle Party of its respective Argyle TV Stations
Assets do not violate any such laws, regulations, orders or decrees, in any
material respect, including, with respect to any owned or leased real property,
any applicable zoning ordinance and other governmental regulations, and no
Argyle Party has any knowledge of any basis for any claim for compensation or
damage or other relief from any violation of the foregoing.
5.15 Employees. Schedule 5.15 lists the names and salaries or rates of
--------- -------------
commission of all the full and part-time
employees of the Argyle TV Stations, indicating any employees who are not
actively at work. Except as shown on Schedule 5.15, no Argyle Party is a party
to any collective bargaining agreement or any other labor agreement covering or
relating to any of the employees of its respective Argyle TV Station, and has
not recognized and has not received a demand for recognition of any collective
bargaining representative.
5.16 Taxes. The representations and warranties in this Section 5.16 are
-----
subject to the matters disclosed in Schedule 5.16. All federal, state and local
income, franchise, sales, use, property, excise, payroll and other tax returns
and reports required to be filed by law where the failure to file
<PAGE>
-27-
such returns on a timely basis could result in a lien on the Argyle TV Station
Assets or the imposition on Gannett of any liability for taxes or assessments
have been duly and timely filed in the proper form with the appropriate
governmental authority. All taxes, fees and assessments of whatever nature due
or payable pursuant to such returns or otherwise have been paid, except for such
amounts as are being contested diligently, in the appropriate forum and in good
faith, where the failure to pay or contest such amounts could result in a lien
on the Argyle TV Station Assets or the imposition on Gannett of any liability
for any taxes or assessments. No pending tax audits and no outstanding
agreements or waivers extending the statutory period of limitations applicable
to any federal, state or local tax return for any period will result in a lien
on the Argyle TV Station Assets or the imposition on Gannett of any liability
for any taxes or assessments related to the Argyle TV Station Assets. There are
no governmental investigations or other legal, administrative or tax proceedings
pursuant to which Argyle is or could be made liable for any taxes, penalties,
interest or other charges, the liability for which will extend to Gannett as
transferee of the Argyle TV Station Assets, or which will result in a lien on
the Argyle TV Station Assets. To the best of Argyle's knowledge, no event has
occurred that could impose on Gannett any liability for any taxes, penalties or
interest due or to become due from Argyle.
<PAGE>
-28-
5.17 Instruments of Conveyance; Good Title. The instruments to be
-------------------------------------
executed by each Argyle Party and delivered to Gannett at the Closing conveying
the Argyle TV Stations Assets to Gannett will transfer good and marketable title
to the Argyle TV Stations Assets free and clear of all liabilities, obligations
and encumbrances, except as provided elsewhere in this Agreement.
5.18 Changes. Except as shown on Schedule 5.18 to this Agreement, since
------- -------------
the Balance Sheet Date, no Argyle Party has, with respect to the business of its
respective Argyle TV Station: (a) mortgaged, pledged or subjected to a lien or
any other encumbrance, any of its respective Argyle TV Stations Assets; (b) sold
or transferred any material asset used or useful in the business of its
respective Argyle TV Station; or (c) increased the compensation payable or to
become payable to any employee or agent, except regularly scheduled increases in
accordance with historical practices.
5.19 Brokers. There is no broker or finder or other person who would
-------
have any valid claim against Gannett for a commission or brokerage in connection
with this Agreement or the transactions contemplated hereby as a result of any
agreement, understanding or action by Argyle.
5.20 Environmental. (a) In connection with the operation of its
-------------
respective Argyle TV Stations, no release, emission or discharge into the
environment of hazardous substances including Polychlorinated Bi-phenyls
("PCBs"), hazardous waste
<PAGE>
-29-
or air pollutants or toxic pollutants, as defined under any law, statute,
ordinance, order, judgment or regulation, whether federal, state or local
("Environmental Laws"), by any Argyle Party, and to the best of Argyle's
knowledge, by any other person, has occurred, is presently occurring, or is
anticipated to occur in excess of permitted levels or reportable quantities,
under any Environmental Law. To the best of Argyle's knowledge, no hazardous
waste has been disposed of by Argyle or by any other person on the real property
occupied by the Argyle TV Stations or its transmitters. As used in this Section
5.20(a), the term "hazardous waste" shall have the same meaning as it has in the
Resource Conservation and Recovery Act ("RCRA"), as amended, and in the
equivalent state statutes, if any, of New York and Michigan, as applicable.
(b) The Argyle TV Stations' present use of the Argyle TV Stations
Assets does not violate any Environmental Law, occupational safety and health or
other applicable law, the effect of which violation could materially adversely
affect the Argyle TV Stations Assets or Gannett's use thereof, or which could
impose a liability on Gannett. Argyle warrants that the technical equipment
included in the Argyle TV Stations Assets does not contain any PCBs that are
required by law to be removed and if any equipment does contain PCBs, that such
equipment is stored and maintained in compliance with applicable law. Argyle has
complied in all material respects
<PAGE>
-30-
with all Environmental Laws applicable to the Argyle TV Stations and its
operations, including but not limited to, the FCC's guidelines regarding RF
radiation.
5.21 No Untrue Statement. No representation or warranty made by Argyle
-------------------
in this Agreement, and no statement made in any certificate, document, exhibit
or schedule furnished or to be furnished in connection with the transactions
herein contemplated, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make such
representation or warranty or any such statement not misleading to Gannett.
ARTICLE VI. Representations and Warranties of Gannett
---------- -----------------------------------------
Gannett represents and warrants to Argyle as follows:
6.1 Organization; Qualification. Combined is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Oklahoma. Multimedia is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina. Each Gannett Party
has the full power and authority to own and operate its respective Gannett TV
Stations Assets and to carry on the business operations of its respective
Gannett TV Station as such operations are now being conducted.
6.2 Authority Relative to this Agreement. Each Gannett Party has the full
------------------------------------
corporate power, authority and legal right to execute and deliver this Agreement
and to consummate the
<PAGE>
-31-
transactions and perform its respective obligations as contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been or will be duly and validly
authorized by all necessary corporate and shareholder action, and this Agreement
has been duly and validly executed and delivered by each Gannett Party and
constitutes its respective legal, valid and binding obligation, enforceable
against it in accordance with its terms.
6.3 Financial Schedules. Gannett has furnished to Argyle (i) the
-------------------
unaudited financial statements of Gannett with respect to the Gannett TV
Stations for the fiscal year ended December 31, 1995 and the nine-month period
ended September 29, 1996 and (ii) unaudited balance sheets as of September 29,
1996 (the "Financial Schedules"). September 29, 1996 is the "Gannett Balance
Sheet Date". The Financial Schedules have been prepared from and are in
accordance with the books and records regularly maintained by Gannett with
respect to the Gannett TV Stations. No material adjustments of the Financial
Schedules are required for a fair presentation of the financial condition and
the results of the Gannett TV Stations' operations for the periods indicated.
The Financial Schedules are true and correct in all material respects. Gannett
makes no representations, however, about the future business or financial
prospects of the Gannett TV Stations for Argyle's intended purposes.
<PAGE>
-32-
6.4 Business Since the Gannett Balance Sheet Date. Since the Gannett
---------------------------------------------
Balance Sheet Date: (a) the business of the Gannett TV Stations has been
conducted in the ordinary course of business and in substantially the same
manner as it was before the Gannett Balance Sheet Date, and (b) there have been
no material adverse changes in the business, condition (financial or otherwise)
or results of the Gannett TV Stations' operations.
6.5 No Defaults. The execution, delivery and performance of this
-----------
Agreement by each Gannett Party will not (a) conflict with any provision of its
respective Articles of Incorporation or bylaws, (b) result in a default (or give
rise to any right of termination, cancellation or acceleration) under or
conflict with any of the terms, conditions or provisions of any Material Gannett
TV Stations Contract (as defined in Section 6.11 below), note, bond, mortgage or
other instrument or obligation relating to the Gannett TV Stations' business and
to which any of the Gannett TV Stations Assets may be subject, (c) violate any
law, statute, rule, regulation, order, injunction or decree of any federal,
state or local governmental authority or agency applicable to either Gannett
Party or any of the Gannett TV Stations Assets, or (d) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever on any of
the Gannett TV Stations Assets.
<PAGE>
-33-
6.6 Undisclosed Liabilities. Gannett has no obligation or liability to
-----------------------
be reflected or reserved against in any of the Financial Schedules which is not
fully reflected or reserved against in such Financial Schedules, and there is no
asserted or unasserted claim or contingent liability whether or not required to
be reflected or reserved against in the Financial Schedules.
6.7 Licenses and Authorizations. (a) As of the date of this Agreement,
---------------------------
Combined and Multimedia are the holders of the respective Gannett TV Stations
FCC Authorizations listed in Schedule 6.7 to this Agreement. Gannett will
------------
deliver to Argyle true and complete copies of the Gannett TV Stations FCC
Authorizations. The Gannett TV Stations FCC Authorizations constitute all of
the licenses and authorizations required under the Communications Act, and the
current rules, regulations, and policies of the FCC for and/or used in the
operation of the Gannett TV Stations as now operated. The Gannett TV Stations
FCC Authorizations are in full force and effect and are unimpaired by any act or
omission of either Gannett Party, or their respective officers, directors,
employees or agents. There is not now pending, or to the knowledge of Gannett
threatened, any action by or before the FCC to revoke, cancel, rescind, modify
or refuse to renew any of such Gannett TV Stations FCC Authorizations, and there
is not now pending, or to the knowledge of Gannett threatened, issued or
outstanding by or before the FCC, any investigation,
<PAGE>
-34-
Order to Show Cause, Notice of Violation, Notice of Apparent Liability or Notice
of Forfeiture or complaint against Gannett or any of its affiliates with respect
to the Gannett TV Stations. In the event of any such action, or the filing or
issuance of any such order, notice or complaint against Gannett, or Gannett's
learning of the threat thereof, Gannett shall promptly notify Argyle of same in
writing and shall take all reasonable measures, at its expense, to contest in
good faith or seek removal or rescission of such action, order, notice or
complaint.
(b) The Gannett TV Stations are operating in compliance in all
material respects with the Gannett TV Stations FCC Authorizations, the
Communications Act and the current rules, regulations and policies of the FCC.
All material reports, forms and statements required to be filed by Gannett with
the FCC with respect to the Gannett TV Stations since the grant of the last
renewal of the Gannett TV Stations FCC Authorizations have been filed and are
complete and accurate. Gannett has no reason to believe that the Gannett TV
Stations FCC Authorizations will not be renewed in the ordinary course.
(c) In addition to the Gannett TV Stations FCC Authorizations
described above, Schedule 6.7 to this Agreement lists all other licenses,
------------
permits and authorizations that are held by Gannett as of the date hereof that
are required for the conduct of the Gannett TV Stations' business operations,
<PAGE>
-35-
as presently conducted, and which, if not present or not in full force and
effect, would have a material adverse effect on such business operations. All
such licenses, permits and authorizations are in full force and effect with no
violations of any of them having occurred.
6.8 Compliance with FCC Regulations. The operation of the Gannett TV
-------------------------------
Stations and all of the Gannett TV Stations Assets are in compliance in all
material respects with (a) all applicable engineering standards required to be
met under applicable FCC rules, and (b) all other applicable rules, regulations,
requirements and policies of the FCC; there are no existing claims known to
Gannett to the contrary.
6.9 Qualification as a Broadcast Licensee. Subject to obtaining the FCC
-------------------------------------
Waiver described in Section 7.6 below, Gannett knows of no fact which would,
under existing law and the existing rules, regulations and practices of the FCC,
disqualify Gannett as (a) assignee of the Argyle TV Stations FCC Authorizations
listed in Schedule 5.7 to this Agreement, or (b) owner and operator of the
------------
Argyle TV Stations Assets. Gannett will take no action which it knows or has
reason to know would cause such disqualification.
6.10 Condition and Adequacy of the Gannett TV Stations Assets. The
--------------------------------------------------------
tangible assets included in the Gannett TV Stations Assets are in good operating
condition and repair, ordinary wear and tear excepted, and are adequate and
suitable
<PAGE>
-36-
in accordance with general industry practices for the purposes for which they
are currently used and intended to be used.
6.11 Contracts and Arrangements. (a) Schedule 6.11 hereto contains true
-------------------------- -------------
and complete lists of the following contracts (written or oral) included in the
Gannett TV Stations Assets involving annual consideration of more than $10,000
(the "Material Gannett TV Stations Contracts"):
(i) Any television network affiliation agreements;
(ii) Except for contracts that expire or are terminable without penalty
with thirty (30) days notice after the Closing Date, contracts
evidencing time sales to advertisers or advertising agencies;
(iii) Any trade or barter agreements;
(iv) Sales agency or advertising representation contracts which are not
terminable by Gannett without penalty upon notice of thirty (30)
days or less;
(v) Contracts for the future construction or purchase of capital
improvements, purchase of materials, supplies or equipment, or for
the sale of assets (other than broadcast time);
(vi) Employment contracts or consulting contracts not terminable by
Gannett without penalty upon notice of thirty (30) days or less;
(vii) Licenses or agreements under which Gannett is authorized to
broadcast on the Gannett TV Stations programming supplied by
others;
(viii) Leases of real property including renewal options exercisable by
any other party thereto, ending more than thirty (30) days after
the date of this Agreement;
(ix) Leases of personal property which have a term, including renewal
options exercisable by any other party thereto, ending more than
thirty (30) days after the date of this Agreement; and
<PAGE>
-37-
(x) Any other contract or lease not made in the usual and ordinary
course of business, or not terminable by Gannett without liability
upon not more than thirty (30) days' written notice.
(b) Schedule 6.11 specifies those Material Gannett TV Stations
-------------
Contracts the assignment of which requires the consent of a third party.
Provided that any requisite consent to the assignment of the Material Gannett TV
Stations Contracts to Argyle is obtained, each of the contracts and leases which
is assigned to and assumed by Argyle on the Closing Date is valid and in full
force and effect.
(c) Subject to Gannett's obtaining all necessary third-party consents,
each Gannett Party has full legal power and authority to assign its respective
rights under the Material Gannett TV Stations Contracts to Argyle in accordance
with this Agreement, and such assignment shall not affect the validity,
enforceability and continuity of any of the Material Gannett TV Stations
Contracts. There is no existing default, event of default or other event under
any such Material Gannett TV Stations Contract or under any contracts being
assumed by Argyle hereunder which defaults in the aggregate would exceed
$50,000, which, with or without notice or lapse of time or both, would, in
reasonable likelihood, constitute a default or an event of default, under any
such contracts, and Gannett has not received or given any notice of default
under any such contracts. Concurrent with the delivery of Schedule 6.11,
-------------
Gannett will provide Argyle with complete copies of all of the Material Gannett
TV Stations Contracts
<PAGE>
-38-
and, to the best of Gannett's knowledge, all other written contracts of the
Gannett TV Stations.
6.12 Title. (a) Schedule 6.12 lists all real property included in the
----- -------------
Gannett TV Stations Assets.
(b) Schedule 6.11 lists all real property leased by each Gannett
-------------
Party and used in its respective Gannett TV Station's operation. Schedule 2.1
------------
lists all tangible personal property included in the Gannett TV Stations Assets.
Except as set forth in Schedule 2.1 or Schedule 6.12, each Gannett Party owns
-----------------------------
and has good and valid title to its respective properties, free and clear of all
security interests, mortgages, pledges, conditional sales agreements, charges,
liens and encumbrances, except for liens for taxes not yet due and payable, and
those liens set forth on Schedule 2.1 or Schedule 6.12 to which Argyle
------------ -------------
reasonably objects and which shall be removed or released at or before Closing.
(c) No lien imposed under Section 401(a)(29) or Section 302(f) or
Section 4068 of ERISA, or arising out of any action filed under ERISA Section
4301(b), exists upon any Gannett TV Stations Assets. Neither Gannett nor any
ERISA Affiliate has terminated any employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) subject to Title IV of ERISA (herein referred
to as a "Title IV Plan") under circumstances giving rise to, or that would give
rise to any actual or potential liability to the Pension Benefit Guaranty
Corporation ("PGBC") or any other person. For purposes of
<PAGE>
-39-
this Section 6.12(c), "ERISA Affiliate" means any member of any "controlled
group of corporations" as defined by Section 414(b) of the Code that includes
Gannett, any member of any group of "trades or businesses under common control"
as defined by Section 414(c) of the Code that includes Gannett, or any member of
any "affiliated service group" as defined in Section 414(m) of the Code that
includes Gannett.
6.13 Call Letters; Trademarks. Schedule 6.13 to this Agreement sets forth a
------------------------ -------------
correct and complete list of all call letters, copyrights, trademarks, trade
names, service marks, jingles, slogans, logos and patents which are owned or
held for use by Gannett solely in connection with the business and operation of
the Gannett TV Stations and which are material to the financial condition of the
Gannett TV Stations Assets (the "Gannett TV Stations Rights"). The
registrations (if any) for the Gannett TV Stations Rights are valid, in good
standing and uncontested. Each Gannett Party possesses adequate rights,
licenses or other authority to use its respective Gannett TV Station Rights
necessary to conduct the business of its respective Gannett TV Station as
presently conducted. Gannett has not received any notice with respect to any
alleged infringement or unlawful or improper use of any Gannett TV Stations
Rights owned or alleged to be owned by others. No director, officer or employee
of either Gannett Party or of any of their respective affiliates has any
interest in any Gannett TV Stations Right listed on Schedule 6.13, all of
-------------
<PAGE>
-40-
which are free and clear of any lien, security interest, claim or encumbrance of
any kind. Neither Gannett Party has granted any outstanding licenses or other
rights to any Gannett TV Stations Rights listed on Schedule 6.13, and neither
-------------
Gannett Party has any knowledge of any infringement of any of the Gannett TV
Stations Rights.
6.14 Litigation and Compliance with Laws. Except as set forth on Schedule
----------------------------------- --------
6.14: (a) neither Gannett Party, with respect to its respective Gannett TV
- ----
Station, has 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,
or local governmental authority or agency which has or could reasonably be
expected to have a materially adverse effect on the business, operations or
financial condition of its respective Gannett TV Station or on the consummation
of the transactions contemplated hereby; (b) neither Gannett Party nor any of
their respective officers or agents has received any inquiry, written or oral,
from any such authority concerning the business, operations or financial
condition of its respective Gannett TV Station during the 12-month period prior
to the date of this Agreement which could reasonably be expected to have a
material adverse effect on the business, operations or financial condition of
such Gannett TV Station or on the consummation of the transactions contemplated
hereby; and (c) there is no litigation pending by or against, or to either
Gannett Party's
<PAGE>
-41-
knowledge threatened against, either Gannett Party or the Gannett TV Stations
related to or affecting any of the Gannett TV Stations Assets. Except as
disclosed in Schedule 6.14, and except for environmental matters described in
-------------
Section 6.20 below, each Gannett Party has complied in all material respects
with all laws, regulations, orders or decrees applicable to its respective
Gannett TV Station, and the present uses by each Gannett Party of its respective
Gannett TV Stations Assets do not violate any such laws, regulations, orders or
decrees, in any material respect, including, with respect to any owned or leased
real property, any applicable zoning ordinance and other governmental
regulations, and neither Gannett Party has any knowledge of any basis for any
claim for compensation or damage or other relief from any violation of the
foregoing.
6.15 Employees. Schedule 6.15 lists the names and salaries or rates of
--------- -------------
commission of all the full and part-time employees of the Gannett TV Stations,
indicating any employees who are not actively at work. Except as shown on
Schedule 6.15, neither Gannett Party is a party to any collective bargaining
- -------------
agreement or any other labor agreement covering or relating to any of the
employees of its respective Gannett TV Station, and has not recognized and has
not received a demand for recognition of any collective bargaining
representative.
<PAGE>
-42-
6.16 Taxes. The representations and warranties in this Section 6.16 are
-----
subject to the matters disclosed in Schedule 6.16. All federal, state and local
-------------
income, franchise, sales, use, property, excise, payroll and other tax returns
and reports required to be filed by law where the failure to file such returns
on a timely basis could result in a lien on the Gannett TV Station Assets or the
imposition on Argyle of any liability for taxes or assessments have been duly
and timely filed in the proper form with the appropriate governmental authority.
All taxes, fees and assessments of whatever nature due or payable pursuant to
such returns or otherwise have been paid, except for such amounts as are being
contested diligently, in the appropriate forum and in good faith, where the
failure to pay or contest such amount could result in a lien on the Gannett TV
Station Assets or the imposition on Argyle of any liability for any taxes or
assessments. No pending tax audits and no outstanding agreements or waivers
extending the statutory period of limitations applicable to any federal, state
or local tax return for any period will result in a lien on the Gannett TV
Station Assets or the imposition on Argyle of any liability for any taxes or
assessments related to the Gannett TV Station Assets. There are no governmental
investigations or other legal, administrative or tax proceedings pursuant to
which Gannett is or could be made liable for any taxes, penalties, interest or
other charges, the liability for which will extend
<PAGE>
-43-
to Argyle as transferee of the Gannett TV Station Assets, or which will result
in a lien on the Gannett TV Station Assets. To the best of Gannett's knowledge,
no event has occurred that could impose on Argyle any liability for any taxes,
penalties or interest due or to become due from Gannett.
6.17 Instruments of Conveyance; Good Title. The instruments to be executed
-------------------------------------
by each Gannett Party and delivered to Argyle at the Closing conveying the
Gannett TV Stations Assets to Argyle will transfer good and marketable title to
the Gannett TV Stations Assets free and clear of all liabilities, obligations
and encumbrances, except as provided elsewhere in this Agreement.
6.18 Changes. Except as shown on Schedule 6.18 to this Agreement, since the
------- -------------
Gannett Balance Sheet Date, neither Gannett Party has, with respect to the
business of its respective Gannett TV Station: (a) mortgaged, pledged or
subjected to a lien or any other encumbrance, any of its respective Gannett TV
Stations Assets; (b) sold or transferred any material asset used or useful in
the business of its respective Gannett TV Station; or (c) increased the
compensation payable or to become payable to any employee or agent, except
regularly scheduled increases in accordance with historical practices.
6.19 Brokers. There is no broker or finder or other person who would have
-------
any valid claim against Argyle for a commission or brokerage in connection with
this Agreement or
<PAGE>
-44-
the transactions contemplated hereby as a result of any agreement, understanding
or action by Gannett.
6.20 Environmental. (a) In connection with the operation of its respective
-------------
Gannett TV Stations, no release, emission or discharge into the environment of
hazardous substances including PCBs, hazardous waste or air pollutants or toxic
pollutants, as defined under any Environmental Laws, by either Gannett Party,
and to the best of each Gannett Party's knowledge, by any other person, has
occurred, is presently occurring, or is anticipated to occur in excess of
permitted levels or reportable quantities, under any Environmental Law. To the
best of Gannett's knowledge, no hazardous waste has been disposed of by Gannett
or by any other person on the real property occupied by the Gannett TV Stations
or its transmitters. As used in this Section 6.20(a), the term "hazardous
waste" shall have the same meaning as it has in RCRA, as amended, and in the
equivalent state statutes, if any, of Ohio and Oklahoma, as applicable.
(b) The Gannett TV Stations' present use of the Gannett TV Stations
Assets does not violate any Environmental Law, occupational safety and health or
other applicable law, the effect of which violation could materially adversely
affect the Gannett TV Stations Assets or Argyle's use thereof, or which could
impose a liability on Argyle. Gannett warrants that the technical equipment
included in the Gannett TV Stations Assets does not contain any PCBs that are
required by
<PAGE>
-45-
law to be removed and if any equipment does contain PCBs, that such equipment is
stored and maintained in compliance with applicable law. Gannett has complied
in all material respects with all Environmental Laws, applicable to the Gannett
TV Stations and its operations, including but not limited to, the FCC's
guidelines regarding RF radiation.
6.21 No Untrue Statement. No representation or warranty made by Gannett in
-------------------
this Agreement, and no statement made in any certificate, document, exhibit or
schedule furnished or to be furnished in connection with the transactions herein
contemplated, contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make such
representation or warranty or any such statement not misleading to Argyle.
ARTICLE VII. Mutual Covenants of Argyle and Gannett Pending the Closing Date.
------------ ---------------------------------------------------------------
Except with the prior consent of the other party, Argyle and Gannett covenant
and agree with respect to the Stations that from the date hereof to and
including the Closing Date:
7.1 Maintenance of Business. (a) Each party shall continue to carry on the
-----------------------
business and operation of the Stations in substantially the same manner as
heretofore in the ordinary course of business.
(b) Each party shall continue to operate the Stations in accordance with
the terms of the FCC Authorizations and in compliance with all applicable laws
and
<PAGE>
-46-
FCC rules and regulations. Each party will promptly execute any necessary
applications for renewal of the FCC Authorizations for the Stations, without
proposing any conditions adverse to the other party. Argyle and Gannett will
deliver to each other, promptly after filing, copies of any reports,
applications or communications with the FCC related to the Stations which are
filed between the date of this Agreement and the Closing Date;
(c) Each party shall, at its expense, maintain all machinery and
equipment used in the business and operation of the Stations it owns in a normal
state of repair and efficiency. Each party will fully perform its obligations
under all contracts to be assigned to and assumed by the other party. Each
party will maintain in full force and effect through the Closing Date adequate
property damage, liability and other insurance with respect to the Argyle TV
Stations Assets and the Gannett TV Stations Assets, respectively (collectively
referred to as the "Stations Assets").
(d) Prior to the Closing Date, neither Argyle nor Gannett will without
the other's prior written consent:
(i) Sell, lease, transfer or agree to sell, lease or transfer any
of the Stations Assets without replacement thereof with an asset of
substantially equivalent kind, condition and value;
(ii) Enter into any contract of employment or collective bargaining
agreement, or permit any increases or
<PAGE>
-47-
changes in the compensation (including bonus) of any of the Stations' employees,
except for regularly scheduled increases in accordance with historical
practices;
(iii) Enter into or amend any contract (including any barter or
trade contract) or commitment with respect to the Stations (A) involving total
consideration of more than $10,000 individually or $25,000 in the aggregate
and/or (B) for a term exceeding one year, or waive any right or enter into any
other transaction, other than as permitted by other provisions of this
Agreement;
(iv) Renew, renegotiate, modify, amend or terminate any existing
time sales contracts with respect to the Stations except in the ordinary course
of business; or
(v) Apply to the FCC for any construction permit with respect to
the Stations or make any material change in the Stations' buildings, leasehold
improvements or fixtures.
7.2 Organization. Each party shall preserve the business organization of the
------------
Stations intact and preserve good relations with its suppliers, customers,
employees and others having business relations with it, unless otherwise
permitted or restricted by the terms of this Agreement.
7.3 Access to Facilities, Files and Records. At the reasonable request of
---------------------------------------
Argyle or Gannett, the other shall from time to time give or cause to be given
to the officers, employees, accountants, counsel and accredited representatives
of the other (a) full access during normal business hours to
<PAGE>
-48-
all facilities, property, accounts, books, minute books, deeds, title papers,
licenses, agreements, contracts, tax returns, records and files of every
character, equipment, machinery, fixtures, furniture, vehicles, notes and
accounts payable and receivable and inventories related to the Stations it owns,
and (b) all such other information concerning the affairs of the Stations as is
reasonably requested.
7.4 Representations and Warranties. Each party shall give detailed written
------------------------------
notice to the other party promptly upon the occurrence of or becoming aware of
the impending or threatened occurrence of any event which would cause or
constitute a breach, or would have caused a breach had such event occurred or
been known prior to the date hereof, of any of its representations or warranties
contained in this Agreement or in any Schedule hereto.
7.5 Corporate Action. Subject to the provisions of this Agreement, each
----------------
party will take all necessary corporate and other action required of it to carry
out the transactions contemplated by this Agreement.
7.6 Applications for FCC Consent. (a) As promptly as practicable after the
----------------------------
date of this Agreement, and in no event later than three (3) business days after
the execution of this Agreement, each party will file applications with the FCC
requesting its written consent to the assignment of the FCC Authorizations for
the Stations (and any extension or renewals thereof) from one party to the other
party, and Gannett shall
<PAGE>
-49-
file an application with the FCC requesting a temporary waiver (the "FCC
Waiver") of the FCC's newspaper/broadcast cross-ownership rules for a period of
at least six months after Closing to permit the disposition of Gannett Parent's
attributable interest in the Niagara Gazette (the "Gazette"), a newspaper owned
and operated by a subsidiary of Gannett Parent.
Each party will diligently take, or cooperate in the taking of, all steps that
are necessary, proper or desirable to expedite the preparation of such
applications and their prosecution to a favorable conclusion.
(b) If Gannett has not obtained the FCC Waiver or otherwise disposed of
its attributable interest in the Gazette by April 1, 1997, Gannett agrees to
file an application with the FCC requesting consent to transfer of the Gazette
to a so-called "disposition trust", within three business days after Gannett's
receipt of written notice from Argyle that Gannett's failure to obtain the FCC
Waiver has materially impaired Argyle's ability to close another third-party
transaction involving a change of control or sale of substantially all of the
assets of Argyle Parent.
7.7 Consents. Argyle and Gannett will use its reasonable efforts to obtain
--------
or cause to be obtained prior to the Closing Date consents to the assignment to
or assumption by the other of all of the Material Argyle TV Stations Contracts
and Material Gannett TV Stations Contracts, respectively included
<PAGE>
-50-
in the Stations Assets which require the consent of any third party by reason of
the transactions provided for in this Agreement; provided, however, that neither
Argyle nor Gannett shall be required to make any payments or to incur any
obligations to third parties in connection with the obtaining of any such
consent.
7.8 Confidential Information. If for any reason the transactions
------------------------
contemplated in this Agreement are not consummated, neither Argyle nor Gannett
shall disclose to third parties any information designated as confidential and
received from the other party or its agents in the course of investigating,
negotiating and completing the transactions contemplated by this Agreement,
including without limitation to the terms of this Agreement. Nothing shall be
deemed to be confidential information which: (a) is rightfully known to the
receiving party at the time of its disclosure to it; (b) becomes publicly known
or available other than through disclosure by the receiving party; (c) is
rightfully received by the receiving party from a third party; (d) is
independently developed by the receiving party; or (e) is required by law to be
disclosed. Argyle and Gannett will be deemed to have fulfilled its
confidentiality obligations under this Section 7.8 if it affords the other's
confidential information the same degree of confidentiality as it affords its
own sensitive business information.
<PAGE>
-51-
7.9 Consummation of Agreement. Subject to the provisions of Section 11.1 of
-------------------------
this Agreement, each party shall use its best efforts to fulfill and perform all
conditions and obligations on its part to be fulfilled and performed under this
Agreement and to cause the transactions contemplated by this Agreement to be
fully carried out.
7.10 Notice of Proceedings. Argyle and Gannett will promptly notify the
---------------------
other in writing upon becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder, or upon receiving any
notice from any governmental department, court, agency or commission of its
intention to institute an investigation into, or institute any action or
proceeding to restrain or enjoin consummation of this Agreement or such
transactions, or to nullify or render ineffective this Agreement or such
transactions if consummated.
7.11 Hart-Scott-Rodino Act. As soon as possible after the execution of this
---------------------
Agreement, but in no event later than five (5) business days thereafter, Argyle
and Gannett 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, if
such filing is required, and shall promptly furnish all materials and
<PAGE>
-52-
information thereafter requested by any of the regulatory agencies having
jurisdiction over such filings.
7.12 Interim Financial Statements. Argyle and Gannett shall deliver to the
----------------------------
other (i) unaudited interim financial statements for the Stations promptly after
the close of each standard broadcast accounting period (monthly or other similar
period) that occurs between the Balance Sheet Date and the Closing Date and (ii)
and weekly sales pacing reports.
ARTICLE VIII. Conditions to the Obligations of Argyle
------------ ---------------------------------------
The obligations of Argyle under this Agreement are, at its option, subject to
the fulfillment of the following conditions prior to or at the Closing Date:
8.1 Representations, Warranties, Covenants. (a) Each of the representations
--------------------------------------
and warranties of Gannett contained in this Agreement and in any schedule or
exhibit to this Agreement delivered by Gannett pursuant hereto 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 on and as of the
Closing Date and shall then be true and accurate, except for changes expressly
permitted or contemplated by this Agreement;
(b) Gannett shall have performed and complied with each and every
covenant and agreement required by this Agreement to be performed or complied
with by it prior to or at the Closing Date, other than delivery to Argyle of the
<PAGE>
-53-
instruments conveying the Gannett TV Stations Assets to Argyle and other
deliveries to be made by Gannett at the Closing; and
(c) Each Gannett Party shall have delivered to Argyle a certificate of an
officer, dated the Closing Date, certifying to the fulfillment of the conditions
set forth in Sections 8.1(a) and 8.1(b) above.
8.2 Proceedings. (a) No action or proceeding shall have been instituted
-----------
before any court or governmental body to restrain or prohibit, or to obtain
substantial damages in respect of, the consummation of this Agreement which, in
the reasonable opinion of Argyle, may reasonably be expected to result in a
preliminary or permanent injunction against such consummation or an award of
such substantial damages; and
(b) Neither Argyle nor Gannett shall have received written notice from any
governmental body of (i) its intent to institute any action or proceeding to
restrain or enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation (other than a routine letter of
inquiry, including a routine Civil Investigative Demand) into the consummation
of this Agreement, or (ii) the actual commencement of such an investigation.
(c) In the event such a notice of intent is received or such an
investigation is commenced, this Agreement may not be abandoned by Argyle prior
to the date specified in Section 11.1(i), but Closing shall be delayed during
such period.
<PAGE>
-54-
8.3 FCC Authorizations. The FCC shall have given its written consent to
------------------
the assignment of the FCC Authorizations without any conditions materially
adverse to Argyle (provided that Argyle may, if there shall be a challenge made
to the FCC consent to any assignment of the FCC Authorizations prior to it
becoming a final order not subject to further review or appeal, delay (but
subject in any event to the terms of Sections 4.1 and 11.1) the Closing of the
transactions contemplated by this Agreement if and for so long as its outside
FCC counsel shall provide it with a written opinion (with a copy to Gannett) to
the effect that the challenge has raised material non-frivolous issues which
could require substantive review of the merits of the challenge by the FCC
and/or any reviewing court and which would more probably than not result in
reversal or rescission of the FCC consent to the assignment of the FCC
Authorizations.
8.4 Hart-Scott-Rodino. The waiting period under the Hart-Scott-Rodino Act
-----------------
shall have expired, and no order of a court restraining the transactions
contemplated by this Agreement shall be outstanding.
8.5 Opinion of Counsel. Argyle shall have received the opinions of
------------------
counsel contemplated by Section 4.3(c) above.
8.6 Argyle's Board Approval. Argyle Television, Inc.'s Board of Directors
-----------------------
shall have approved this Agreement and the transactions contemplated hereby.
<PAGE>
-55-
8.7 Damage to the Gannett TV Stations Assets. (a) If on the Closing Date
----------------------------------------
the real or personal properties used in the day-to-day operations of the Gannett
TV Stations shall have suffered material damage in excess of $1,000,000 in the
aggregate on account of fire, explosion or other cause of any nature, and the
Gannett TV Stations Assets cannot be substantially repaired or restored within
fifteen (15) days after such loss, then Argyle shall have the right at its
election to complete the purchase hereunder and to collect and receive on behalf
of Gannett the proceeds of any insurance payable to Gannett on account of the
damage. If Argyle does not so elect, it shall have the right to terminate this
Agreement, and upon such termination Argyle and Gannett shall be released from
any liability under this Agreement.
(b) If before the Closing Date normal broadcast transmissions of
either Gannett TV Station are materially interrupted, interfered with or in any
way impaired, and such Station is not restored so that operation is resumed to
full licensed power and antenna height within five (5) days of such event, or if
more that three (3) such events occur within any thirty (30) day period, or if
either Gannett TV Station shall be off the air for more that seventy-two (72)
consecutive hours, than Argyle shall have the right to terminate this Agreement.
8.8 Completion of Due Diligence. Argyle shall have until thirty (30) days
---------------------------
after the delivery to Argyle of the
<PAGE>
-56-
schedules required to be delivered by Gannett pursuant to Section 12.6(a) of
this Agreement to complete its due diligence with respect to the Gannett TV
Stations Assets. If Argyle's due diligence under this Section 8.8 reveals any
conditions of which Argyle was unaware prior to the date of this Agreement
and/or any breaches of Gannett's representations, warranties and/or covenants
hereunder, which unknown conditions and/or breaches in the aggregate would have
a material adverse effect on the aggregate value of the Gannett TV Stations or
on Argyle's ability to operate any Gannett TV Station as it is currently being
operated by Gannett, then Argyle may terminate this Agreement and neither Argyle
nor Gannett shall have any further liability hereunder. Without limiting the
foregoing, such due diligence may include:
(a) Environmental Audit. Argyle may obtain a Phase I environmental audit
-------------------
report (the "Phase I Report") at Argyle's sole expense regarding the Gannett TV
Stations Owned Real Estate and the Gannett TV Stations Leased Real Estate
(collectively the "Gannett TV Stations Real Estate") the results of which will
give rise to those rights and obligations specified in Section 12.2 below.
(b) Title Insurance and Surveys. Argyle may obtain (i) commitments for
---------------------------
ALTA title insurance policies with respect to the Gannett TV Stations Real
Estate (the "Titles"); and (ii) staked-on-ground boundary surveys of the Gannett
TV
<PAGE>
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Stations Real Estate, certified current as of the date of delivery thereof,
prepared by a duly licensed and registered land surveyor acceptable to Argyle
(the "Surveys"). Argyle shall pay all costs and expenses of obtaining the
Titles and the Surveys, including without limitation, all title insurance
premiums associated therewith.
(c) Real Estate. Argyle may confirm that services for utilities,
-----------
including without limitation, for water and sewer service, telephone service,
electric and/or gas service, and sanitary services shall be sufficient to
service the use of the Gannett TV Stations Real Estate in a manner consistent
with Argyle's use thereof.
(d) Building and Mechanical Inspection. Argyle may obtain an
----------------------------------
inspection report from a reputable engineer at Argyle's sole expense indicating
that the condition of the material buildings, structures, improvements and
fixtures comprising part of the Gannett TV Stations Real Estate is as set forth
in Section 6.10 above.
ARTICLE IX. Conditions to the Obligations of Gannett
---------- ----------------------------------------
The obligations of Gannett under this Agreement are, at its option, subject
to the fulfillment of the following conditions prior to or at the Closing Date.
9.1 Representations, Warranties, Covenants. (a) Each of the
--------------------------------------
representations and warranties of Argyle contained in this Agreement and in any
schedule or exhibit to this Agreement
<PAGE>
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delivered by Argyle pursuant hereto 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 on and as of the Closing Date and shall
then be true and accurate, except for changes expressly permitted or
contemplated by this Agreement;
(b) Argyle shall have performed and complied with each and every
covenant and agreement required by this Agreement to be performed or complied
with by it prior to or at the Closing Date, other than delivery to Gannett of
the instruments conveying the Argyle TV Stations Assets to Gannett and other
deliveries to be made by Argyle at the Closing; and
(c) Each Argyle Party shall have delivered to Gannett a certificate of
an officer, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Sections 9.1(a) and 9.1(b) above.
9.2 Proceedings. (a) No action or proceeding shall have been instituted
-----------
before any court or governmental body to restrain or prohibit, or to obtain
substantial damages in respect of, the consummation of this Agreement which, in
the reasonable opinion of Gannett, may reasonably be expected to result in a
preliminary or permanent injunction against such consummation or an award of
such substantial damages; and
(b) Neither Gannett nor Argyle shall have received written notice from
any governmental body of (i) its intent to institute any action or proceeding to
restrain or enjoin or
<PAGE>
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nullify this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including a routine
Civil Investigative Demand) into the consummation of this Agreement or (ii) the
actual commencement of such an investigation.
(c) In the event such a notice of intent is received or such an
investigation is commenced, this Agreement may not be abandoned by Gannett prior
to the date specified in Section 11.1(i), but Closing shall be delayed during
such period.
9.3 FCC Authorizations. The FCC shall have given its written consent to
------------------
the assignment of the FCC Authorizations without any conditions materially
adverse to Gannett (provided that Gannett may, if there shall be a challenge
made to the FCC consent to the assignment of the FCC Authorizations prior to it
becoming a final order not subject to further review or appeal, delay (but
subject in any event to the terms of Sections 4.1 and 11.1) the Closing of the
transactions contemplated by this Agreement if and for so long as its outside
FCC counsel shall provide it with a written opinion (with a copy to Argyle) to
the effect that the challenge has raised material non-frivolous issues which
could require substantive review of the merits of the challenge by the FCC
and/or any reviewing court and which would more probably than not result in
reversal or rescission of the FCC consent to the assignment of the FCC
Authorizations. The FCC shall have
<PAGE>
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granted the FCC Waiver or Gannett Parent shall have otherwise disposed of its
attributable interest in the Gazette.
9.4 Hart-Scott-Rodino. The waiting period under the Hart-Scott-Rodino Act
-----------------
shall have expired, and no order of a court restraining the transactions
contemplated by this Agreement shall be outstanding.
9.5 Opinion of Counsel. Gannett shall have received the opinions of
------------------
counsel contemplated by Section 4.2(c) above.
9.6 Gannett Board Approval. Gannett Co., Inc.'s Board of Directors shall
----------------------
have approved this Agreement and the transactions contemplated hereby.
9.7 Damage to the Argyle TV Stations Assets. (a) If on the Closing Date
---------------------------------------
the real or personal properties used in the day-to-day operations of the Argyle
TV Stations shall have suffered damage in excess of $1,000,000 in the aggregate
on account of fire, explosion or other cause of any nature, and the Argyle TV
Stations Assets cannot be substantially repaired or restored within fifteen (15)
days after such loss, then Gannett shall have the right at its election to
complete the purchase hereunder and to collect and receive on behalf of Argyle
the proceeds of any insurance payable to Argyle on account of the damage. If
Gannett does not so elect, it shall have the right to terminate this Agreement,
and upon such termination Gannett and Argyle shall be released from any
liability under this Agreement.
<PAGE>
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(b) If before the Closing Date normal broadcast transmissions of
either Argyle TV Station are materially interrupted, interfered with or in any
way impaired, and such Station is not restored so that operation is resumed to
full licensed power and antenna height within five (5) days of such event, or if
more that three (3) such events occur within any thirty (30) day period, or if
either Argyle TV Station shall be off the air for more that seventy-two (72)
consecutive hours, than Gannett shall have the right to terminate this
Agreement.
9.8 Completion of Due Diligence. Gannett shall have until thirty (30)
---------------------------
days after the delivery to Gannett of the schedules required to be delivered by
Argyle pursuant to Section 12.6(a) of this Agreement to complete its due
diligence with respect to the Argyle TV Stations Assets. If Gannett's due
diligence under this Section 9.8 reveals any conditions of which Gannett was
unaware prior to the date of this Agreement and/or any breaches of Argyle's
representations, warranties and/or covenants hereunder, which unknown conditions
and/or breaches in the aggregate would have a material adverse effect on the
aggregate value of the Argyle TV Stations or on Gannett's ability to operate any
Argyle TV Station as it is currently being operated by Argyle, then Gannett may
terminate this Agreement and neither Gannett nor Argyle shall have any further
liability hereunder. Without limiting the foregoing, such due diligence may
include:
<PAGE>
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(a) Environmental Audit. Gannett may obtain a Phase I environmental
-------------------
audit report (the "Phase I Report") at Gannett's sole expense regarding the
Argyle TV Stations Owned Real Estate and the Argyle TV Stations Leased Real
Estate (collectively the "Argyle TV Stations Real Estate") the results of which
will give rise to those rights and obligations specified in Section 12.2 below.
(b) Title Insurance and Surveys. Gannett may obtain (i) commitments
---------------------------
for ALTA title insurance policies with respect to the Argyle TV Stations Real
Estate (the "Titles"); and (ii) staked-on-ground boundary surveys of the Argyle
TV Stations Real Estate, certified current as of the date of delivery thereof,
prepared by a duly licensed and registered land surveyor acceptable to Gannett
(the "Surveys"). Gannett shall pay all costs and expenses of obtaining the
Titles and the Surveys, including without limitation, all title insurance
premiums associated therewith.
(c) Real Estate. Gannett may confirm that services for utilities,
-----------
including without limitation, for water and sewer service, telephone service,
electric and/or gas service, and sanitary services shall be sufficient to
service the use of the Argyle TV Stations Real Estate in a manner consistent
with Gannett's use thereof.
(d) Building and Mechanical Inspection. Gannett may obtain an
----------------------------------
inspection report from a reputable engineer at Gannett's sole expense indicating
that the condition of the
<PAGE>
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material buildings, structures, improvements and fixtures comprising part of the
Argyle TV Stations Real Estate is as set forth in Section 5.10 above.
ARTICLE X. Indemnification
--------- ---------------
10.1 Survival; Limitations. (a) The several representations, warranties,
---------------------
covenants and agreements of Argyle and Gannett 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, warranties, covenants and agreements contained in Sections 5.2,
5.5, 5.7, 5.12, 5.16, 5.17, 6.2, 6.5, 6.7, 6.12, 6.16, 6.17, 10.2(c), 10.2(d),
10.3(c), 10.3(d), 12.2 and 12.3 shall survive without time limit, and (ii) the
representations, warranties, covenants and agreements contained in Section 3.2
shall survive for the time limit imposed by the statute of limitations
applicable to any claim for which indemnity is sought.
(b) Neither party shall be entitled to indemnification under this
Agreement for any indemnification claim until the aggregate losses, damages or
expenses suffered by such party exceed $250,000 (the "Threshold"), whereupon the
indemnified party shall be entitled to indemnification pursuant to this Article
X for indemnification claims from the
<PAGE>
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indemnifying party for any losses, damages or expenses suffered by the
indemnified party in excess of the Threshold, except that the Threshold shall
not apply to claims under Sections 10.2(c), 10.2(d), 10.3(c), 10.3(d), 12.2(b)
and 12.3.
(c) Each party's maximum aggregate liability to the other for
indemnification claims under this Agreement shall be $25,000,000.
10.2 Indemnification of Gannett. Argyle agrees that it shall indemnify
--------------------------
and hold Gannett, its affiliated companies and subsidiaries, and their
respective employees, directors, officers, agents, successors and assigns
harmless from and against any and all damages, claims, losses, expenses, costs,
obligations and liabilities, including without limitation, (i) liabilities for
reasonable attorneys' fees and disbursements and (ii) any taxes imposed on the
receipt of any payments under this Article X (reduced by any taxes saved as a
result of the damage, claim, loss, expense, use, obligation or liability being
indemnified) ("Loss and Expense"), suffered directly or indirectly by Gannett by
reason of, or arising out of:
(a) any breach of representation or warranty made by Argyle pursuant
to this Agreement;
(b) any failure by Argyle to perform or fulfill any of its covenants
or agreements set forth in this Agreement;
<PAGE>
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(c) any failure by Argyle to pay or perform when due any of its
liabilities or obligations (including without limitation any liability for
taxes) arising out of or related to the business of the Argyle TV Stations
which have not been assumed by Gannett hereunder or to pay any amounts due
under Article III above;
(d) any failure by Argyle to pay or discharge on or subsequent to
the Closing Date any liabilities or obligations assumed by Argyle hereunder
or incurred or first required to be performed by Argyle with respect to the
Gannett TV Stations on or after the Closing Date; or
(e) any litigation, proceeding or claim by any third party (including
governmental agencies) relating to the business or operation of the Argyle
TV Stations prior to the Closing Date or relating to the business or
operation of the Gannett TV Stations on or after the Closing Date.
10.3 Indemnification of Argyle. Gannett agrees that it shall indemnify
-------------------------
and hold Argyle, its affiliated companies and subsidiaries and their respective
employees, directors, officers, agents, successors and assigns harmless from and
against any and all Loss and Expense suffered directly or indirectly by Argyle
by reason of, or arising out of:
(a) any breach of representation or warranty made by Gannett pursuant
to this Agreement;
<PAGE>
-66-
(b) any failure by Gannett to perform or fulfill any of its covenants
or agreements set forth in this Agreement;
(c) any failure by Gannett to pay or perform when due any of its
liabilities or obligations (including without limitation any liability for
taxes) arising out of or related to the business of the Gannett TV Stations
which have not been assumed by Argyle hereunder or to pay any amounts due
under Article III above;
(d) any failure by Gannett to pay or discharge on or subsequent to the
Closing Date any liabilities or obligations assumed by Gannett hereunder or
incurred or first required to be performed by Gannett with respect to the
Argyle TV Stations on or after the Closing Date; or
(e) any litigation, proceeding or claim by any third party (including
governmental agencies) relating to the business or operation of the Gannett
TV Stations prior to the Closing Date or relating to the business or
operation of the Argyle TV Stations on or after the Closing Date.
10.4 Notice of Claims. If Argyle or Gannett believes that it has suffered
----------------
or incurred any Loss and Expense, it shall notify the other party promptly in
writing and within the applicable time period specified in Section 10.1,
describing such Loss and Expense, the amount thereof, if known, and the method
of computation of the Loss and Expense, all with reasonable particularity and
containing a reference
<PAGE>
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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.
10.5 Defense of Third Party Claims. If any action at law or suit in
-----------------------------
equity is instituted by a third party (a "Claim") with respect to which Argyle
or Gannett intends to claim a Loss and Expense under this Article X, such party
shall promptly notify the indemnifying party of such action or suit. 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 10 days
after receipt of the notice specified in this Section 10.5 that it is defending
any such Claim, then the indemnified party may defend such Claim and settle such
Claim, through counsel of its own choosing, and recover from the indemnifying
party the amount of such settlement or of any judgment and the costs and
expenses of such defense including, but not limited to, reasonable attorneys'
fees and disbursements.
Notwithstanding the foregoing, the failure by a party to abide by these
terms and conditions shall not affect the other
<PAGE>
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party's obligations to indemnify such party against Loss and Expense under this
Article X.
ARTICLE XI. Termination Rights
---------- -----------------
11.1 Abandonment of Agreement. This Agreement may be terminated by Argyle
------------------------
or Gannett, as indicated, at any time prior to the Closing Date:
(a) by the mutual consent of Argyle and Gannett;
(b) by Argyle if any of the conditions in Article VIII hereof have not
been met by the time required and have not been waived;
(c) by Gannett if any of the conditions in Article IX in hereof have
not been met by the time required and have not been waived;
(d) by Argyle or Gannett pursuant to Section 8.7(a) or 9.7(a) above,
as applicable;
(e) by Argyle or Gannett pursuant to Section 12.2(b) below;
(f) by Argyle or Gannett pursuant to Section 8.8 or 9.8 above, as
applicable;
(g) by Argyle or Gannett if the other party, by November 29, 1996
(provided that Argyle and Gannett shall have used their best efforts to
cooperate in its preparation), has not placed on file with the FCC its portions
of a substantially complete application for FCC consent to the transfer or
assignment of its Stations;
<PAGE>
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(h) by Argyle or Gannett if the FCC has denied any of the assignments
of the FCC Authorizations contemplated by this Agreement; or
(i) by Argyle or Gannett if the Closing has not been fully completed
by August 15, 1997. No termination pursuant to this Section 11.1 shall relieve
Argyle or Gannett of liability it would otherwise have for breach of this
Agreement.
11.2 Liabilities Upon Abandonment. In the event this Agreement is
----------------------------
terminated pursuant to Section 11.2 above, neither Argyle nor Gannett shall have
any liability to the other for costs, expenses, damages, loss of anticipated
profits or otherwise, unless the termination occurs because of any
misrepresentation or breach of warranty by a party hereto or the failure of
performance of, or compliance with, any covenant or agreement contained in this
Agreement.
11.3 Unwind. In the event Argyle and Gannett close prior to the time the
------
FCC issues a final order not subject to further review or appeal, and if there
shall be a material non-frivolous petition for reconsideration made to the FCC
consent to the assignment of any of the FCC Authorizations and/or action by the
FCC on its own motion to review the consent to the assignment of any of the FCC
Authorizations that results in an order of the FCC or a court of competent
jurisdiction requiring that this transaction be unwound or imposes materially
adverse conditions to the FCC
<PAGE>
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Authorizations, then Argyle and Gannett will negotiate a mutually agreeable
arrangement to unwind the transactions in this Agreement and to put the parties
in the positions they were in prior to the Closing.
ARTICLE XII. Miscellaneous Provisions
------------ ------------------------
12.1 Expenses. Except as otherwise provided herein, all costs and expenses
--------
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such costs and expenses. All costs
associated with transferring the Stations Assets to the other party pursuant to
this Agreement, including without limitation any sales or use taxes or recording
or transfer taxes or fees, shall be paid by the transferring party. Each party
will be responsible for all filing fees related to its respective filing under
the Hart-Scott-Rodino Act pursuant to Section 7.11 above. The cost of title
insurance for the real property acquired by each party hereunder shall be paid
by such party.
12.2 Environmental Studies. (a) Either Argyle or Gannett may, at its
---------------------
election and cost, conduct an environmental study of the real property owned or
leased by the other party for use in or relating to the operation of the
Stations. If a study hereunder indicates that any representation or warranty
made by Argyle in Section 5.20 or by Gannett in Section 6.20 is untrue, such
party shall disclose the results of such study
<PAGE>
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to the other party, and the terms of Section 5.20 or 6.20, as applicable, will
govern. Argyle and Gannett agree that the results of any environmental study
carried out pursuant to this Section 12.2 shall not be disclosed to any third
parties, unless such disclosure is required by law.
(b) If the parties learn between the date of this Agreement and the
Closing Date that either Argyle or Gannett is not in compliance with the
provisions of Sections 5.20 or 6.20, as applicable, then the non-complying party
may, at the other party's election, be required to contribute up to $250,000
toward the cure of such non-complying conditions as required by applicable law
and to use reasonable efforts to complete such cure prior to the Closing Date.
If the cost to cure such conditions would exceed $250,000 in the aggregate, the
other party may elect to terminate this Agreement. Such party agrees to give the
non-complying party twenty (20) days' prior written notification of its
intention to terminate this Agreement, during which twenty (20)-day period the
non-complying party shall notify the other party as to whether it intends to
cure the identified conditions. If the non-complying party elects to cure such
conditions, the other party shall not be entitled to terminate this Agreement.
12.3 Employees and Employee Benefits. (a) The parties agree that Gannett
-------------------------------
shall have the right to elect which of the Argyle TV Stations employees it will
hire as of the Closing Date. Gannett will notify Argyle in writing no less than
five
<PAGE>
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(5) days prior to Closing of those Argyle TV Stations employees it does not
intend to hire. Argyle shall be responsible for payment of all compensation
(including accrued vacation, commissions and sick pay) payable to all employees
of the Argyle TV Stations up through the day preceding the Closing Date. Argyle
shall pay all non-qualified, out-of-pocket pension liabilities and other
employee liabilities to employees or former employees of the Argyle TV Stations
related to the period prior to the Closing Date whether or not hired by Gannett,
and shall provide COBRA coverage for such employees. Effective on the Closing
Date, Argyle will amend its 401(k) plan to fully vest all accrued benefits under
such plan for employees employed by the Argyle TV Stations prior to Closing.
Argyle will retain all of the Argyle TV Stations' employee benefit plans and
pension plans, and Gannett will not assume any obligations under such plans
related to any period of time prior to or after the Closing Date. Argyle shall
be fully and solely responsible for any costs, expenses, obligations and
liabilities, vested or non-vested, arising out of the pension or retirement
obligations attributable to the Argyle TV Stations' current or former employees
related to the period prior to the Closing Date. Argyle agrees to indemnify,
defend and hold Gannett harmless from and against all direct and indirect costs,
expenses or liabilities arising from or relating to claims made by the Argyle TV
Stations' employees (i) by reason of termination of employment pursuant to this
<PAGE>
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Agreement, and (ii) in respect of any employee benefit plans of Argyle.
(b) To the extent severance is required, Argyle will be responsible
for all employee severance obligations with respect to WZZM-TV and WGRZ-TV
employees who are not hired by Gannett on the Closing Date or whose employment
at WZZM-TV or WGRZ-TV is terminated by Gannett at any time between the Closing
Date and sixty (60) days thereafter, unless such termination is for cause;
provided, however, that Argyle will make severance payments and Gannett will
reimburse Argyle for such severance obligations in accordance with the
following:
(i) for employees not covered by a collective bargaining
agreement, two (2) weeks' compensation for each terminated employee's
initial year of employment or portion of a year at the Argyle TV
Station, and one (1) week's compensation for each additional year or
portion of a year;
(ii) for employees covered by a collective bargaining agreement,
severance pay as defined in such agreement.
Gannett will reimburse Argyle for its severance obligations hereunder as
follows: (i) on the Closing Date, for severance paid to WZZM-TV and WGRZ-TV
employees not hired by Gannett on the Closing Date, and (ii) promptly after
receipt of written notice from Argyle for severance paid to WZZM-TV and WGRZ-TV
<PAGE>
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employees whose employment terminates between the Closing Date and sixty (60)
days thereafter.
(c) The parties agree that Argyle shall have the right to elect which
of the Gannett TV Stations employees it will hire as of the Closing Date. Argyle
will notify Gannett in writing no less than five (5) days prior to closing of
those Gannett TV Stations employees it does not intend to hire. Gannett shall be
responsible for payment of all compensation (including accrued vacation,
commissions and sick pay) payable to all employees of WLWT-TV and KOCO-TV up
through the day preceding the Closing Date. Gannett shall pay all non-qualified,
out-of-pocket pension liabilities and other employee liabilities to employees or
former employees of WLWT-TV and KOCO-TV related to any period prior to the
Closing Date whether or not hired by Argyle, and shall provide COBRA coverage
for such employees. Effective on the Closing Date, Gannett will amend its 401(k)
plan to fully vest all accrued benefits under such plan for employees employed
by WLWT-TV and KOCO-TV prior to Closing. Gannett will retain all of the Gannett
TV Stations's employee benefit plans and pension plans, and Argyle will not
assume any obligations under such plans related to any period of time prior to
or after the Closing Date. Gannett shall be fully and solely responsible for any
costs, expenses, obligations and liabilities, vested or non-vested, arising out
of the pension or retirement obligations attributable to WLWT-TV's and KOCO-TV's
current or
<PAGE>
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former employees related to the period prior to the Closing Date. Gannett
agrees to indemnify, defend and hold Argyle harmless from and against all direct
and indirect costs, expenses or liabilities arising from or relating to claims
made by WLWT-TV's and KOCO-TV's employees (i) by reason of termination of
employment pursuant to this Agreement, and (ii) in respect of any employee
benefit plans of Gannett.
(d) To the extent severance is required, Gannett will be responsible for
all employee severance obligations with respect to WLWT-TV and KOCO-TV employees
who are not hired by Argyle on the Closing Date or whose employment at WLWT-TV
or KOCO-TV is terminated by Argyle at any time between the Closing Date and
sixty (60) days thereafter, unless such termination is for cause; provided,
however, that Gannett will make severance payments and Argyle will reimburse
Gannett for such severance obligations in accordance with the following:
(i) for employees not covered by a collective bargaining
agreement, two (2) weeks' compensation for each terminated employee's
initial year of employment or portion of a year at WLWT-TV or KOCO-TV, and
one (1) week's compensation for each additional year or portion of a year;
(ii) for employees covered by a collective bargaining agreement,
severance pay as defined in such agreement.
Argyle will reimburse Gannett for its severance obligations hereunder as
follows: (i) on the Closing Date, for severance
<PAGE>
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paid to WLWT-TV and KOCO-TV employees not hired by Argyle on the Closing Date,
and (ii) promptly after receipt of written notice from Gannett for severance
paid to WLWT-TV and KOCO-TV employees whose employment terminates between the
Closing Date and sixty (60) days thereafter.
(e) Argyle and Gannett, each in its sole discretion, shall determine what
employee benefits will be made available to the employees of WLWT-TV and KOCO-TV
and WZZM-TV and WGRZ-TV, respectively, on and after the Closing; provided,
however, that each party will (i) waive any health plan coverage waiting period
or pre-existing condition rules for all employees it hires hereunder, and (ii)
offer medical coverage to all of such employees on and after the Closing Date.
(f) Notwithstanding the foregoing provisions of this Section 12.3 or any
other provision of this Agreement, Gannett and Argyle shall each have the right
to designate at least ten (10) days prior to Closing a mutually agreeable number
of its employees (the "Designated Employees") of the Gannett TV Stations and
Argyle TV Stations, as applicable, that it shall retain and may not be hired by
the other party as of the Closing Date. Each party shall be fully and solely
responsible for payment of all compensation and other employee benefits and
liabilities for its Designated Employees related to any period of time prior to
or after the Closing Date.
<PAGE>
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12.4 Accounts Receivable. (a) For a period of six (6) months following the
-------------------
Closing Date (the "Collection Period") Gannett shall continue to collect and
receive payment in the ordinary course of business with respect to the Argyle TV
Stations' accounts receivable for the period prior to the Closing Date (the
"Argyle TV Stations Receivables"), and shall pursue collection thereof in
accordance with Gannett's normal practices; provided, however, that in no event
shall this obligation extend to the institution of litigation, employment of any
collection agency, legal counsel, or other third party or any other
extraordinary means of collection by Gannett. All payments from each obligor of
a Argyle TV Stations Receivable not identified to a specific invoice shall be
applied on a "first-in, first-out" basis during the Collection Period so that
each payment from an obligor is applied first to the oldest outstanding account
receivable of such obligor. Gannett shall remit to Argyle no later than ten (10)
days after the end of each standard broadcast month during the Collection Period
those amounts required to be paid to Argyle hereunder during such period.
Following the end of the Collection Period, Gannett shall cease to have any
further responsibilities with respect to the uncollected Argyle TV Stations
Receivables (except that Gannett shall promptly remit to Argyle any amount
subsequently received by Gannett expressly on account of the Argyle TV
<PAGE>
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Stations Receivables), and Argyle may collect any uncollected Argyle TV Stations
Receivables in any manner Argyle chooses.
(b) For a period of six (6) months following the Closing Date (the
"Collection Period") Argyle shall continue to collect and receive payment in the
ordinary course of business with respect to the Gannett TV Stations' accounts
receivable for the period prior to the Closing Date (the "Gannett TV Stations
Receivables"), and shall pursue collection thereof in accordance with Argyle's
normal practices; provided, however, that in no event shall this obligation
extend to the institution of litigation, employment of any collection agency,
legal counsel, or other third party or any other extraordinary means of
collection by Argyle. All payments from each obligor of a Gannett TV Stations
Receivable not identified to a specific invoice shall be applied on a "first-in,
first-out" basis during the Collection Period so that each payment from an
obligor is applied first to the oldest outstanding account receivable of such
obligor. Argyle shall remit to Gannett no later than ten (10) days after the
end of each standard broadcast month during the Collection Period those amounts
required to be paid to Gannett hereunder during such period.
Following the end of the Collection Period, Argyle shall cease to have any
further responsibilities with respect to the uncollected Gannett TV Stations
Receivables (except that Argyle shall promptly remit to Gannett any amount
subsequently
<PAGE>
-79-
received by Argyle expressly on account of the Gannett TV Stations Receivables),
and Gannett may collect any uncollected Gannett TV Stations Receivables in any
manner Gannett chooses.
12.5 Further Assurances. (a) From time to time after the Closing Date,
------------------
without further consideration, Argyle and Gannett each will, at its expense, (i)
execute and deliver, or cause to be executed and delivered, such documents to
the other party as such party may reasonably request in order to effectively
vest in the other party good title to the Stations Assets, and (ii) use all
reasonable efforts to obtain any necessary third party consents to the
assignment of the Material Stations Contracts.
(b) From time to time after the Closing Date, Argyle and Gannett will
provide the other party with access, with reasonable prior notice and during
normal business hours, to the financial records of the Argyle TV Stations and
the Gannett TV Stations, as applicable, related to the period prior to the
Closing Date for use by such party in connection with tax and/or legal
proceedings related to its operation of such Stations prior to the Closing Date.
Argyle and Gannett agree to maintain all tax records related to the Stations for
all tax years that remain open as of the Closing Date unless and until (i) the
other party notifies such party that any such tax year(s) are closed or (ii)
such party has given the other party prior notice of its intent to destroy such
records
<PAGE>
-80-
and the other party has not reasonably and promptly requested that such records
not be destroyed.
12.6 Schedules. Gannett will deliver to Argyle, within fifteen (15) days
---------
immediately following the date of this Agreement, all schedules and related
documents required to be delivered under this Agreement by Gannett. Argyle
shall be permitted, for a period of thirty (30) days immediately following its
receipt of such schedules and documents, to terminate this Agreement if (i) such
schedules reveal any conditions of which Argyle is not aware as of the date of
this Agreement and/or any breaches of Gannett's representations, warranties
and/or covenants hereunder, which unknown conditions and/or breaches in the
aggregate would have a material adverse effect on the aggregate value of the
Gannett TV Stations or on Argyle's ability to operate the Gannett TV Stations as
they are currently being operated by Gannett. Following any such termination,
Gannett and Argyle shall have no further obligation to one another in respect of
this Agreement.
(b) Argyle will deliver to Gannett, within fifteen (15) days immediately
following the date of this Agreement, all schedules required to be delivered
under this Agreement by Argyle. Gannett shall be permitted, for a period of
thirty (30) days immediately following its receipt of such schedules and
information, to terminate this Agreement if (i) such schedules reveal any
condition of which Gannett was unaware as
<PAGE>
-81-
of the date of this Agreement and/or any breaches of Argyle's representations,
warranties and/or covenants hereunder, which unknown conditions and/or breaches
in the aggregate would have a material adverse effect on the value of the Argyle
TV Stations or on Gannett's ability to operate the Argyle TV Stations as they
are currently being operated by Argyle.
12.7 Waiver of Compliance. Except as otherwise provided in this Agreement,
--------------------
any failure of Argyle or Gannett 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.
12.8 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), at such other address for a party as shall be specified by like
notice):
(a) If to Argyle, to:
Argyle Television, Inc.
200 Concord Plaza Drive
Suite 700
San Antonio, TX 78216
Attention: Dean Blythe
Fax No. (210) 828-7300
<PAGE>
-82-
with a copy to:
Locke Purnell Rain Harrell 2200 Ross Avenue
Suite 2200
Dallas, TX 75201
Attention: Guy Kerr
Fax No. (214) 740-8800
(b) If to Gannett to:
Gannett Broadcasting
1100 Wilson Boulevard
Arlington, Virginia 22234
Attention: Cecil L. Walker
Fax No. (703) 247-3114
with a copy to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22234
Attention: Thomas L. Chapple, Esq.
Fax No. (703) 558-3897
12.9 Assignment. This Agreement and all of its terms shall be binding upon
----------
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement shall not be assigned by any party hereto,
except that any party may assign or transfer this Agreement to any of its
affiliates or subsidiaries.
12.10 Governing Law. This Agreement shall be governed by, construed and
-------------
enforced in accordance with the laws of the State of Delaware.
12.11 Bulk Sales Law. As an inducement to the other party to waive
--------------
compliance with the provisions of any applicable bulk transfer laws, Argyle and
Gannett each covenants that it will promptly pay and discharge all debts,
<PAGE>
-83-
obligations and liabilities relating to its Stations which are not expressly
assumed by the other party under this Agreement as and when they become due and
payable. Argyle and Gannett further agree to indemnify and hold the other party
harmless pursuant to Article X above from all Loss and Expense suffered by the
other party by reason of or arising out of claims made by creditors with respect
to non-compliance with any bulk transfer law.
12.12 Control of the Stations. Prior to the Closing Date, neither Argyle nor
-----------------------
Gannett shall directly or indirectly control, or attempt to control, the
operations of the other party's Stations. Such operations, including complete
control and supervision of all programming, employees and policies, shall be the
sole responsibility of the party owning such Stations.
12.13 Public Announcements. No public announcement (including an
--------------------
announcement to employees) or press release concerning the transactions provided
for herein shall be made by Argyle or Gannett without the prior written approval
of the other party, which shall not be unreasonably withheld or delayed.
12.14 Entire Agreement; Amendments. This Agreement, including the Exhibits
----------------------------
and Schedules hereto and the documents delivered hereunder, embodies the entire
agreement and understanding of the parties in respect of the subject matter
<PAGE>
-84-
hereof, and supersedes all prior agreements and understandings between the
parties. This Agreement may not be amended except in a writing signed by Argyle
and Gannett.
[signature page follows]
<PAGE>
-85-
Argyle and Gannett have caused this Agreement to be signed by their respective
duly authorized officers as of the date first above written.
COMBINED COMMUNICATIONS
CORPORATION OF OKLAHOMA, INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice President
-------------------------
MULTIMEDIA ENTERTAINMENT, INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: President
-------------------------
WZZM ARGYLE TELEVISION, INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice President
-------------------------
GRAND RAPIDS ARGYLE TELEVISION,
INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice President
-------------------------
WGRZ ARGYLE TELEVISION, INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice President
-------------------------
BUFFALO ARGYLE TELEVISION, INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice President
-------------------------
<PAGE>
-86-
PERFORMANCE GUARANTY
For valuable consideration the undersigned Gannett Co., Inc., a Delaware
corporation, hereby unconditionally guarantees the performance of the
obligations of the "Gannett Parties" to the "Argyle Parties" under the foregoing
Asset Exchange Agreement.
GANNETT CO., INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice Chairman
------------------------
PERFORMANCE GUARANTY
For valuable consideration the undersigned Argyle Television, Inc., a Delaware
corporation, hereby unconditionally guarantees the performance of the
obligations of the "Argyle Parties" to the "Gannett Parties" under the foregoing
Asset Exchange Agreement.
ARGYLE TELEVISION, INC.
By: [SIGNATURE ILLEGIBLE]
----------------------------
Title: Vice President
------------------------
<PAGE>
EXHIBIT 20.1
[LETTERHEAD OF ARGYLE TELEVISION APPEARS HERE]
FOR RELEASE: November 20, 1996 CONTACT: Bob Marbut
4:30 p.m. EST 210-828-1700
ARGYLE TELEVISION TO SWAP TELEVISION STATIONS IN GRAND RAPIDS AND BUFFALO
-------------------------------------------------------------------------
TO GANNETT FOR TELEVISION STATIONS IN CINCINNATI AND OKLAHOMA CITY
-------------------------------------------------------------------
San Antonio, TX...Argyle Television, Inc. (NASDAQ: ARGL) today announced
that it has entered into a definitive agreement with Gannett Co., Inc. to
swap Argyle's WZZM-TV, the ABC affiliate in Grand Rapids, Michigan, and
WGRZ-TV, the NBC affiliate in Buffalo, New York, to Gannett for Gannett's
WLWT-TV, the NBC affiliate in Cincinnati, Ohio, and KOCO-TV, the ABC
affiliate in Oklahoma City, Oklahoma.
Commenting on the transaction, Argyle's chairman and CEO, Bob Marbut, said,
"We are pleased with this agreement to exchange stations with Gannett. For
Gannett, this makes it possible for them to comply with an FCC divestiture
order.
"For Argyle, the exchange will increase Argyle's NBC-related broadcast cash
flow; increase total market advertising revenues (from Grand Rapids and
Buffalo to Cincinnati and Oklahoma City); give us a growing ABC market with
no competing ABC affiliate and with a signal that covers the entire market;
and, enhance our geographic diversity," he continued.
"We are saddened at the prospect of not being able to continue to work with
our colleagues in Buffalo and Grand Rapids and are very proud of the work
they've done to advance the stations. We know that both these stations and
their employee-management teams will be valuable elements of the Gannett
broadcast group going forward.
"It was previously announced that Argyle is exploring strategic
alternatives to realize for our company the benefits of the industry's
current consolidation," Marbut continued. "We believe that the exchange
with Gannett will positively reconfigure our station mix, making Argyle
more attractive as we continue to actively explore strategic alternatives
in order to best serve our company and our shareholders. Therefore, today's
transaction is but one step along the way, not the destination," he
concluded.
Blake Byrne, Argyle's president and chief operating officer, said "While
this is an exciting and important move for Argyle, it is difficult to part
with our stations in Grand Rapids and Buffalo, given all of the good work
and effort our people have devoted to the stations. I want to thank all of
our employees at WZZM and WGRZ. They can be very proud of their television
stations that now will become important pieces of the Gannett group."
<PAGE>
Gannett acquired WLWT in Cincinnati, where it owns the Cincinnati Enquirer, and
-------------------
certain cable systems in Oklahoma City, where it owned KOCO, as part of its
acquisition of Multimedia in December 1995. Federal Communications Commission
rules prohibit cross-ownership of television properties and daily newspapers in
the same market, and television properties and cable systems in the same market.
Gannett had received a temporary waiver from the FCC, set to expire in December
1996 to these cross-ownership rules in the Multimedia acquisition. The swap of
WLWT and KOCO to Argyle for WZZM and WGRZ resolves the cross-ownership issues
for Gannett.
For the nine months ended September 30, 1996, pro forma total revenues for
Argyle, assuming completion of this transaction, would have increased by $7.1
million, or 13.3%, to $60.2 million from $53.1 million. In connection with the
swap, Gannett will also receive $20 million in additional consideration from
Argyle.
The markets, DMA size (in terms of television households), network affiliations
and other information for the stations involved in this transaction are as
follows:
TO ARGYLE FROM GANNETT
Call Letters Market DMA Size Channel Network
------------ ----------- -------- ------- -------
WLWT Cincinnati, OH 29 5 NBC
KOCO Oklahoma City, OK 43 5 ABC
TO GANNETT FROM ARGYLE
Call Letters Market DMA Size Channel Network
------------ ------------ -------- ------- -------
WZZM Grand Rapids, MI 38 13 ABC
WGRZ Buffalo, NY 39 2 NBC
The transaction is expected to close during the first quarter of 1997 and is
subject to the satisfactory completion of a due diligence period, approval of
the license transfers by the FCC and certain other conditions.
Today, Argyle Television, Inc. owns and operates network-affiliated television
stations WZZM-TV, the ABC affiliate in Grand Rapids, MI; WGRZ-TV, the NBC
affiliate in Buffalo, NY; WNAC-TV, the Fox affiliate in Providence, RI; KITV-TV,
the ABC affiliate in Honolulu, HI; WAPT-TV, the ABC affiliate in Jackson, MS;
and, KHBS-TV, the ABC affiliate in Fort Smith, AR, and its satellite KHOG-TV,
the ABC affiliate in Fayetteville, AR. Argyle's Series A Common Stock trades on
the Nasdaq National Market System under the symbol "ARGL".
