Asset Exchange Agreement

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


TABLE OF CONTENTS


PAGE NO.
-------- 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


(i)


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


(ii)


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


(iii)


SCHEDULES - --------- 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)


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
---------- -------------------------------------


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;
-------------


(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;
------------


(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
---------------------------------- 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;


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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,
----------- 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;


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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
...