SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report: July 27, 1999
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6961 16-0442930
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices)(Zip Code)
(703) 284-6000
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 24, 1999, Gannett U.K. Limited ("Gannett UK"), a newly formed
wholly-owned subsidiary of Gannett Co., Inc. ("Gannett"), made a cash
offer to acquire the entire issued and to be issued share capital of
Newsquest plc ("Newsquest"). Pursuant to the Offer, Newsquest
shareholders may elect to receive 460 pence (US $7.26) in cash or
Loan Notes for each of 200.4 million fully diluted shares, for a total
price of approximately 922 million pounds sterling (US $1.5 billion).
Gannett UK will also assume Newsquest's existing debt. The purchase is
to be financed principally by commercial paper borrowings, existing
facilities, U.S. public debt markets and/or operating cash flow. On
July 26, 1999, pursuant to the Offer Document, Gannett UK declared the
Offer unconditional in all respects.
Gannett UK has received irrevocable undertakings to accept the
Offer from the two largest shareholders and the executive directors
of Newsquest and other valid acceptances under the Offer. Gannett UK
has also acquired Newsquest plc shares through market purchases.
Altogether, Gannett UK has valid acceptances and Newsquest shares
totaling 186,735,028, representing approximately 95.1% of the issued
share capital of Newsquest.
Newsquest's principal activities are publishing and printing regional
and local newspapers in the United Kingdom with a portfolio that includes
63 paid-for daily and weekly newspapers and 120 free weekly newspapers.
For the 53 weeks ended January 3, 1999, Newsquest reported revenues of
305.8 million pounds sterling (US $507.6 million) and operating income
of 81.4 million pounds sterling (US $135.0 million).
A portion of Gannett's News Release dated June 24, 1999, providing
a detailed description of the Offer, is attached as Exhibit 99-1 and
is incorporated in this report by reference.
ITEM 5. OTHER EVENTS
On July 27, 1999, Gannett Co., Inc. announced that it has entered
into an agreement to sell its cable business. A news release
announcing this transaction, attached hereto as Exhibit 99-2, and the
Asset Purchase Agreement, attached hereto as Exhibit 99-3, are
incorporated in this report by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Newsquest plc
The financial statements required under this Item
are not included in this report. The required
financial statements will be filed at the
earliest possible date and, in any event, no later
than October 6, 1999.
(b) Unaudited Pro Forma Financial Information
.
The pro forma financial information required under
this Item is not included in this report. The
required pro forma financial information will be filed
at the earliest possible date and, in any event, no
later than October 6, 1999.
(c) Exhibits.
See Exhibit Index for list of exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GANNETT CO., INC.
Dated: July 27, 1999 By:/s/George R. Gavagan
-----------------------
George R. Gavagan
Vice President and Controller
EXHIBIT INDEX
Exhibit
Number Title or Description Location
99-1 Portion of Gannett's News Release Attached
dated June 24, 1999, describing
Gannett U.K. Limited Cash Offer for
Newsquest plc
99-2 Gannett's News Release dated Attached
July 27, 1999, announcing sale of
cable business
99-3 Asset Purchase Agreement Attached
between Multimedia Cablevision,
Inc. and Cox Communications, Inc.
Not for release, publication or distribution in or into Canada,
Australia or Japan.
GANNETT U.K. LIMITED
Cash Offer
For
NEWSQUEST PLC
1 Introduction
The Board of Gannett Co., Inc. ("Gannett") announces the
terms of a cash offer to be made for the entire issued and
to be issued share capital of Newsquest plc ("Newsquest") by
Gannett U.K. Limited ("Gannett UK"), a wholly owned
subsidiary of Gannett.
The Board of Newsquest is of the unanimous view that it is
in the best interests of Newsquest and its Shareholders for
the Offer to be put forward to Newsquest Shareholders for
consideration.
The Offer:
- will be 460p in cash for each Newsquest Share;
- values the existing issued share capital of Newsquest
at approximately L904 million;
- represents a multiple of 21.7x Newsquest's basic
earnings per share, and a multiple of 11.3x Newsquest's
earnings before interest, tax, depreciation and
amortisation for the 53 weeks ended 3 January 1999;
- represents a premium of approximately 25 per cent to
the average Closing Price of a Newsquest Share in the
six months to 23 June 1999 of 367.5p;
- represents a premium of approximately 9 per cent to the
Closing Price of a Newsquest Share of 423p on 23 June
1999; and
- includes a Loan Note Alternative. Gannett has received
irrevocable undertakings to accept the Offer
The financial effects of acceptance of the Offer and the
bases of and sources of information for the above
calculations are set out in Appendices II and III
respectively.
2 The Offer
The Offer will be made on the following basis:
for each Newsquest Share 460p in cash
The Offer will be subject to the conditions and further
terms set out below and in Appendix I to this announcement
and will be set out in full in the Offer Document and Form
of Acceptance.
The Newsquest Shares will be acquired under the Offer fully
paid and free from all liens, charges, equitable interests,
encumbrances, rights of pre-emption and other interests and
together with all rights now or hereafter attaching thereto.
The Offer is to be financed from Gannett's own resources and
existing facilities or from the US public debt markets.
3 Loan Note Alternative
Accepting Newsquest Shareholders (other than to certain
family members and family trusts) will be entitled to elect
to receive Loan Notes to be issued by Gannett UK instead of
some or all of the cash consideration which would otherwise
be receivable under the Offer on the following basis:
for every L1 of L1 nominal of Loan Notes
cash consideration
The Loan Notes, which will be governed by English law, will
be issued, credited as fully paid, in multiples of L1
nominal amount. Fractional entitlements to Loan Notes will
be disregarded. The obligations of Gannett UK as the issuer
of the Loan Notes will be guaranteed as to principal only by
Gansat, a member of the Gannett Group.
The Loan Notes will bear interest from the date of issue to
the relevant holder of Loan Notes at a rate of 0.5 per cent
per annum below LIBOR for six month sterling deposits
(subject to a cap of 6.5 per cent), payable six monthly in
arrears on 30 June and 31 December except that the first
interest payment date will be 31 December 1999.
The Loan Notes will not be transferable (other than to
certain family members and family trusts) and no application
will be made for the Loan Notes to be listed or dealt in on
any stock exchange. The Loan Notes will be redeemable at
the holder's option, in part or in whole, on 30 June 2000
and on each interest payment date thereafter, and any Loan
Notes not previously repaid, redeemed or purchased will be
repaid at par (together with any accrued interest) on 31
December 2006. The Loan Notes can be redeemed by the issuer
on any interest payment date prior to 31 December 2006 if
the aggregate value of Loan Notes in issue is less than
L100,000.
Hoare Govett has advised that, based on current market
conditions, its estimate of the value of the Loan Notes, if
they had been in issue on 23 June 1999, would have been
approximately 98p per L1 nominal value.
If valid elections for the Loan Note Alternative do not
require the issue of Loan Notes exceeding L10 million in
nominal value in aggregate, no Loan Notes will be issued
unless Gannett determines otherwise, and Newsquest
Shareholders who have elected for the Loan Note Alternative
will then receive cash in accordance with the terms of the
Offer.
The total amount of Loan Notes to be issued will not exceed
L50 million in nominal value, unless Gannett otherwise
determines. To the extent that elections for Loan Notes
exceed L50 million in nominal value in aggregate and Gannett
does not determine to increase the total amount to be
issued, elections will be scaled back pro-rata such that
elections are accepted in respect of Loan Notes that have
nominal aggregate value of L50 million, with the balance of
the consideration being settled in cash.
The Loan Note Alternative will be conditional upon the Offer
becoming or being declared unconditional in all respects and
will remain open for so long as the Offer remains open for
acceptance. Full particulars of the Loan Notes are contained
in the Offer Document which will be posted to Newsquest
Shareholders today.
4 Arrangements with Newsquest Shareholders
(a) Irrevocable undertakings to accept the Offer
Gannett has received irrevocable undertakings to accept the
Offer from certain Newsquest Shareholders as set out below:
Newsquest Shares Percentage
of issued
share capital
KKR 72,330,628 36.81
Shareholdings managed by Cinven Limited:
Coal Pension Venture Nominees Limited 10,177,410 5.18
Cinven Fund No 1 Limited Partnership 5,215,592 2.66
Railway Pension Venture Capital Limited 3,820,574 1.95
Barclays Venture Nominees Limited 3,820,574 1.95
Cinven Fund US No 1 Limited Partnership 2,425,555 1.23
Cinven Nominees Limited 16,171 0.01
---------- -----
25,475,876 12.97
Executive directors of Newsquest:
James Brown 1,423,475 0.72
Paul Davidson 1,190,243 0.61
John Pfeil 1,189,943 0.61
--------- ----
3,803,661 1.94
----------- -----
Total 101,610,165 51.73
These irrevocable undertakings will lapse if a competing
offer in excess of 495p per Newsquest Share is announced
prior to midnight on the seventh day after posting of the
Offer Document.
In addition, the executive directors of Newsquest have
agreed, conditional only on the Offer being declared or
becoming unconditional in all respects, to accept the Offer
in respect of Newsquest Shares issued upon the exercise of
options under the Newsquest Share Option Schemes.
(b) Sharing and exclusivity agreement
Gannett has entered into an agreement with KKR and Cinven
under which KKR and Cinven will, at the time of any disposal
of all or part of their holdings of Newsquest Shares in
circumstances where a competing offer in excess of 495p is
made and such shareholders do not accept the Gannett Offer,
pay Gannett a fee on the following basis:-
(i) if the disposal price per Share is more than 400p,
but less than 495p, an amount per Share equal to
22.6 per cent of the excess over 400p; or
(ii) if the disposal price per Share is 495p or more, but
less than 600p, an amount per Share of 21.5p plus an
amount equal to 20.4 per cent of the excess over
495p; or
(iii) if the disposal price per Share is 600p or more, an
amount per Share of 42.9p.
KKR and Cinven have also agreed, inter alia, not to solicit
offers for the Company whilst the Gannett Offer is open for
acceptance.
5 Background to the Offer
Introduction
As described in a letter from the Directors of Newsquest to
Shareholders contained in the Offer Document to be sent to
Shareholders today, Gannett submitted a conditional offer of
460p per Share to the Board of Newsquest in May 1999. This
followed an examination by the Board of Newsquest of various
strategic opportunities to maximise shareholder value which
resulted in the subsequent decision to seek a possible
purchaser for the Company. Merrill Lynch was retained to act
as the Company's financial advisor in relation to this
process.
Issues for consideration
Set out below are the issues that the Board of Newsquest, as
advised by Merrill Lynch, examined when considering their
response to the conditional Gannett offer and to which the
Board believes Shareholders should have regard when making
their decision whether or not to accept the Offer:
(a) Gannett's proposal of an offer of 460p per Newsquest
Share would only proceed on the basis of, inter alia:
(i) the Board permitting the offer to be made to
Shareholders;
(ii) KKR, Cinven and the executive directors of Newsquest
providing irrevocable undertakings to accept the
offer; and
(iii) certain management and employees committing to
remain with the Company after the offer had been
completed.
(b) The Board's recognition that the process, undertaken by
Merrill Lynch, represented a comprehensive examination
of the universe of those trade buyers most likely to be
interested in acquiring Newsquest, and that Gannett's
Offer represents the highest price offered from this
universe of potential buyers as part of this process.
Neither the Board, nor Merrill Lynch, has been
approached by any person, other than those approached
as part of this process, on behalf of a bona fide
potential offeror wishing to instigate discussions with
a view to any offer being made for Newsquest.
Discussions with other potential offerors approached as
part of this process have ceased.
(c) KKR, Cinven, and the executive directors of Newsquest
indicating that they were prepared to enter into
irrevocable undertakings to accept the Offer in respect
of their holdings, representing approximately 51.7 per
cent of Newsquest's issued ordinary share capital. It
should be noted that each of KKR, Cinven and the
executive board members have held substantially all of
their stakes since the initial public offering of the
Company in October 1997.
(d) The Board's recognition that both the sector's and
Newsquest's recent performance has contributed to the
current level of the Newsquest Share price.
(e) The Board's recognition that the Offer is above the
highest Closing Price of Newsquest Shares (447.5p on 7
May 1999).
(f) Gannett's offer was not expected to have any UK, EU or
US competition clearance issues.
(g) The Board's belief, supported by Merrill Lynch's
analysis, that at the current share price of 423p, on
an earnings before interest, tax, depreciation and
amortisation (EBITDA), earnings before interest and tax
(EBIT) and earnings per share (EPS) multiple basis,
Newsquest, for the first time, is trading broadly in
line with its peer group.
(h) The prospects for the Company as an independent public
company. Set out in paragraph 8 below is a summary of
the Company's recent AGM statement, as released on the
Regulatory News Service on 5 May 1999, which set out
the Board's view of the Company's performance and
prospects.
Additionally, in assessing whether to accept the Offer, the
Board believes that Shareholders should consider the
following:
(a) If the Offer is declared unconditional in all respects,
a Shareholder who does not tender his Shares into the
Offer whilst the Offer is open for acceptances after it
has gone unconditional may, if the compulsory purchase
and sale procedures in the Companies Act are not
operated or applicable, be in a minority position and
therefore may be exposed to certain risks. In
particular:
(i) the possibility that Gannett as the majority
shareholder may terminate or reduce dividend
payments; and
(ii) the possibility that Newsquest may be delisted from
the London Stock Exchange.
(b) Furthermore, if the Offer is declared unconditional in
all respects, the liquidity of Newsquest Shares is
likely to be substantially reduced and there would be
no guarantee that a subsequent offer would be made in
the future for the outstanding minority position, by
either Gannett or another offeror.
Board's conclusion
Having taken each of these issues into consideration, it is
the view of the Board that the Offer represents a serious
and fair proposal worthy of consideration by Shareholders.
However, the Board's view is that the Offer is not such a
compelling proposal that the Board could give an outright
recommendation to Shareholders that it was absolutely in
their best interests to accept.
The Board similarly was of the view that, particularly as
the Company's two largest shareholders, both represented on
the Newsquest Board, and the executive directors, were all
minded to accept the Offer, it was appropriate for the Board
to agree to Gannett making the Offer to all Shareholders.
Therefore, the Board has waived the relevant sections of the
confidentiality and standstill agreement that Gannett had
entered into at the start of this process, and has agreed
under Rule 5.2 of the City Code to allow Gannett to obtain
irrevocable undertakings from Shareholders representing 51.7
per cent of Newsquest's issued ordinary share capital, and
has agreed to permit Gannett to purchase shares in
Newsquest.
In conclusion, the Directors, who have been so advised by
Merrill Lynch, believe that it is in the best interests of
Newsquest and its Shareholders to put the Offer forward for
consideration by all Shareholders.
The executive directors (Messrs James Brown, John Pfeil and
Paul Davidson), who together hold 1.9 per cent of
Newsquest's issued ordinary share capital have, as
Shareholders, irrevocably committed, in terms set out in
paragraph 4 above, to accept the Offer.
In providing advice to the Directors, Merrill Lynch has
relied on the Board's commercial assessment.
6 Reasons for the Offer
Gannett's core operations include publishing newspapers and
the provision of newspaper Internet sites. Gannett's
strategy is to create and expand its quality portfolio of
titles, products and services through innovation, and to
make acquisitions in news, information and communications
and related fields in support of this strategy. As the
largest publisher of local and regional newspapers in
England, and a leader in using Internet technology to
deliver local news and information, Newsquest represents an
attractive opportunity for Gannett to enhance shareholder
value through acquisition. In particular the acquisition:
- permits Gannett and Newsquest to exchange best
practices in gathering news and information;
- creates the ability to exploit the combined
marketing and Internet expertise of both companies to
further develop innovative quality products and
services for both regional advertisers and
readers/users;
- means that Gannett and Newsquest will be better
positioned to serve the needs of international
advertisers;
- enables Gannett to diversify outside the USA
through a sizeable presence in the UK, which
represents one of the major European markets for
regional newspapers; and
- provides Gannett and Newsquest with further
economies of scale, including purchasing newsprint and
capital equipment.
Gannett believes that in balancing the complementary
strengths of both companies while recognising their
individual markets' uniqueness, the combined companies will
better serve their readers and advertisers and will enhance
profitable development and growth to the substantial benefit
of employees and shareholders.
7 Information on Gannett
Gannett is a diversified news and information company that
publishes 74 daily newspapers including USA TODAY and is the
USA's largest newspaper group in terms of circulation. It
also owns and operates 21 television stations covering 17.3%
of the US, and cable television systems in three US states.
It is also engaged in marketing, commercial printing, a
newswire service, data services and news programming.
Gannett is listed on the New York Stock Exchange and has a
market capitalisation of approximately US$20.5 billion,
(L12.9 billion) and employs approximately 39,400 people
worldwide.
Gannett reported operating revenues of US$5,121 million
(L3,221 million) for the fiscal year ended 27 December 1998
compared with operating revenues of US$4,729 million (L2,974
million) for the fiscal year ended 28 December 1997.
Gannett reported operating profits of US$1,444 million (L908
million) for the fiscal year ended 27 December 1998 (1997:
US$1,316 million (L828 million)). As at 27 December 1998,
Gannett had net assets of US$3,980 million (L2,503 million).
8 Information on Newsquest
Newsquest's principal activities are that of publishing and
printing local newspapers in the UK with a portfolio of 63
paid for daily and weekly newspapers and 120 free weekly
newspapers. Its titles include the Northern Echo and the
Evening Argus.
For the 53 weeks ended 3 January 1999, Newsquest reported
turnover of L305.8 million (52 weeks ended 28 December 1997:
L285.6 million), profit before tax on ordinary activities of
L61.0 million (1997: L31.6 million), and basic earnings per
share of 21.2p (1997: 11.9p). Newsquest had net assets as
at 3 January 1999 of L226.4 million.
At the Annual General Meeting of Newsquest on 5 May 1999,
James Brown, Executive Chairman, made the following remarks
commenting both on Newsquest's quarterly results for the 13
weeks to 4 April 1999 (which were released on 5 May 1999)
and on prospects for the current year:
"The year has started well for Newsquest, with the benefits
of strong advertising revenues resulting in an underlying
revenue growth of 7.5% in the quarter. This, together with
marginally lower newsprint prices, is reflected in an
underlying 19.6% growth in operating profits, as shown in
our first quarter results published this morning. These
figures also benefit from the fact that Easter fell earlier
this year. The threatened economic slowdown has resulted in
a soft landing, and the increase in like-for-like revenue
growth in areas other than recruitment reflects the
Company's initiatives in these areas.
As I said in our Annual Report, we are cautiously optimistic
for the remainder of the year."
9 Management and Employees
Gannett attaches great importance to the skills and
experience of the existing management and employees of
Newsquest. Gannett has given assurances to the board of
Newsquest that the existing employment rights, including
pension rights, of the employees of Newsquest will be fully
safeguarded.
10 Newsquest Share Option Schemes
The Offer will extend to any Newsquest Shares
unconditionally allotted or issued and fully paid before the
Offer closes (or before such earlier date as the directors
of Gannett UK (subject to the City Code) may determine not
being earlier than the date on which the Offer becomes or is
declared unconditional as to acceptances or if later the
first closing date of the Offer) as a result of the exercise
of options granted under the Newsquest Share Option Schemes.
Appropriate proposals will be made in due course to
participants in the Newsquest Share Option Schemes.
11 Cancellation of listing and compulsory acquisition
After the Offer becomes unconditional in all respects,
Gannett UK intends to procure the making of an application
by Newsquest for the cancellation of the listing of the
Newsquest Shares on the London Stock Exchange. It is
anticipated that such cancellation will take effect no
earlier than 20 business days after the Offer becomes
unconditional in all respects.
If Gannett UK receives acceptances under the Offer in
respect of, and/or otherwise acquires, 90 per cent or more
of the Newsquest Shares to which the Offer relates, Gannett
UK will exercise its rights pursuant to the provisions of
sections 428 to 430F of the Companies Act 1985 to acquire
compulsorily the remaining Newsquest Shares.
12 Offer Document
The formal Offer Document will be posted by Gannett UK to
Newsquest Shareholders today.
13 General
This announcement does not constitute an offer or an
invitation to purchase any securities and this announcement
and related materials do not constitute an offer of
securities for sale in the United States or to US persons.
The Offer will not be made, directly or indirectly, in or
into Canada, Australia or Japan. Accordingly, copies of
this announcement are not being, and must not be mailed or
otherwise distributed or sent in or into Canada, Australia
or Japan and persons receiving this announcement (including
custodians, nominees and trustees) must not distribute or
send it into or from Canada, Australia or Japan. Doing so
may invalidate any purported acceptance.
The Loan Notes that may be issued pursuant to the Offer will
not be listed on any stock exchange and have not been, and
will not be, registered under the US Securities Act of 1933,
as amended, nor under any relevant securities laws of any
state of the US and the relevant clearances will not be
obtained from the regulatory authority of any province or
territory of Canada. The Loan Notes are not being offered,
sold or delivered, directly or indirectly, to, or for the
account or benefit of, US persons or into the United States,
Canada, Australia or Japan, or into any other jurisdiction
if to do so would constitute a violation of relevant laws in
such jurisdiction.
The Offer will be open for at least 20 US business days from
the date of the Offer Document, which is being posted to
Newsquest Shareholders today.
PricewaterhouseCoopers, which is authorised to carry on
investment business by the Institute of Chartered
Accountants in England and Wales, is acting for Gannett and
Gannett UK and no one else in connection with the Offer and
will not be responsible to anyone other than Gannett and
Gannett UK for providing the protections afforded to
customers of PricewaterhouseCoopers or for giving advice in
relation to the Offer.
Merrill Lynch, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for
Newsquest and no one else in connection with the Offer and
will not be responsible to anyone other than Newsquest for
providing the protections afforded to its customers or for
providing advice in relation to the Offer.
The directors of Gannett UK and Gannett accept
responsibility for the information contained in this
announcement (other than the information contained in
paragraphs 5 and 8 of this announcement and other
information relating to the Newsquest Group). To the best
of the knowledge and belief of the directors of Gannett UK
and Gannett (who have taken all reasonable care to ensure
that such is the case), such information contained in this
announcement is in accordance with the facts and does not
omit anything likely to affect the import of such
information.
The Directors of Newsquest accept responsibility for the
information contained in paragraphs 5 and 8 of this
announcement and other information in this announcement
relating to the Newsquest Group. To the best of the
knowledge and belief of the Directors of Newsquest (who have
taken all reasonable care to ensure that such is the case),
such information contained in this announcement is in
accordance with the facts and does not omit anything likely
to affect the import of such information.
Save for the arrangements with Newsquest Shareholders
summarised in paragraph 4 above, neither Gannett nor any
person deemed to be acting in concert with Gannett owns or
controls any Newsquest Shares or has any options to acquire
any Newsquest Shares. Save as summarised in paragraph 4
above, neither Gannett nor any person acting in concert with
Gannett for the purposes of the Offer has any arrangement in
relation to Newsquest Shares or any securities convertible
or exchangeable into Newsquest Shares or options (including
traded options) in respect of or derivatives referenced to
any such shares. For these purposes, "arrangement" includes
any indemnity or option arrangement, any agreement or
understanding, formal or informal, of whatever nature,
relating to Newsquest Shares which may be an inducement to
deal or refrain from dealing in such shares.
Gannett and Newsquest entered into an exclusivity agreement
on 17 June 1999 under which Newsquest undertook, inter alia,
not to solicit offers for the Company prior to the
announcement of the Offer and, thereafter, whilst the Offer
is open for acceptance.
Certain sources and bases of assumptions and calculations
are set out in Appendix III.
PricewaterhouseCoopers has approved the contents of this
announcement solely for the purpose of section 57 of the
Financial Services Act 1986.
24 June 1999
NEWS RELEASE FOR IMMEDIATE RELEASE July 27, 1999 Arlington, Va. -- Gannett Co., Inc. announced today an agreement to sell the assets of Multimedia Cablevision, Inc., a wholly-owned subsidiary of Gannett's Multimedia, Inc., to Cox Communications, Inc. of Atlanta, Ga. for approximately $2.7 billion in cash. Closing is expected to occur as soon as regulatory approvals are obtained. Gannett is a nationwide news and information company that publishes 74 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 21 television stations and cable television systems in three states.
ASSET PURCHASE AGREEMENT
BETWEEN
MULTIMEDIA CABLEVISION, INC.
AND
COX COMMUNICATIONS, INC.
Dated July 22, 1999
Table of Contents
Page
ARTICLE I. Sale of Assets and Terms of Payment. . . 1
1.1 Transfer of Assets.. . . . . . . .1
1.2 Excluded Assets. . . . . . . . . .2
1.3 Liabilities. . . . . . . . . . . .2
1.4 Consideration. . . . . . . . . . .4
1.5 Manner of Payment. . . . . . . . .4
1.6 Adjustments. . . . . . . . . . . .4
ARTICLE II. The Closing. . . . . . . .. . . . . . . .6
2.1 Time and Place of Closing. . . . .6
2.2 Deliveries by Multimedia.. . . . .6
2.3 Deliveries by Buyer. . . . . . . .6
ARTICLE III. Representations and Warranties of
Multimedia. . . . . . . . . . . . . . .7
3.1 Organization; Qualification. . . .7
3.2 Authority Relative to this
Agreement.. . . . . . . . . . .7
3.3 System Information.. . . . . . . .7
3.4 Financial Statements.. . . . . . .8
3.5 Business Since the Balance
Sheet Date. . . . . . . . . . .8
3.6 Undisclosed Liabilities. . . . . .8
3.7 No Defaults. . . . . . . . . . . .9
3.8 No Material Misstatements. . . . .9
3.9 Governmental Permits.. . . . . . .9
3.10 Condition and Adequacy of the
Assets. . . . . . . . . . . . 10
3.11 Accounts Receivable.. . . . . . 10
3.12 Contracts.. . . . . . . . . . . 10
3.13 Title.. . . . . . . . . . . . . 10
3.14 Intellectual Property.. . . . . 11
3.15 Litigation and Compliance with
Laws. . . . . . . . . . . . . 11
3.16 Employees.. . . . . . . . . . . 11
3.17 Taxes.. . . . . . . . . . . . . 12
3.18 Instruments of Conveyance;
Good Title. . . . . . . . . . 12
3.19 Changes.. . . . . . . . . . . . 12
3.20 Broker. . . . . . . . . . . . . 12
3.21 Real Property.. . . . . . . . . 13
3.22 Environment.. . . . . . . . . . 13
3.23 Mid-Kansas Stock. . . . . . . . 13
3.24 Competitive Activity. . . . . . 14
3.25 Employee Benefit Plans. . . . . 14
3.26 Transactions with Affiliates. . 15
3.27 Bonds; Letters of Credit. . . . 15
ARTICLE IV. Representations and Warranties of Buyer. 15
4.1 Organization.. . . . . . . . . . 15
4.2 Authority Relative to this
Agreement. . . . . . . . . . .15
4.3 No Defaults. . . . . . . . . . . 15
4.4 Brokers. . . . . . . . . . . . . 15
ARTICLE V. Covenants of Multimedia Pending the
Closing Date. . . . . . . . . 16
5.1 Maintenance of Business. . . . . 16
5.2 Organization.. . . . . . . . . . 16
5.3 Access to Facilities, Files
and Records. . . . . . . . . 16
5.4 Representations and Warranties.. 17
5.5 Corporate Action.. . . . . . . . 17
5.6 Consents.. . . . . . . . . . . . 17
5.7 Confidential Information.. . . . 18
5.8 Consummation of Agreement. . . . 18
5.9 Notice of Proceedings. . . . . . 18
5.10 Hart-Scott-Rodino Act.. . . . . 18
5.11 Control of the Systems. . . . . 19
5.12 Interim Financial Statements. . 19
5.13 Governmental Filings. . . . . . 19
5.14 Change in Control Plan. . . . . 19
ARTICLE VI. Covenants of Buyer Pending the Closing
Date. . . . . . . . . . . . . 19
6.1 Representations and Warranties.. 20
6.2 Corporate Action.. . . . . . . . 20
6.3 Confidential Information.. . . . 20
6.4 Consummation of Agreement. . . . 20
6.5 Notice of Proceedings. . . . . . 20
6.6 Hart-Scott-Rodino Act. . . . . . 20
6.7 Consents.. . . . . . . . . . . . 21
ARTICLE VII. Conditions to the Obligations of
Multimedia. . . . . . . . . . 21
7.1 Representations, Warranties,
Covenants. . . . . . . . . . .21
7.2 Proceedings. . . . . . . . . . . 21
7.3 Hart-Scott-Rodino. . . . . . . . 22
7.4 Franchises.. . . . . . . . . . . 22
7.5 Consents.. . . . . . . . . . . . 22
7.6 Discharge of Bonds, etc. . . . . 22
ARTICLE VIII. Conditions to the Obligations of Buyer.22
8.1 Representations, Warranties,
Covenants. . . . . . . . . . .23
8.2 Proceedings. . . . . . . . . . . 23
8.3 Hart-Scott-Rodino. . . . . . . . 23
8.4 EBS's. . . . . . . . . . . . . . 24
8.5 Changes. . . . . . . . . . . . . 24
8.6 Franchises.. . . . . . . . . . . 24
8.7 Consents.. . . . . . . . . . . . 24
ARTICLE IX. Indemnification. . . . . . . . . . . . . 24
9.1 Survival; Limitations. . . . . . 24
9.2 Indemnification. . . . . . . . . 25
9.3 Indemnification of Multimedia. . 26
9.4 Notice of Claims.. . . . . . . . 26
9.5 Defense of Third Party Claims. . 26
9.6 Known Matters. . . . . . . . . . 27
ARTICLE X. Miscellaneous Provisions. . . . . . . . . 27
10.1 Risk of Loss. . . . . . . . . . 27
10.2 Abandonment of Agreement. . . . 27
10.3 Liabilities Upon Abandonment. . 28
10.4 Expenses. . . . . . . . . . . . 28
10.5 Environmental Reports.. . . . . 29
10.6 Schedules.. . . . . . . . . . . 29
10.7 Employees and Employee Benefits 30
10.8 Portal Space. . . . . . . . . . 31
10.9 Further Assurances, Consents
and Post Closing Matters. . . 32
10.10 Allocation of Purchase Price.. 32
10.11 Waiver of Compliance.. . . . . 32
10.12 Notices. . . . . . . . . . . . 32
10.13 Assignment.. . . . . . . . . . 33
10.15 Bulk Sales Law.. . . . . . . . 34
10.16 Public Announcements.. . . . . 34
10.17 No Third Party Rights. . . . . 34
10.18 Waiver of Jury Trial.. . . . . 34
10.19 Counterparts.. . . . . . . . . 34
10.20 Closing with Fewer than 100%
of Franchise Consents.. . . . 35
10.21 Board Approvals.. . . . . . . . 35
10.22 Alternative Structure.. . . 35
10.23 Non-Solicitation. . . . . . 36
10.24 Entire Agreement; Amendments.. 37
Schedules
Schedule 1.6 Adjustments for Closing EBS's
Schedule 3.3(a) System Information: EBS's and Operational Matters
Schedule 3.3(b) System Rates for Classes of Service
Schedule 3.3(c) Franchise Fees and Notifications of Adjustments to
Franchise Fees
Schedule 3.4 GAAP Exceptions
Schedule 3.5 Changes Since the Balance Sheet
Schedule 3.9 Governmental Permits
Schedule 3.10 Shared Fiber Facilities
Schedule 3.12 Certain Contracts; Non-Compliance with Contracts
Schedule 3.13(a) Owned Real Property
Schedule 3.13(b) Leased Real Property
Schedule 3.13(d) Rights to Purchase Assets
Schedule 3.14 Intellectual Property Notices
Schedule 3.15 Litigation and Compliance with Laws
Schedule 3.16 Employees; Salaries; Union Representation
Schedule 3.17 Tax Matters
Schedule 3.19 Changes
Schedule 3.22 Environmental Matters
Schedule 3.24 Competitive Activity
Schedule 3.25 Employee Benefit Plans
Schedule 3.26 Transactions with Affiliates
Schedule 3.27 Bonds; Letters of Credit
Schedule 5.1 Capital Expenditures
Schedule 7.5 Contract Consents
Schedule 10.7(a) Employees
Schedule 10.7(b) Change in Control Plan Participants
Exhibits
Exhibit 1.3 Change in Control Plan
Exhibit 1.4 Form of Deposit Escrow Agreement
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is
dated as of July 22, 1999, and is between Multimedia
Cablevision, Inc., a South Carolina corporation
("Multimedia''), and Cox Communications, Inc., a Delaware
corporation ("Buyer").
Multimedia owns and operates cable television systems
("Systems") in Kansas, North Carolina and Oklahoma that are
identified on Schedule 3.3(a) ("Business"). Multimedia desires
to sell and Buyer desires to purchase substantially all of the
asset related to the Business as a going concern. Based upon
the representations and warranties made by each party to the
other in this Agreement, the parties have agreed to consummate
the sale of the Business on the terms contained herein.
ARTICLE I. Sale of Assets and Terms of Payment.
1.1 Transfer of Assets.
Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (as defined in Section 2.1
hereof) Multimedia will sell, convey or cause to be conveyed,
and deliver to Buyer, and Buyer will purchase and accept from
Multimedia, substantially all of the assets and properties of
Multimedia, tangible or intangible, of every kind and description
primarily used or held for use by Multimedia in connection with
the Business as a going concern (all such assets being referred
to herein as the "Assets"), but excluding the Excluded Assets
described in Section 1.2 below. The Assets include without
limitation the following:
(a) Multimedia's tangible personal property, assets
and equipment relating to the Business;
(b) all written or oral contracts or arrangements
providing for the provision of cable television
and related cable services, re-transmission
consent agreements, pole line agreements,
underground conduit agreements, crossing
agreements, multiple dwelling, bulk billing and
commercial service agreements, advertising
agreements, software license agreements
(including without limitation for general ledger,
accounts payable and customer service and
billing services), agreements for the lease or
exchange of cable/fiber capacity and all other
agreements and documents that relate to the
Business (other than Governmental Permits),
and which are in effect on the date hereof, or
which are entered into by Multimedia between
the date hereof and the Closing Date in
compliance with the provisions of this
Agreement (which are referred to collectively as
"Contracts");
(c) 1000 shares of stock of Mid-Kansas, Inc., a
Kansas corporation (the "Shares");
(d) all franchises, approvals, authorizations, permits,
licenses, easements, registrations, qualifications,
variances and similar rights obtained from any
governmental authority authorizing, permitting
or governing the provision of cable television
and telecommunications services, including all
amendments thereto and renewals or
modifications thereof in compliance with this
Agreement ("Governmental Permits");
(e) all subscriber and advertiser lists, patents,
copyrights, and other similar intangible rights
and interests (other than Contracts and
Governmental Permits) owned by Multimedia
and used in the Business ("Intellectual
Property");
(f) all of Multimedia's accounts receivable arising
out of the Business ("Accounts Receivable");
(g) all of Multimedia's owned real property and
leaseholds described in Schedule 3.13(a) and
Schedule 3.13(b);
(h) all of Multimedia's files and other records
relating to the Business; and
(i) all of Multimedia's going concern value of the
Business.
1.2 Excluded Assets.
The following assets relating to the Business shall be
retained by Multimedia and shall not be sold, assigned or
transferred to Buyer (the ''Excluded Assets"):
(a) claims by Multimedia with respect to (i) the
Excluded Assets and (ii) liabilities not assumed
by Buyer; including without limitation claims for
tax refunds and counterclaims with respect to
obligations and liabilities not being assumed by
Buyer hereunder;
(b) all contracts of insurance;
(c) all employee benefits plans of any nature;
(d) cash on hand and in banks and other cash items;
(e) all tangible personal property of Multimedia
disposed of or consumed in the ordinary course
of business as permitted under Section 5.1 below
or with the consent of Buyer between the date of
this Agreement and the Adjustment Time;
(f) subject to Section 10.9 below, the names
Multimedia Cablevision, Multimedia, or any
variant thereof and any associated trademarks,
logos, tradenames or similar marks;
(g) all files relating to the Business that are located
at Gannett Co., Inc.'s corporate headquarters,
subject to Buyer's access pursuant to Section
5.3;
(h) all cable programming services agreements; and
(i) any property of Multimedia not primarily used in
the Business.
1.3 Liabilities.
(a) The Assets shall be sold and conveyed to Buyer
free and clear of all liabilities, obligations, liens,
security interests and encumbrances, except for
liens for taxes not yet due and payable, except
that Buyer shall assume, discharge and perform
the following liabilities:
(i) Multimedia's obligations to subscribers
of the Business for (A) subscriber
deposits held by Multimedia as of the
Adjustment Time to the extent included
as current liabilities for purposes of
Section 1.6 and which are refundable;
(B) subscriber, advertising and other
advance payments held by Multimedia as
of the Adjustment Time for services to
be rendered by a System after the
Adjustment Time to the extent included
as current liabilities for purposes of
Section 1.6; and (C) the delivery of cable
service to subscribers of the Business
after the Closing Date;
(ii) obligations accruing and relating to
periods after the Adjustment Time and
arising out of Buyer's ownership of the
Assets or operation of the Systems after
the Adjustment Time, including without
limitation under the Contracts and
Governmental Permits, except to the
extent such obligations or liabilities relate
to Excluded Assets;
(iii)Multimedia's obligations under the
change in control plan attached hereto as
Exhibit 1.3 (the "Change in Control
Plan") of up to $4.0 million;
(iv) all liabilities of the Business reflected on
the Closing Date Balance Sheet to the
extent reflected in current liabilities for
purposes of Section 1.6;
(v) all liabilities related to capital
expenditures incurred in accordance with
Section 5.1;
(vi) except for matters specified in Section
1.3(b) below, all liabilities and
obligations incurred in the ordinary
course of the Business and, subject to
Section 10.6, disclosed to Buyer in the
Post-Signing Schedules; and
(vii)the bonds, guaranties and letters of credit
set forth on Schedule 3.27, other than the
Telesynergy letter of credit, except to the
extent that Buyer provides substitutes for
any such bond, guaranty or letter of
credit and a release of Multimedia's
(including any of its affiliates) obligations
thereunder, each in form and substance
acceptable to Multimedia.
(b) Buyer does not assume and will not be liable for
any of the following liabilities or obligations of
Multimedia:
(i) any liability or obligation related to the
Excluded Assets;
(ii) any liability to any of Multimedia's
employees of any nature whatsoever
related to the period prior to the
Adjustment Time, including under any
employee benefits plan of any nature
(except as otherwise provided for in
Sections 1.3(a) and 10.7, or as included
as a current liability pursuant to Section
1.6(a));
(iii)any liability arising out of any termination
by Multimedia of the employment of any
employee or the engagement of any
consultant of Multimedia prior to the
Adjustment Time, or who retired prior to
or on the Closing Date;
(iv) any liability under any litigation,
proceeding or claim of any nature related
to the Business brought by any person or
entity with respect to the period of time
prior to or on the Closing Date, whether
or not such litigation, proceeding or
claim is pending, threatened or asserted
before or on the Closing Date;
(v) any liability for any taxes owed by
Multimedia with respect to the Business
or the Assets prior to the Adjustment
Time; or
(vi) any liability or obligation owed by
Multimedia or any of its affiliates to any
broker or finder in connection with this
Agreement or the transactions
contemplated hereby.
1.4 Consideration.
(a) Subject to the conditions contained in this
Agreement, and in consideration of the sale of the Assets,
Buyer will pay on the Closing Date the sum of $2.7 Billion
Dollars (the "Purchase Price"), subject to adjustment pursuant
to Section 1.6 below.
(b) Upon receipt of the approval of the Boards of
Directors of Multimedia, Gannett Co., Inc. and Buyer, Buyer
shall deliver to a bank or other financial institution acceptable to
the parties, as escrow agent under a deposit escrow agreement
in substantially the form attached hereto as Exhibit 1.4 (the
"Escrow Agreement"), a deposit (the "Deposit") consisting of
cash in the amount of $27 million. The Deposit will be invested
as provided in the Escrow Agreement. The Escrow Agreement
shall provide that interest shall be paid to Buyer on a monthly
basis as it accrues in the escrow account. The Deposit with
accrued interest thereon shall be returned to Buyer in the event
this Agreement is terminated, unless Multimedia terminates this
Agreement pursuant to Section 10.2(b) or Section 10.2(d) due
to Buyer's material breach of this Agreement, which shall be the
only basis upon which the Deposit will be forfeited by Buyer.
1.5 Manner of Payment.
The Purchase Price, as adjusted pursuant to Section 1.6
below, shall be paid to Multimedia in immediately available
funds by wire transfer on the Closing Date. Any undistributed,
accrued interest on the Deposit shall be paid to Buyer on the
Closing Date as provided in the Escrow Agreement.
1.6 Adjustments.
(a) The parties acknowledge and agree that the
Purchase Price reflects the financial condition of the Business as
described in the financial statements described in Section 3.4
below. If on the Closing Date the Business's current liabilities
exceed current assets by more than $6,912,000 the Purchase
Price will be reduced by such excess. If current assets plus
$6,912,000 exceed current liabilities, then the Purchase Price
will be increased by such excess. The calculations described
above are referred to herein as the "Balance Sheet Test." For
purposes of this Agreement, "current assets" means all current
assets of the Business as of the Adjustment Time, determined in
accordance with generally accepted accounting principles
("GAAP") consistently applied; provided, however, that (i)
current assets shall not include cash or cash equivalents, any
amounts in respect of Excluded Assets, accruals for federal,
state or local taxes (including the current portion of deferred
income taxes) and any intercompany receivables from any
affiliates of Multimedia, and (ii) current assets shall include
capital expenditures incurred after the date hereof and through
the Closing Date in accordance with Section 5.1; and (iii)
current assets shall include 92.8% of the face amount of
subscriber and advertising accounts receivable of the Business
without regard to the allowance for doubtful accounts balance.
For purposes of this Agreement "current liabilities" means all
current liabilities of the Business as of the Adjustment Time,
determined in accordance with GAAP consistently applied;
provided, however, that accrued vacation, accrued subscriber
rebates, refundable subscriber deposits, paid-in-advance
subscriber liabilities, pre-paid advertising and all current and
non-current deferred income for programming launch supports
(whether or not required to be treated by GAAP) will be
included in current liabilities, and federal, state and local taxes
payable, intercompany payables to any affiliate of Multimedia
and any liabilities related to Employee Plans and Compensation
Arrangements will be excluded from current liabilities. All
federal, state and local deferred taxes on income through the
Closing Date, including interest and penalties, and all
intercompany and affiliate receivables or liabilities and all long-
term liabilities and capital leases will be treated as shareholders'
equity and will be excluded from the Balance Sheet Test and
will not be assumed by Buyer.
(b) The Purchase Price shall be adjusted for the total
number of the Systems' EBS's as of the Adjustment Time, as
provided in Schedule 1.6.
(c) On the third business day preceding the Closing
Date, to the extent practicable, the adjustments provided in this
Section 1.6 shall be made to the Purchase Price on the basis of
the then most recently available financial statements of the
Business, which shall be reflected on a preliminary balance sheet
("Preliminary Balance Sheet") prepared by Multimedia. Within
120 days after the Closing Date, Multimedia will prepare an
adjusted balance sheet ("Closing Date Balance Sheet") of the
Business as of the Adjustment Time, reflecting the adjustments
provided in this Section 1.6 and showing the recalculation of
adjustments reflected on the Preliminary Balance Sheet. Within
180 days after the Closing Date, final adjustments pursuant to
this Section 1.6 and any required refund or payment shall be
made on the basis of the Closing Date Balance Sheet. If any
dispute arises over the amount to be refunded or paid, such
refund or payment shall nonetheless be promptly made to the
extent such amount is not in dispute. If any such dispute cannot
be resolved by the parties, it shall be referred to a mutually
satisfactory independent public accounting firm of national
stature which has not been employed by either party for the two
years preceding the Closing Date. The determination of such
firm shall be conclusive and binding on each party. The fees of
such firm shall be shared equally by each party. For purposes
hereof, "Adjustment Time" means 12:01 a.m. Eastern Time on
the Closing Date.
ARTICLE II. The Closing.
2.1 Time and Place of Closing.
The closing (the "Closing") of the sale and purchase of
the Assets shall be held at the offices of Dow, Lohnes &
Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite
800, Washington, D.C. 20036 at 10:00 a.m., local time, on the
date specified in accordance with the immediately following
sentence by Buyer by notice to Multimedia after all of the
conditions to closing set forth in Articles VII and VIII have
been satisfied or waived (the "Closing Date"). The parties
agree that upon satisfaction of the conditions in Sections 7.3,
7.4, 8.3 and 8.6, the Closing Date shall be scheduled for the
fifth business day thereafter, provided the occurrence of the
Closing shall be subject to the satisfaction of all the conditions
in Articles VII and VIII.
2.2 Deliveries by Multimedia.
At the Closing, Multimedia will deliver to Buyer the
following, each of which shall be in form and substance
satisfactory to both parties:
(a) bills of sale, deeds, assignments and other
instruments of transfer and conveyance
transferring and assigning the Assets to Buyer;
(b) certificates representing the Shares and
instruments of transfer and conveyance
transferring and assigning the Shares to Buyer;
(c) any consents to assignment from third parties
obtained by Multimedia relating to the Material
Contracts listed on Schedule 7.5 and
Governmental Permits requiring such consent
that are designated with an "*" on Schedule 3.9 hereto,
as well as any other consents obtained by Multimedia;
(d) receipt for the Purchase Price;
(e) certificate, dated the Closing Date, of the
Secretary of Multimedia and Gannett Co., Inc.
("Gannett") as to resolutions of the Boards of
Directors of Multimedia and Gannett relating to
this Agreement and the transactions
contemplated hereby;
(f) certificate of an officer of Multimedia certifying
the fulfillment of the conditions set forth in
Sections 8.1(a) and 8.1(b) below; and
(g) duly executed UCC-3 termination statements,
mortgage releases and such other release and
termination instruments as Buyer shall
reasonably request to release any liabilities,
obligations, liens, security interests and
encumbrances, except for liens for taxes not yet
due and payable, from the Assets transferred to
Buyer at Closing.
2.3 Deliveries by Buyer.
At the Closing, Buyer will deliver to Multimedia the
following, each of which shall be in form and substance
satisfactory to both parties:
(a) funds equal to the Purchase Price as adjusted,
and in such manner as described in Section 1.5
above;
(b) an assumption agreement pursuant to which
Buyer shall assume Multimedia's liabilities and
obligations as provided in Section 1.3(a) hereof;
(c) certificate, dated the Closing Date, of the
Secretary of Buyer and Buyer's parent company
as to resolutions of the Board of Directors of
Buyer and Buyer's parent company relating to
this Agreement and the transactions
contemplated hereby;
(d) certificate of an officer of Buyer certifying the
fulfillment of the conditions set forth in Sections
7.1(a) and 7.1(b) below; and
(e) evidence that the Buyer has provided bonds,
guaranties or letters of credit in substitution for
Multimedia's obligations listed in Schedule 3.27 and
a release of Multimedia's (including any of its
affiliates) obligations thereunder.
ARTICLE III. Representations and Warranties of Multimedia.
Multimedia represents and warrants to Buyer as follows:
3.1 Organization; Qualification.
Multimedia is a corporation duly organized, validly
existing and in good standing under the laws of the State of
South Carolina and is qualified to do business in Kansas, North
Carolina, and Oklahoma. Multimedia has the full power and
authority to own and operate the Assets and carry on the
operations of the Business as such operations are now being
conducted.
3.2 Authority Relative to this Agreement.
Multimedia has the full corporate power, authority and
legal right to execute and deliver this Agreement and to
consummate the transactions and perform its obligations as
contemplated hereby. Subject to Multimedia's obtaining the
approval of its and Gannett Co., Inc.'s Boards of Directors, the
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate and shareholder
action and this Agreement has been duly and validly executed
and delivered by Multimedia and constitutes a legal, valid and
binding obligation of Multimedia enforceable against
Multimedia in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency or similar
law affecting the rights or creditors generally.
3.3 System Information.
(a) With respect to the Systems, Schedule 3.3(a) sets forth
as of June 27, 1999 for each System: (i) the approximate number
of miles of completed operational trunk and distribution cable or
fiber plant; (ii) the approximate number of homes passed;
(iii) the number of currently fully operational channels;
(iv) the approximate number of EBS's as of June 27, 1999,
(v) all stations and signals carried and channel position
for each signal and station, (vi) the existing towers that are used
by Multimedia currently and that Multimedia anticipates using
after completion of planned upgrades, and (vii) the bandwidth
capacity, including two-way capability. For purposes hereof,
"EBS" shall be calculated as of the applicable date using
Multimedia's CBIS Cable Master software consistent with
Multimedia's past practices.
(b) Schedule 3.3(b) includes for each System: (i) as
of June 27, 1999 each class of service (with the exception of
program packages), the rates being charged by Multimedia for
each and the approximate number of customers receiving each
class other than basic services; (ii) any announced increases in
the rates being charged by Multimedia to subscribers; and (iii) a
list of those local franchising authorities certified to regulate
basic rates.
(c) The current rates for all franchise fees payable
with respect to Multimedia's cable television franchises included
in the Governmental Permits are disclosed in Schedule 3.3(c).
Except as disclosed in Schedule 3.3(c), Multimedia has not been
notified by any governmental authority or other entity regarding
any adjustment to the amount of franchise fees paid by
Multimedia to such authority or entity.
3.4 Financial Statements.
Multimedia has furnished to Buyer the unaudited
financial statements of Multimedia with respect to the Systems
as prepared individually for the Systems located in each of
Kansas, North Carolina and Oklahoma (the "Regions")(the
"Financial Statements") (i) for the fiscal year ended December
27, 1998 and (ii) for the periods through June 27, 1999 (the
"Balance Sheet Date"). The Financial Statements have been
prepared, and the financial statements to be delivered pursuant
to Section 5.12 will be prepared, in accordance with GAAP,
consistently applied, except as indicated in Schedule 3.4, and
except for the absence of statements of cash flows and the
omission of information ordinarily contained in footnotes to
audited financial statements and, in the case of any Financial
Statements not as of the end of a fiscal year, subject to
customary year-end adjustments). The Financial Statements
are, and the interim financial statements to be delivered
pursuant to Section 5.12 will be, correct and complete in
accordance with the books and records regularly maintained by
Multimedia with respect to the Systems, and the Financial
Statements fairly present, and the financial statements to be
delivered pursuant to Section 5.12 will fairly present, the results
of operations and financial position of the Business. Multimedia
makes no representations, however, about the future business
or financial prospects of the Business for Buyer's intended
purposes.
3.5 Business Since the Balance Sheet Date.
Except as disclosed on Schedule 3.5, since the Balance
Sheet Date, the Business has been conducted in the ordinary
course of business and in substantially the same manner as it
was before the Balance Sheet Date. Since the Balance Sheet
Date, there have been no changes in the assets, liabilities,
business, condition (financial or otherwise) or results of
operations of the business which have had a material adverse
effect on the assets, liabilities, business, financial condition or
results of operations of the Business or the operation of the
Business as it is currently being operated by Multimedia, other
than any change or effect resulting from changes affecting the
cable industry generally ("Material Adverse Effect").
3.6 Undisclosed Liabilities.
The Company has no obligation or liability of a type
required by GAAP to be reflected or reserved against in any of
the Financial Statements which is not fully reflected or reserved
against in such Financial Statements.
3.7 No Defaults.
The execution, delivery and performance of this
Agreement by Multimedia will not (a) conflict with any
provision of its Articles of Incorporation or bylaws, (b) subject
to obtaining the appropriate consents, 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 Contract, note, bond, mortgage or other instrument or
obligation relating to the Business and to which any of the
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
Multimedia or any of the Assets, except with respect to
antitrust law, as to which Buyer must satisfy itself, or (d) result
in the creation or imposition of any lien, charge or encumbrance
of any nature whatsoever on any of the Assets.
3.8 No Material Misstatements.
No representation or warranty made by Multimedia 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 Buyer.
3.9 Governmental Permits.
(a) The Governmental Permits (together with their
expiration dates) are listed on Schedule 3.9. Except as set forth
on Schedule 3.9, (i) the Governmental Permits are currently in
full force and effect and are valid according to their terms, (ii)
there is no legal action, governmental proceeding or
investigation, pending or threatened, to terminate, suspend or
modify any Governmental Permit and (iii) Multimedia is, and to
Multimedia's knowledge, each other party thereto is, in
compliance with the terms and conditions of all the
Governmental Permits and with other applicable requirements
of all governmental authorities (including the Federal
Communications Commission (the "FCC") and the Register of
Copyrights) relating to the Governmental Permits. Multimedia
has made available to Buyer true and complete copies of all of
its Governmental Permits as in effect on the date hereof.
Except as reflected on Schedule 3.9, Multimedia has not
received any written notice from any governmental authority,
any consultant representing any governmental authority, any
state cable regulatory authority or the FCC to the effect that
Multimedia is not currently in compliance with the terms of any
of its Governmental Permits.
(b) Without limiting the generality of the foregoing:
(i) the operation of each System has been, and is, in compliance
with the Communications Act of 1934, as amended (as so
amended, the "Communications Act"), and the rules and
regulations of the FCC; (ii) Multimedia has made all filings
required to be made with the FCC (including cable television
registration statements, annual reports and aeronautical
frequency usage notices); (iii) Multimedia has provided all
notices to subscribers required under the Communications Act;
and (iv) Multimedia is in compliance with all signal leakage
criteria prescribed by the FCC.
(c) A valid request for renewal has been duly and
timely filed under Section 626(a) of the Cable Act with the
proper governmental authorities with respect to all of
Multimedia's cable television franchises that will expire within
thirty months after the date of this Agreement.
3.10 Condition and Adequacy of the Assets.
The tangible assets included in the Assets are in
adequate 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. The Assets include all
the assets and properties primarily used by Multimedia to
conduct the Business as it is now being conducted, except for
certain shared fiber facilities as described in Schedule 3.10.
3.11 Accounts Receivable.
All of the Accounts Receivable have been validly
created in bona fide transactions in the ordinary course of
business.
3.12 Contracts.
Schedule 3.12 contains a list of each of the Contracts in
effect on the date hereof, which involves payments by
Multimedia in excess of $400,000 annually or in excess of $3.0
million in the aggregate over its remaining term, which list is
true, correct and complete. With delivery of the Post-Signing
Schedules, Multimedia will deliver to Buyer true and complete
copies of all such Contracts as in effect on the date hereof. The
Contracts are in full force and effect (subject to expiration at the
end of their current term) and are valid, binding and enforceable
upon Multimedia and, to Multimedia's knowledge, the other
parties thereto in accordance with their terms, except to the
extent such enforceability may be limited by applicable
bankruptcy, insolvency or similar law affecting the rights of
creditors generally. Except as disclosed in Schedule 3.12,
Multimedia is in compliance with the terms of such Contracts
and Multimedia has not received any notice from any third party
alleging any noncompliance or default under any such Contract.
3.13 Title.
(a) Schedule 3.13(a) lists all owned real property
included in the Assets. Multimedia owns and has good and
valid marketable title to such properties, free and clear of all
security interests, mortgages, conditional sales agreements,
charges, liens and encumbrances.
(b) Schedule 3.13(b) lists all real property leased by
Multimedia and used in the operation of the Business.
Multimedia has a valid leasehold interest in each item of real
property included in the Assets that is a leasehold (subject to
expiration of such real property lease in accordance with its
terms), free and clear of all security interests, mortgages,
conditional sales agreements, charges, liens and encumbrances
created by Multimedia. Multimedia owns and has good and
valid title to all tangible personal property included in the
Assets, free and clear of all security interests, mortgages,
pledges, conditional sales agreements, charges, liens and
encumbrances.
(c) Multimedia (i) owns and has good and valid title
to all intangible personal property included in the Assets, free
and clear of all security interests, mortgages, pledges,
conditional sales agreements, charges, liens and encumbrances
or (ii) has the valid and enforceable right to use all intangible
personal property included in the Assets as currently used by it.
(d) Except as disclosed on Schedule 3.13(d), no
person or entity has an option to purchase, right of first refusal
or other similar right with respect to all or any part of the
Assets.
3.14 Intellectual Property.
Except as disclosed on Schedule 3.14, Multimedia is not
infringing upon nor has it received any notice alleging that it is
infringing upon any trademarks, trade names, copyrights or
similar intellectual property rights of others. Multimedia has
made all requisite filings and payments with the Register of
Copyrights with respect to the Business and is otherwise in
compliance with all applicable rules and regulations of the
Copyright Office. Multimedia does not possess any patent,
patent right, trademark or copyright material to the Business
and is not a party to any license or royalty agreement with
respect to any such patent, patent right, trademark or copyright,
except for licenses respecting program material and obligations
under the Copyright Act of 1976 applicable to cable television
systems generally.
3.15 Litigation and Compliance with Laws.
Except as set forth on Schedule 3.15, and except for
environmental matters, as to which Multimedia's
representations are contained exclusively in Section 3.22 below:
(a) Multimedia has not been operating under or subject to, or in
default with respect to, any order, writ, injunction, judgment or
decree of any court or federal, state, or local governmental
authority or agency; (b) neither Multimedia nor any of its
officers or agents has received any inquiry, written or oral, from
any such authority alleging any violations of law related to the
operations of the Business during the 12-month period prior to
the date of this Agreement; (c) there is no litigation or
arbitration pending by or against, or to Multimedia's
knowledge, threatened against, Multimedia related to or
affecting any of the Assets or the Business; and (d) Multimedia
has complied with all laws, regulations, orders or decrees
applicable to the Business, the present uses by Multimedia of
the Assets do not violate any such laws, regulations, orders or
decrees, and Multimedia has no knowledge of any basis for any
claim for compensation or damage, or other relief from any
violation of the foregoing.
3.16 Employees.
Schedule 3.16 lists the names and salaries or rates of
commission, date of employment and job title of all the full and
part-time employees of Multimedia earning in excess of $35,000
annually. Multimedia and its affiliates have no written or oral
contracts of employment with any of the Employees of
Multimedia other than (i) oral employment agreements
terminable at will without penalty or (ii) those listed in Schedule
3.16. There is no collective bargaining agreement or other
contract with any labor organization regarding any of the
employees of Multimedia (the "Employees"), and, except as
reflected in Schedule 3.16, neither Multimedia nor any of its
affiliates has recognized or agreed to recognize or is required to
recognize any union or other collective bargaining
representative for any of the Employees of Multimedia. Other
than as described in Schedule 3.16, no union or other collective
bargaining representative claims to represent or has been
certified as representing any of the Employees of Multimedia
nor has Multimedia or any of its affiliates received a request
from any party for recognition as a representative for any of the
Employees of Multimedia for collective bargaining purposes.
The Employees of Multimedia are not engaged in, and within
the prior twelve months have not been subject to, any
organizing activity with respect to any labor organization and,
to the knowledge of Multimedia, no such activity is threatened.
Except as disclosed in Schedule 3.16, neither Multimedia nor
any of its affiliates has received any notices stating that it is
required to prepare any affirmative action plan applicable to any
of the Employees of Multimedia.
3.17 Taxes.
With respect to the Business, (a) Multimedia has filed,
or caused to be filed, all federal, state and local tax returns
required to be filed by Multimedia; and (b) Multimedia has paid,
or made provisions for the payment of (i) all taxes due for the
periods covered by such returns, except such accrued and
unpaid taxes for which appropriate accruals have been made in
accordance with generally accepted accounting principles, and
(ii) all deficiencies assessed as a result of any examination of
such returns. Except as disclosed in Schedule 3.17, Multimedia
has not received any notices of proposed reassessments of any
property owned by Multimedia that would affect the taxes of
Multimedia. There are no material tax liens on any of the
Assets, other than liens for current taxes not yet due and
payable and liens for taxes that are being contested in good faith
by appropriate proceedings.
3.18 Instruments of Conveyance; Good Title.
The instruments to be executed by Multimedia and
delivered to Buyer at the Closing, conveying the Assets to
Buyer, will transfer good and marketable title to the Assets free
and clear of all liabilities, obligations and encumbrances.
3.19 Changes.
Except as shown on Schedule 3.19 and changes which
are contemplated or explicitly permitted by this Agreement,
since the Balance Sheet Date, Multimedia has operated the
Business in the ordinary course consistent with past practices
and has not, with respect to the Business: (a) mortgaged,
pledged or subjected to a lien or any other encumbrance, any of
the Assets; (b) sold or transferred any material asset used or
useful in the Business; or (c) increased the compensation
payable or to become payable to any employee or agent, except
increases in accordance with historical practices or except as
disclosed herein.
3.20 Broker.
There is no broker or finder or other person who would
have any valid claim against Buyer 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 Multimedia.
3.21 Real Property.
The present use by Multimedia of the owned and leased
real property included in the Assets complies with applicable
zoning ordinances and other governmental laws, rules and
regulations. Multimedia has, with respect to the owned real
property included in the Assets, full legal and practical access to
public roads or streets necessary for the proper and lawful
conduct and operation of the Systems as currently utilized. All
the real property included in the Assets complies with all
applicable restrictive covenants.
3.22 Environment.
Except as provided in Schedule 3.22, in connection with
the real property owned or leased by Multimedia in connection
with the Business, no release, emission or discharge into the
environment of hazardous substances, waste or air pollutants or
toxic pollutants, as defined under any law, statute, ordinance,
order, judgment or regulation, whether federal, state or local
("Environmental Laws"), has occurred within the past
twenty-four months for properties acquired from Tele-
Communications, Inc. and forty-two months for all other
properties, is presently occurring, or is anticipated to occur in
excess of permitted levels or reportable quantities, under any
Environmental Law. Multimedia's present use of the Assets
does not violate any Environmental Law, occupational safety
and health or other applicable law. Multimedia has complied in
all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the
Business. No hazardous waste or hazardous substance
including Polychlorinated Biphenyls ("PCBS") has been
disposed of by Multimedia, and to the best of Multimedia's
knowledge, no hazardous waste or hazardous substance
including PCBs has been disposed of by any other person, on
the real property occupied by Multimedia. As used herein, the
term "hazardous wastes" shall have the same meaning as it has
in the Resource Conservation and Recovery Act, as amended,
and in the equivalent state statutes, if any, of the states in which
Multimedia operates Systems. If Multimedia learns between the
date of this Agreement and the Closing Date that Multimedia is
in breach of any representation and warranty set forth in this
Section 3.22, Multimedia shall notify Buyer and begin remedial
action promptly and use reasonable efforts to complete such
remedial action before the Closing Date. All costs associated
with taking such remedial action shall be Multimedia's sole
responsibility. If such remedial action is likely to cost
Multimedia in excess of $2,700,000, Multimedia may elect not
to take such remedial action. However, in such event Buyer
may either require Multimedia to proceed to Closing and Buyer
shall receive a credit of $2,700,000 towards the Purchase Price
or Buyer may terminate this Agreement. If Buyer does not
require Multimedia to close, this Agreement shall be terminated
and Multimedia shall not have any liability to Buyer as a result
of such termination, other than as set forth in Section 10.3.
3.23 Mid-Kansas Stock.
Multimedia owns beneficially and of record the Shares,
which comprise 50% of the issued and outstanding shares of
Mid-Kansas, Inc. capital stock. Other than this Agreement,
Multimedia has not executed and is not a party to any option,
right, agreement or commitment relating to the sale, delivery or
transfer of the Shares. Multimedia has, and at Closing will
transfer to Buyer, good and valid title to the Shares free and
clear of all encumbrances. The Shares have been duly
authorized, validly issued and are fully paid and non-assessable,
and have been issued in accordance with applicable law.
Multimedia has not made any commitment (including, without
limitation, a commitment to make any contributions to the
equity or capital of Mid-Kansas, Inc.) in respect of the Shares
which will be binding upon Buyer.
3.24 Competitive Activity.
Except as forth on Schedule 3.24, (a) there are no
operating cable television systems in the franchised areas in
which the Systems are operated, and (b) to the knowledge of
Multimedia, no franchise or other operating authority for a
cable television system or video services provider has been
granted to any party other than Multimedia by the appropriate
governmental authority in such franchised areas, and no third
party is seeking such a franchise or other operating authority.
3.25 Employee Benefit Plans.
(a) All Employee Plans and Compensation
Arrangements of Multimedia, any plan, arrangement or other
scheme which will become an Employee Plan or Compensation
Arrangement and any amendment to any Employee Plan or
Compensation Arrangement are listed in Schedule 3.25, and
complete and accurate copies of (including any amendments to)
any such Employee Plans, Compensation Arrangements or
other arrangements (and related insurance policies) have been
furnished to Buyer or will be furnished to Buyer within twenty
days immediately following the public announcement of the
transactions described in this Agreement, along with copies of
any employee handbooks or similar documents describing such
Employee Plans, Compensation Arrangements or other
arrangements.
(b) Each of Multimedia's Employee Plans and
Compensation Arrangements listed on Schedule 3.25 has been
administered in compliance with its own terms and in material
compliance with the provisions of ERISA, the Code and any
other applicable Federal or state laws.
(c) Neither Multimedia nor any other trade or
business under common control with Multimedia (within the
meaning of Sections 414(b), (c), (m) or (o) of the Code)
contributes, is required to contribute or has contributed to any
Multiemployer Plan (within the meaning of ERISA Section
3(37)) with respect to the Employees of Multimedia. Except as
described in Schedule 3.25, neither Multimedia nor any other
trade or business under "common control" with Multimedia (for
purposes of this Section 3.25, a business shall be considered
under "common control" with Multimedia if such trade or
business is under common control within the meaning of
Sections 414(b), (c), (m) or (o) of the Code), maintains or
contributes to any Employee Plan or Compensation
Arrangement that provides retiree medical or retiree life
insurance coverage to current employees, directors or
independent contractors of Multimedia.
(d) For purposes of this Agreement, the following
terms shall have the meanings indicated: (i) "Employee Plan"
shall mean any retirement or welfare plan or arrangement or any
other employee benefit plan as defined in Section 3(3) of
ERISA to which Multimedia or any other trade or business
under common control with Multimedia contributes or to which
Multimedia or any other trade or business under common
control with Multimedia sponsors, maintains or otherwise is
bound that provides benefits to Employees, former employees
or independent contractors of Multimedia; and (ii)
"Compensation Arrangement" shall mean any plans or
compensation arrangements other than an Employee Plan,
whether written or unwritten, which provide to Employees,
former employees or independent contractors of Multimedia
compensation or other benefits, whether deferred or not, other
than base salary or wages, and that are sponsored or maintained
by Multimedia or any other trade or business under common
control with Multimedia.
3.26 Transactions with Affiliates.
Except to the extent set forth in Schedule 3.26 and
except with respect to customary corporate overhead services
provided by the corporate, division or regional offices of
Gannett Co., Inc., Multimedia is not a party to any business
arrangement or business relationship with any of its affiliates
with respect to the Assets, the Systems or the Business, and
none of its affiliates owns any property or right, tangible or
intangible, that is used primarily in the Business or operations of
the Systems.
3.27 Bonds; Letters of Credit
Except as set forth on Schedule 3.27, there are no
franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by
Multimedia in connection with its operation or ownership of
any of the Systems.
ARTICLE IV. Representations and Warranties of Buyer.
Buyer represents and warrants to Multimedia as follows:
4.1 Organization.
Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
4.2 Authority Relative to this Agreement.
Buyer has the full corporate power, authority and legal
right to execute and deliver this Agreement and to consummate
the transactions and perform its obligations as contemplated
hereby. Subject to Buyer's obtaining the approval of its and its
parent company's Boards of Directors, the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate and shareholder action,
and this Agreement has been duly and validly executed and
delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance
with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency or similar law affecting the
rights of creditors generally.
4.3 No Defaults.
The execution, delivery and performance of this
Agreement by Buyer and the operation of the Business after the
Closing will not (a) conflict with or result in any breach of any
provision of its Certificate of Incorporation or bylaws, or (b)
violate any law, statute, rule, regulation, order, injunction or
decree of any federal, state or local governmental authority or
agency applicable to Buyer, except with respect to antitrust law,
as to which Multimedia must satisfy itself.
4.4 Brokers.
There is no broker or finder or other person who would
have any valid claim against Multimedia 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 Buyer.
ARTICLE V. Covenants of Multimedia Pending the Closing Date.
Multimedia covenants and agrees that from the date
hereof to and including the Closing Date:
5.1 Maintenance of Business.
Multimedia shall continue to carry on the Business in
substantially the same manner as heretofore conducted in the
ordinary course of business; provided, however, that any
actions Multimedia proposes to take that are not substantially in
the ordinary course of business or that constitutes entering into
or amending any Material Contract, will be subject to Buyer's
prior written consent, not to be unreasonably withheld,
conditioned or delayed. After the date of this Agreement,
Multimedia may make those capital expenditures that are
described in Schedule 5.1, and Buyer will reimburse Multimedia
at Closing for all such expenditures. Multimedia will make only
those additional capital expenditures that are approved in
advance by Buyer and for which Buyer will reimburse
Multimedia at Closing. For purposes of this Agreement,
"Material Contract" means all headend, tower and microwave
site leases, fiber leases, and any other Contract that requires
payments by Multimedia in excess of $400,000 annually or in
excess of $3.0 million in the aggregate over its remaining term.
Multimedia and its affiliates shall not, without the prior
approval of Buyer, (i) voluntarily recognize any union or other
labor organization as the collective bargaining representative for
any of the employees of Multimedia; or (ii) enter into a
collective bargaining agreement applicable to any of the
Employees of Multimedia, without first presenting such
proposed agreement to Buyer for review and approval, which
approval shall not be unreasonably withheld.
5.2 Organization.
Multimedia shall use its commercially reasonable efforts
to preserve its business organization intact and preserve the
goodwill of its subscribers, suppliers, and others having
business relations with it, except to the extent this Agreement
gives Buyer the right to approve or disapprove such matter.
5.3 Access to Facilities, Files and Records.
(a) At Buyer's reasonable request, Multimedia shall
from time to time give or cause to be given to the Buyer's
officers, employees, accountants, counsel and authorized
representatives (i) full access during normal business hours to
all facilities, property, accounts, books, minute books, deeds,
title papers, licenses, agreements, contracts, tax returns, records
and files, equipment, machinery, fixtures, furniture, vehicles,
notes and accounts payable and receivable and inventories
related to the Business, and (ii) all such other information
concerning the affairs of the Business as Buyer may reasonably
request.
(b) Buyer shall, for a period of two years from the
Closing Date, have access to, and the right to copy, at its
expense, during usual business hours upon reasonable prior
notice to Multimedia, all of the books and records that are
included in the Excluded Assets and that are related to the
Assets and the Systems that were transferred to Buyer pursuant
to this Agreement. Multimedia shall retain and preserve all such
books and records for such two-year period.
5.4 Representations and Warranties.
Multimedia shall give detailed written notice to Buyer
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 to Multimedia prior to the
date hereof, of any of Multimedia's representations or
warranties contained in this Agreement or in any Schedule
hereto.
5.5 Corporate Action.
Subject to the provisions of this Agreement, Multimedia
will take all necessary corporate action required of it to carry
out the transactions contemplated by this Agreement
5.6 Consents.
(a) Multimedia will use commercially reasonable
efforts to obtain or cause to be obtained prior to the Closing
Date consents to the assignment to or assumption by Buyer of
all of the Contracts and Governmental Permits which require
the consent of any third party by reason of the transactions
provided for in this Agreement; provided, however, that
Multimedia shall not be required to make any payments or to
incur any obligations to third parties in connection with the
obtaining of any such consents (other than normal or customary
filing fees, administrative costs or professional fees and
expenses relating to obtaining such consents and except as may
be required to cure any default by Multimedia under any
Contract or Governmental Permit).
(b) As soon as practicable after the date of this
Agreement but in no event later than twenty business days after
the public announcement of the transactions described in this
Agreement, Multimedia and Buyer will complete, execute, and
deliver, or cause to be completed, executed, and delivered to
the appropriate governmental authority a request for such
authority's consent to transfer each System franchise as to
which such consent is required. The request for consent with
respect to any System franchise shall be on an FCC Form 394.
Multimedia agrees that if in connection with the process of
obtaining any consent, a governmental authority or other person
or entity purports to require any significant adverse condition,
change or additional or materially different adverse terms to a
Governmental Permit or Contract to which such consent relates
that would be applicable to Buyer as a requirement for granting
its consent, Buyer's approval is required before Multimedia
accepts any such conditions, changes or additional or different
terms. Buyer will cooperate in all reasonable respects with
Multimedia to obtain all such consents, but Buyer will not be
required to accept (i) any materially adverse changes in, or the
imposition of any materially adverse condition to, including,
without limitation, the imposition of open access requirements
upon, any Governmental Permit as a condition to obtaining any
such consent or (ii) any condition that, if accepted, will
materially and adversely affect the assets, liabilities, business,
financial condition or results of operations of any member of the
Cox Control Group. For purposes of this Agreement, the "Cox
Control Group" shall mean each of Anne Cox Chambers,
Barbara Cox Anthony, Margaretta Johnson Taylor, Katharine
Rayner, James Cox Chambers, James C. Kennedy, Blair D.
Parry-Okeden and any of their spouses, living descendants
(including adopted persons) and any trust for the primary
benefit of any of the foregoing individuals (including, without
limitation, the Anne Cox Chambers Atlanta Trust, the Barbara
Cox Anthony Atlanta Trust and the Dayton Cox Trust), the
estate of any of the foregoing individuals, or any corporation,
partnership, limited liability company or any other entity more
than 50 percent of the total combined voting power in which
and at least one-third of the capital stock in which is owned by
one or more of the foregoing persons, provided, however, none
of the foregoing entities with respect to which the imposition of
any adverse change or condition shall be proposed shall be
included in the Cox Control Group in the event that the fair
market value of such entities in the aggregate shall be less than
$27 Million.
(c) Notwithstanding the foregoing, Multimedia will
have no further obligation to obtain consents: (i) with respect
to license agreements relating to pole attachments where the
licensing party will not consent to an assignment of such license
agreement, after exercise of its commercially reasonable efforts,
but requires that Buyer enter into the utility's then current
standard form of agreement with such utility, in which case
Buyer shall use its commercially reasonable efforts to enter into
such agreement on or prior to the Closing or as soon as
practicable thereafter and Multimedia will cooperate with and
assist in obtaining such agreements; and (ii) for any business
radio license which Multimedia reasonably expects can be
obtained within 120 days after the Closing and so long as a
temporary authorization is available to Buyer under FCC rules
with respect thereto.
5.7 Confidential Information.
Multimedia shall not disclose to third parties any
confidential information received from Buyer or its agents and
advisors in the course of investigating, negotiating and
completing the transactions contemplated by this Agreement.
Nothing shall be deemed to be confidential information which:
(a) is known to Multimedia at the time of its disclosure to it;
(b) becomes publicly known or available other than through
disclosure by Multimedia; (c) is rightfully received by
Multimedia from a third party; or (d) is independently
developed by Multimedia.
5.8 Consummation of Agreement.
Subject to the provisions of Section 10.2 of this
Agreement, Multimedia shall use all commercially reasonable
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.
5.9 Notice of Proceedings.
Multimedia will promptly notify Buyer 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 is
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.
Multimedia shall use commercially reasonable efforts to
overcome any objections raised by any governmental authority.
5.10 Hart-Scott-Rodino Act.
As soon as possible after the execution of this
Agreement, but in no event later than ten business days
thereafter, Multimedia 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. Multimedia shall use commercially reasonable efforts
to respond as promptly as reasonably practicable to any
inquiries received from the Federal Trade Commission ("FTC")
and the Department of Justice ("DOJ") for additional
information or documentation and to respond as promptly as
reasonably practicable to all inquiries and requests from any
other governmental authority in connection with antitrust
matters. Multimedia shall use its commercially reasonable
efforts to overcome any objections which may be raised by the
FTC, DOJ or any other governmental authority having
jurisdiction over antitrust matters. Notwithstanding anything to
the contrary in this Agreement, if Multimedia, in its reasonable
business judgment, considers the imposition of a condition upon
the transactions by a governmental agency to be materially
adverse to Multimedia or any of its affiliates, Multimedia may
terminate this Agreement.
5.11 Control of the Systems.
Prior to the Closing Date, control of the Systems shall
remain with Multimedia. Neither Buyer nor any of its
employees, agents or representatives, directly or indirectly, shall
or have any right to control, direct or otherwise supervise, or
attempt to control, direct or supervise, such Systems, it being
understood that supervision of all programs, equipment,
operations and other activities of such Systems shall be the sole
responsibility, and at all times prior to the Closing Date remain
with the complete control and discretion, of Multimedia, subject
to the terms of this Agreement.
5.12 Interim Financial Statements.
Multimedia shall deliver to Buyer unaudited interim
financial statements for the Regions and combined unaudited
interim financial statements for Multimedia's Cable Division
(the "Division") within thirty days after the close of each of the
Regions' and the Division's normal accounting periods that
occur between the Balance Sheet Date and the Closing Date.
5.13 Governmental Filings.
Multimedia will give to Buyer copies of all forms
required to be filed with the FCC or any other governmental
authority under the Communications Act and the FCC rules and
regulations promulgated thereunder with respect to rates or
otherwise prepared with respect to any or the Systems.
Multimedia also will duly and timely file a valid notice of
renewal under Section 626 of the Cable Act with the
appropriate governmental entity with respect to any System
franchise that will expire within thirty months after any date
between the date of the Agreement and the Closing Date.
5.14 Change in Control Plan.
Multimedia shall not modify or amend in any respect the
Change in Control Plan without Buyer's prior written consent.
ARTICLE VI. Covenants of Buyer Pending the Closing Date.
Buyer covenants and agrees that from the date hereof to
and including the Closing Date:
6.1 Representations and Warranties.
Buyer shall give detailed written notice to Multimedia
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 to Buyer prior to the date
hereof, of any of the representations and warranties of Buyer
contained in this Agreement.
6.2 Corporate Action.
Subject to the provisions of this Agreement, Buyer will
take all necessary corporate action required of it to carry out
the transactions contemplated by this Agreement.
6.3 Confidential Information.
If for any reason the transactions contemplated in this
Agreement are not consummated, Buyer shall not disclose to
third parties any confidential information received from
Multimedia or its agents and advisors in the course of
investigating, negotiating and completing the transactions
contemplated by this Agreement. Nothing shall be deemed to be
confidential information which: (a) is known to Buyer at the
time of its disclosure to it; (b) becomes publicly known or
available other than through disclosure by Buyer; (c) is
rightfully received by Buyer from a third party; or (d) is
independently developed by Buyer.
6.4 Consummation of Agreement.
Subject to the provisions of Section 10.2 of this
Agreement, Buyer shall use all commercially reasonable efforts
to fulfill and perform all conditions and obligations on its part to
be fulfilled and performed under this Agreement in order to
cause the transactions contemplated by this Agreement to be
fully carried out. Buyer will use commercially reasonable
efforts to continue to carry any cable programming to the extent
that the failure to do so would result in a liability to Multimedia
under the related cable programming services agreement for all
or a portion of the related launch payments; provided,
Multimedia has given notice in the Post-Signing Schedules with
respect to the cable programming services agreements under
which and the periods during which termination of carriage
would generate liability to Multimedia.
6.5 Notice of Proceedings.
Buyer will promptly notify Multimedia 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 the consummation of this
Agreement or such transactions, or to nullify or render
ineffective this Agreement or such transactions if consummated.
Buyer shall use commercially reasonable efforts to overcome
any objections raised by any governmental authority.
6.6 Hart-Scott-Rodino Act.
As soon as possible after the execution of this
Agreement, but in no event later than ten business days
thereafter, Buyer shall prepare and file all documents with the
Federal Trade Commission and the United States Department
of Justice as are required to comply with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. Buyer shall
use commercially reasonable efforts to respond as promptly as
reasonably practicable to any inquiries received from the FTC
and the DOJ for additional information or documentation and to
respond as promptly as reasonably practicable to all inquiries
and requests from any other governmental authority in
connection with antitrust matters. Buyer shall use its
commercially reasonable efforts to overcome any objections
which may be raised by the FTC, DOJ or any other
governmental authority having jurisdiction over antitrust
matters. Notwithstanding anything to the contrary in this
Agreement, if Buyer, in its reasonable business judgment,
considers the imposition of a condition upon the transactions by
a governmental agency to be materially adverse to Buyer or any
of its affiliates, Buyer may terminate this Agreement.
6.7 Consents.
Buyer will cooperate with Multimedia to obtain
consents to the assignment to or assumption by Buyer of the
Contracts and Governmental Permits as described in Section
5.6 above. As soon as practicable after the date of this
Agreement, but in no event later than twenty business days after
the public announcement of the transactions described in this
Agreement, Buyer and Multimedia will complete, execute and
deliver to the appropriate governmental authority a request for
such authority's consent to transfer each System franchise as to
which such consent is required. The request for consent with
respect to any System franchise shall be on an FCC Form 394.
ARTICLE VII. Conditions to the Obligations of Multimedia.
The obligations of Multimedia under this Agreement
are, at its option, subject to the fulfillment of the following
conditions prior to or at the Closing Date:
7.1 Representations, Warranties, Covenants.
(a) Each of the representations and warranties of
Buyer contained in this Agreement and in any statement,
certificate, schedule or other document delivered by Buyer
pursuant hereto or in connection with the transactions
contemplated hereby, shall have been true and accurate in all
material respects as of the date when made and shall be deemed
to be made again on and as of the Closing Date and shall then
be true and accurate in all material respects;
(b) Buyer shall have performed and complied in all
material respects 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 the delivery by
Buyer of the Purchase Price; and
(c) Buyer shall have delivered to Multimedia a
certificate of an officer of Buyer, dated the Closing Date,
certifying the fulfillment of the conditions set forth in Sections
7.1(a) and 7.1(b) above.
7.2 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 opinion of
Multimedia, may reasonably be expected to result in a
preliminary or permanent injunction against such consummation
or an award of substantial damages;
(b) Neither of the parties to this Agreement 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; and
(c) In the event such a notice of intent is received or
such an investigation is commenced, this Agreement may not be
abandoned by Multimedia for a period of ninety days from the
date of such notice of intent or notice of commencement, but
Closing shall be delayed during such period. This Agreement
may be abandoned after this ninety-day period if, in the
reasonable opinion of Multimedia, there is a likely probability
that an investigation will result in an action or proceeding of the
type described in Section 7.2(a).
7.3 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.
7.4 Franchises.
The aggregate number of the Systems' EBS's covered
by (i) franchises as to which consents for franchise transfers
have been obtained and (ii) franchises that do not require such
consent, shall equal at least 90% of the total number of
Multimedia's EBS's as of the Adjustment Time.
7.5 Consents.
Subject to Section 8.6 below, Multimedia shall have
obtained consents to assignment of those Material Contracts
listed on Schedule 7.5 and those Governmental Permits
designated with an "*" on Schedule 3.9.
7.6 Discharge of Bonds, etc.
Buyer shall have delivered evidence, in form and
substance acceptable to Multimedia, that the bonds, guaranties
and letters of credit listed on Schedule 3.27 have been replaced
by obligations of Buyer, and Multimedia (including its affiliates)
shall have been released from its obligations thereunder.
ARTICLE VIII. Conditions to the Obligations of Buyer.
The obligations of Buyer 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
Multimedia contained in this Agreement and in any statement,
deed, certificate, schedule or other document delivered pursuant
to this Agreement or in connection with the transactions
contemplated hereby, shall have been true and accurate as of the
date when made and shall be deemed to be made again on and
as of the Closing Date and shall then be true and accurate,
except for representations and warranties that by their terms
refer to a specific date and except in each case for untrue or
inaccurate representations or warranties which, together with
any noncompliance or nonperformance by Multimedia of any
covenant hereunder, would not, in the aggregate, constitute a
Material Adverse Effect;
(b) Multimedia 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 Buyer of the
instruments conveying the Assets to Buyer, except in each case
for any noncompliance or nonperformance which, together with
any untrue or inaccurate representations or warranties of
Multimedia hereunder, would not, in the aggregate, constitute a
Material Adverse Effect; and
(c) Multimedia shall have delivered to Buyer a
certificate of an officer of Multimedia, dated the Closing Date,
certifying the fulfillment of the conditions set forth in Sections
8.l(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 opinion of
Buyer, 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 of the parties to this Agreement 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; and
(c) In the event such a notice of intent is received or
such an investigation is commenced, this Agreement may not be
abandoned by Buyer for a period of ninety days from the date of
such notice of intent or notice of commencement, but Closing
shall be delayed during such period. This Agreement may be
abandoned after the ninety-day period if, in the reasonable
opinion of Buyer, there is a likely probability that an
investigation will result in an action or proceeding of the type
described in Section 8.2(a).
8.3 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.
8.4 EBS's.
As of the Closing Date, the Systems will serve no fewer
than 490,000 EBS's , certified by an appropriate officer of
Multimedia.
8.5 Changes.
Except for changes affecting the cable industry
generally, no changes in the Business or the Assets, other than
those reflected in the Post-Signing Schedules delivered pursuant
to Section 10.6 below, has occurred which, in the aggregate,
would constitute a Material Adverse Effect.
8.6 Franchises.
The aggregate number of the Systems' EBS's covered
by (i) franchises as to which consents for franchise transfers
have been obtained and (ii) franchises that do not require such
consent, shall equal at least 90% of the total number of
Multimedia's EBS's as of the Adjustment Time.
8.7 Consents.
Multimedia shall have obtained all consents to
assignment of the Material Contracts listed on Schedule 7.5 and
those Governmental Permits designated with an "*" on
Schedule 3.9.
ARTICLE IX. Indemnification.
9.1 Survival; Limitations.
(a) The several representations, warranties,
covenants and agreements of the parties 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 the representations,
warranties covenants and agreements contained in Sections 3.2,
3.7, 3.13, 3.18, 4.2, 4.3 and Article IX shall survive without
time limit, (excluding claims under Section 9.2(f) which will
survive for a period of one year after the Closing Date), and the
representations and warranties contained in Section 3.17 shall
survive until 10 days after the expiration of the applicable
statute of limitations.
(b) Buyer shall not be entitled to indemnification
under this Agreement for any indemnification claim under
Sections 9.2(a) and 9.2(b) (excluding the obligation to pay the
Purchase Price adjustment in Section 1.6) until the aggregate
Losses and Expenses suffered by Buyer exceeds $2.7 million in
the aggregate (the "Threshold"), whereupon Buyer shall be
entitled to indemnification pursuant to Section 9.2 below for
indemnification from Multimedia for such Losses and Expenses
suffered by Buyer in excess of the Threshold.
(c) Buyer shall not be entitled to indemnification
under this Agreement for any indemnification claim under
Section 9.2(f) until the aggregate Losses and Expenses suffered
by Buyer related to Section 9.2(f) exceeds $400,000 in the
aggregate (the "Year 2000 Threshold"), whereupon Buyer shall
be entitled to indemnification pursuant to Section 9.2(f) for
indemnification from Multimedia for such Losses and Expenses
suffered by Buyer in excess of the Year 2000 Threshold.
(d) Multimedia's maximum aggregate liability to
Buyer for indemnification claims under Sections 9.2(a) and
9.2(b) shall be $27 million. Multimedia's maximum aggregate
liability to Buyer for indemnification claims under Section 9.2(f)
shall be $4,000,000.
(e) The sole and exclusive remedy of Buyer and
Multimedia after the Closing with respect to any and all claims
relating to this Agreement shall be pursuant to the
indemnification provisions of this Article IX, except that any
breach by Multimedia of its representations and warranties in
Section 3.22 shall be governed exclusively in accordance with
that section and excluded from Multimedia's indemnification
obligations pursuant to this Article IX.
(f) Neither party shall be responsible for any lost
profits or consequential, special or indirect damages of any
nature whatsoever under this Agreement.
9.2 Indemnification.
Subject to Section 9.1, Multimedia agrees it shall
indemnify, defend and hold Buyer harmless from and against
any and all damages, claims, losses, expenses, costs, obligations
and liabilities, including without limitation, liabilities for
reasonable attorneys' fees and disbursement and any taxes
imposed on the receipt of any payments under this Article IX
(reduced by any taxes saved as a result of any damage, claim,
loss, expense, obligation or liability being indemnified) ("Loss
and Expense''), suffered directly or indirectly by Buyer by
reason of, or arising out of:
(a) any breach of representation or warranty made
by Multimedia pursuant to this Agreement;
(b) any failure by Multimedia to perform or fulfill
any of its covenants or agreements set forth in
this Agreement;
(c) any failure by Multimedia to pay or perform
when due any of its liabilities or obligations
arising out of or related to the Business which
have not been assumed by Buyer hereunder,
including, without limitation, income taxes or
taxes for periods prior to the Closing Date and
any and all rate refund obligations with respect
to periods prior to the Closing Date;
(d) any litigation, proceeding or claim by any third
party relating to the Business prior to or on the
Closing Date;
(e) all liabilities and obligations relating to the
Excluded Assets; or
(f) the repair or replacement cost of material
Computer and Other Systems that are not Year
2000 Ready (including labor and installation
costs associated therewith, but excluding any
consequential damages relating thereto,
including lost profits) provided, however, that
Multimedia's indemnification obligations with
respect to this clause (f) shall arise only if the
Closing occurs prior to March 31, 2000. For
purposes of this Section 9.2, the term
"Computer and Other Systems" means any level
of hardware or software, equipment and cable
plant, or building and other facilities included in
the Assets and which will be used in connection
with the business of the Systems following the
Closing which are date dependent or which
process date data, including, without limitation,
any microcode, firmware, application programs,
user interfaces, files and databases, and which
might be adversely affected by the advent or
changeover to the calendar year 2000 A.D. or to
the advent or changeover to any leap year. For
purposes of this Section 9.2, the term "Year
2000 Ready" means that the referenced
component, system, software, equipment or
other item is designed to be used prior to, during
and after the calendar year 2000 A.D., and that
such component, system, software, equipment or
other item will operate at all levels, including,
without limitation, microcode, firmware,
application programs, user interfaces, files and
databases, during each such time period without
error or interruption relating to, or the product
of, date data which represents or references
different centuries or more than one century or
leap year.
9.3 Indemnification of Multimedia.
Buyer shall indemnify, defend and hold Multimedia
harmless from and against any and all Loss and Expense
suffered directly or indirectly by Multimedia by reason of, or
arising out of:
(a) any breach of representation or warranty made
by Buyer pursuant to this Agreement;
(b) any failure by Buyer to perform or fulfill any of
its covenants or agreements set forth in this
Agreement;
(c) any failure by Buyer to pay or discharge on or
subsequent to the Closing Date any liabilities or
obligations assumed by Buyer hereunder or
incurred or first required to be performed by
Buyer after the Closing Date; or
(d) any litigation, proceeding or claim by any third
party relating to the Business after the Closing
Date.
9.4 Notice of Claims.
If Multimedia or Buyer believes that it has suffered or
incurred any Loss and Expense, it shall notify the other party
promptly in writing within the applicable time period specified
in Section 9.1, describing such Loss and Expense, the amount
thereof, if known, and the method of computation of such Loss
and Expense, all with reasonable particularity and containing a
reference to the provisions of this Agreement in respect of
which such Loss and Expense shall have occurred. The amount
of the Loss and Expense set forth in the notice shall not be a
limitation on any claim for the actual amount of such Loss and
Expense, however.
9.5 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 any of the parties
intends to claim a Loss and Expense under this Article IX, 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, at its election, may participate in the
defense of any such Claim at its sole cost and expense. If the
indemnifying party does not notify the indemnified party within
ten days after receipt of the notice specified in this Section 9.5
that it is defending any such Claim, then the indemnified party
may defend such Claim and settle such Claim, through counsel
of its own choosing, and recover from the indemnifying party
the amount of such settlement or of any judgment and the costs
and expenses of such defense, including, but not limited to,
reasonable attorneys' fees and disbursements.
Notwithstanding the foregoing, the failure by a party to
abide by these terms and conditions shall not affect the other
party's obligations to indemnify such party against Loss and
Expense under this Article IX.
9.6 Known Matters.
Notwithstanding anything to the contrary in this
Article IX, (a) no claim for indemnification may be asserted
under Section 9.2 with respect to any matter discovered by or
known to Buyer on or before the date of this Agreement and
(b) no claim for indemnification may be asserted under
Section 9.3 with respect to any matter discovered by or known
to Multimedia on or before the date of this Agreement.
ARTICLE X. Miscellaneous Provisions.
10.1 Risk of Loss.
The risk of any loss, damage or destruction to any of the
Assets to be transferred to Buyer hereunder from fire or other
casualty or cause shall be borne by Multimedia at all times prior
to or on the Closing Date hereunder. Upon the occurrence of
any loss or damage to any of the Assets to be transferred
hereunder as a result of fire, casualty, accident or other causes
prior to or on the Closing Date, Multimedia shall notify Buyer
of same in writing immediately stating with particularity the
extent of the loss or damage incurred, the cause thereof if
known and the extent to which restoration, replacement and
repair of the Assets lost or destroyed will be reimbursed under
any insurance policy which respect thereto. In the event there is
material loss or damage and the Assets cannot be substantially
repaired or restored within 15 days after such loss, Buyer shall
have the option to:
(a) terminate this Agreement;
(b) postpone the Closing until such time as the
Assets have been substantially repaired, replaced
or restored; or
(c) elect to consummate the Closing and accept the
Assets in their "then" condition, in which event
Multimedia shall assign to Buyer all rights under
any insurance claim covering the loss and pay
over to Buyer any proceeds, including
reimbursement for any deductibles, under any
such insurance policy thereto received by
Multimedia with respect thereto.
10.2 Abandonment of Agreement.
This Agreement may be terminated by Multimedia or
Buyer at any time prior to the Closing Date:
(a) by the mutual consent of both parties hereto; or
(b) by Multimedia if any of the conditions provided
in Article VII hereof have not been met by the
time required and have not been waived by
Multimedia; or
(c) by Buyer pursuant to Section 3.22 or if any of
the conditions provided in Article VIII hereof
have not been met by the time required and have
not been waived by Buyer; or
(d) by any party hereto if the Closing has not been
fully completed by June 30, 2000;
(e) provided, however, that the party seeking
termination pursuant to clause (b), (c) or (d)
above is not in breach in any material respect of
any of its representations, warranties, covenants
or agreements in this Agreement.
10.3 Liabilities Upon Abandonment.
Except as otherwise provided for in Section 1.4(b), in
the event this Agreement is terminated pursuant to Section 10.2
or 10.21, no party hereto shall have any liability to the other
party for costs, expenses, damages, loss of anticipated profits or
otherwise, unless the termination occurs because of any
misrepresentation or breach of warranty by such party hereto or
the failure of performance of, or compliance with, any covenant
or agreement contained in this Agreement by such party;
provided that:
(a) Surviving Obligations. The obligations of the
parties described in 6.3, 10.3, 10.4 (and all other provisions of
this Agreement relating to expenses) and 10.16 will survive any
such termination.
(b) Withdrawal of Applications. All filings,
applications and other submissions relating to the
consummation of the transactions contemplated hereby shall, to
the extent practicable, be withdrawn from any governmental
authority or other person or entity to whom made.
The parties agree that if this Agreement is terminated by
Multimedia pursuant to Section 10.2(b) or Section 10.2(d) due
to Buyer's material breach of this Agreement, the amount of the
actual damages suffered by Multimedia as a result of a material
breach by Buyer are likely to be difficult or impractical to
ascertain and, therefore, the payment of the Deposit to
Multimedia is fair and reasonable and does not constitute a
penalty. The payment of the Deposit to Multimedia shall be a
liquidated sum in full satisfaction and complete payment of any
damages suffered by Multimedia, and in lieu of any and all other
damages, including without limitation, all consequential,
incidental and punitive damages, arising out of or related to the
breach and no additional damages shall be payable to
Multimedia or any other person or entity arising out of or
related to such breach and termination.
10.4 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 Assets to Buyer pursuant to this Agreement,
including without limitation any sales or use taxes or recording
or transfer taxes or fees, shall be paid by Buyer. The cost of
title insurance for the real, property purchased by Buyer
hereunder shall be paid by Buyer. The Hart-Scott-Rodino filing
fee shall be paid Buyer.
10.5 Environmental Reports.
Buyer may, at its election and cost, conduct
environmental studies of the real property owned or leased by
Multimedia for use in or relating to the operation of the
Business. Buyer shall provide Multimedia with a copy of any
such studies promptly upon Buyer's receipt thereof. If the
studies indicate that any representation or warranty made by
Multimedia in Section 3.22 is untrue, Multimedia shall be
required to take remedial actions only to the extent required
under Section 3.22. Multimedia shall control the process of
undertaking all such remedial actions after the Closing,
provided that all such remedial actions shall be reasonably
satisfactory to Buyer. Subject to the limitation in Section 3.22,
Multimedia shall be solely responsible for all costs incurred in
undertaking such remedial actions after the Closing.
Multimedia and Buyer agree that the results of any
environmental studies carried out pursuant to this Section 10.5
shall not be disclosed to any third parties, unless such disclosure
is required to be made by law.
10.6 Schedules.
Multimedia agrees to deliver to Buyer, within twenty
days immediately following the public announcement of the
transactions described in this Agreement, updated schedules
(including any schedules not previously delivered on the date of
this Agreement) (the "Post-Signing Schedules") and in
connection therewith to supply to Buyer such other information
as Buyer may reasonably request in connection with its review
of such Post-Signing Schedules. Notwithstanding the
foregoing, Multimedia will not deliver an updated version of
Schedule 3.4. Buyer shall be permitted, for a period of thirty
days immediately following its receipt of such Post-Signing
Schedules to evaluate the Post-Signing Schedules and any
additional or revised disclosures set forth therein (the
"Additional Disclosures"). If and only to the extent that the
exceptions to the representations and warranties of Multimedia
contained in the Additional Disclosures would result in
liabilities, losses or other damages to Buyer in excess of $27
million, then Buyer shall so notify Multimedia in writing (the
"Objection Notice") within five days. In the event the
Objection Notice is given, Buyer and Multimedia agree to
negotiate in good faith to reach agreement as to a mutually
satisfactory procedure for addressing the exceptions and other
information contained in the Additional Disclosures (including,
by way of example, agreeing to treat objectionable matters as
Excluded Assets or indemnified liabilities). If Buyer and
Multimedia are unable to reach such agreement within five days
after delivery of the Objection Notice, then Buyer shall have the
right to terminate this Agreement upon written notice to
Multimedia, which notice of termination shall be given to
Multimedia no later than two days following the expiration of
such five-day period, provided that to the extent any liability,
loss or damage is cured by Multimedia within thirty days after
Buyer's receipt of the Post-Signing Schedules, such liability,
loss or damage shall be deemed to have been excluded from the
Post-Signing Schedules for all purposes of this Agreement.
Once Buyer and Multimedia reach agreement in writing on the
Additional Disclosures contained in the Post-Signing Schedules,
such Post-Signing Schedules will be deemed to have been part
of this Agreement effective as of the date hereof.
10.7 Employees and Employee Benefits.
(a) Buyer hereby agrees to offer to employ all of
Multimedia's Employees on the Closing Date in comparable
positions with the same or greater current cash compensation.
For purposes of this Agreement, Employees of Multimedia will
include Active employees on Multimedia's payroll as well as
Active employees working solely for the Systems but who are
paid by an affiliate of Multimedia and who are listed on
Schedule 10.7(a). For purposes of this Section 10.7, "Active"
employees shall mean those employees actively at work as of
the Closing and those employees absent from work as of the
Closing due to vacation, sick leave, short-term disability or
military, family or medical leave or other short-term leave of
absence who are expected to return to work and who are able
to, and do in fact offer to, return to work in a comparable
position with Buyer within twelve weeks following the Closing,
or twenty-six weeks after Closing with respect to employees
absent due to short-term disability. Multimedia shall be
responsible for payment of all compensation (including accrued
vacation and commissions) payable to all Employees of
Multimedia up through the Closing Date. Multimedia shall pay
or be responsible to pay all non-qualified, out-of-pocket pension
liabilities and all other liabilities arising under the Employee
Plans and Compensation Arrangements to current or former
Employees of Multimedia related to the period prior to the
Closing Date. Multimedia will retain all of the Employee Plans
and Compensation Arrangements in which employees
participated prior to or on the Closing Date, and Buyer will not
assume obligations under such plans. Multimedia shall be fully
and solely responsible for any costs, expenses, obligations and
liabilities arising out of the pension or retirement obligations
attributable to current or former Employees of Multimedia
related to the period prior to the Closing Date. Buyer agrees to
indemnify, defend and hold Multimedia harmless from and
against all direct and indirect costs, expenses or liabilities arising
from or relating to claims made by Multimedia's Active
employees with respect to termination of employment which
claims arise solely by reason of the transactions contemplated
by this Agreement including, but not limited to, any claims for
improper termination or severance payments (but excluding any
costs, expenses or liabilities that have accrued under any
employment agreement between Multimedia and any such
employee or under any Employee Plan or Compensation
Agreement). Buyer shall be responsible for any obligations
under federal, state and local plant closing statutes, including
the WARN Act, provided that Buyer will not be responsible for
obligations arising as a result of termination of Employees prior
to the Closing Date.
(b) For any of Multimedia's Employees Buyer does
not hire or whose subsequent employment by Buyer terminates
within six months after the Closing, unless such termination is
for cause, Buyer will pay severance to such employees in
accordance with a severance formula of two weeks of salary for
every full year (or portion thereof) of employment with
Multimedia or any of its affiliated companies (including past
service with any prior owner or operator) and Buyer (with a
minimum or two weeks and a maximum of twenty-six weeks);
provided, however, that any employees who are covered by the
Change in Control Plan and identified in Schedule 10.7(b) shall
receive severance pay pursuant to either this Section 10.7(b) or
the Change in Control Plan, whichever is greater.
(c) Notwithstanding anything to the contrary herein,
Buyer shall (i) credit each Employee of Multimedia that
becomes employed by Buyer as of the Closing the greater of the
amount of vacation accrued by or credited to him or her as an
Employee of Multimedia through and including the Closing
Date or the amount of accrued vacation permitted to be accrued
by employees of Buyer in accordance with Buyer's standard
practices; (ii) permit each employee and such employee's
dependents to participate in Buyer's employee benefit plans to
the same extent as similarly situated employees of Buyer and
such employee's dependents; (iii) give each employee credit for
his or her past service with Multimedia and any of its affiliated
companies (including past service with any prior owner or
operator) to the extent such service was credited under
Multimedia's Employee Benefit Plans for purposes of eligibility
and vesting under Buyer's employee benefit and other plans; but
not including benefit accrual purposes and eligibility for retiree
medical benefits; (iv) not subject any employee to any waiting
periods or limitations on benefits for pre-existing conditions
under Buyer's group health and disability plans except to the
extent such waiting periods or limitations applied under the
terms of any Multimedia Employee Plan or Compensation
Arrangement; and (v) give credit under Buyer's group health
plans for any deductible previously met by such employee under
Multimedia's group health plan. Buyer's group health and
disability insurance plans shall offer coverage which is equal to
or broader than the coverage available on the date of this
Agreement under comparable plans of Multimedia.
(d) Multimedia shall retain full responsibility and
liability for offering and providing "continuation coverage" to
any "covered employee" or "qualified beneficiary" who is (or
was) covered by a "group health plan" sponsored or contributed
to by Multimedia and who has experienced a "qualifying event"
or is receiving "continuation coverage" on or prior to the
Closing Date; provided, however, that Buyer shall retain full
responsibility and liability for offering and providing
"continuation coverage" to any "covered employee" or
"qualified beneficiary" (i) to whom Buyer does not offer
employment in accordance with Section 10.7(a) or (ii) who,
after the Closing, is covered by a "group health plan" sponsored
or contributed to by Buyer and who experiences a "qualifying
event" or is receiving "continuation coverage" subsequent to
the Closing as a result of services performed at the Systems
after the Closing. With respect to any Employee to be hired by
Buyer or any of its affiliates, Buyer shall use its commercial best
efforts to enroll such Employee and any "qualified beneficiary"
of such Employee in its "group health plan" on the Closing
Date. "Continuation coverage," "covered employee," "qualified
beneficiary," "qualifying event" and "group health plan" all shall
have the meanings given such terms under Section 4980B of the
Code and Section 601 et seq. of ERISA.
(e) For three months after the Closing Date,
Multimedia will assist Buyer in transferring employee payroll
processing services from Gannett to Buyer.
10.8 Portal Space.
Commencing on the Closing Date, Buyer shall (a)
during the initial term of Multimedia's agreement with Road
Runner, place usatoday.com on Buyer's front page of its high-
speed Internet access provider in the following markets:
Wichita, Kansas, the suburban communities of Oklahoma City,
Oklahoma, and, subject to obtaining approval of Road Runner
(which such approval Buyer agrees to use commercially
reasonable efforts to obtain), Fairfax County, Virginia and
Spotsylvania County, Virginia subject to the terms of a royalty-
free customary license agreement with the affiliate of
Multimedia that owns usatoday.com; (b) use commercial best
efforts to place usatoday.com for a period of two years on a
first page below the front page of its high speed Internet access
provider in all other markets where Buyer or any of its affiliates
owns or operates a cable television system; and (c) for a period
of one year, negotiate in good faith to enter into joint ventures
with Gannett for the provision of local content programming in
markets where Buyer or any of its affiliates owns and operates
other cable television systems and Gannett owns and operates
newspapers or television stations.
10.9 Further Assurances, Consents and Post Closing Matters.
(a) From time to time after the Closing Date,
without further consideration, Multimedia will, at its expense,
(i) execute and deliver, or cause to be executed and delivered,
such documents to Buyer as Buyer may reasonably request in
order to effectively vest in Buyer good title to the Assets, and
(ii) use reasonable efforts to obtain any third party consents to
the assignment to Buyer of the Contracts and Governmental
Permits which require the consent of any third party by reason
of the transactions provided for in this Agreement and which
were not obtained by Multimedia on or before the Closing Date.
(b) From time to time after the Closing Date, Buyer
will provide Multimedia with access, with reasonable prior
notice and during normal business hours, to records related to
the period prior to or on the Closing Date for use by
Multimedia in connection with tax and/or legal proceedings
related to Multimedia's operation of the Business prior to or on
the Closing Date.
(c) Multimedia agrees that, for a period of three
months after the Closing Date, Buyer may use the name
Multimedia Cablevision and Multimedia in connection with its
operation of the Business, but thereafter it shall remove the
name and any associated trademarks, logos, trade names and
other similar marks from all of Buyer's property and shall not
use such names thereafter.
10.10 Allocation of Purchase Price.
Within 180 days after the Closing Date, Multimedia and
Buyer shall negotiate in good faith to reach agreement
regarding the allocation of the Purchase Price and any assumed
liabilities in accordance with the requirements of Section 1060
of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder. If Multimedia and
Buyer reach agreement with respect to such allocation, then
each party agrees, (i) to jointly complete and separately file
Forms 8594 with its federal income tax return for the tax year in
which the Closing Date occurs, and (ii) that neither Multimedia
nor Buyer will take a position on any income, transfer or gains
tax return that is in any manner inconsistent with the terms of
any such allocation without the written consent of the other. If
Multimedia and Buyer are unable to reach agreement with
respect to such allocation, then each party shall make its own
determination of such allocation for financial and tax reporting
purposes.
10.11 Waiver of Compliance.
Any failure of either party to comply with any
obligation, representation, warranty, covenant, agreement or
condition herein may be waived by the other party only by a
written instrument signed by the party granting the waiver. Any
such waiver or failure to insist upon strict compliance with a
term of this Agreement shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure to
comply.
10.12 Notices.
All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or
by facsimile transmission or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties
at the following addresses (or at such other address for a party
as shall be specified by like notice):
If to Multimedia, to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22234
Attention: Chief Financial Officer
Fax No.: 703-558-3837
with a copy to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22234
Attention: General Counsel
Fax No.: 703-558-3837
If to Buyer, to:
Cox Communications, Inc.
1400 Lake Hearn Drive, N.E.
Atlanta, Georgia 30319
Attention: Mr. John M. Dyer
Fax No.: 404-843-5939
with a copy to:
Cox Communications, Inc.
1400 Lake Hearn Drive, N.E.
Atlanta, Georgia 30319
Attention: Legal Department
Fax No.: 404-843-5845
and
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, NW
Suite 800
Washington, DC 20036
Attention: Stuart A. Sheldon, Esq.
Fax No.: 202-776-2222
10.13 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 Buyer without Multimedia's prior written consent.
10.14 Governing Law.
This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Delaware.
10.15 Bulk Sales Law.
As an inducement to Buyer to waive compliance with
the provisions of any applicable bulk transfer laws, Multimedia
covenants that all debts, obligations and liabilities relating to the
Business which are not expressly assumed by Buyer under this
Agreement will be promptly paid and discharged by Multimedia
as and when they become due and payable. Multimedia further
agrees to indemnify and hold Buyer harmless from all Loss and
Expense suffered by Buyer by reason of or arising out of claims
made by creditors with respect to non-compliance with any bulk
transfer law.
10.16 Public Announcements.
Through the Closing, no public announcement
(including an announcement to employees) or press release
concerning the transactions provided for herein shall be made
by any party without the prior written approval of the other
party, which consent shall not be unreasonably withheld or
delayed; provided, however, that any party hereto (and any of
its affiliates), subject to prior written notice to the other party
with an opportunity to review, may disclose the existence of
this Agreement, or the terms hereof, as such party believes in
good faith to be required by law.
10.17 No Third Party Rights.
Nothing in this Agreement shall be deemed to create any
right on the part of any person or entity not a party to this
Agreement.
10.18 Waiver of Jury Trial.
Multimedia and Buyer specifically waive any right to
trial by jury in any court with respect to any contractual,
tortious or statutory claim, counterclaim or crossclaim against
the other arising out of or connected in any way to this
Agreement because the parties hereto, both of whom are
represented by counsel, believe that the complex commercial
aspects of their dealings with one another make a jury
determination neither desirable nor appropriate
10.19 Counterparts.
This Agreement may be executed in identical
counterparts and each counterpart hereof shall be deemed to be
an original instrument, but all counterparts hereof taken
together shall constitute a single document. Delivery by
telecopier of an executed counterpart of a signature page to this
Agreement shall be as effective as delivery of an original
executed counterpart of this Agreement.
10.20 Closing with Fewer than 100% of Franchise Consents.
(a) If the conditions precedent set forth in Articles
VII and VIII (including Sections 7.4 and 8.6) have been
satisfied yet fewer than 100% of the franchises that require
consent to transfer have been obtained, then Multimedia and
Buyer shall consummate the Closing, excluding from the Assets
conveyed at Closing the franchises for which consents are
required but have not been obtained (the "Retained
Franchises").
(b) Concurrently with the Closing, Multimedia and
Buyer shall enter into a management agreement ("Management
Agreement") with respect to each area served by a Retained
Franchise, in form and substance reasonably satisfactory to
Multimedia and Buyer, pursuant to which Buyer will manage
such franchise area for Multimedia's benefit and Buyer will be
entitled to receive and retain all revenues, and will be
responsible for all costs and expenses, attributable to the
operations of any portions of the Systems within such franchise
area after Closing.
(c) Following the Closing and for the duration of the
remaining term of each Retained Franchise, the parties shall
continue to use commercially reasonable efforts to obtain
consents for Retained Franchises, subject to the provisions of
Section 5.6(b). Promptly after obtaining consent to transfer any
Retained Franchise, Multimedia shall assign and transfer such
Retained Franchise to Buyer free and clear of all liens and
encumbrances and the Management Agreement entered into
with respect to such Retained Franchise subsequently assigned
to Buyer shall be cancelled.
(d) In the event Closing is consummated as
contemplated by this Section 10.20, the Purchase Price shall not
be reduced for the value of the Retained Franchise and the
number of EBS's for purposes of Section 8.4 shall include any
EBS's in areas served under a Retained Franchise.
10.21 Board Approvals.
Notwithstanding any other provisions of this
Agreement, if by July 27, 1999, the Boards of Directors of
Multimedia, Gannett and Buyer have not approved this
Agreement and the transactions contemplated hereby, then
either party may terminate this Agreement upon two days' prior
written notice.
10.22 Alternative Structure.
On or prior to the twelfth (12th) business day after the
date hereof, Buyer shall prepare and deliver to Multimedia, Inc.
a draft stock purchase agreement (as contemplated herein) and
on or prior to the twentieth (20th) business day after the date
hereof, Buyer may elect to convert the form of this transaction
to a purchase by Buyer of the stock of Multimedia. In the event
of such election by Buyer, the parties agree that Buyer and
Multimedia, Inc. will, on such twentieth (20th) business day,
enter into a stock purchase agreement (the "Stock Purchase
Agreement") that will:
(i) contain provisions dealing with the
determination of the purchase price (including
adjustments) which shall have the same
economic effect as the corresponding provisions
of this Agreement and the same terms and
provisions regarding indemnification;
(ii) contain representations, warranties, covenants
and conditions (other than those referred to in (i)
above) which shall be the same as the
corresponding provisions of this Agreement
except for such changes as shall be appropriate
for a stock agreement (but which will have no
adverse effect on Multimedia, Inc. absent a
breach by Multimedia, Inc.); for example, but
without limitation:
(A) a representation on capitalization,
including indebtedness;
(B) covenants concerning issuance of stock,
incurrence of indebtedness and
distributions with respect to stock;
(C) appropriate provisions concerning the
filing of income tax returns and the
administration of any audits of such
returns;
(D) appropriate provisions regarding filings
for necessary consents for the
consummation of a stock purchase as
opposed to an asset purchase; and
(E) appropriate provisions regarding the
treatment of employees and employee
benefits so that such matters are treated
in substantially similar manner to their
treatment in this Agreement.
(iii)require Buyer and Multimedia, Inc. to make a
timely election under Section 338(h)(10) of the
Internal Revenue Code, as amended (and under
any similar applicable state or local income tax
laws) to treat for Federal and state tax purposes
the sale of the stock of Multimedia as a sale of
the assets of Multimedia and to report the sale
consistently with such elections; and
(iv) not contain any provision which would impose
on Multimedia, Inc. an obligation to pay any sum
to Buyer which Multimedia would not be
obligated to pay under this Asset Purchase
Agreement absent a breach by Multimedia, Inc.
Effective upon execution of the Stock Purchase
Agreement, this Agreement shall automatically terminate, and
the parties shall have no further liabilities or obligations under
this Agreement. For purposes of this Section 10.22,
Multimedia shall cause Multimedia, Inc. to perform this Section
10.22.
10.23 Non-Solicitation.
Multimedia agrees that neither it nor any of its affiliates
shall, between the date hereof and the date on which the
transactions contemplated by this Agreement are presented to
the Board of Directors of Gannett, disclose any of the terms or
provisions of this Agreement, enter into any agreement with,
solicit offers from, or otherwise negotiate or discuss with any
person or entity, other than Buyer, with respect to any
transactions that involve the direct or indirect sale of all or any
part of the Assets or the Business, including via merger or stock
sale.
10.24 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 hereof, and supersedes all prior agreements
and understandings between the parties. Except as otherwise
noted herein, this Agreement may not be amended except in a
writing signed by both parties.
The parties have caused this Agreement to be signed by
their respective duly authorized officers as of the date first
above written.
MULTIMEDIA CABLEVISION, INC.
/s/Thomas L. Chapple
By: ____________________________
Secretary
Title:__________________________
COX COMMUNICATIONS, INC.
/s/John M. Dyer
By: ____________________________
Vice President
Title: __________________________
MULTIMEDIA, INC.
/s/Thomas L. Chapple
By: _____________________________
Secretary
Title:____________________________
For purposes of Section 10.22 only
GUARANTY
Multimedia, Inc. hereby unconditionally guarantees the full and
timely performance of Multimedia's indemnification obligations
set forth in Article IX of the foregoing Asset Purchase
Agreement and Multimedia's obligations under Section 10.23.
The guarantee provided herein is an absolute and continuing
guarantee and shall not be affected by any amendment of the
foregoing Asset Purchase Agreement, or any renewal or
extension of the time for performance by Multimedia of any of
its obligations thereunder, or any indulgences or waivers with
respect thereto.
MULTIMEDIA, INC.
/s/Thomas L. Chapple
By: ____________________________
Thomas L. Chapple
Name: __________________________
Secretary
Title: _________________________
SCHEDULE 1.6
Adjustments for Closing EBS's
If the Closing occurs after December 31, 1999, the
Purchase Price shall be reduced by the dollar amount equal to
the product of (x) $5,000 times (y) the amount by which the
total number of the Systems' EBS's as of the Adjustment Time
is less than 520,000, provided however, there shall be no
adjustment in respect of EBS's less than 510,000.
Notwithstanding the foregoing, to the extent that a Purchase
Price adjustment is made pursuant to this Schedule 1.6 due to
the loss of any EBS's following the occurrence of a force
majeure event between the date of this Agreement and the
Closing Date, Buyer will refund to Multimedia nine months
after the Closing Date the portion of such adjustment
attributable to EBS's of the Systems that re-sign for cable
service with any of the Systems during such nine-month period.
SCHEDULE 3.3(a)
System Information: EBS's and Operational Matters
SCHEDULE 3.3(b)
System Rates for Classes of Service
SCHEDULE 3.3(c)
Franchise Fees and Notifications of Adjustments
to Franchise Fees
SCHEDULE 3.4
GAAP Exceptions
SCHEDULE 3.9
Governmental Permits
SCHEDULE 3.10
Shared Fiber Facilities
SCHEDULE 3.12
Certain Material Contracts; Non-Compliance with Contracts
SCHEDULE 3.13(a)
Owned Real Property
SCHEDULE 3.13(b)
Leased Real Property
SCHEDULE 3.13(d)
Rights to Purchase Assets
SCHEDULE 3.14
Intellectual Property
SCHEDULE 3.15
Litigation and Compliance with Laws
SCHEDULE 3.16
Employees; Salaries; Union Representation
SCHEDULE 3.17
Tax Matters
SCHEDULE 3.19
Changes
SCHEDULE 3.22
Environmental Matters
SCHEDULE 3.24
Competitive Activity
SCHEDULE 3.25
Employee Benefit Plans
SCHEDULE 3.26
Transactions with Affiliates
SCHEDULE 3.27
Bonds; Letters of Credit
SCHEDULE 5.1
Capital Expenditures
SCHEDULE 7.5
Contract Consents
SCHEDULE 10.7(a)
Employees
SCHEDULE 10.7(b)
Change in Control Plan Participants