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 (Date of earliest event reported):July 27, 1999
Cox Communications, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
1-6590 58-2112288
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(Commission File Number) (I.R.S. Employer Identification Number)
1400 Lake Hearn Drive
Atlanta, Georgia 30319
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(Address of principal executive offices) (Zip Code)
(404) 843-5000
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(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On July 27, 1999, Cox Communications, Inc. ("CCI") issued the following
press release:
Cox Communications to Acquire Multimedia Cable TV Assets From Gannett.
Cox reaches 6 million customer milestone
ATLANTA - Cox Communications, Inc. ("Cox") (NYSE:COX) announced today that
it has signed a definitive agreement with Gannett Co., Inc. ("Gannett") to
acquire its cable television operations serving 522,000 customers in Kansas,
Oklahoma and North Carolina for $2.7 billion in cash.
Because the transaction has been structured as a purchase of assets, based
on conservatives assumptions, it will generate approximately $350 million in tax
benefits to Cox. Net of these benefits, the $2.35 billion value represents
$4,500 per subscriber or 15.6 times estimated 2000 operating cash flow.
The agreement has been approved by the boards of Gannett and Cox, and will
be subject to necessary government and regulatory approvals. It is expected to
close by the end of the first quarter of 2000.
By year-end 1999, the systems are expected to serve 303,000 customers in
Kansas, including Wichita, Topeka and Manhattan; 122,000 customers in Oklahoma
City, Oklahoma; and 97,000 customers in North Carolina, including Greenville and
Rocky Mount.
"Gannett's cable properties are a natural fit with our growth strategy of
adding large, technologically advanced properties in stand-alone markets and in
markets contiguous to our existing operations. This acquisition will allow us to
establish a large presence in Kansas and will significantly enhance our already
strong presence in Oklahoma," commented Jim Robbins, Cox Communications
President and CEO. "these systems are also highly advanced technologically --
75% having already been upgraded to 750 Mhz -- which will allow us to expedite
the introduction of the full-service package of video, voice and high-speed data
services that Cox already offers in many of its largest markets."
In addition to this transaction, Cox has recently announced plans to
acquire 495,000 customers from AT&T and 833,000 customers from TCA Cable.
Following closing of these transactions, Cox will serve more than 2.4 million
customers in a six state region in the central U.S., including Oklahoma,
Arkansas, Louisiana, Texas, Kansas and Nebraska. Additionally, Cox announced in
April plans to acquire 264,000 customers from Media General, pushing its total
anticipated number of customers served to more than 6 million in 18 states.
According to Robbins, the Gannett transaction marks a milestone for Cox's
mergers and acquisition activity and for the company's growth strategy. "We've
achieved a great deal of strategic growth in a short period of time through
acquisitions, successfully growing our
<PAGE>
customer base by more than 2 million while expanding our footprint in highly
clustered geographic regions.
"We believe that 6 million customers is a formidable size in today's
environment. Our recent acquisitions provide us the size and scale that will
enable us to remain a significant player in the broadband communications
industry. We will, however, always be on the lookout for opportunistic
transactions that enhance our current clusters."
Morgan Stanley Dean Witter and Daniels & Associates served as financial
advisors to Cox in the transaction.
Following the close of pending cable system acquisitions, Cox will serve
approximately 6 million customers nationwide, making it the nation's fourth
largest cable company. A full-service provider of telecommunications products,
Cox offers an array of services, including cable television under the Cox Cable
brand, local and long distance telephone services under Cox Digital Telephone
brand; high-speed Internet access via Cox@Home; advanced digital video
programming services under the Cox Digital TV brand; and commercial voice and
data services via Cox Business Services. Cox is an investor in
telecommunications companies including Sprint PCS and Exite@Home, as well as
programming networks including Discovery Channel, The Learning Channel, Outdoor
Life and Speedvision. More information about Cox Communications can be accessed
on the Internet at www.cox.com.
Any statements in this press release that are not historical facts are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. The words "estimate," "anticipate" and other
expressions that indicate future events and trends identify forward-looking
statements. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from
historical results or those Cox anticipates. Factors that could have a material
and adverse impact on actual results are described in Cox's current report on
Form 10-K, dated March 29, 1999. All forward-looking statements in this press
release are qualified by reference to the cautionary statements included in
Cox's Form 10-K.
CONTACT:
Cox Communications, Inc.
Media Ellen East, 404-843-5854
pager: 888-773-6994
-or-
Amy Porter Cohn, 404-843-5769
pager: 888-395-1854
Analysts/Investors:
Mark Major, 404-843-5447
pager: 888-467-9374
Item 7. Exhibits
Exhibit 2.1 Asset Purchase Agreement between Multimedia Cablevision,
Inc. and Cox Communications, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COX COMMUNICATIONS, INC.
Dated: July 27, 1999 By: /s/ Andrew A. Merdek
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Andrew A. Merdek
Secretary
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
MULTIMEDIA CABLEVISION, INC.
AND
COX COMMUNICATIONS, INC.
Dated July 22, 1999
<PAGE>
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");
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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,
<PAGE>
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,
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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 TeleCommunications, 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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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,
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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,
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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,
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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: _________________________
