<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 5, 1997
REGISTRATION NO. 333-15657
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 3 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
JONES INTERNATIONAL NETWORKS, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 7922 84-1250515
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
(303) 792-3111
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
ELIZABETH M. STEELE, VICE PRESIDENT AND SECRETARY
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
(303) 792-3111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
PAUL HILTON, ESQ. MARC WEINGARTEN, ESQ.
N. ANTHONY JEFFRIES, ESQ. DEBORAH FREEDMAN, ESQ.
DAVIS, GRAHAM & STUBBS LLP SCHULTE ROTH & ZABEL LLP
370 SEVENTEENTH STREET, SUITE 4700 900 THIRD AVENUE
DENVER, COLORADO 80202 NEW YORK, NEW YORK 10022
(303) 892-9400 (212) 756-2000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions and the $753,750 payable to M. Kane &
Company, Inc. for financial advisory services, payable by the Company in
connection with the sale of Class A Common Stock being registered (all amounts
are estimated except the SEC Registration Fee and the NASD Filing Fee).
<TABLE>
<S> <C>
SEC Registration Fee............................................ $ 15,177
National Association of Securities Dealers, Inc. Filing Fee..... 5,509
Nasdaq Listing Application Fee.................................. 33,500
Blue Sky Fees and Expenses (including legal fees)............... 25,000
Printing Expenses............................................... 175,000
Legal Fees and Expenses......................................... 150,000
Accountants' Fees and Expenses.................................. 170,000
Transfer Agent and Registrar Fees............................... 20,000
Miscellaneous Expenses.......................................... 205,814
---------
Total......................................................... $ 800,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with the Colorado Act, the Company's articles of incorporation
eliminate in certain circumstances the liability of directors of the Company
for monetary damages for breach of their fiduciary duty as directors. This
provision does not eliminate the liability of a director for: (i) a breach of
the director's duty of loyalty to the Company or its shareholders, (ii) acts
or omissions by the director not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) a willful or negligent
declaration of an unlawful distribution or (iv) transactions from which the
director derived an improper personal benefit.
The Company's articles of incorporation also provide that the Company shall
indemnify any person and his or her estate and personal representatives
against all liability and expenses incurred by reason of the person being or
having been a director or officer of the Company or, while serving as a
director or officer of the Company, is or was serving at the request of the
Company or any of its subsidiaries as a director, an officer, an agent, an
associate, an employee, a fiduciary, a manager, a member, a partner, a
promoter, or a trustee of, or to hold any similar position with, another
domestic or foreign corporation or other individual or entity or of an
employee benefit plan, to the full extent permitted under the Colorado Act.
The Colorado Act requires a corporation to indemnify its officers and
directors against reasonable expenses incurred in any proceeding to which the
officer or director is a party and was wholly successful, on the merits or
otherwise, in defense of the proceeding. In addition to this mandatory
indemnification, the Colorado Act provides that a corporation may indemnify
its officers and directors against liability and reasonable expenses if the
officer or director acted in good faith and in a manner reasonably relieved to
be in the best interests of the corporation in the case of conduct in an
official capacity, in a manner he or she reasonably believed was at least not
opposed to the corporation's best interests in all other cases, or in a manner
he or she had no reasonable cause to believe was unlawful in the case of
criminal proceedings. In actions by or in the name of the corporation, the
Colorado Act provides the same standard but limits indemnification to
reasonable expenses incurred by the director and prohibits any indemnification
if the director was adjudged liable to the corporation. The Colorado Act also
prohibits indemnification of a director in connection with actions charging
improper personal benefit to the director if the director is adjudged liable
on that basis.
II-1
<PAGE>
Section 7 of the Underwriting Agreement (to be filed as Exhibit 1.1 hereto)
provides that the Underwriters will indemnify and hold harmless the Company
and its directors, officers and controlling persons from and against certain
liabilities, including any liability caused by any statement or omission in
the Registration Statement or Prospectus based on certain information
furnished to the Company by the Underwriters for use in the preparation
thereof.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Securities Act of 1933, as amended (the "Securities Act") (all share amounts
reflect the proposed 220-for-1 stock-split):
Effective September 30, 1996, the Company acquired its playback, trafficking
and uplinking facilities through the purchase of all of the outstanding common
stock of Jones Earth Segment, Inc. from Glenn R. Jones and Jones
International, Ltd. for 110,833 shares and 472,500 shares, respectively, of
Class A Common Stock.
In August 1996, the Company agreed to grant a warrant to M. Kane & Company,
Inc. ("MKC") to purchase 14,000 shares of the Class A Common Stock at an
exercise price equal to 120% of the initial public offering price of the Class
A Common Stock. In connection with the warrant, MKC will receive certain
registration rights that provide, among other things, that MKC will have one
demand registration right and unlimited piggy-back registration rights
relating to the shares of Class A Common Stock underlying the warrant.
Immediately prior to the consummation of this offering, the Company will
acquire: (i) an 8.35% equity interest in the PIN Venture from Adelphia
Communications Corporation in exchange for 262,500 shares of Class A Common
Stock, (ii) Glenn R. Jones' 19% equity interests in Jones Infomercial
Networks, Inc. and Great American Country, Inc. in exchange for 333,333 shares
of Class A Common Stock and (iii) certain transponder leases and related
subleases owned by Space Segment in exchange for 416,667 shares of Class A
Common Stock. Also immediately prior to the consummation of this offering, the
Company will issue 501,492 shares of its Class B Common Stock as repayment of
all of the approximately $6.0 million in advances owed to Jones International
as of December 31, 1996. The shares of Class A Common Stock and Class B Common
Stock to be issued in the transactions described in this paragraph are valued
at the assumed initial public offering price of the Class A Common Stock of
$12.00 per share. The actual number of shares to be issued in these
transactions will be adjusted, if necessary, to reflect the actual initial
public offering price.
The Company issued (or will issue) all of the foregoing shares of Class A
Common Stock and Class B Common Stock in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
3.3* Restated Articles of Incorporation of the Company
4.1 Form of Class A Common Stock Certificate
4.2* Form of Warrant Purchase Agreement between the Company and M. Kane &
Company, Inc.
5.1* Form of Opinion of Davis, Graham & Stubbs LLP as to the legality of
issuance of the Company's Class A Common Stock
10.1 Promissory Note, dated December 19, 1994, in the amount of
$6,554,500 from Jones Earth Segment, Inc. to Jones Spacelink, Ltd.
(assumed by the Company on September 30, 1996)
10.2 Letter Agreement dated August 14, 1996, between the Company and M.
Kane & Company, Inc.
10.3 The Company's 1996 Stock Option Plan
10.4+ Cable Sales Representation Agreement dated April 15, 1996, between
MediaAmerica, Inc. and Great American Country, Inc.
10.5+ Sales Representation Agreement dated November 1, 1995, between
MediaAmerica, Inc. and the Company
10.6*+ Sales Representation Agreement dated December 1, 1995, between
MediaAmerica, Inc. and Jones Satellite Networks, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.7 Purchase and Sale Agreement dated August 9, 1996, between Jones
Global Group, Inc. and the Company
10.8+ Partnership Agreement of Galactic/Tempo dated May 7, 1990, between
Tempo Sound, Inc. and Galactic Radio Partners, Inc.
10.9*+ Amended and Restated Partnership Agreement of Product Information
Network Venture dated October 1, 1995, among Jones Infomercial
Network Ventures, Inc., Cox Consumer Information Network, Inc. and
Adelphia Communications Corporation
10.10* Affiliate Agreement dated January 1, 1996, among Great American
Country, Inc., Jones Programming Services, Inc. and Jones
Intercable, Inc.
10.11 Galaxy V Satellite Transponder Agreement, dated January 1, 1995,
among Jones Satellite Holdings, Jones Galactic Radio and Mind
Extension University
10.12 Amended and Restated Affiliate Agreement dated August 1, 1994,
between Jones Infomercial Networks, Inc. and Jones Intercable,
Inc.
10.13+ Affiliate Agreement dated January 31, 1995, between Product
Information Network Venture and Cox Communications, Inc.
10.14+ Agreement dated May 1, 1995, between Product Information Network
and National Media Corporation
10.15*+ Letter Agreement dated August 23, 1996, between Product
Information Network and Seventh Medium, Inc.
10.16 License Agreement dated January 31, 1995, between Jones
International, Ltd. and Product Information Network Venture
10.17 Uplink Services Agreement dated January 1, 1995, among Jones Earth
Segment, Inc., Jones Infomercial Networks, Inc., Jones Computer
Network, Ltd., Mind Extension University, Inc. and Jones Galactic
Radio, Inc.
10.18 Transponder License Agreement dated January 1, 1995, among Jones
Space Segment, Inc., Jones Infomercial Networks, Inc. and Jones
Computer Network, Ltd.
10.19+ Satellite Transponder Service Agreement dated July 28, 1989,
entered into by Jones Space Segment, Inc.
10.20+ Transponder License Agreement dated October 28, 1992, between
Jones Space Segment, Inc. and Deutsche Welle
10.21 Tax Allocation Agreement dated August 28, 1992, among Jones
International, Ltd. and certain of its subsidiaries
10.22 Exchange Agreement relating to Jones Earth Segment, Inc. dated
September 30, 1996, between Glenn R. Jones, Jones International,
Ltd. and the Company
10.23 Agreement dated November 6, 1996, between Jones Space Segment,
Inc. and the Company
10.24 Agreement dated November 6, 1996, between Glenn R. Jones and the
Company
10.25 Agreement dated January 7, 1997, between Adelphia Communications
Corporation and the Company
10.26 Services Agreement dated January 1, 1995, among Jones Earth
Segment, Jones Infomercial Networks, Jones Computer Network and
Mind Extension University
10.27 Commitment Letter, dated January 29, 1997, between NationsBank of
Texas, N.A. and the Company
21 * Subsidiaries
23.1 Consent of Arthur Andersen LLP
23.2 * Consent of Davis, Graham & Stubbs LLP (See Exhibit 5.1)
23.3 Consent of Gary D. Edens
23.4 Consent of Michael L. Pandzik
24 Power of Attorney
27 Financial Data Schedule
</TABLE>
- --------
*Filed herewith.
+Portions of this exhibit have been omitted pursuant to a determination that
certain information contained therein shall be afforded confidential
treatment.
II-3
<PAGE>
Schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions, are inapplicable and therefore have been omitted or
the information required by the applicable schedule is included in the notes
to the financial statements.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act,
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the Company's bylaws, articles of incorporation or the
Underwriting Agreement, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 3 TO A REGISTRATION STATEMENT ON
FORM S-1 (FILE NO. 333-15657) TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF ENGLEWOOD, STATE OF COLORADO, ON
MARCH 5, 1997.
Jones International Networks, Ltd.
/s/ Gregory J. Liptak*
By: _________________________________
GREGORY J. LIPTAK
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 3 TO A REGISTRATION STATEMENT ON FORM S-1 (FILE NO. 333-15657)
HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURES TITLE DATE
/s/ Glenn R. Jones* Chairman of the
- ------------------------------------- Board of Directors March 5, 1997
GLENN R. JONES
President and
/s/ Gregory J. Liptak* Director (Principal March 5, 1997
- ------------------------------------- Executive Officer)
GREGORY J. LIPTAK
/s/ Jay B. Lewis* Group Vice
- ------------------------------------- President/Chief March 5, 1997
JAY B. LEWIS Financial Officer
and Director
(Principal
Financial Officer)
/s/ Keith D. Thompson* Chief Accounting
- ------------------------------------- Officer (Principal March 5, 1997
KEITH D. THOMPSON Accounting Officer)
/s/ Elizabeth M. Steele
*By: ________________________________
ELIZABETH M. STEELE
ATTORNEY-IN-FACT
II-5
<PAGE>
Exhibit 1.1
3,350,000 Shares
JONES INTERNATIONAL NETWORKS, LTD.
Class A Common Stock
UNDERWRITING AGREEMENT
----------------------
March __, 1997
Oppenheimer & Co., Inc.
Hambrecht & Quist
M. Kane & Company, Inc.
c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Jones International Networks, Ltd., a Colorado corporation (the
"Company"), proposes to sell to you and the other underwriters named on Schedule
I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 3,350,000 shares (the "Firm Shares") of the
Company's Class A Common Stock, $0.01 par value (the "Class A Common Stock").
In addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 502,500 shares (the "Option Shares") of Class A
Common Stock from it solely for the purpose of covering over-allotments in
connection with the sale of the Firm Shares. The Firm Shares and the Option
Shares are together called the "Shares."
1. Sale and Purchase of the Shares. On the basis of the
-------------------------------
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase, at
$[ ] per share (the "Initial Price"), the total number of Firm Shares
(adjusted by the Representatives to eliminate fractions) which bears the
same proportion to the number of Firm Shares to be sold by the Company as
the number of Firm Shares set forth opposite the name of such Underwriter
on Schedule I to this Agreement bears to the total number of Firm Shares to
be sold by the Company.
<PAGE>
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representatives
to eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
only once thereafter within 30 days after the date of this Agreement, in
each case upon written or facsimile notice, or verbal or telephonic notice
confirmed by written or facsimile notice, by the Representatives to the
Company no later than 12:00 noon, New York City time, on the business day
before the Firm Shares Closing Date or at least two business days before
the Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the time and
date (if other than the Firm Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery of the certificates for the
--------------------
Firm Shares shall be made by the Company to the Representatives for the
respective accounts of the Underwriters, and payment of the purchase price by
wire transfer of immediately available funds to the Company, shall take place at
the offices of Oppenheimer & Co., Inc., at Oppenheimer Tower, World Financial
Center, New York, New York 10281, at 10:00 a.m., New York City time, on the
third business day following the date of this Agreement; provided, however, that
if the Shares sold hereunder are priced and this Agreement is entered into after
4:30 p.m., New York City time, on any business day, payment and delivery in
respect of the Firm Shares shall take place on the fourth business day following
the date of this Agreement; in either case unless some other time shall be
agreed upon by the Company and the Representatives (such time and date of
delivery and payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised, delivery of the certificates for the Option Shares shall be made by
the Company to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price by wire transfer of immediately
available funds to the Company shall take place at the offices of Oppenheimer &
Co., Inc. specified above at the time and on the date (which may be the same
date as, but in no event shall be earlier than, the Firm Shares Closing Date)
specified in the notice referred to in Section 1(b) (such time and date of
delivery and payment are called the "Option Shares Closing Date"). The Firm
Shares Closing Date and the Option Shares Closing Date are called, individually,
a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
-2-
<PAGE>
3. Registration Statement and Prospectus; Public Offering. The
------------------------------------------------------
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No. 333-
15657), including a preliminary prospectus relating to the Shares, and has filed
with the Commission the Registration Statement (as hereinafter defined) and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and of
the related preliminary prospectus have heretofore been delivered by the Company
to you. The term "preliminary prospectus" means the preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement or filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the Rules and that is
delivered to prospective investors. The Registration Statement, as amended at
the time and on the date it becomes effective (the "Effective Date"), including
all exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b) and Rule 430A of the Rules, is called the
"Registration Statement." The term "Prospectus" means the prospectus in the
form first used to confirm sales of the Shares (whether such prospectus was
included in the Registration Statement at the time of effectiveness or was
subsequently filed with the Commission pursuant to Rule 424(b) of the Rules).
If the Company files a registration statement to register a portion of the
Shares and relies on Rule 462(b) for such registration statement to become
effective upon filing with the Commission (the "Rule 462(b) Registration
Statement"), then any reference to the "Registration Statement" herein shall be
deemed to include both the registration statement referred to above (No. 333-
15657) and the Rule 462(b) Registration Statement, as each such registration
statement may be amended pursuant to the Securities Act.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each preliminary
prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement and all other
registration statements and reports filed with the Commission by the
Company complied, and on the date of the Prospectus, on the date any post-
effective amendment to the Registration Statement shall become effective,
on the date any supplement or amendment to the Prospectus is filed with the
Commission, at all times that a prospectus must be delivered by the
Underwriters pursuant to the Securities Act and on each Closing Date, the
Registration Statement, the Prospectus (and any amendment thereof or
supplement
-3-
<PAGE>
thereto) and all other registration statements and reports filed with the
Commission by the Company will comply, in all material respects, with the
applicable provisions of the Securities Act and the Rules and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder; the Registration
Statement did not, as of the Effective Date, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and on the other dates referred to above neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When any
related preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto or
pursuant to Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material respects
with the applicable provisions of the Securities Act and the Rules and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty as to the last paragraph of the
cover page of the Prospectus, the paragraph with respect to stabilization
on the inside front cover page of the Prospectus and the statements
contained under the caption "Underwriting" in the Prospectus (to the extent
such statements relate to the Underwriters). The Company acknowledges that
the statements referred to in the previous sentence constitute the only
information furnished in writing by the Representatives on behalf of the
several Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus.
(b) The consolidated financial statements of the Company and its
Subsidiaries (as defined below) (including all notes and schedules thereto)
included in the Registration Statement and the Prospectus comply as to form
in all material respects with the requirements of the Securities Act and
present fairly on a consolidated basis the financial position, the results
of operations and cash flows and the shareholders' equity and the other
information purported to be shown therein of the Company and its
Subsidiaries at the respective dates and for the respective periods to
which they apply; and such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently
applied throughout the periods involved, and all adjustments necessary for
a fair presentation of the results for such periods have been made; and the
other financial and statistical information and the supporting schedules
included in the Prospectus and in the Registration Statement present
fairly, in all material respects, the information required to be stated
therein.
(c) Arthur Andersen LLP, whose report is filed with the Commission as
a part of the Registration Statement, are and, during the periods covered
by their reports, were independent public accountants as required by the
Securities Act and the Rules.
-4-
<PAGE>
(d) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Colorado.
Except for the Company's subsidiaries listed in Exhibit 21.1 to the
Registration Statement and the Prospectus (the "Subsidiaries"), the Company
has no subsidiary or subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or
other business organization. Each of the Subsidiaries has been duly
organized and is validly existing as a corporation or partnership in good
standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries is duly qualified and in good standing as
a foreign corporation in each jurisdiction in which the location of the
properties owned or leased by it or in which the character of the business
conducted by it makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole (a "Material Adverse Effect").
Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries owns, leases or licenses
any asset or property or conducts any business outside the United States of
America. Each of the Company and its Subsidiaries has all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies, including without limitation the Federal
Communications Commission, or any other person or entity, to own, lease and
license its assets and properties and conduct its businesses as now being
conducted and as described in the Registration Statement and the
Prospectus, except for such authorizations, approvals, consents, orders,
licenses, certificates and permits the failure to so obtain would not have
a Material Adverse Effect; no such authorization, approval, consent, order,
license, certificate or permit contains a materially burdensome restriction
other than as disclosed in the Registration Statement and the Prospectus;
and the Company has all such corporate power and authority, and such
authorizations, approvals, consents, orders, licenses, certificates and
permits to enter into, deliver and perform this Agreement and to issue and
sell the Shares to be issued and sold by the Company (except as may be
required under the Securities Act, the Exchange Act or the National
Association of Securities Dealers, Inc. ("Nasdaq") National Market and
state and foreign Blue Sky laws).
(e) Neither the Commission nor the Blue Sky or securities authorities
of any jurisdiction has issued an order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any preliminary
prospectus, the Prospectus, the Registration Statement, or any amendment or
supplement thereto, refusing to permit the effectiveness of the
Registration Statement or suspending the registration or qualification of
the Shares, nor to the Company's knowledge has any of such authorities
instituted or threatened to institute any proceedings with respect to such
an order in any jurisdiction in which the Shares are to be sold.
(f) Each of the Company and its Subsidiaries owns, or possesses
adequate and enforceable rights to use, all licenses or other rights to
use, all patents, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications,
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technology, know-how and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its business as
described in the Registration Statement and the Prospectus. Neither the
Company nor any Subsidiary has received any notice of, or is aware of, any
infringement of or conflict with asserted rights of others with respect to
any Intangibles which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect. Except as set forth in the Registration Statement or the
Prospectus, the discoveries, inventions, products or processes of the
Company and its Subsidiaries referred to in the Registration Statement or
the Prospectus do not to the Company's knowledge infringe or conflict with
any right or patent of any third party, or any discovery, invention,
product or process which is the subject of a patent application filed by
any third party which would have a Material Adverse Effect.
(g) Each of the Company and its Subsidiaries has good title to each of
the items of real and personal property that are reflected in the financial
statements referred to in Section 4(b) or are referred to in the
Registration Statement and the Prospectus as being owned by it and valid
and enforceable leasehold interests in each of the items of real and
personal property that are referred to in the Registration Statement and
the Prospectus as being leased by it, in each case free and clear of all
liens, encumbrances, claims, security interests and defects, other than
those described in the Registration Statement and the Prospectus and those
which do not and will not have a Material Adverse Effect.
(h) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or, to the knowledge of the Company, threatened (and the Company
does not know of any basis therefor) against, or involving the Company or
any of its Subsidiaries which would have a Material Adverse Effect or which
would prevent the consummation of the transactions contemplated by this
Agreement or is required to be disclosed in the Prospectus.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (i) there has not been any event which has resulted in or may
result in a Material Adverse Effect on the Company and its Subsidiaries,
whether or not arising from transactions in the ordinary course of
business; (ii) neither the Company nor any of its Subsidiaries, has
sustained any loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake,
hurricane, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental
action, order or decree that would have a Material Adverse Effect; and
(iii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein,
neither the Company nor any of its Subsidiaries has (A) issued any
securities or incurred any liability or obligation, direct or contingent,
for borrowed money, except such liabilities or obligations incurred in the
ordinary course of business, (B) entered into any transaction not in the
ordinary course of business or (C) declared or paid any dividend or made
any distribution on any shares of its stock or
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redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its stock or other securities.
(j) There is no document or contract of a character required to be
described in the Registration Statement and the Prospectus or to be filed
as an exhibit to the Registration Statement which is not described or filed
as required. Each agreement to which the Company or any of its
Subsidiaries is a party which is described in the Prospectus or is filed as
an Exhibit to the Registration Statement is in full force and effect and is
valid and enforceable by and against the Company or one or more of its
Subsidiaries, as the case may be, in accordance with its terms, assuming
the due authorization, execution and delivery thereof by each of the other
parties thereto except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (ii) to the extent that
rights to indemnity or contribution under this Agreement may be limited by
Federal and state securities laws or the public policy underlying such
laws. Neither the Company nor any of its Subsidiaries, nor, to the best
knowledge of the Company, any other party is in default in the observance
or performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default, in any such case which
default or event would have a Material Adverse Effect. No default exists,
and no event has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any term,
covenant or condition, by the Company or any of its Subsidiaries, of any
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which it or its properties or business may be
bound or affected which default or event would have a Material Adverse
Effect.
(k) Neither the Company nor any of its Subsidiaries is in violation of
any term or provision of its articles of incorporation, certificate,
charter or by-laws, as applicable, or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation would have a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or any of its Subsidiaries, pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries, or any of their respective properties
or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any
of its Subsidiaries, or violate any
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provision of the articles of incorporation, certificate, charter or by-laws
of the Company or any of its Subsidiaries, as applicable, except for such
consents or waivers which have already been obtained and are in full force
and effect.
(m) The Company has authorized and outstanding capital stock as set
forth under the captions "Capitalization" and "Description of Capital
Stock" in the Prospectus. All of the outstanding shares of Class A Common
Stock and of the Company's Class B Common Stock, $.01 par value per share
(the "Class B Common Stock" and together with the Class A Common Stock, the
"Common Stock"), have been duly and validly issued and are fully paid and
nonassessable, and none of them was issued in violation of any preemptive
or other similar right. The Company owns all of its shares of capital
stock or other beneficial interests of the Subsidiaries, free and clear of
all liens, charges, claims, security interests, encumbrances, shareholders'
agreements, voting trusts and any other restrictions whatsoever. The
Shares, when issued and sold pursuant to this Agreement, will be duly and
validly issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of stock of
the Company, or any of its Subsidiaries or any security convertible into,
or exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus.
(n) Except as described in the Registration Statement and the
Prospectus, no holder of any security of the Company has the right to have
any security owned by such holder included in the Registration Statement or
to demand registration of any security owned by such holder during the
period ending 180 days after the date of this Agreement.
(o) Each Shareholder listed on Schedule II hereto, and each director
and executive officer of the Company has delivered to the Representatives
his or her written agreement that he or she will not, for a period of 180
days after the date of this Agreement, directly or indirectly, offer, sell
(including "short sales"), assign, encumber or otherwise transfer or
dispose of (collectively, "Transfer"), or contract to Transfer, any shares
of Common Stock or any other securities convertible into or exchangeable
for shares of Common Stock, or any other equity securities of the Company
owned by him or her, without the prior written consent of the
Representatives, except for (i) sales to the several Underwriters pursuant
to this Agreement or (ii) pursuant to will or the laws of intestate
succession.
(p) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
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except (i) as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles and (ii) to the extent that rights to
indemnity or contribution under this Agreement may be limited by Federal
and state securities laws or the public policy underlying such laws.
(q) Neither the Company nor any of its Subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a Material Adverse Effect and the
Company is not aware of any existing or imminent labor disturbances by the
employees of any of its principal suppliers, manufacturers or contractors
who provide network programming materials, scripts or the like to the
Company which would have a Material Adverse Effect.
(r) No transaction has occurred between or among the Company or any of
its Subsidiaries and any of its or their officers, directors or
shareholders, or any affiliate or affiliates of any such officer, director
or shareholder that is required under item 404 of Regulation S-K of the
Rules to be described in and is not described in the Registration Statement
and the Prospectus.
(s) Neither the Company nor any of its Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to or
which might reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Class A Common Stock to
facilitate the sale or resale of any of the Shares in violation of Rule
10b-6 or Rule 10b-7 or Regulation M under the Exchange Act.
(t) The Shares have been duly authorized for quotation on the Nasdaq
National Market, subject to official notice of issuance.
(u) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as each such term is defined in the Investment Company Act of
1940, as amended.
(v) Each of the Company and its Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the business in which it is engaged; and
neither the Company nor its Subsidiaries has reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a
Material Adverse Effect, except as described in or contemplated by the
Prospectus.
(w) Neither the Company nor any of its Subsidiaries has, directly or
indirectly, paid or delivered any fee, commission or other sum of money or
item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which
is in any manner related to the business or operations of the Company or a
Subsidiary, which the Company knows or has reason to
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<PAGE>
believe have been illegal under any federal, state or local laws of the
United States or any other country having jurisdiction; and neither the
Company nor its Subsidiaries has participated, directly or indirectly, in
any boycotts or other similar practices in contravention of law affecting
any of its actual or potential customers.
(x) Each of the Company and its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the accounting records for
assets are compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) Each of the Company and its Subsidiaries (i) is in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "Environmental Laws"), (ii) has received all
permits, licenses or other approvals required under applicable
Environmental Laws to conduct business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a Material Adverse Effect.
(z) The Company meets, and on the Effective Date of the Registration
Statement and on each Closing Date will meet, the conditions for use of
Form S -1 under the Securities Act and the Rules.
5. Conditions of the Underwriters' Obligations. The obligations of
-------------------------------------------
the Underwriters under this Agreement are several and not joint. The
Representatives hereby confirm that they are authorized to act on behalf of the
Underwriters. The respective obligations of the Underwriters to purchase the
Shares are subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(A)(a) of this Agreement. The Registration
Statement shall have become effective no later than 3:00 p.m., New York
City time, on the date of this Agreement or such later time and date as
shall be consented to in writing by the Representatives.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for
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<PAGE>
additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificate delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date and the Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it or them at or before such
Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
or chief accounting officer of the Company to the effect that the signers
of such certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties
of the Company in this Agreement are true and correct on and as of such
Closing Date, with the same effect as if made on such Closing Date and the
Company has performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or
satisfied by it at or prior to such Closing Date.
(e) The Representatives shall have received on the Effective Date, at
the time this Agreement is executed and on each Closing Date:
(i) A signed letter from Arthur Andersen LLP addressed to the
Representatives and dated, respectively, the Effective Date, the date
of this Agreement and each such Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Securities Act and
the Rules, that the response to Item 10 of the Registration Statement
is correct insofar as it relates to them and stating in effect that:
(A) in their opinion the audited financial statements and the
schedules to the financial statements included in the Registration
Statement and the Prospectus and reported on by them comply as to form
in all material respects with the applicable accounting requirements
of the Securities Act and the Rules;
(B) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Consolidated Financial Data," "Selected Consolidated Financial Data,"
"Capitalization," "Dilution" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter, a reading of the minutes of the meetings of the
shareholders and directors of the Company and its Subsidiaries
(including
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committees thereof), and inquiries of certain officials of the Company
and its Subsidiaries who have responsibility for financial and
accounting matters of the Company and its Subsidiaries, as to
transactions and events subsequent to the date of the latest audited
financial statements, except as disclosed in the Registration
Statement and the Prospectus, nothing came to their attention which
caused them to believe that:
(1) the amounts in "Summary Consolidated Financial Data",
"Selected Consolidated Financial Data," "Capitalization,"
"Dilution" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," included in the
Registration Statement and the Prospectus do not agree with the
corresponding amounts in the audited financial statements from
which such amounts were derived; and
(2) (x) there were, at a specified date not more than five
business days prior to the date of the letter, any changes in the
short-term or long-term debt of the Company and its Subsidiaries
or capital stock of the Company or its Subsidiaries or any
decreases in net income or in working capital or the
Shareholders' equity in the Company, or its Subsidiaries, as
compared with the amounts shown on the Company's audited
September 30, 1996 balance sheet included in the Registration
Statement or (y) for the period from September 30, 1996 to such
specified date not more than five business days prior to the date
of the letter, there were any decreases, as compared with the
corresponding period in the preceding year, in net revenues or in
the total per share amounts of net income in which case the
Company shall deliver to the Representatives a letter containing
an explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives or is set forth in or contemplated by the
Registration Statement;
(C) on the basis of a reading of the pro forma financial
statements included in the Registration Statement and the Prospectus,
carrying out certain procedures that would not necessarily reveal
matters of significance with respect to the comments set forth in this
clause (C), inquiries of certain officials of the Company and its
Subsidiaries who have responsibility for financial and accounting
matters and proving the arithmetic accuracy of the application of the
pro forma adjustments to the historical amounts in the pro forma
financial statements, nothing came to their attention that caused them
to believe that the pro forma financial statements included in the
Prospectus do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X, or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements; and
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<PAGE>
(D) they have performed certain other procedures as a result of
which they have determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company.
References to the Registration Statement and the Prospectus
in this paragraph are to such documents as amended and supplemented at
the date of the letter.
(f) The Representatives shall have received on each Closing
Date from Davis, Graham & Stubbs, LLP, counsel for the Company, an
opinion, addressed to the Representatives, dated such Closing Date,
and stating in effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Colorado. Based solely on a review of the Company's minute books
and otherwise to such counsel's knowledge, except for the
Subsidiaries, the Company has no other subsidiary and does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization. Each of the
Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization. The Company and its Subsidiaries is duly qualified and
in good standing as a foreign corporation or partnership in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its businesses
make such qualification necessary, except for such jurisdictions where
the failure to so qualify would not have a Material Adverse Effect.
(ii) Each of the Company and its Subsidiaries has all
requisite corporate or partnership power and authority to own, lease
and license its assets and properties and conduct its business as now
being conducted and as described in the Registration Statement and the
Prospectus; and the Company has all requisite corporate power and
authority and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits, other than those required
under or by the Securities Act, the Exchange Act and the Nasdaq
National Market and state and foreign Blue Sky laws, to enter into,
deliver and perform this Agreement and to authorize, issue and sell
the Shares.
(iii) The Company has authorized and issued capital stock
as set forth in the Registration Statement and the Prospectus. The
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company. All of the
outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other similar right,
under the Company's articles of incorporation, by-laws, Colorado law,
any document filed as an exhibit to the Registration Statement or
otherwise to such
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counsel's knowledge. The Company owns all of the shares of capital
stock or other beneficial interests of the Subsidiaries, free and
clear of any perfected security interest or to such counsel's
knowledge, liens, charges, claims, security interests, encumbrances,
shareholders' agreements, voting trusts and any other restrictions
whatsoever, except as disclosed in the Prospectus and except for such
restrictions that would not have a Material Adverse Effect. The
Shares, when issued and sold pursuant to this Agreement, will be duly
and validly issued, outstanding, fully paid and nonassessable, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity and none of them will have been issued in
violation of any preemptive or other similar right, under the
Company's articles of incorporation, by-laws, Colorado law, any
document filed as an exhibit to the Registration Statement or
otherwise to such counsel's knowledge. To such counsel's knowledge,
except as disclosed in the Registration Statement and the Prospectus,
there is no outstanding option, warrant or other right calling for the
issuance of, and no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company. The Common
Stock and the Shares conform in all material respects to the
descriptions thereof contained in the Prospectus under the caption
"Description of Capital Stock."
(iv) The lock-up agreements of the Company's Shareholders and
directors and officers have been duly and validly executed and
delivered by such persons and constitutes the legal, valid and binding
obligation of each such person enforceable against each such person in
accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be
limited by applicable usury, bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general
equitable principles and (ii) to the extent that rights to indemnity
or contribution under this Agreement may be limited by Federal or
state securities laws or the public policy underlying such laws.
(vi) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any
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payment due under, or violate or conflict with or result in the breach
of any term or provision of, or constitute a default (or any event
which with notice or lapse of time, or both, would constitute a
default) under, or require consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any of its Subsidiaries
pursuant to the terms of any document filed as an exhibit to the
Registration Statement or otherwise to such counsel's knowledge, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation of which such counsel is aware or violate any provision
of the articles of incorporation or by-laws, as the case may be, of
the Company or, any of the Subsidiaries.
(vii) To such counsel's knowledge, neither the Company nor any
of its Subsidiaries is in violation of any term or provision of its
articles of incorporation, charter, certificate or by-laws, as the
case may be, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, where the consequences of such
violation would have a Material Adverse Effect.
(viii) To such counsel's knowledge there is no litigation or
governmental or other proceeding or investigation before any court or
before or by any public body or board pending or threatened against,
or otherwise involving the assets, properties or businesses of, the
Company or any of its Subsidiaries, that have a Material Adverse
Effect.
(ix) The statements in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale,"
"Management," "Risk Factors," and "Certain Relationships and Related
Transactions," insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair summaries in
all material respects of such documents and matters of law. All
contracts and other documents required to be filed as exhibits to the
Registration Statement pursuant to Item 601 of Regulation S-K of the
Rules, or described in the Registration Statement, have been so filed.
(x) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel expresses
no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
(xi) The Registration Statement has become effective under the
Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
threatened, pending or contemplated.
To the extent deemed advisable by such counsel, counsel
may rely as to matters of fact on certificates of responsible officers
of the Company and public officials as to matters which are governed
by laws other than the laws of the State of Colorado, the General
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Corporation Law of the State of Delaware and the Federal laws of the United
States. Copies of such certificates shall be furnished to the Representatives
and counsel for the Underwriters. Such counsel shall also state that Schulte
Roth & Zabel LLP, in rendering its opinion to the Underwriters pursuant to
Section 5(g), may rely on the opinion of such counsel as to all matters which
are governed by Colorado law.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, at which conferences representatives of the Representatives, counsel to
the Underwriters, and representatives of the independent certified public
accountants of the Company were present, and at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel that caused a such counsel to believe that the
Registration Statement at the time it became effective (except with respect to
the financial statements and notes and schedules thereto and other financial and
statistical data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus as amended or supplemented (except with respect to the
financial statements and notes and schedules thereto and other financial data,
as to which such counsel need express no belief), on the date thereof, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein not misleading.
(g) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their counsel and
the Underwriters shall have received from Schulte Roth & Zabel LLP a favorable
opinion, addressed to the Representatives and dated each Closing Date, with
respect to the Shares, the Registration Statement and the Prospectus, and such
other related matters as the Representatives may reasonably request, and the
Company shall have furnished to Schulte Roth & Zabel LLP such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters. In rendering its opinion to the Underwriters, Schulte Roth & Zabel LLP
may rely on the opinion of Davis, Graham & Stubbs, LLP, as to all matters that
are governed by Colorado law.
(h) The Representatives shall have received from each of the
Shareholders listed on Schedule II hereto and each director and executive
officer of the Company his or her enforceable written agreement as described in
Section 4(o).
(i) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates and documents as the Representatives
shall have reasonably requested.
(j) At each Closing Date, the Shares shall have been approved for
quotation
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on the Nasdaq National Market, subject to official notice of issuance.
6. Covenants of the Company. (A) The Company covenants and
------------------------
agrees as follows:
(a) The Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act, and shall promptly advise the Representatives (i)
when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional information,
(iii) of the prevention or suspension of the use of any preliminary
prospectus or the Prospectus or of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose and (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representatives a copy for their review prior to filing and shall not file
any such proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 6(A), an amendment or supplement
which shall correct such statement or omission or an amendment which shall
effect such compliance.
(c) The Company shall make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of the
fiscal quarter of the Company during which the Effective Date occurs (or 90
days if such 12-month period coincides with the Company's fiscal year), an
earnings statement (which need not be audited) of the Company, covering
such 12-month period, which shall satisfy the provisions of Section 11(a)
of the Securities Act or Rule 158 of the Rules.
(d) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including all
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exhibits thereto and amendments thereof) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and all
amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Rules,
as many copies of any preliminary prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale under the
laws of such jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company shall not
be required in connection therewith, as a condition thereof, to qualify as
a foreign corporation or to execute a general consent to service of process
in any jurisdiction or subject itself to taxation as doing business in any
jurisdiction.
(f) For a period of four years after the date of this Agreement, the
Company shall supply to the Representatives, and to each other Underwriter
who may so request in writing, copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock and
to furnish to the Representatives a copy of each annual or other report it
shall be required to file with the Commission on a non-confidential basis.
(g) Without the prior written consent of the Representatives, for a
period of 180 days after the date of this Agreement, the Company shall not
directly or indirectly, offer, sell (including "short sales"), assign,
encumber or Transfer, or contract to Transfer, any shares of Common Stock,
or any other securities convertible into or exchangeable for shares of
Common Stock, or any other equity securities of the Company, except for (i)
the issuance of the Shares pursuant to the Registration Statement; (ii) the
issuance of shares of Common Stock pursuant to stock options outstanding on
the date hereof or the issuance of shares of Common Stock or stock options
thereon pursuant to the Company's 1996 Stock Plan (the "1996 Plan"); (iii)
the issuance of shares of Common Stock in connection with the "Pre-Offering
Transactions" (as contemplated in the Prospectus); and (iv) the issuance of
shares of Common Stock in connection with acquisitions or carriage
incentive programs provided that the recipients of such shares of Common
Stock agree to be "locked-up" as contemplated by this paragraph for the
greater of 120 days or the balance of the "lock-up" period as contemplated
by this paragraph. In the event that during this period, any shares of
Common Stock are issued in connection with (i) the 1996 Plan or (ii) any
registration effected on Form S-8 or any successor form, the Company shall
obtain the enforceable written agreement of such grantee or purchaser or
holder of such securities that, for a period of 180 days after the date of
this Agreement, such person will not directly or indirectly, without the
prior written consent of the Representatives, offer, sell (including "short
sales"), assign, encumber or Transfer, or contract to Transfer or exercise
any registration rights with respect to, any shares of Common Stock (or any
other securities convertible into or exchangeable for any shares of Common
Stock, or any other equity securities) owned by such person.
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<PAGE>
(h) The Company shall cause each director and executive officer
of the Company, and each shareholder to deliver to the Representatives his
or her written agreement that pursuant to the Registration Statement, he or
she will not, for a period of 180 days after the date of this Agreement,
directly or indirectly, without the prior written consent of the
Representatives, offer, sell (including "short sales"), assign, encumber or
Transfer, or contract to Transfer any shares of Common Stock or any other
securities convertible into or exercisable or exchangeable for, shares of
Common Stock, or any other equity securities of the Company except for (i)
sales to the several Underwriters pursuant to this Agreement or (ii)
pursuant to will or the laws of intestate succession.
(i) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by the Nasdaq
National Market (including any required registration under the Exchange
Act).
(j) The Company intends to apply the net proceeds from the offering of
the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(B) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement, the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the fees and disbursements of counsel
for the Company and of the Company's independent public accountants; (iii)
the preparation and delivery of certificates for the Shares to the
Underwriters; (iv) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 6(A)(e), including the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
registration and qualification and the preparation, printing, distribution
and shipment of preliminary and supplementary Blue Sky memoranda; (v) the
furnishing (including costs of shipping and mailing) to the Representatives
and to the Underwriters of copies of each preliminary prospectus, the
Prospectus and all amendments or supplements to the Prospectus, and of the
several documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold;
(vi) the filing fees of the National Association of Securities Dealers,
Inc. in connection with its review of the terms of the public offering;
(vii) the furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 6(A)(f); (viii) inclusion of the Common
Stock for quotation on the Nasdaq National Market; and (ix) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. Subject to the provisions of Section 9, the
Underwriters agree to pay, whether or not the transactions contemplated
hereby are consummated or this Agreement
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<PAGE>
is terminated, all costs and expenses incident to the performance of the
obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation,
the fees and disbursements of counsel for the Underwriters.
7. Indemnification.
---------------
(a) The Company agrees, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement, the Prospectus, or any amendment thereof
or supplement thereto, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
(i) such indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims, damages
or liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration Statement,
the Prospectus, or such amendment or supplement, and was contained in the last
paragraph of the cover page of the Prospectus, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus or under the
caption "Underwriting" in the Prospectus (to the extent such statements relate
to the Underwriters) or (ii) such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) and, if required by law, a copy of the Prospectus (as so
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Shares to such person.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, each director of the Company and each officer of the Company
who signs the Registration Statement, to the same extent as the foregoing
indemnities from the Company to each Underwriter, but only insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i) any
untrue statement or omission or alleged untrue statement or omission which was
made in any preliminary prospectus, the Registration Statement, the Prospectus,
or any amendment thereof or supplement
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<PAGE>
thereto, and was contained in the last paragraph of the cover page of the
Prospectus, in the paragraph relating to stabilization on the inside front cover
page of the Prospectus or under the caption "Underwriting" in the Prospectus (to
the extent such statements relate to the Underwriters) or (ii) an alleged or
actual untrue statement or omission made in a preliminary prospectus, if such
alleged or actual statement or omission is eliminated or remedied in the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) and, if required by law, a copy of the
Prospectus (as so amended or supplemented) shall not have been furnished to such
person at or prior to the written confirmation of the sale of such Shares to
such person; provided, however, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or officer
thereof), as the case may be, shall be limited to the net proceeds received by
the Company, as the case may be, from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a) or (b) shall be available to any party who shall fail to give
notice as provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the omission
so to notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability that it may have to any indemnified
party for contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in
any such action, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel, as provided above, to assume the defense of such action within
a reasonable time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying parties. In no event shall the indemnifying parties be liable for
the fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or
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<PAGE>
separate but similar or related actions in the same jurisdictions arising out of
the same general allegations or circumstances. An indemnifying party shall not
be liable for any settlement of any action, suit, proceeding or claim effected
without its written consent.
8. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 7(a) or (b) for any reason is unavailable to or insufficient to hold
harmless an indemnified party under Section 7(a) or (b), then each indemnifying
party shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted) to which the indemnified party may be subject
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares or, if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter (except as
may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder less the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission which was made in any
preliminary prospectus, the Registration Statement, the Prospectus or any
amendment thereof or supplement thereto; and (ii) the Company shall be liable
and responsible for any amount in excess of the amount set forth in clause (i)
of this sentence; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to
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<PAGE>
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect
-----------
to the Shares to be purchased on a Closing Date by the Representatives notifying
the Company at any time:
(a) in the sole discretion of the Representatives at or before any
Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if the Company or any of its Subsidiaries,
shall have sustained a loss or interference with its business by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which is material to the Company and the Subsidiaries,
taken as a whole, whether or not said loss shall have been insured, or by
court or governmental action, order or decree which will, in the opinion of
the Representatives, make it inadvisable or impractical to proceed with the
offering; (iii) if there has been, since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole, whether or not arising in the ordinary course of
business; (iv) if there has occurred any new outbreak or material
escalation of hostilities or other calamity or crisis the effect of which
on the financial markets of the United States is such as to make it, in the
judgment of the Representatives, inadvisable or impractical to proceed with
the offering; (v) if there shall be such a material adverse change in
general financial, political or economic conditions in the United States or
elsewhere or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of the
Representatives, inadvisable or impractical to proceed with the offering;
(vi) if trading in the Shares has been suspended by the Commission or
trading generally on The New York Stock Exchange, Inc., on the American
Stock Exchange, Inc. or the Nasdaq National Market has been suspended or
limited, or minimum or maximum ranges for prices for securities shall have
been fixed, or maximum ranges for prices for securities have been required,
by said exchanges or automated quotation system or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (vii) if a banking
moratorium has been declared by the States of Colorado and New York state
or Federal authority, or
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<PAGE>
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall be under any liability to any Underwriter (except as otherwise
provided in Section 6(B)), and no Underwriter shall be under any liability to
the Company except that (y) if this Agreement is terminated by the
Representatives because of any failure, refusal or inability on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement, the Company will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees and disbursements of their counsel)
incurred by them in connection with the proposed purchase and sale of the Shares
or in contemplation of performing their obligations hereunder and (z) no
Underwriter who shall have failed or refused to purchase the Shares agreed to be
purchased by it under this Agreement, without some reason sufficient hereunder
to justify cancellation or termination of its obligations under this Agreement,
shall be relieved of liability to the Company or to the other Underwriters for
damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
----------------------------
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, however, that in no event shall the
maximum number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 10 by more than
one-ninth of such number of Shares without the written consent of such
Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements
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<PAGE>
to the Registration Statement or Prospectus) may be effected by the
Representatives and the Company. If the number of Shares to be purchased on
such Closing Date by such defaulting Underwriter or Underwriters shall exceed
10% of the Shares that all the Underwriters are obligated to purchase on such
Closing Date, and none of the nondefaulting Underwriters or the Company shall
make arrangements pursuant to this Section within the period stated for the
purchase of the Shares that the defaulting Underwriters agreed to purchase, this
Agreement shall terminate with respect to the Shares to be purchased on such
Closing Date without liability on the part of any nondefaulting Underwriter to
the Company and without liability on the part of the Company, except in both
cases as provided in Sections 6(B), 7, 8 and 9. The provisions of this Section
shall not in any way affect the liability of any defaulting Underwriter to the
Company or to the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes of
this Agreement.
11. Miscellaneous. The respective agreements, representations,
-------------
warranties, indemnities and other statements of the Company or its directors or
officers and of the Underwriters set forth in or made pursuant to this Agreement
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or the Company or any of the officers, directors
or controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matters hereof, and may
be amended only with the written consent of all parties hereto.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters and the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone, telex or facsimile transmission if
subsequently confirmed in writing, (a) if to the Representatives, c/o
Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial Center, New York,
New York 10281 Attention: Michael Kessler; (b) if to the Company, to the
Company's agent for service as such agent's address appears on the cover page of
the Registration Statement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
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<PAGE>
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
JONES INTERNATIONAL NETWORKS, LTD.
By:
----------------------------------
Name:
Title:
OPPENHEIMER & CO., INC.
HAMBRECHT & QUIST
M. KANE & COMPANY, INC.
Acting severally on behalf of themselves
and as representatives of the several
Underwriters named in Schedule I annexed
hereto.
By: OPPENHEIMER & CO., INC.
By:
------------------------------
Name:
Title:
HAMBRECHT & QUIST
By:
------------------------------
Name:
Title:
M. KANE & COMPANY, INC.
By:
------------------------------
Name:
Title:
-26-
<PAGE>
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
- ---- -------------
Oppenheimer & Co., Inc. _____________
Hambrecht & Quist _____________
M. Kane & Company, Inc. _____________
[ ] _____________
[ ] _____________
Total 3,350,000
=============
-27-
<PAGE>
EXHIBIT 3.3
RESTATED ARTICLES OF INCORPORATION
OF
JONES INTERNATIONAL NETWORKS, LTD.
(As amended on February 21, 1997)
These Restated Articles of Incorporation amend and restate in their
entirety the Articles of Incorporation of Jones International Networks, Ltd.
filed with the Colorado Secretary of State on November 10, 1993, and were duly
adopted in accordance with the provisions of Section 7-110-103 and Section 7-
110-107 of the Colorado Business Corporation Act. These Restated Articles of
Incorporation contain amendments that were adopted by the shareholders of Jones
International Networks, Ltd. on February 21, 1997, and the number of votes cast
for the amendments by each voting group entitled to vote separately on the
amendments was sufficient for approval by that voting group.
ARTICLE I
NAME
The name of the corporation is Jones International Networks, Ltd.
(the "Corporation").
ARTICLE II
JURISDICTION OF INCORPORATION
The Corporation is organized under the laws of the State of Colorado.
ARTICLE III
DURATION
The period of duration of the Corporation shall be perpetual.
<PAGE>
ARTICLE IV
REGISTERED OFFICE
The address of the registered office of the Corporation in the State
of Colorado is 9697 East Mineral Avenue, Englewood, Colorado 80112, and the name
of the registered agent at such address is Elizabeth M. Steele.
ARTICLE V
PURPOSES
The nature of the business or purposes of the Corporation is to engage
in the transaction of all lawful business and to pursue any other lawful purpose
or purposes for which a corporation may be organized under the laws of the State
of Colorado. The Corporation shall have, enjoy and exercise all of the rights,
powers and privileges conferred upon corporations organized under the laws of
the State of Colorado, whether now or hereafter in effect, and whether or not
herein specifically mentioned. The foregoing enumeration of purposes and powers
shall not limit or restrict in any manner the exercise of other and further
rights and powers that may now or hereafter be allowed or permitted by law.
ARTICLE VI
CAPITAL STRUCTURE
6.1. AUTHORIZED SHARES. The total number of shares of capital
-----------------
stock that the Corporation shall have authority to issue is 57,000,000 shares,
consisting of three classes of capital stock:
(a) 50,000,000 shares of Class A Common Stock, par value
$.01 per share (the "Class A Shares");
(b) 2,000,000 shares of Class B Common Stock, par value
$.01 per share (the "Class B Shares"; and, together with the Class A Shares, the
"Common Shares"); and
(c) 5,000,000 shares of Preferred Stock, par value $.01
per share (the "Preferred Shares").
-2-
<PAGE>
6.2. DESIGNATIONS, PREFERENCES, ETC. The designations,
-------------------------------
preferences, powers, qualifications, and special or relative rights or
privileges of the capital stock of the Corporation shall be as set forth in
Article VII and Article VIII below.
ARTICLE VII
COMMON SHARES
7.1. IDENTICAL RIGHTS. Except as herein otherwise expressly
----------------
provided in this Article VII, all Common Shares shall be identical and shall
entitle the holders thereof to the same rights and privileges.
7.2. DIVIDENDS.
---------
(a) When, as and if dividends are declared by the
Corporation's Board of Directors, whether payable in cash, in property or in
securities of the Corporation, the holders of Common Shares shall be entitled to
share equally in and to receive, in accordance with the number of Common Shares
held by each such holder, all such dividends. The Board of Directors of the
Corporation may declare a dividend payable solely in Class A Shares to holders
of both Class A Shares and Class B Shares.
(b) Dividends payable under this Paragraph 7.2 shall be
paid to the holders of record of the outstanding Common Shares as their name
shall appear on the stock register of the Corporation on the record date fixed
by the Board of Directors in advance of declaration and payment of each
dividend. Any Common Shares issued as a dividend pursuant to this Paragraph 7.2
shall, when so issued, be duly authorized, validly issued, fully paid and non-
assessable, and free of all liens and charges. The Corporation shall not issue
fractions of Common Shares on payment of such dividend but shall issue a whole
number of shares to such holder of Common Shares rounded up or down in the
Corporation's sole discretion to the nearest whole number, without compensation
to the stockholder whose fractional share has been rounded down or from any
stockholder whose fractional share has been rounded up.
(c) Notwithstanding anything contained herein to the
contrary, no dividends on Common Shares shall be declared by the Corporation's
-3-
<PAGE>
Board of Directors or paid or set apart for payment by the Corporation at any
time that such declaration, payment or setting apart is prohibited by applicable
law.
7.3. STOCK SPLITS. Except as otherwise provided by Paragraph
------------
7.2(a) above, the Corporation shall not in any manner
subdivide (by any stock split, reclassification, stock dividend,
recapitalization, or otherwise) or combine the outstanding shares of one class
of Common Shares unless the outstanding shares of all classes of Common Shares
shall be proportionately subdivided or combined.
7.4. LIQUIDATION RIGHTS. Upon any voluntary or involuntary
------------------
liquidation, dissolution or winding-up of the affairs of the Corporation, after
payment shall have been made to holders of outstanding Preferred Shares, if any,
of the full amount to which they are entitled pursuant to these Restated
Articles of Incorporation and any resolutions that may be adopted from time to
time by the Corporation's Board of Directors in accordance with Article VIII
below (for the purpose of fixing the voting rights, designations, preferences,
and relative, participating, optional or other special rights of any series of
Preferred Shares), the holders of Common Shares and the holders of any Preferred
Shares with participation rights shall share ratably in all remaining assets of
the Corporation available for distribution among the holders of shares, whether
such assets are capital, surplus or earnings. For the purposes of this
Paragraph 7.4, neither the consolidation or merger of the Corporation with or
into any other corporation or corporations in which the shareholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation), nor the sale, lease or transfer by
the Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation as those
terms are used in this Paragraph 7.4.
7.5. VOTING RIGHTS.
-------------
(a) On all matters submitted to the shareholders not
requiring a class vote under applicable law, the holders of the Common Shares
shall vote as a single class, with each Class A Share entitled to one vote and
each Class B Share entitled to ten votes, except with respect to any Going
Private Transaction (as such term is defined in subparagraph (b) below).
(b) With respect to any Going Private Transaction (as such
term is defined herein), the holders of Class A Shares and the holders of Class
B Shares shall vote as a single class, with each Class A Share and each Class B
-4-
<PAGE>
Share entitled to one vote. For purposes of this Paragraph 7.5, the term "Going
Private Transaction" shall mean any transaction between the Corporation and (i)
Glenn R. Jones, (ii) any Affiliate of Glenn R. Jones (as such term is defined
herein), or (iii) any group including Mr. Jones or Affiliates of Mr. Jones where
the participation of such person or persons in such group would cause the
transaction to be deemed to be a "Rule 13e-3 Transaction," that is a "Rule 13e-3
Transaction," as such term is defined in Rule 13e-3(a)(3), 17 C.F.R. (S)240.13e-
3, as amended from time to time, promulgated under the Securities Exchange Act
of 1934, as amended. For purposes of this Paragraph 7.5 and for purposes of
Paragraph 7.7 below, the term "Affiliate" of Glenn R. Jones shall mean (i) any
individual or entity who or that, directly or indirectly, controls, is
controlled by, or is under common control with, Glenn R. Jones, and (ii) a child
or grandchild (by blood, adoption or marriage) of Glenn R. Jones, or any trust
for the benefit of one or more of the foregoing.
7.6. NO PREEMPTIVE OR SUBSCRIPTION RIGHTS. No holder of Common
------------------------------------
Shares shall be entitled to preemptive or subscription rights.
7.7. CONVERSION OF CLASS B SHARES.
----------------------------
(a) AUTOMATIC CONVERSION. Each Class B Share shall convert
--------------------
automatically and without the requirement of any further action into one fully
paid and non-assessable Class A Share (i) upon its sale, gift or other transfer
to a party other than Glenn R. Jones or an Affiliate of Glenn R. Jones (as such
term is defined in Paragraph 7.5 above), or (ii) upon the death of Glenn R.
Jones. Each of the foregoing automatic conversion events shall be referred to
hereinafter as an "Event of Automatic Conversion." Notwithstanding the
foregoing, if a holder of Class B Shares desires to transfer such shares to a
party that is not Glenn R. Jones or an Affiliate of Glenn R. Jones and have such
shares retain their status as Class B Shares, such holder of Class B Shares may
do so if the transfer is approved by a vote of a majority of the Class A Shares
held by disinterested shareholders represented at a shareholders meeting called
for such purpose. If a majority vote of the disinterested holders of the Class A
Shares approves such a transfer, the automatic conversion provisions and
procedures of this Paragraph 7.7 shall no longer be effective as to such Class B
Shares and such Class B Shares shall no longer be subject to automatic
conversion upon any subsequent transfer of such Class B Shares or upon the death
of Glenn R. Jones.
-5-
<PAGE>
(b) AUTOMATIC CONVERSION PROCEDURE. Promptly upon the
------------------------------
occurrence of any Event of Automatic Conversion such that Class B Shares are
converted automatically into Class A Shares, the holder of such Class B Shares
shall surrender the certificate or certificates therefor, duly endorsed in blank
or accompanied by proper instruments of transfer, at the office of the
Corporation or of any transfer agent for the Class A Shares, and shall give
written notice to the Corporation, at such office: (i) stating that the Class B
Shares are being converted pursuant to an Event of Automatic Conversion into
Class A Shares as provided in Paragraph 7.7(a) of this Article VII, (ii)
specifying the Event of Automatic Conversion (and, if the occurrence of such
event is within the control of the transferor, stating the transferor's intent
to effect an Event of Automatic Conversion), (iii) identifying the number of
Class B Shares being converted, and (iv) setting out the name or names (with
addresses) and denominations in which the certificate or certificates for Class
A Shares shall be issued and shall include instructions for delivery thereof.
Delivery of such notice together with the certificate or certificates
representing the Class B Shares shall obligate the Corporation to issue such
Class A Shares. Thereupon the Corporation or its transfer agent shall promptly
issue and deliver at such stated address to such holder or to the transferee of
Class B Shares a certificate or certificates for the number of Class A Shares to
which such holder or transferee is entitled registered in the name of such
holder, the designee of such holder or the transferee as specified in such
notice. To the extent permitted by law, conversion pursuant to an Event of
Automatic Conversion shall be deemed to have been effected as of the date on
which the Event of Automatic Conversion occurred (such time being the
"Conversion Time"). The person entitled to receive the Class A Shares issuable
upon such conversion shall be treated for all purposes as the record owner of
such Class A Shares at and as of the Conversion Time, and the right of such
person as the holder of Class B Shares shall cease and terminate at and as of
the Conversion Time, in each case without regard to any failure by the holder of
the Class B Shares to deliver the certificates or the notice required by this
subparagraph (b).
(c) VOLUNTARY CONVERSION. Each Class B Share shall be
--------------------
convertible, at the option of its holder, into one fully paid and non-assessable
Class A Share at any time.
(d) VOLUNTARY CONVERSION PROCEDURE. At the time of a
------------------------------
voluntary conversion, the holder of Class B Shares shall deliver to the office
of the Corporation or of any transfer agent for the Class A Shares: (i) the
certificate or certificates representing the Class B Shares to be converted,
duly endorsed in blank or accompanied by proper instruments of transfer, and
(ii) written notice to
-6-
<PAGE>
the Corporation stating that such holder elects to convert such share or shares
and stating the name and addresses in which each certificate for Class A Shares
issued upon such conversion is to be issued. Conversion shall be deemed to have
been effected at the close of business on the date when such delivery is made to
the Corporation of the Class B Shares to be converted, and the person exercising
such voluntary conversion shall be deemed to be the holder of record of the
number of Class A Shares issuable upon such conversion at such time. The
Corporation shall promptly deliver certificates evidencing the appropriate
number of Class A Shares to such person.
(e) UNCONVERTED SHARES. In the event of the conversion of
------------------
less than all of the Class B Shares evidenced by a certificate surrendered to
the Corporation in accordance with the procedures of this Paragraph 7.7, the
Corporation shall execute and deliver to or upon the written order of the holder
of such certificate, without charge to such holder, a new certificate evidencing
the number of Class B Shares not converted.
(f) NO REISSUE OF CLASS B SHARES. Class B Shares that are
----------------------------
converted into Class A Shares as provided herein shall be retired and canceled
and shall not be reissued.
(g) RESERVATION OF CLASS A SHARES. The Corporation hereby
-----------------------------
reserves and shall at all times reserve and keep available, out of its
authorized and unissued Class A Shares, for the purposes of effecting
conversions, such number of duly authorized Class A Shares as shall from time to
time be sufficient to effect the conversion of all outstanding Class B Shares.
The Corporation covenants that all of the Class A Shares so issuable shall, when
so issued, be duly and validly issued, fully paid and non-assessable, and free
from liens and charges with respect to the issue. The Corporation will take all
such action as may be necessary to ensure that all such Class A Shares may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Class A Shares
may be listed.
7.8. CONSIDERATION IN ANY MERGER, REORGANIZATION OR
----------------------------------------------
RECAPITALIZATION. The holders of the Class A Shares shall be entitled to
- ----------------
to per share voting rights) as the holders of the Class B Shares in any merger,
reorganization or recapitalization of the Corporation. The Corporation shall not
support any tender offer or exchange offer for shares of the Corporation in
which the holders of the Class A Shares are not offered the same consideration
(except with respect
-7-
<PAGE>
to per share voting rights) on a per share basis as the holders of the Class B
Shares.
ARTICLE VIII
PREFERRED SHARES
Shares of Preferred Stock may be issued from time to time as
determined by the Board of Directors. The Board of Directors is authorized to
divide the authorized shares of Preferred Stock into one or more series and, in
accordance with law and this Article VIII, to fix and determine the preferences,
limitations and relative rights of the shares of any series of Preferred Stock,
including but not limited to the following: (i) the distinctive designation of
each series and the number of shares constituting such series; (ii) the rate and
the time of payment of dividends, and any preferences, restrictions, conditions
or limitations on dividends; (iii) whether shares are redeemable, and, if so,
the price, terms and conditions of redemption; (iv) the amount payable upon
shares in the event of liquidation, dissolution or winding-up of the
Corporation; (v) sinking fund or other provisions, if any, for the redemption or
purchase of shares; (vi) the terms and conditions on which shares may be
converted, if the shares of any series are convertible; (vii) the voting powers,
if any, of shares; and (viii) such other terms, qualifications, privileges,
limitations, options, restrictions, and special or relative rights and
preferences, if any, of shares or any series of shares of Preferred Stock as the
Board of Directors of the Corporation may lawfully fix and determine.
ARTICLE IX
AMENDMENTS
The Corporation reserves the right to amend or repeal any provisions
contained in these Restated Articles of Incorporation from time to time and at
any time in the manner now or hereafter prescribed in these Restated Articles of
Incorporation and by the laws of the State of Colorado, and all rights herein
conferred upon shareholders are granted subject to such reservation.
-8-
<PAGE>
ARTICLE X
MAJORITY VOTING
Any action proposed to be taken by the shareholders which, but for
this Article X, would require a greater vote under the Colorado Business
Corporation Act, as amended from time to time, may be taken by a majority of the
votes to which the then outstanding shares, or any class or series thereof, are
entitled.
ARTICLE XI
DIRECTORS
The business and affairs of the Corporation shall be managed by a
Board of Directors, the members of which shall be elected at the annual meeting
of the shareholders, or at a special meeting called for that purpose. The
number of directors shall be as stated in the Corporation's By-laws and the
number of directors may be increased or decreased from time to time in the
manner provided in the By-laws of the Corporation, but no decrease shall have
the effect of shortening the term of any incumbent director.
ARTICLE XII
CUMULATIVE VOTING
Shareholders of the Corporation shall not have cumulative voting
rights.
ARTICLE XIII
RELATED PARTY TRANSACTIONS
No contract or other transaction between the Corporation and one or
more of its directors or any other corporation, partnership, joint venture,
trust, association, other entity, or employee benefit plan in which one or more
of the Corporation's directors or officers are directors or officers or are in
any similar managerial or fiduciary position or are financially interested shall
be either void or voidable solely because of such relationship or interest or
solely because such directors or officers are present at the meeting of the
Board of Directors or a committee thereof which authorizes, approves or ratifies
such contract or
-9-
<PAGE>
transaction or solely because their votes are counted for such purpose, so long
as such contract or transaction satisfies the requirements explicitly set forth
in the Colorado Business Corporation Act, as amended from time to time, for
contracts between a corporation and its directors.
ARTICLE XIV
LIMITATION OF LIABILITY OF DIRECTORS
No director of the Corporation shall have any personal liability for
monetary damages to the Corporation or its shareholders for breach of his or her
fiduciary duty as a director, except that this provision shall not eliminate or
limit the personal liability of a director to the Corporation or its
shareholders for monetary damages for: (i) any breach of the director's duty of
loyalty to the Corporation or its shareholders; (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) acts specified in Section 7-108-403 of the Colorado Business
Corporation Act; or (iv) any transaction from which the director directly or
indirectly derives an improper personal benefit. Nothing contained herein will
be construed to eliminate or diminish the defenses ordinarily available to a
director or to deprive any director of any right he or she may have for
contribution from any other director or other person. If the Colorado Business
Corporation Act hereafter is amended to eliminate or limit further the liability
of a director, then, in addition to the elimination and limitation of liability
provided by the preceding sentences of this Article XIV, the liability of each
director shall be eliminated or limited to the fullest extent permitted by the
Colorado Business Corporation Act as so amended. Any repeal or modification of
this Article XIV shall not adversely affect any right or protection of a
director of the Corporation under this Article XIV as in effect immediately
prior to such repeal or modification with respect to any liability that would
have accrued, but for this Article XIV, prior to such repeal or modification.
ARTICLE XV
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person, and the estate and
personal representative of any such person, against all liability and expense
(including attorneys' fees) incurred by reason of the fact that such person is
or was a director or officer of the
-10-
<PAGE>
Corporation or, while serving as a director or officer of the Corporation, such
person is or was serving at the request of the Corporation or any of its
subsidiaries as a director, officer, partner, trustee, employee, fiduciary or
agent of, or in any similar managerial or fiduciary position of, another
domestic or foreign corporation or other individual or entity or of an employee
benefit plan. The Corporation shall also indemnify any person who is serving or
who has served the Corporation as a director, officer, employee, fiduciary or
agent, and such person's estate and personal representative, to the extent and
in the manner provided by any by-law, resolution of the shareholders or
directors, contract or otherwise, so long as such provision is legally
permissible.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity or arising out of his or her status
as such, whether or not the Corporation would have the power to indemnify him or
her against such liability under the provisions of this Article XV.
Executed at Englewood, Colorado on February 21, 1997.
_____________________________
Glenn R. Jones
Chairman of the Board
and Chief Executive Officer
ATTEST:
__________________________
Elizabeth M. Steele
Secretary
[SEAL]
(28547)
-11-
<PAGE>
Exhibit 4.2
JONES INTERNATIONAL NETWORKS, LTD.
STOCK PURCHASE WARRANT
THE WARRANTS EVIDENCED HEREBY AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD WITHOUT
REGISTRATION UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SUCH ACT,
OR THE RULES OR REGULATIONS PROMULGATED THEREUNDER, AND ANY APPLICABLE STATE
SECURITIES LAWS
WARRANT TO PURCHASE 14,000 SHARES OF CLASS A COMMON STOCK $.01 PAR VALUE AS
DESCRIBED HEREIN
Issue Date: ____________ ___, 19__ (the "ISSUE DATE").
Expiration Date: * _____________ ___, 2002 (the "EXPIRATION DATE").
* 5 years from Issue Date
This certifies that, for value received, M. Kane & Company, Inc. or
its permitted successors and assigns which have agreed in writing to be bound by
the provisions of this Stock Purchase Warrant ("Holder") is entitled to purchase
from Jones International Networks, Ltd., a Colorado corporation (the "Company"),
up to and including 14,000 fully paid and nonassessable shares (the "Warrant
Shares") of the Class A Common Stock, $.01 par value per share, of the Company
(the "Class A Common Stock") on the terms set forth herein at an exercise price
of $**_________ per share (the "Purchase Price"). The Warrant Shares and the
Purchase Price may be adjusted from time to time as described in this Warrant
(hereafter, the "Stock Purchase Warrant" or the "Warrant").
** 120% of the public offering price.
1. EXERCISE.
--------
1.1 TIME FOR EXERCISE. Commencing one (1) year from the Issue
-----------------
Date (the "Onset Date"), until the Expiration Date (the "Exercise Period"),
this Warrant may be exercised in whole or in part at any time and from time to
time.
1.2 MANNER OF EXERCISE. This Warrant shall be exercised by
------------------
delivering it to the Company with the exercise form duly completed and signed,
specifying (i) the number of shares as to which the Warrant is being exercised
at that time (the "Exercise Number"), and (ii) whether the exercise is being
made by "purchase" or "exchange".
1.2.1 PURCHASE. If the Holder elects the purchase option, the
---------
Holder shall
1
<PAGE>
simultaneously deliver to the Company cash or a certified check in an amount
equal to the Exercise Number multiplied by the Purchase Price, and the Holder
shall be entitled to receive the full Exercise Number of shares of Class A
Common Stock.
1.2.2 EXCHANGE. If the Holder elects the exchange option, the
---------
Holder shall be entitled (without cash payment) to receive that number of shares
of Common Stock having an aggregate Market Value on the date of exercise equal
to the difference between the Market Value of the Exercise Number of shares and
the aggregate Purchase Price thereof. "Market Value" for any security on any
given date means (i) the average closing price for the prior ten trading days
for such security on the principal stock exchange on which such security is
traded or (ii) if not so traded, the closing (or, if no closing price is
available, the average of the bid and asked prices) for such period on NASDAQ if
such security is listed on the NASDAQ or (iii) if not listed on any exchange or
quoted on the NASDAQ, such value determined without regard to the minority
shareholder position of the Holders as may be determined pursuant to Section
4.4. The Holder shall be entitled to two (2) exchanges pursuant to this Section
1.2.2 and the second exchange must include the entire number of Warrant Shares
then subject to this Warrant.
1.3 EFFECT OF EXERCISE. Promptly after any exercise, the Company
------------------
shall deliver to the Holder (i) duly executed certificates in the name or names
specified in the exercise notice representing the aggregate number of shares
issuable upon such exercise, and (ii) if this Warrant is exercised only in part,
a new Warrant of like tenor representing the balance of the Warrant Shares
(after subtracting the Exercise Number of shares). Such certificates shall be
deemed to have been issued, and the person receiving them shall be deemed to be
a holder of record of such shares, as of the close of business on the date the
actions required in Section 1.2 shall have been completed or, if on that date
the stock transfer books of the Company are closed, as of the next business day
on which the stock transfer books of the Company are open.
2. TRANSFER OF WARRANTS AND STOCK.
------------------------------
2.1 TRANSFER RESTRICTIONS. This Warrant is not transferable for a
---------------------
period of one (1) year from the Issue Date, except to officers and partners of
M. Kane and Company, Inc. In addition, neither this Warrant nor the securities
issuable upon its exercise may be sold, transferred or pledged unless the
Company shall have been supplied with reasonably satisfactory evidence (which
may include an opinion of counsel) that such transfer is not in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws. The Company may place a legend to that effect on this
Warrant any replacement Warrant and any certificate or certificates representing
Warrant Shares.
2.2 MANNER OF TRANSFER. Subject to compliance with Section 2.1
------------------
above, upon delivery of this Warrant to the Company with the assignment form
duly completed and signed, the Company will promptly execute and deliver to the
Holder, Warrants of like tenor evidencing the rights (i) of the transferee(s) to
purchase the number of Warrant
2
<PAGE>
Shares specified for each in the assignment forms, and (ii) of the Holder to
purchase any untransferred portion, which in the aggregate shall equal the
number of Warrant Shares of the original Warrant. The Company may decline to
proceed with any partial transfer if any new Warrant would represent the right
to purchase fewer than 500 shares of Common Stock (such number to be adjusted as
provided in Section 4).
2.3 LOSS, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt of
-----------------------------------------
(i) evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and (ii) except in the case of
mutilation, an indemnity or security reasonably satisfactory to the Company, the
Company will promptly execute and deliver a replacement Warrant of like tenor
representing the right to purchase the same number of Warrant Shares.
3. COST OF ISSUANCES. The Company shall pay all expenses, transfer
-----------------
taxes and other charges payable in connection with the preparation, issuance and
delivery of stock certificates or replacement Warrants, except for any transfer
tax or other charge imposed as a result of (a) any issuance of certificates in
any name other than the name of the Holder or its partners or officers (b) any
transfer of the Warrant other than to partners or officers of the Holder. The
Company shall not be required to issue or deliver any stock certificate or
Warrant until it receives reasonably satisfactory evidence that any such tax or
other charge has been paid by the Holder.
4. ANTI-DILUTION PROVISIONS
------------------------
If any of the following events occur at any time hereafter during the
life of this Warrant, then the Purchase Price and the Warrant Shares immediately
prior to such event shall be changed as described in order to prevent dilution:
4.1 STOCK SPLITS AND REVERSE SPLITS. If at any time (i) the
-------------------------------
outstanding shares of Class A Common Stock are subdivided into a greater number
of shares, then the Purchase Price will be reduced proportionately and the
Warrant Shares will be increased proportionately, conversely, (ii) if the
outstanding Class A Common Stock is consolidated into a smaller number of
shares, then the Purchase Price will be increased proportionately and the
Warrant Shares will be reduced proportionately.
4.2 DIVIDENDS. In the event the Company declares a dividend upon
---------
the Class A Common Stock payable in its securities, at the time of subsequent
exercise of this Warrant, the Company shall deliver both (i) the Shares for
which exercise is made plus (ii) such securities paid as dividends as would have
been previously distributed to the Holder if such exercise had been made on the
date hereof. If the Company shall declare a dividend payable in cash on its
Class A Common Stock and shall at substantially the same time offer to its
stockholders a right to purchase new Class A Common Stock from the proceeds of
such dividend, or for an amount substantially equal to the dividend, the amount
of Class A Common Stock so offered shall, for the purpose of this Warrant, be
deemed to have been issued as a stock dividend.
3
<PAGE>
4.3 EFFECTS OF CERTAIN EVENTS. A. In the event of any (i)
reorganization or reclassification of the Class A Common Stock, or (ii)
consolidation or merger of the Company in which the Company is the survivor,
whereby the holders of the Class A Common Stock are entitled to receive
securities and/or assets as a result of their ownership of Class A Common Stock,
then, upon exercise of this Warrant, the Holder will have the right to receive
the shares of stock, securities or assets which they would have received if this
Warrant had been fully exercised as of the record date for such a transaction.
B. In the event of (i) any consolidation or merger of the Company in which the
Company is not to be the survivor, or (ii) the sale of all or substantially all
of the assets of the Company, the Company will give the Holder notice of such an
event at the same time that notice is given thereof to the holders of the Class
A Common Stock. The Holder shall be entitled to exercise this Warrant at any
time prior to the record date for determining who shall be entitled to receive
any shares, securities or property as a result of any such event. Thereafter,
this Warrant shall become void and of no further force or effect.
Notwithstanding the foregoing, if, prior to the first anniversary of the Issue
Date, there is a merger, consolidation or other reorganization of the Company in
which the Company is not the survivor, the Company shall require the successor
to assume the obligations of the Company under this agreement.
4.4 COMPUTATIONS AND ADJUSTMENTS. Upon each computation of an
----------------------------
adjustment under this Section 4, the Purchase Price shall be computed to the
nearest cent and the number of Warrant Shares shall be calculated to the next
lowest whole share. However, the fractional amount shall be used in calculating
any future adjustments. No fractional shares of Class A Common Stock shall be
issued in connection with the exercise of this Warrant, but the Company shall,
in the case of the final exercise under this Warrant, make a cash payment for
any fractional shares based on the closing price on the date of exercise of a
share of Class A Common Stock on the NASDAQ or, if not then listed or traded
thereon, on the closing price on the principal exchange or system on which the
Class A Common Stock is then listed or traded, or, if not then listed or traded
on such exchange or system, the mean of the closing bid and asked prices on an
automated quotation system, or, if such quotations are not available, such value
as may be determined in good faith by the Company's Board of Directors, which
determination shall be conclusively binding on the parties except that, at the
request of the Significant Holders, the fair price shall be determined by an
investment banking firm reasonably acceptable to the Company, whose fees will be
paid by the Holders unless the Market Price so determined exceeds 110% of that
set by the Board. Notwithstanding any changes in the Purchase Price or the
number of Warrant Shares, this Warrant, and any Warrants issued in replacement
or upon transfer thereof, may continue to state the initial Purchase Price and
the initial number of Warrant Shares. Alternatively, the Company may elect to
issue a new Warrant or Warrants of like tenor for the additional shares of Class
A Common Stock purchasable hereunder or, upon surrender of the existing Warrant,
to issue a replacement Warrant evidencing all the Warrant Shares to which the
Holder is entitled after such adjustments.
4
<PAGE>
5. COVENANTS. The Company agrees that:
---------
5.1 RESERVATION OF STOCK. During the period in which this Warrant
--------------------
may be exercised, the Company will reserve sufficient authorized but unissued
securities (and, if applicable, property) to enable it to satisfy its
obligations on exercise of this Warrant. If at any time the Company's
authorized securities shall not be sufficient to allow the exercise of this
Warrant, the Company shall take such corporate action as may be necessary to
increase its authorized but unissued securities to be sufficient for such
purpose;
5.2 NO LIENS, ETC. All securities that may be issued upon
-------------
exercise of this Warrant will, upon issuance, be validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and shall be listed on any exchanges on which that class of
securities is listed;
5.3 FURNISH INFORMATION. The Company will promptly deliver to the
-------------------
Holder upon request copies of all financial statements, reports and proxy
statements which the Company shall have sent to its stockholders generally; and
5.4 STOCK AND WARRANT TRANSFER BOOKS. Except upon dissolution,
--------------------------------
liquidation or winding up or for ordinary holidays and weekends, the Company
will not at any time close its stock or warrant transfer books so as to result
in unreasonably preventing or delaying the exercise or transfer of this Warrant.
6. STATUS OF HOLDER.
----------------
6.1 NOT SHAREHOLDER. Until the Holder exercises this Warrant in
---------------
writing, the Holder shall not be entitled to any rights (i) as a stockholder of
the Company with respect to the shares as to which the Warrant is exercisable
including, without limitation, the right to vote or receive dividends or other
distributions, or (ii) to receive any notice of any proceedings of the Company
except as otherwise provided in this Warrant.
6.2 LIMITATION OF LIABILITY. Until the Holder exercises this
-----------------------
Warrant in writing, the Holder's rights and privileges hereunder shall not give
rise to any liability for the Purchase Price or as a stockholder of the Company,
whether to the Company or its creditors.
7. REGISTRATION RIGHTS.
-------------------
7.1 DEFINITION. The following terms shall have the respective
----------
meanings set forth below:
7.1.1 "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
5
<PAGE>
7.1.2 "REGISTRABLE SECURITIES" shall mean those shares of Class A
Common Stock acquired upon exercise of the Warrants but excluding any shares
which may be resold to the public without registration pursuant to Rule 144 or
any other comparable rule under the Securities Act.
7.1.3 "REGISTRATION PERIOD" shall mean the period of time beginning on
the first anniversary of the Issue Date and ending on, and including, the sixth
anniversary of such date.
7.1.4 "REGISTRATION STATEMENT" shall mean any registration statement
or comparable document under the Securities Act through which a public sale or
disposition of the Class A Common Stock may be registered or exempted from
registration (except a form exclusively for the sale or distribution of
securities by the Company or to employees of the Company or its subsidiaries or
for use exclusively in connection with a business combination).
7.1.5 "SELLING HOLDER" shall mean, with respect to any Registration
Statement, any Holder whose securities are included therein.
7.1.6 "SELLERS' UNDERWRITER" shall mean, with respect to any
Registration statement, the underwriter, if any, designated in writing by the
Selling Holders as underwriting the Registrable Securities involved.
7.1.7 "SIGNIFICANT HOLDERS" shall mean, at any time, Holders together
holding more than fifty percent (50%) of the then outstanding Registrable
Securities held by the Holders.
7.2 DEMAND REGISTRATION.
-------------------
7.2.1 NOTICE OF DEMAND. The Significant Holders may at any time during
----------------
the Registration Period by written notice request that the Company register the
Registrable Securities under the Securities Act. The Significant Holders shall
be entitled to demand only one (1) Registration Statement, and the Company shall
use its best efforts to keep such Registration Statement continuously effective
for nine (9) months; provided, however, that the Company may at any time
-------- -------
temporarily suspend the effectiveness of the Registration Statement in
accordance with the provisions of Section 7.10. During such suspension, the
Selling Holders shall discontinue sales or other dispositions of the Warrant
Shares pursuant to the Registration Statement. The notice of demand shall set
forth (i) the number of shares to be included; (ii) the names of the Selling
Holder(s) and the amounts to be sold by each; and (iii) the proposed manner of
sale. Within 10 days after receipt of such notice, the Company shall notify all
other Holders and offer to them the opportunity to include their Registrable
Securities in such registration. Each of the other Holders shall have twenty
(20) days from the mailing of such notice to notify the Company of the
6
<PAGE>
number of Registrable Securities such Holder desires be included in the
Registration Statement, but the Company shall have no obligation to include the
Registrable Securities of any such Holder in the Registration Statement if the
Company does not receive the required notice within such 20-day period.
7.2.2 HOLDER DEMAND REGISTRATION. Promptly, but in any event within
--------------------------
sixty (60) days, after receipt of any demand pursuant to Section 7.2.1, the
Company shall prepare and file with the Securities and Exchange Commission (the
"SEC"), a Registration Statement on any applicable form, with respect to all the
Warrant Shares specified in all notices received in a timely manner received
pursuant to Section 7.2.1, and use its best efforts to cause such Registration
Statement to become effective.
7.2.3 WITHDRAWAL OF DEMAND. The Holders of a majority of the
--------------------
Registrable Securities with respect to which a registration request is made
under this Section 7.2 may withdraw such request at any time prior to the
effectiveness of the Registration Statement, and such Holders shall not be
deemed to have made a demand for the purposes of this Section 7.2 if within
sixty (60) days of withdrawing their request such Holders reimburse the Company
for all of the expenses for which the Company is responsible pursuant to Section
7.9.
7.2.4 REQUIRED MINIMUM. The Company may decline to prepare or file any
----------------
Registration Statement under this Section 7.2 unless the Registrable Securities
to be sold thereunder constitute at least fifty percent (50%) of the then
outstanding Registrable Securities held by all the Holders.
7.3 INCIDENTAL REGISTRATION. If, at any time after the Onset Date and
-----------------------
during the Registration Period, the Company proposes to file a Registration
Statement for a public offering by the Company, the Company shall take the
following steps with respect to such Registration Statements:
7.3.1 Mail a written notice to each Holder at the address shown on the
books and records of the Company at least twenty-five (25) days prior to the
filing date of any such Registration Statement; and
7.3.2 Include in such Registration Statement any and all Registrable
Securities specified in a notice by the Holder which is received by the Company
not more than fifteen (15) days following the mailing of the notice specified in
Section 7.3.1. In connection with any such registration, the Selling Holder
must: (i) sell such Registrable Securities in the manner and on the terms
adopted by or through the underwriter(s) acting on behalf of the Company in
connection with such registration, if such underwriter(s) so requests; and (ii)
accept a reduction (including a total elimination) in the number of shares to be
included in such registration on a pro rata basis (based on the number of
securities held by each) with any other selling securityholders holding
contractual registration rights (except any selling shareholders who initiated
such Registration Statement on the basis of a contractual demand right) if the
underwriter(s) reasonably deem that without such
7
<PAGE>
reduction (or elimination) the Company might be substantially hindered in the
terms or number of securities which it could sell in such registration.
7.4. REGISTRATION PROCEDURES. Whenever the Company shall register any
-----------------------
securities pursuant to this Agreement, the parties agree as follows:
7.4.1 SELLING HOLDER INFORMATION. The Selling Holders shall provide
--------------------------
the Company with such information about such Holder and its intended manner of
distributing the Registrable Securities, and shall otherwise cooperate with the
Company and any underwriter(s) selected by the Selling Holders as may be needed
or helpful in the reasonable opinion of the Company to complete any obligation
of the Company hereunder. Failure to comply with this requirement shall excuse
the Company from any further obligation to a Selling Holder to include its
shares in that Registration Statement;
7.4.2 CONSULTATION. The Company shall supply copies of any
------------
Registration Statement, any amendment thereto and any communications with the
SEC related thereto to each Selling Holder and to the Sellers' Underwriter prior
to filing such document with the SEC, and shall reasonably consult with such
persons and their counsel with respect to the form and content of such filing.
The Company will immediately amend such Registration Statement to include such
reasonable changes as the Selling Holders and the Sellers' Underwriter
reasonably agree should be included therein. Any Selling Holder requesting a
change refused by the Company may withdraw his or her shares from the
Registration Statement;
7.4.3 PROVISION OF PROSPECTUSES. The Company shall furnish to each
-------------------------
Selling Holder and any Sellers' Underwriter such number of copies of a summary
prospectus or other prospectus (including any amendments and supplements thereto
and a preliminary prospectus in conformity with the requirements of the
Securities Act) and such other documents as such Selling Holder may reasonably
request in order to facilitate the public sale or other disposition of such
securities;
7.4.4 BLUE SKY COMPLIANCE. The Company shall use its best efforts to
-------------------
register or qualify the securities covered by such Registration Statement under
the securities or "blue sky" laws of such jurisdictions as any Selling Holder
shall reasonably request (provided, however, that the Company shall not be
-------- -------
required (i) to consent to, or take any action which would subject it to,
general service of process for all purposes or (ii) to qualify to do business in
any jurisdiction where it is not then subject or qualified) and do any and all
other acts or things which may be reasonably necessary or advisable to enable
the Selling Holders to consummate the public sale or other disposition of such
securities in such jurisdictions;
7.4.5 AMENDMENTS. The Company shall use its best efforts to prepare
----------
and file promptly with the SEC such amendments and supplements to the
Registration Statement filed with the SEC in connection with such registration,
and the prospectus used in connection therewith, as may be necessary to keep
such Registration Statement
8
<PAGE>
continuously effective and in compliance with the Securities Act for a period of
nine (9) months, or until all Registrable Securities registered in that
Registration Statement are sold, whichever is earlier;
7.4.6 PROSPECTUS DELIVERY. At any time when a sale or other public
-------------------
disposition pursuant to a Registration Statement is subject to a prospectus
delivery requirement, the Company shall immediately notify each Selling Holder
and the Seller's Underwriter, if any, of the occurrence of any event as a result
of which the prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and the
Company shall thereafter diligently proceed to amend the prospectus as necessary
to correct such untrue statement or omission of a material fact and provide
updates thereto. Upon receipt of such a notice, each Selling Holder shall
immediately discontinue sales or other dispositions of Registrable Securities
pursuant to the Registration Statement. The Selling Holders may resume sales
only upon receipt of amended prospectuses or after such Holders have been
advised by the Company that the use of the previous prospectus may be legally
resumed;
7.4.7 OPINIONS. At the request of any Selling Holder, the Company
--------
shall use its best efforts to furnish on the date that the Registrable
Securities are delivered to the Seller's Underwriter for sale in connection with
a registration pursuant to this Agreement (i) an opinion of the counsel
representing the Company for the purposes of such registration, and (ii) a
letter from the independent certified public accountants of the Company, each
dated such date and in form and substance as is customarily given by counsel and
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Seller's Underwriter and to the requesting
Selling Holders;
7.4.8 STOP-ORDERS. The Company agrees to immediately notify each
-----------
Selling Holder (i) of the issuance by the SEC of any stop order or order
suspending the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose, or (ii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction, or the initiation of any
proceedings for such purpose. The Company, with the reasonable cooperation of
the Selling Holders, shall make every reasonable effort to contest any such
proceedings and to obtain the withdrawal of any such order at the earliest
possible moment;
7.4.9 REVIEW OF RECORDS. The Company shall make available such
-----------------
financial and other records, pertinent corporate documents and properties of the
Company for inspection by any Selling Holder, Seller's Underwriter, and their
counsel and accountants as may be appropriate for purposes of this Warrant so
long as such person agrees to keep confidential any such records, information or
documents;
9
<PAGE>
7.4.10 EARNINGS STATEMENTS. The Company shall, upon request, make
-------------------
earning statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder generally available to its security holders as soon
as reasonably practicable, but in no event later than 45 days, after the end of
any 12-month period commencing at the end of any fiscal quarter in which
Registrable Securities are sold; and
7.4.11 LISTING OF SHARES. Promptly, but in any event within 30 days,
-----------------
after receipt of any demand pursuant to Section 7.2.1 or of a notice by the
Holder pursuant to Section 7.3.2, the Company shall prepare and file with the
principal securities exchange on which the Class A Common Stock is then traded
an additional listing application or similar document with respect to all the
Registrable Securities specified in all notices received in a timely manner
pursuant to Section 7.2.1 or Section 7.3.2, and use its best efforts to cause
such Registrable Securities to be approved for listing on such exchange upon
official notice of issuance.
7.4.12 COMPLIANCE WITH LAWS. In all actions taken under this
--------------------
Agreement, the Company and each Selling Holder agree to use their best efforts
to comply with all provisions of the Securities Act, the Exchange Act and any
other law applicable to them.
7.5 REGISTRATION NOT REQUIRED. The Company shall have no obligation to
-------------------------
any Holder under this Stock Purchase Warrant with respect to whom the Company
has obtained an opinion of counsel, in form reasonably satisfactory to such
Holder, to the effect that the Registrable Securities involved may be
immediately sold to the public without registration thereof, whether pursuant to
Rule 144 under the Securities Act or otherwise.
7.6 DELAY OF REGISTRATION. No Holder shall have any right to take any
---------------------
action to restrain, enjoin or otherwise delay the filing or effectiveness of any
Registration Statement on the basis of any controversy which might arise with
respect to the interpretation or implementation of this Agreement.
7.7 INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
7.7.1 THE COMPANY INDEMNITY. The Company agrees that it will indemnify
---------------------
each Selling Holder and Sellers' Underwriter (and any of its officers, directors
and persons who control such Holder or Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) against all claims,
losses, damages, liabilities and reasonable expenses (including those relating
to settlements approved by the Company, which consent shall not be unreasonably
withheld) resulting from any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or from any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same may have been based upon (i) information furnished in writing to the
Company by such Holder, an underwriter, or another Selling Holder, expressly for
10
<PAGE>
use therein, or (ii) the circumstances set forth in Section 7.7.2(y) below.
7.7.2 THE HOLDER'S INDEMNITY. Each Selling Holder will indemnify the
----------------------
Company, any underwriter, and any other person selling under the applicable
Registration Statement (and any of the officers and directors and persons who
control any of the foregoing within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) against all claims, losses, damages,
liabilities and reasonable expenses (including those relating to settlements
approved by the Selling Holder, which consent shall not be unreasonably
withheld) resulting from (x) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or from any omission or
alleged omission to state a material fact required to be stated or necessary to
make the information therein not misleading, but only to the extent based upon
or arising from any information furnished in writing to the Company by that
Selling Holder expressly for inclusion in that Registration Statement, or (y)
any untrue statement or alleged untrue statement of a material fact contained
in, or any omission or alleged omission of a material fact from, a prospectus if
(i) a later prospectus which corrected the untrue statement or alleged untrue
statement, or omission or alleged omission was provided to the Selling Holder,
(ii) the Selling Holder had received written notice from the Company of the
later prospectus prior to confirmation of the sale to the aggrieved purchaser,
and (iii) there would have been no such liability but for the failure of the
Selling Holder to deliver such later prospectus to such purchaser.
7.7.3 CONTRIBUTION. If the indemnification provided for in this
------------
Section 7.7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or reasonable
expenses referred to therein as a result of a judicial determination that such
indemnification may not be enforced in such case notwithstanding this Stock
Purchase Warrant, the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expense, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty or such fraudulent
misrepresentation.
7.8 UNDERWRITING AGREEMENT. As a condition of inclusion of any securities
----------------------
in a Registration Statement, at the request of the Company, each Selling Holder
shall enter into an underwriting agreement with the Company and the
underwriter(s) with respect to
11
<PAGE>
the registration of any of their respective registrable Securities hereunder in
such form as may be reasonably agreed upon by the Company and such
underwriter(s), so long as such form is materially consistent with those then
currently in use by major underwriters and with the provisions of this Stock
Purchase Warrant.
7.9 EXPENSES OF REGISTRATION. The Company shall bear all expenses (other
------------------------
than the Selling Holders' pro rata share of any brokerage or underwriting fees,
expenses or commissions) incurred in connection with any Registration Statement,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers,
Inc.), fees and expenses of complying with securities and blue sky laws,
printing expenses and fees and disbursements of the independent certified public
accountants and counsel to the Company. Each Selling Holder shall bear its pro
rata share of any brokerage or underwriting fees, expenses or commissions and
the cost of any lawyers, accountants, experts and other consultants retained by
it.
7.10 EXCEPTION AS TO TIMING. Notwithstanding any other section of this
----------------------
Stock Purchase Warrant, the Company may, at any time, postpone or suspend for a
reasonable period of time (not to exceed 180 days) the filing or effectiveness
of any Registration Statement demanded under Section 7.2, if, at the time it
receives the demand for, or during the effectiveness of, such registration, (a)
the Company is conducting or is about to conduct a primary offering of other
securities of the Company and is advised by its investment banker in writing
that such offering would be materially adversely affected by such demand
registration or (b) the board of directors of the Company shall in good faith
determine that such demand registration would materially adversely affect any
financing, merger, sale of assets, acquisition, recapitalization or other
material transaction involving the Company, which, in each case, is either
pending or under active and continuing negotiation. If any demand registration
is so postponed, then, as between the Company and the Selling Holders, it shall
be deemed withdrawn, unless a majority in interest of the Holders elect in
writing not to withdraw such registration demand. A registration demand that is
deemed to have been withdrawn by operation of the preceding sentence shall not
count as a demand registration for the purposes of Section 7.2.1. If the Company
suspends the effectiveness of a Registration Statement, Selling Holders shall
immediately discontinue sales or other dispositions of Registrable Securities
pursuant to the Registration Statement during the period of such postponement,
and the length of time the Company is required to keep such Registration
Statement effective under Section 7.2.1 shall be increased by the length of the
postponement. The Company may suspend the effectiveness of a Registration
Statement by giving written notice of the suspension to the Selling Holders and
shall not be required to make any filings with the Securities and Exchange
Commission relating to such suspension other than those required by law.
7.11 REPORTS UNDER THE SECURITIES AND EXCHANGE ACT. With a view to make the
---------------------------------------------
benefits of Rule 144 under the Exchange Act available to the Holders, the
12
<PAGE>
Company agrees, until the earlier of sale of all of the Warrant Shares or the
eighth anniversary of the Issue Date, to use its best efforts to timely file
with the SEC all reports and other documents required under the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder.
8. MISCELLANEOUS.
-------------
8.1 COMPLETE AGREEMENT; MODIFICATIONS. This Warrant and any documents
---------------------------------
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Warrant may not be amended, altered or modified except by a writing
signed by the parties hereto.
8.2 ADDITIONAL DOCUMENTS. Each party hereto agrees to execute any and all
--------------------
further documents and writings and to perform such other actions which may be or
become necessary or expedient to effectuate and carry out this Warrant.
8.3 NOTICES. Except as otherwise provided herein, all notices under this
-------
Warrant shall be in writing and shall be delivered by personal service or
telecopy or certified mail (if such service is not available, then by first
class mail), postage prepaid, to the Company's principal business address, and
the Holder's last address as set forth in the Warrant transfer records of the
Company. Any notice sent by certified mail shall be deemed to have been given
three (3) days after the date on which it is mailed. All other notices shall be
deemed given when received. No objection may be made to the manner of delivery
of any notice actually received in writing by an authorized agent of a party.
8.4 NO THIRD-PARTY BENEFITS; SUCCESSORS AND ASSIGNS. None of the provisions
-----------------------------------------------
of this Warrant shall be for the benefit of, or enforceable by, any third-party
beneficiary. Except as provided herein to the contrary, this Warrant shall be
binding upon and inure to the benefit of the parties, their respective
successors and permitted assigns.
8.5 GOVERNING LAW. This Agreement will be governed by Colorado substantive
-------------
law, regardless of the choice of law provisions of any jurisdiction.
8.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or right
--------------------------
provided herein or otherwise available to any party hereunder (i) no waiver or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and (ii) no alteration, modification or impairment
shall be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
8.7 SEVERABILITY. The validity, legality or enforceability of the remainder
------------
of this Warrant shall not be affected even if one or more of its provisions
shall be held to be invalid, illegal or unenforceable in any respect.
13
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer.
JONES INTERNATIONAL NETWORKS, LTD.
Dated: _________ ___, 19__ By:_______________________________
______________________
______________________
ATTEST:
_________________________
________________
________________
14
<PAGE>
SUBSCRIPTION FORM
(To be executed if Holder desires
to exercise the Warrant Certificate)
The undersigned hereby irrevocably exercises the Warrant with regard
to ____________ shares of Class A Common Stock and herewith [makes payment of
$___________ ] [requests that the Company exchange the Warrant as provided in
Section 1.2.2 of the Warrant]. The undersigned requests that certificate(s) for
such shares and the Warrant for the unexercised portion of this Warrant be
issued to the Holder in the name set forth below.
Name __________________________________________
(Please Print or Type)
Address _______________________________________
City, State and Zip Code ______________________
Taxpayer Identification
or Social Security Number ____________________
Dated:_________________ __________________________________
Signature of Registered Holder
<PAGE>
WARRANT ASSIGNMENT FORM
(To be executed by the Holder if such
Holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED, ___________________ hereby sells, assigns and
transfers to:
Name _________________________________________
(Please Print)
Address ______________________________________
City, State and Zip Code _____________________
Taxpayer Identification
or Social Security Number ___________________
the right to purchase up to ____________________ Warrant Shares represented by
this Warrant Certificate and does hereby irrevocably constitute and appoint
_________________________________________________ to transfer said Warrant on
behalf of the Company, with full power of substitution in the premises.
Dated:________________ ____________________________________
Signature of Registered Holder
NOTICE
The signature to the foregoing Warrant Assignment Form must correspond
to the name as written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF DAVIS, GRAHAM & STUBBS LLP APPEARS HERE]
March 5, 1997
Jones International Networks, Ltd.
9697 East Mineral Avenue
Englewood, CO 80112
Re: Sale of Up to 3,852,500 Shares of Common Stock Pursuant to a
Registration Statement on Form S-1 (File No. 333-15657)
Ladies and Gentlemen:
We are providing this opinion in connection with the registration by Jones
International Networks, Ltd., a Colorado corporation (the "Company"), of
3,852,500 shares of common stock, $.01 par value (the "Shares"), on a
Registration Statement on Form S-1 (File No. 333-15657), as filed with the
Securities and Exchange Commission on November 6, 1996, as subsequently amended
on January 10, 1997, and as subsequently amended on February 14, 1997, and as
subsequently amended on March 5, 1997 (the registration statement, as so
amended, the "Registration Statement").
In connection with this opinion, we have examined certain corporate
records and proceedings of the Company, including actions taken by the Company
with respect to the authorization and issuance of the Shares, and such other
matters as we deemed appropriate. Based on the foregoing, we are of the opinion
that the Shares have been duly authorized and, when sold as contemplated in the
Registration Statement, will be legally issued, fully paid and non-assessable.
We hereby consent to the reference to this firm under the heading "Legal
Matters" in the Registration Statement, and in the Prospectus constituting a
part thereof, as the counsel who will pass upon the validity of the Shares.
Very truly yours,
/s/ DAVIS, GRAHAM & STUBBS LLP
DAVIS, GRAHAM & STUBBS LLP
<PAGE>
Exhibit 10.6
Portions of this exhibit have been omitted pending a determination by the
Securities and Exchange Commission that certain information contained herein
shall be afforded confidential treatment. The omitted portions are indicated by
three asterisks.
<PAGE>
SALES REPRESENTATION AGREEMENT
------------------------------
This Agreement dated and effective as of December 1, 1995, between
MEDIAAMERICA, INC., a New York corporation ("MAI") and JONES SATELLITE NETWORKS,
INC., a Colorado corporation ("JSN"). The parties hereto agree as follows:
1. Engagement. Pursuant to the terms and conditions of this Agreement,
----------
JSN hereby engages MAI as JSN's exclusive sales representative (except as
provided in Section 8) during the term of this Agreement through the area
served by the Network (as defined below), such area to be known as the
"Territory", in respect of ad sales for the Network. The Territory shall be
limited to the United States only and the engagement of MAI is likewise
limited to the United States. MAI hereby accepts the engagement and by doing so
agrees to render those services customarily rendered by first-class sales
representatives in the U.S. radio broadcasting industry. MAI's services
hereunder shall be non-exclusive, it being understood and agreed that MAI is
entitled to be the sales representative for services, producers and distributors
other than JSN.
2. The Network. The Network to be represented by MAI hereunder is
-----------
titled "Jones Satellite Network" which is currently comprised of eight (8)
24-hour per day, satellite delivered radio formats: CD Country, US Country,
Adult Hit Radio, Good Time Oldies, Soft Hits, FM Lite, The Word-in-Music and Z-
Net. Additional 24-hour per day formats are projected to become part of the
Network. JSN shall promptly advise MAI of any additional such formats or changes
to the formats and broadcast times/dates. This Agreement does not apply to
programming which is not a 24-hour per day format. The inclusion of any such
other programming herein shall be made only by express
<PAGE>
agreement of the parties; it being understood that in any event the commission
rate of MAI with respect thereto shall not exceed ***.
3. Parties' Obligations.
---------------------
3.1. MAI shall render its services hereunder with respect to all
advertising time to be inserted during the broadcasting of
the Network (the "Advertisements"). In furtherance of its
responsibilities hereunder, MAI will use its best efforts to
promote the Network, maximize and collect Gross Sales (as
defined below) derived from the Advertisements, and
coordinate its sales activities with JSN personnel. JSN will
provide adequate staff to act as a liaison with its
affiliated radio stations which receive the Network.
3.2. MAI shall render the following services, without
limitation, at MAI's sole expense:
3.2.1. engage in customary sales promotion activities
to sell the Advertisements;
3.2.2. negotiate and enter into agreements with, and pay
Commissions to, all advertising agencies and
advertisers respecting the sale of the
Advertisements. All orders for Advertisements shall
be acceptable to JSN in its sole discretion. MAI
shall furnish to JSN promptly upon execution, copies
of all agreements entered into by MAI with respect to
the Advertisements. MAI shall make no sales of
Advertisements for any period which
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<PAGE>
is after this Agreement terminates or is to terminate
(whether by expiration of its term or as a result of
notice) without first receiving the written consent
of JSN.
3.2.3 MAI will perform for JSN the functions of
trafficking (scheduling) JSN inventory.
3.3. No less frequently than monthly, or as dictated by
advertisers, MAI will secure, obtain and collect all
affidavits of performance from all radio stations
broadcasting the Network in the Territory. These affidavits
of performance will be made available to JSN on at least a
monthly basis. JSN shall cooperate in the enforcement of
compliance by the stations with their obligations to
promptly submit such affidavits and to adhere to applicable
scheduling requirements.
3.4. MAI will provide information on sales to JSN as each sale is
made. The JSN log will close at 5 P.M. Mountain Time each
Thursday for the broadcast week beginning a week from the
following Monday. Any advertising time within that
broadcast week remaining unsold by MAI at closing will
revert to JSN. Complete logs for each broadcast week will be
furnished by MAI to JSN one week in advance on the Monday
preceding the Monday on which the broadcast begins.
3.5 MAI shall by notice advise JSN at least ten (10) days before
entering into any agreement to render services
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<PAGE>
comparable to those of MAI under this Agreement to any
provider of twenty-four hours per day music formats to
radio stations. Such notice shall identify the contracting
party and shall confirm that MAI will observe the provisions
of Sections 4.7 and 4.8 of this Agreement if they become
applicable as a result of such other agreement.
4. Gross Sales; Compensation to MAI.
--------------------------------
4.1 . "Gross Sales" shall mean any and all revenues and income and other
consideration derived from the sales of advertising time by MAI
hereunder in respect of the Advertisements pursuant to all contracts
obtained by MAI during the term of this Agreement. "Adjusted Gross
Sales" shall mean Gross Sales less only advertising agency
commissions (not to exceed 15 percent) actually paid by MAI to
unaffiliated third parties.
4.2. MAI shall render bills in respect of all Gross Sales within five (5)
business days after the end of the advertising schedule or the
Standard Broadcast month in which the Network is broadcast and shall
directly receive and use its best efforts to collect one hundred
percent (100%) of all Adjusted Gross Sales. Copies of such bills
shall be mailed concurrently to JSN.
4.3. As compensation for its services under this Agreement, MAI shall
receive (a) *** of all collected Adjusted Gross Sales for
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<PAGE>
Advertisements booked and run for December 1995; (b) *** of all
collected Adjusted Gross Sales for Advertisements booked and run for
the twelve month period January 1, 1996 to December 31, 1996. If
Adjusted Gross Sales for such twelve month period exceed ***, the
rate will be *** with respect to the amount in excess of ***; (c) ***
of all collected Adjusted Gross Sales for Advertisements booked and
run for the twelve month period January 1, 1997 to December 31, 1997.
If Adjusted Gross Sales for such twelve month period exceed the
greater of *** or *** of the Adjusted Gross Sales for calendar 1996,
the rate will be *** with respect to the amount in excess of the
greater of *** or *** of the Adjusted Gross Sales for calendar 1996,
and (d) *** of all collected Adjusted Gross Sales for the remaining
period of this Agreement.
4.4. MAI shall account to JSN with respect to collected Adjusted Gross
Sales as and when received from advertisers or agencies, but in no
event less often than monthly, commencing thirty (30) days after
broadcast of the advertising schedule on the Network for as long as
bills are outstanding. MAI shall remit JSN's share of Adjusted Gross
Sales on a weekly basis for checks that were received by MAI that
week. Copies
-5-
<PAGE>
of corresponding advertiser/ad agency checks will be forwarded to JSN
along with JSN's share of Adjusted Gross Sales. A complete, detailed
accounts receivable report will be forwarded to JSN on a monthly
basis, within ten (10) days after the end of each month.
4.5. It is expressly agreed that as to the percentage amounts of Adjusted
Gross Sales which MAI has the right to receive pursuant to Section
4.1 above and which, if received and collected, it shall remit to JSN
pursuant to this Agreement MAI shall receive such funds in trust for
and on behalf of JSN. MAI shall have no ownership interest in any of
such amounts and such amounts shall not be available to any of the
creditors of MAI.
4.6. MAI shall not *** to other 24-hour satellite delivered formats ***.
4.7. MM will not provide to any other program producer any sharing
arrangement or participation based on advertising time contributions
made by its clients that is more favorable than is provided to JSN
under this Agreement, including the allocation of any bonuses with
respect to the inventory made available by JSN; provided that the
foregoing shall not apply to the arrangement between MAI and EFM.
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<PAGE>
4.8. The parties mutually agree to keep confidential the compensation
payable under Section 4 of this Agreement, except if disclosure is
required by law (including securities law disclosure requirements),
or if such information is disclosed by MAI or is in the public
domain.
5. Employees.
---------
5.1. Neither JSN nor any of its subsidiaries, partners, joint venturers,
employees or agents shall employ or offer to employ any of the
current staff of MAI for a period of one (1) year from the
termination of this Agreement for any reason.
5.2. Neither MAI nor any of its subsidiaries, partners, joint venturers,
employees or agents shall employ or offer to employ any of the
current staff of JSN for a period of one (1) year from the
termination of this Agreement.
6. Books and Records. JSN shall have the right to examine all of MAI's books,
-----------------
records and other information relative to the sale of the Network
Advertisements, the booking and collection of the Network's Gross Sales, the
calculation of Adjusted Gross Sales, the relative contributions by JSN vis-a-vis
others pursuant to Section 4.8, and all related matters, upon reasonable advance
written notice to MAI at any time and at a reasonable frequency, and shall have
the right to commence arbitration thereon within one (1) year after the
termination of this Agreement. In the event JSN's examination of MAI's books and
records reveals an underpayment to JSN, then MAI shall promptly pay any
underpayment.
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<PAGE>
7. Term of the Agreement.
---------------------
7.1. The term of this Agreement shall commence as of December 1, 1995, and
shall continue for a period of 2 1/2 years, ending on May 31, 1998,
unless sooner terminated as provided in this Agreement.
7.2. In the event that Gross Sales hereunder are less than $7,800,000 with
respect to calendar year 1996, JSN shall have the right to terminate
this Agreement by giving at least sixty (60) days notice of such
termination at any time after December 31, 1996 and before February
28, 1997. If no such notice is given before February 28, 1997, such
right to terminate shall be void.
7.3. Upon the termination of this Agreement for any reason, if JSN (or its
designee) shall collect Gross Sales derived from any contracts
obtained by MAI during the term of this Agreement, JSN shall pay MAI
the appropriate percentage (as determined under Section 4.3 or
Section 4.4) of the Adjusted Gross Sales after deductions permitted
herein (if any) and for which MAI shall continue to perform services,
and MAI shall turn over all relevant records to JSN relating to the
Network or sale of Advertisements. Each party agrees to cooperate
during a transitional period from one sales organization to another.
-8-
<PAGE>
8. Rights of JSN to *** Sales Representative.
-----------------------------------------
(a) Notwithstanding any other provision of this Agreement, if JSN
terminates this Agreement under Section 7.2, JSN shall have the right, at any
time after the notice referred to in Section 7.2 is given, to *** prior to the
end of the sixty day notice period, provided that the *** shall only be for
periods after the end of such sixty day period.
(b) Notwithstanding any other provision of this Agreement, JSN shall
have the right at any time after January 31, 1998, and upon notice to MAI, to
*** prior to June 1, 1998. Such *** may *** immediately, provided that the ***
shall only be for periods on or after June 1, 1998.
9. Meetings. The parties shall meet four (4) times each calendar year
--------
during the term of this Agreement for the purpose of reviewing the performance
of MAI and the working relationship of the parties. Two of such meetings shall
be held in Denver, Colorado and two in New York City. Meetings shall be held
approximately quarterly, with the exact time and place of each meeting to be
determined by the parties.
10. Representations, Warranties and Indemnification. Each party hereby
-----------------------------------------------
represents and warrants that it has the full power and authority to enter into
this Agreement and to perform its obligations hereunder. JSN will use its best
efforts to obtain all releases, authorizations, consents and waivers necessary
for authorization to broadcast the material to be included in the Network. JSN
hereby agrees to indemnify MAI from and against any claims made for unauthorized
use by any persons, their heirs, assigns and the estates of any such persons,
whose names, voices or material are to be included in the
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<PAGE>
Network, and from and against any other losses resulting from a breach by JSN of
these representations and warranties. Each party hereby agrees to indemnify and
hold harmless the other party from and against any and all claims finally
adjudicated, arbitrated or settled with the consent of both parties (which
consent may not be unreasonably withheld), and any and all expenses (including
reasonable attorneys' fees), damages, causes of actions and losses, arising out
of a breach of any agreements, warranties or representations made by the
indemnifying party.
11. General.
-------
11.1. Notices. All notices and documents desired or required to
-------
be given to either party hereunder must be in writing and
shall be deemed given on the date received, via express
or certified mail return receipt requested, or the date
telexed or telefaxed, all charges prepaid, to the other
party's respective address set forth below or to such
other address as either party shall designate to the other
in writing. All statements and payments required to be
given to JSN hereunder shall be remitted to the address
set forth below or to such other address as JSN shall
designate in writing. A courtesy copy of all notices to
MAI shall be sent to David Newberg, Esq., Collier, Cohen,
Crystal & Bock, 440 Park Avenue South, New York, New York
100l6-80l2, and all notices to JSN are to 9697 E. Mineral
Avenue, Englewood, Colorado 80112, with a courtesy copy to
General Counsel, at the same address.
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<PAGE>
11.2. Assignments. Without the consent of MAI, JSN shall have
-----------
the right to assign this Agreement to (i) any party
acquiring all or a substantial portion of its assets,
whether by merger, consolidation or otherwise, and (ii) to
any affiliate of JSN. Any other assignment shall require
the consent of MAI, which consent shall not be
unreasonably withheld. MAI may not assign this Agreement
without the consent of JSN, which consent shall not be
unreasonably withheld.
11.3. Arbitration. Any dispute arising between the parties to
-----------
this Agreement shall be submitted to and resolved by
binding arbitration in New York City and in Denver,
Colorado, according to the rules of the American
Arbitration Association. The site of such arbitration
shall shift every six months, with the first site being
New York City.
11.4. Entire Agreement: Relation of the Parties. This Agreement
-----------------------------------------
expresses the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes
any and all former agreements and understandings; whether
oral or written, relating to the subject matter hereof.
No amendments or modifications may be made except in a
writing signed by the parties hereto. No waiver of default
by either party shall constitute a waiver of any other
default whether or not similar. Nothing contained in this
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<PAGE>
Agreement shall be construed to constitute either party
the employee, agent, partner or joint venturer of the
other, it being understood and agreed that the
relationship of the parties is that of independent
contractors. This Agreement shall be construed in
accordance with the laws of the State of Colorado
applicable to agreements entered into and wholly
performed therein.
MEDIAAMERICA, INC. JONES SATELLITE NETWORKS, INC.
11 West 42nd Street 9697 East Mineral Avenue
28th Floor Englewood, CO 80112
New York, NY 10036
By:/s/ Ron Hartenbaum By:/s/ Eric Hauenstein
----------------------- ---------------------------------
Ron Hartenbaum Eric Hauenstein
Chairman Vice President/General Manager
19233
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<PAGE>
Exhibit 10.9
Portions of this exhibit have been omitted pending a determination by the
Securities and Exchange Commission that certain information contained herein
shall be afforded confidential treatment. The omitted portions are indicated
by three asterisks.
<PAGE>
AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
PRODUCT INFORMATION NETWORK VENTURE
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE 1 ORGANIZATION.......................................................1
1.1 Name...............................................................1
1.2 Purpose............................................................1
1.3 Principal Office, Partners' Names and Addresses....................2
1.4 Term...............................................................2
ARTICLE 2 CAPITAL AND OTHER REQUIREMENTS.....................................3
2.1 Partners' Ownership Interests; Initial Contributions...............3
2.2 Concerning Adelphia................................................3
2.3 Additional Capital Contributions...................................6
2.4 Default in the Payment of Additional Capital Contributions.........7
2.5 Interest on Capital Contributions..................................9
2.6 Capital Accounts...................................................9
2.7 Protection Against Dilution.......................................10
ARTICLE 3 ALLOCATION OF PROFITS AND LOSSES..................................10
3.1 Allocation of Profits.............................................10
3.2 Allocation of Losses..............................................10
3.3 Allocation of Gain or Loss on Sale................................10
3.4 Change in Ownership Interest......................................10
3.5 Minimum Gain Chargeback Rules.....................................12
3.6 Nonrecourse Debt..................................................12
3.7 Curative Allocations..............................................12
3.8 Contributions of Property.........................................12
3.9 Profit or Loss....................................................12
ARTICLE 4 NON-LIQUIDATION DISTRIBUTIONS.....................................13
4.1 Distribution in Accordance with Ownership Interests...............13
4.2 Distribution Policy...............................................13
4.3 Withholding.......................................................13
</TABLE>
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<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 5 ACCOUNTING RECORDS AND FISCAL YEAR................................13
5.1 Books and Records.................................................13
5.2 Financial Statements and Reports..................................14
5.3 Bank Accounts.....................................................14
5.4 Tax Returns Information...........................................14
5.5 Fiscal Year.......................................................17
5.6 Tax Elections.....................................................17
ARTICLE 6 MANAGEMENT........................................................17
6.1 Executive Committee...............................................17
6.2 Chairman of Executive Committee...................................18
6.3 Meetings of Executive Committee...................................18
6.4 Business Plan.....................................................19
6.5 Actions Requiring Approval of Executive Committee According
to Ownership Interests............................................19
6.6 Action on Programming Content.....................................21
6.7 No Authority to Act for Other Partners............................21
ARTICLE 7 SERVICES OF PARTNERS..............................................22
ARTICLE 8 DAY-TO-DAY MANAGEMENT; PARTNERSHIP EXPENSES; PARTNER
AFFILIATION AGREEMENTS............................................22
8.1 Management Services of JINI.......................................22
8.2 Partnership Expenses..............................................23
8.3 Partner Affiliation Agreements....................................23
ARTICLE 9 REPRESENTATIONS AND WARRANTIES....................................29
9.1 Due Incorporation; Authorization of Agreement.....................29
9.2 No Conflict; No Default...........................................29
9.3 Litigation........................................................30
ARTICLE 10 DISSOLUTION AND LIQUIDATION.......................................30
10.1 Events of Dissolution and Liquidation.............................30
10.2 Winding-Up........................................................32
</TABLE>
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<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 11 RESTRICTIONS ON TRANSFER OR SALE OF PARTNERSHIP OWNERSHIP
INTERESTS; GO-ALONG RIGHTS........................................34
11.1 Restrictions on Transfer..........................................34
11.2 Right of First Refusal............................................34
11.3 Go-Along Rights...................................................37
ARTICLE 12 DEFAULT...........................................................38
12.1 Definition of Default.............................................38
12.2 Remedies..........................................................38
ARTICLE 13 FORCE MAJEURE.....................................................39
13.1 Force Majeure.....................................................39
13.2 Notice of Force Majeure...........................................39
ARTICLE 14 MISCELLANEOUS.....................................................40
14.1 Limits of Partnership.............................................40
14.2 Insurance.........................................................40
14.3 Confidential Information..........................................40
14.4 Publicity.........................................................43
14.5 Modification......................................................43
14.6 Gender and Number.................................................43
14.7 Benefits and Obligations..........................................43
14.8 Counterparts......................................................43
14.9 Captions..........................................................43
14.10 Further Performance...............................................43
14.11 Governing Law.....................................................43
14.12 Notices...........................................................44
14.13 Severability......................................................45
14.14 Title to Property.................................................45
14.15 No Commissions....................................................45
14.16 Plan for a Public Offering........................................45
14.17 Powers of the Partners............................................46
14.18 Partners' Own Infomercials........................................46
</TABLE>
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<PAGE>
AMENDED AND RESTATED
--------------------
PARTNERSHIP AGREEMENT
---------------------
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT (this "Agreement") is
effective as of the 1st day of October, 1995, by and among Jones Infomercial
Network Ventures, Inc., a Colorado corporation ("JINI"), Cox Consumer
Information Network, Inc., a Delaware corporation ("Cox"), and Adelphia
Communications Corporation, a Delaware corporation ("Adelphia"). The parties
are sometimes referred to collectively as the "Partners" and individually as a
"Partner".
WHEREAS, on January 1, 1995 Cox and JINI formed a general partnership
under the laws of Colorado known as Product Information Network Venture; and
WHEREAS, the parties desire to amend the agreement for such general
partnership and to admit Adelphia as a general partner upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE 1
ORGANIZATION
1.1 Name. The name of the Partnership shall be Product
----
Information Network Venture or such other name as the Executive Committee (as
defined in Section 6.1 of this Agreement) shall determine.
1.2 Purpose. The purposes of the Partnership shall be to
-------
develop fully a network (the "Network") for the promotion and exhibition of
multiple direct response television commercials ("Infomercials"), generally
ranging in length from 30 seconds to 60 minutes, depending on the requirements
needed to adequately demonstrate the particular products or services that are
the subjects of the Infomercials. The Partnership shall seek to market the
Network
<PAGE>
and related services to other cable television operators, multi-channel, multi-
point distribution systems, low power and full power television stations, full
service television networks and direct broadcast satellite and other direct to
home services, as well as similar television distribution methods which may
develop in the future. The Partnership may conduct any and all activities which
are necessary or appropriate in connection with the foregoing.
1.3 Principal Office, Partners' Names and Addresses. The
-----------------------------------------------
Partnership shall have its principal business office at 9697 East Mineral
Avenue, Englewood, Colorado 80112. It may move such office and have additional
offices at such other place or places as the Executive Committee may select from
time to time. The names and addresses of the Partners are as follows:
JINI:
Jones Infomercial Network Ventures, Inc.
9697 E. Mineral Avenue
Englewood, Colorado 80112
Cox:
Cox Consumer Information Network, Inc.
1400 Lake Hearn Drive
Atlanta, Georgia 30319
Adelphia:
Adelphia Communications Corporation
5 West Third Street
Coudersport, Pennsylvania 16915
1.4 Term. The term of the Partnership shall be until
----
December 31, 2004. Thereafter, the Partnership shall continue for successive
five-year terms unless either JINI or Cox gives written notice to the other
Partners at least 120 days prior to the expiration of the initial term, or at
least 90 days prior to the expiration of any successive five-year term, that the
Partnership will dissolve at the end of such term.
2
<PAGE>
ARTICLE 2
CAPITAL AND OTHER REQUIREMENTS
2.1 Partners' Ownership Interests; Initial Contributions.
----------------------------------------------------
The interests in the Partnership shall be designated as Ownership
Interests ("Ownership Interests"). The percentage Ownership Interests of the
Partners shall be as set forth on Exhibit A hereto (which Exhibit is hereby
incorporated herein by reference). For such Ownership Interests, the Partners
shall have contributed the assets set forth on Exhibit A-1. Each contributing
Partner represents and warrants to the other Partners that the assets so
contributed are free and clear of all liens, claims and encumbrances (except as
set forth in Exhibit A-1); that all required consents to the transfer thereof
have been obtained and that all affiliate agreements so transferred are valid,
binding and enforceable.
2.2 Concerning Adelphia.
-------------------
a.(i) Upon the effective date of this Amended and Restated
Partnership Agreement, Adelphia's sole contribution to the Partnership shall be
the Affiliation Agreement which is Exhibit G hereto. Such Affiliation Agreement
(the "Adelphia Agreement") shall be for a period of five (5) years from such
effective date. Adelphia's Ownership Interest in the Partnership will result in
a reduction of the Ownership Interests of JINI and Cox and shall be determined
as follows:
On or before October 1, 1996, Adelphia agrees to provide at least ***
subscribers to the Network. Adelphia may also provide additional
subscribers pursuant to the Adelphia Agreement. For all full-time
subscribers provided to the Network on or before October 1, 1996, Adelphia
shall receive an Ownership Interest in the Partnership equal to *** for
each *** subscribers so provided, up to a total of *** percent, and an
additional *** percent Ownership Interest in the Partnership for each ***
subscribers over and above *** subscribers, but not to exceed *** percent
in the aggregate. For all full-time subscribers provided to the Network
during the period October 2, 1996 and ending April 1, 1998, Adelphia shall
receive an
3
<PAGE>
additional *** percent Ownership Interest in the Partnership for each ***
full-time subscribers provided over and above the subscribers provided on
or before October 1, 1996. Notwithstanding the foregoing, in no event under
Section 2.2.a(i) shall Adelphia be entitled to more than a *** percent
Ownership Interest in the aggregate for the subscribers provided to the
Network. On October 1, 1996 and April 1, 1998 any fractional amount of
Ownership Interest due Adelphia, as calculated above, which is the result
of full-time subscribers provided in an amount less than a full ***
subscriber increment, will be issued to Adelphia.
(ii) Notwithstanding the above, if the Partnership has not issued, in
exchange for distribution commitments, Ownership Interests totalling ***
percent to new partners (including Adelphia, but excluding JINI and Cox) on
or before April 1, 1998, Adelphia shall be entitled to receive an
additional Ownership Interest equal to the lesser of:
x) *** percent less the percentage Ownership Interest *** on or
before April 1, 19***; or
y) *** less the actual Ownership Interest received by Adelphia as
calculated in a.(i) above.
b. The Ownership Interest of Adelphia, as provided in the
preceding paragraph, shall not be *** prior to April 2, 199*** as the result
of the *** as the means of acquiring an Ownership Interest in the Partnership.
Accordingly, if the Partnership admits an additional partner or partners during
such period on such basis, the percentage Ownership Interest of such partner
necessary to prevent any *** of Adelphia shall be derived ***. In determining
whether such partner has provided cable television subscribers to the Network in
exchange for its Ownership
4
<PAGE>
Interest, the fact that such partner also contributes an incidental amount of
cash or other property to the Partnership shall not be considered.
c. If, on or prior to October 1, 1996, the Partnership
admits an additional partner or partners whose Ownership Interest is determined
substantially on the basis of the provision of cable television subscribers to
the the Network (regardless of the number of subscribers so provided and the
fact that such partner also contributes an incidental amount of cash or other
property to the Partnership shall not be considered), the Partnership shall
provide to *** Ownership Interest in the Partnership *** if *** in its
discretion that such basis *** provided that the foregoing shall not be
applicable in the event that the Partnership admits one or more of the cable
television operators whose names are set forth on Exhibit I hereto.
d. At the election of the Partnership, the Ownership
Interest of Adelphia shall terminate and Adelphia shall be deemed to have
withdrawn from the Partnership if (x) at any time during the period from October
2, 1996 to April 1, 1998, Adelphia fails to achieve *** of the First Adelphia
Benchmark (as defined in Section 8.3.b and such failure shall continue for a
period of 120 days or (xx) at any time after April 2, 1998, Adelphia shall have
failed to achieve *** of the Second Adelphia Benchmark (as defined in Section
8.3.b and such failure shall continue for a period of 120 days. In either such
event and upon notice that the Partnership has so elected, Adelphia shall be
deemed to have withdrawn from the Partnership and shall have no rights or
further obligations with respect to the Partnership except that Adelphia shall
be entitled to receive its share (based on its Ownership Interest as in effect
immediately prior to such withdrawal) of any
5
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undistributed cash balances as of the date of its withdrawal and except for the
obligations described in the following sentences of this Section 2.2, upon such
withdrawal, the Partnership shall have no further claims against Adelphia under
Section 2.2 or Section 8.3, except for any amount owed to the Partnership prior
to such withdrawal. In addition, for the two-year period commencing with its
withdrawal, Adelphia shall not solicit, directly or indirectly, in connection
with the operation of an infomercial network that is substantially similar to
the Partnership's Network, any cable television system operator with respect to
any system which, on the date of such withdrawal, was subject to an affiliate
agreement with the Partnership (the "Covered Systems"). During such two-year
period, Adelphia shall not, directly or indirectly, compete with the Partnership
in the provision of Infomercials in the areas of the Covered Systems in
connection with the operation of an infomercial network that is substantially
similar to the Partnership's Network; provided that the foregoing shall not
apply to showing infomercials on its own Systems.
e. Adelphia shall not, directly or indirectly, have any
equity interest in any infomercial network during the term of this Agreement.
For the two-year period referred to in Section 2.2.d above, Adelphia shall not,
directly or indirectly, have a greater than *** equity interest in an
infomercial network. An "infomercial network" is a nationally distributed
network, substantially all of the programming of which consists of infomercial
or informational programming.
2.3 Additional Capital Contributions.
--------------------------------
Additional capital contributions may be required by the
Partnership from time to time in such amounts and payable at such time, in such
manner and on such terms as may be determined by the Executive Committee (as
described herein), subject to the terms of this Agreement. Such additional
6
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capital contributions shall be provided to the Partnership by each Partner in
proportion to such Partner's Ownership Interest at the time of the Executive
Committee's capital call.
2.4 Default in the Payment of Additional Capital
--------------------------------------------
Contributions.
- -------------
a. If any Partner shall fail or refuse to pay any additional
capital contributions (the "Defaulting Partner"), the other Partners (the
"Complying Partners"), on a pro rata basis, may, at their sole option:
i. make an additional capital contribution to the
Partnership in the aggregate amount of the additional
capital contribution required of such Partner and the
Defaulting Partner in response to such call (an
"Aggregate Capital Contribution"); or
ii. make a loan to the Partnership in an amount equal to
the aggregate amount of the additional capital
contribution required of such Partner and the
Defaulting Partner (a "Deficit Loan"), secured by
both the assets of the Partnership and the Ownership
Interest of the Defaulting Partner.
b. If a Complying Partner elects to make the Aggregate
Capital Contribution of the Defaulting Partner pursuant to Section 2.4.a.i., the
Complying Partner's Capital Account (as hereafter defined) shall be credited
with the amount of such contribution. In order to give effect to the increased
capital contribution of the Complying Partner, the Ownership Interests of the
Complying Partner and the Defaulting Partner shall be adjusted according to the
relative cumulative capital contributions of such Partners as of the date of the
Aggregate Capital Contribution.
c. If a Complying Partner elects to make a Deficit Loan
pursuant to Section 2.4.a.ii, such loan shall bear interest at the per annum
rate of two percent (2%) in excess of the prime rate in effect from time to time
as published by Colorado National Bank of Denver or its successor (the "Prime
7
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Rate"). Any Deficit Loan shall be payable in three equal annual installments of
principal plus accrued interest on the first, second and third anniversaries of
the date thereof. A Defaulting Partner shall not be entitled to any Partnership
distributions (but shall be allocated and required to report its share of
Partnership profit and loss in accordance with Article 3), until all Deficit
Loans attributed to the Defaulting Partner are paid in full. A Defaulting
Partner may prepay its Deficit Loan at any time without penalty. Until all
Deficit Loans are paid in full, any distributions which the Defaulting Partner
would otherwise be entitled to receive under Article 4 or Section 10.2 shall be
paid to the Complying Partner, and shall be applied first to reimbursement of
costs of collection, next to accrued interest and the balance to outstanding
principal of the Deficit Loans and shall reduce the final installment due
thereon. If the Partnership defaults in payment of a Deficit Loan, such loan
shall become immediately due and payable, and shall bear interest from the date
of default until payment in full at the rate of 18% per annum. The Partnership
shall take commercially reasonable efforts to avoid a default. With respect to
any Deficit Loan, the Partnership agrees to pay all costs of collection,
including attorneys' fees. All Deficit Loans shall automatically become due and
payable upon any transfer of the Defaulting Partner's Ownership Interest. All
Deficit Loans shall be represented by a promissory note from the Partnership or
other evidence of indebtedness satisfactory to the Complying Partner and shall
be secured both by a security interest in the Defaulting Partner's Ownership
Interest and the Partnership's assets, respectively. Both the Partnership and
the Defaulting Partner shall execute and deliver such promissory notes, security
agreements, financing statements and other documents relating to a Deficit Loan
as the Complying Partner shall reasonably request.
d. If a Complying Partner does not elect to make an
Aggregate Capital Contribution or Deficit Loan, the Defaulting Partner shall not
be relieved of its obligation to contribute the unpaid amount of any additional
capital contribution, and such amount shall be payable without further demand,
together with interest at the rate of 2% per annum in excess of the Prime Rate
8
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and all costs of collection, including attorneys' fees, and shall be secured by
a security interest in the Defaulting Partner's Ownership Interest.
e. The rights granted to the Complying Partner under this
Section 2.4 are in addition to any rights or remedies that the Complying Partner
or the Partnership may have under this Agreement or at law or in equity relating
to the failure or refusal of the Defaulting Partner to make any additional
capital contribution required of it in response to a call by the Executive
Committee. In the event that there is a default with respect to the payment by
the Partnership to a Complying Partner of a Deficit Loan, the Complying Partner
agrees that it shall first foreclose its security interest against the assets of
the Partnership or otherwise take action against such assets (in each case to
the extent it lawfully may do so), before seeking to foreclose upon or taking
action against the Ownership Interest of the Defaulting Partner.
f. In the event that following a call for additional capital
contributions, the Partnership has not obtained the full amount of the called
funds according to the provisions of Section 2.4, the Executive Committee may
seek to obtain funds from other parties and may determine to admit additional
partners pursuant to Section 6.5 of this Agreement.
2.5 Interest on Capital Contributions. No interest shall be paid
---------------------------------
on any contribution to the capital of the Partnership.
2.6 Capital Accounts.
----------------
a. There shall be established and maintained on the books of
the Partnership a separate capital account (a "Capital Account") for each
Partner. Each Partner's Capital Account shall be credited with the amount of
money and the fair market value of other property contributed by such Partner to
the Partnership (net of liabilities secured by such contributed property that
the Partnership or any other Partner is considered to assume or take subject to
under Internal Revenue Code of 1986 ("IRC") Section 752) pursuant to Sections
2.1, 2.2, 2.3 and 2.4 of this Agreement. Each Partner's allocated share of
Partnership items of profit and loss shall be credited or debited to its Capital
Account. All Partnership distributions to a Partner of cash or property (which
shall be valued at its fair market value, net of liabilities secured by such
9
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distributed property that such Partner is considered to assume or take subject
to under IRC Section 752) shall be debited to such Partner's Capital Account.
Notwithstanding anything in this Section 2.6a. to the contrary, Capital Accounts
shall in any event be determined and maintained in accordance with IRC Section
704(b) and Treasury Regulations Section 1.704-1(b)(2)(iv).
b. If additional partners are admitted to the Partnership in
return for the contribution of money or other property or as a Partner or
Partners contribute additional money or other property to the Partnership in
exchange for an interest in the Partnership, the Tax Matters Partner (designated
under Section 5.4 a. of this Agreement) may, at the election of the Executive
Committee, cause the Capital Accounts of the Partners to be adjusted to reflect
a revaluation of the assets of the Partnership based on the fair market value of
such assets as determined by the Executive Committee to reflect the manner in
which unrealized income, gain, loss or deduction in such assets (that has not
previously been reflected in the Capital Accounts) would be allocated among the
Partners if there were a taxable disposition for the fair market value of such
assets on the date of admission of the additional partners. If the assets of the
Partnership are revalued pursuant to the preceding sentence, then (i) the
Partners' Capital Accounts will thereafter be adjusted in accordance with Treas.
Reg. (S) 1.704-1(b)(2)(iv)(g) for allocations to them, pursuant to Article 3, of
depreciation, amortization, and gain or loss as computed for book purposes with
respect to such assets, and (ii) allocations of depreciation, amortization, and
gain or loss as computed for tax purposes, with respect to such property shall
be determined so as to take account of the variation between the adjusted tax
basis and book value of such property consistent with the principles of IRC
Sections 704(b) and 704(c).
2.7 Protection Against Dilution. The Partners shall have a
---------------------------
preemptive right against dilution of their Ownership Interests by the admission
of other Partners. Nonetheless, the parties agree that such dilution can occur:
a. In the event that the Partnership (or any successor entity
selected to be the public vehicle) goes public, or
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b. Subject to Section 2.2b, if the Executive Committee determines
pursuant to the provisions of Section 6.5 to allow additional
persons to join the Partnership.
ARTICLE 3
ALLOCATION OF PROFITS AND LOSSES
3.1 Allocation of Profits. Except as otherwise provided in this
---------------------
Article 3, all Partnership profit shall be allocated as follows:
a) First, to the Partners in the amount of losses, if any, previously
allocated under Section 3.2 to such Partners in the reverse order of such
previous loss allocations until the amount of profit allocated to the Partners
under this Section 3.1(a) equals the total amount of loss allocated under
Section 3.2. Such allocation shall be made in the same ratio as the allocation
of any such losses;
b) Second, to the Partners in accordance with their respective
Ownership Interests.
3.2 Allocation of Losses. Except as otherwise provided in this
--------------------
Article 3, all Partnership losses shall be allocated to the Partners in
accordance with their respective Ownership Interests.
3.3 Allocation of Gain or Loss on Sale. Notwithstanding Sections
----------------------------------
3.1 and 3.2, profit or loss on the sale of all or substantially all of the
assets of the Partnership shall be allocated to the Partners so as to cause, to
the extent possible, the Capital Account balance of each Partner to bear the
same ratio to the aggregate Capital Account balances of all Partners as such
Partner's Ownership Interest.
3.4 Change In Ownership Interest. If a Partner's Ownership
----------------------------
Interest changes during a fiscal year, the Partner's share of profits, losses
and credits for such fiscal year shall be determined by assigning to each day in
the fiscal year the fraction of such item equal to the Partner's Ownership
Interest in effect on such day divided by the number of days in the fiscal year,
and by taking the sum of all the amounts so assigned within the fiscal year;
provided that gain or loss on the sale of Partnership assets shall be allocated
in accordance with the Ownership Interests in effect at the time of the sale.
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3.5 Minimum Gain Chargeback Rules. Notwithstanding any other
-----------------------------
provisions of this Article 3, items of income and gain of the Partnership shall
be allocated so as to comply with the gain chargeback requirements of Treas.
Reg. Sections 1.704-2(f) and 1.704-2(i)(4).
3.6 Nonrecourse Debt. Any Partner nonrecourse deductions for a
----------------
taxable year shall be allocated to the Partner that made, or guaranteed, or is
otherwise liable with respect to the loan to which such deductions are
attributable, in accordance with Treas. Reg. Section 1.704-2(i) or any successor
provision.
3.7 Curative Allocations. The allocations of profits and loss in
--------------------
Section 3.1 and Section 3.2 are intended to cause the Capital Account of each
Partner to equal to the amounts distributable to such Partner pursuant to
Section 4.1. Any allocations of profit or loss (or items thereof) pursuant to
Section 3.5 and Section 3.6 shall, to the maximum extent possible consistent
with such Sections, be taken into account in computing subsequent allocations of
profit and loss, so that the Partners' Capital Account balances shall be equal
to the balances that would have resulted in the absence of such Sections, and
the Tax Matters Partner is authorized to adjust the allocations of profit and
loss pursuant to Sections 3.1 and 3.2 to the extent necessary to cause the
Capital Account of each Partner to equal the amounts distributable to such
Partner pursuant to Section 4.1. The character of profit or loss allocated in
such subsequent allocations shall, to the extent possible, be the same as the
allocations which would have been made in the absence of such Sections.
3.8 Contributions of Property. In accordance with IRC Section
-------------------------
704(c) and the Treasury Regulations thereunder, solely for federal and
applicable state and local income tax purposes, income, gain, loss and deduction
with respect to any property contributed to the Partnership shall be allocated
among the Partners so as to take account of any variation between the adjusted
basis of such property to the contributing Partner for federal income tax
purposes and its fair market value at the time of contributions.
3.9 Profit or Loss. For purposes of Section 2.3 and Article 3,
--------------
"profit or loss" refers to taxable income of the Partnership as
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computed under IRC Section 703, but taking into account also (i) any item of
income exempt from tax, and (ii) any item of expense described in IRC Section
705(a)(2)(B) or treated as described in IRC Section 705(a)(2)(B) by Regulations
promulgated under IRC Section 704(b) and excluding any items specially allocated
pursuant to Sections 3.5 and 3.6 hereof.
ARTICLE 4
NON-LIQUIDATION DISTRIBUTIONS
4.1 Distributions in Accordance with Ownership Interests.
----------------------------------------------------
Distributions by the Partnership shall be made in accordance with the Ownership
Interests at the time of distribution.
4.2 Distribution Policy. The Partners hereby adopt the following
-------------------
policy (the "Distribution Policy"):
The Partnership shall make distributions to the Partners in amounts
that the Executive Committee determines are not needed and may not
reasonably be expected to be needed for Partnership purposes,
including repayment of Partnership obligations, or establishing
reasonable reserves therefor. In addition, the Partnership shall
repay principal and accrued interest on any Deficit Loans prior to
making any distributions to the Partners.
4.3 Withholding. All amounts withheld pursuant to the IRC or any
-----------
provision of any state or local tax law with respect to any payment or
distribution to a Partner shall be treated as amounts distributed to such
Partner pursuant to this Article 4.
ARTICLE 5
ACCOUNTING RECORDS AND FISCAL YEAR
5.1 Books and Records. The Partnership shall keep or cause to be
-----------------
kept appropriate records and books of account in reasonable detail and in
accordance with generally accepted accounting principles. The Partnership's
books will be audited annually by a firm of independent public accountants
selected from time to time by the Executive Committee. The books and records
shall be maintained at the principal business office of the Partnership or such
other places as the Executive Committee may determine, and all such books and
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records shall be available for inspection and copying by the Partners or their
duly authorized representatives during normal business hours after giving
reasonable notice.
5.2 Financial Statements and Reports. The Partnership shall cause
--------------------------------
to be delivered to each Partner the following financial statements prepared, in
each case, in accordance with generally accepted accounting principles
consistently applied, and such other reports as any Partner may reasonably
request:
a. promptly upon availability, and in any event within
thirty (30) days after the end of each month, an unaudited balance sheet as of
the end of such month and an unaudited statement of income or loss for the
interim period through such month, such statement of income or loss for such
period to include, in reasonable detail, a comparison of actual to budgeted
income or loss;
b. promptly upon availability, and in any event within sixty
(60) days after the end of each of the first three quarterly periods of each
fiscal year, an unaudited statement of sources and uses of funds for the year to
date then ended; and
c. promptly upon availability, and in any event within
ninety (90) days after the end of each fiscal year, a balance sheet of the
Partnership as of the end of such fiscal year and a statement of income or loss
for such fiscal year, such balance sheet and statement of income and loss to
include a comparison of the current fiscal year with the immediately preceding
fiscal year.
5.3 Bank Accounts. The Partnership shall maintain bank accounts in
-------------
such banks or institutions as the Executive Committee from time to time shall
select in accordance with the terms of this Agreement, and such accounts shall
be drawn upon by checks signed by such person or persons, and in such manner, as
may be designated by the Executive Committee. All monies of the Partnership
shall be deposited in the bank account or accounts of the Partnership, and shall
not be commingled with monies of the Partners.
5.4 Tax Returns Information.
-----------------------
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a. JINI is hereby designated "Tax Matters Partner" for the
Partnership, and may take any action on behalf of the Partnership that it has
authority to take as Tax Matters Partner. The Tax Matters Partner is expressly
authorized to perform on behalf of the Partnership or any Partner any act that
may be necessary to make this designation effective under any regulation,
ruling, procedure or instruction that may be issued by the Internal Revenue
Service. The Tax Matters Partner is authorized to represent the Partnership
before taxing authorities and courts in tax matters affecting the Partnership
and the Partners in their capacity as such, and is entitled to take any action
on behalf of the Partnership in any such tax proceeding that it, in its
reasonable business judgment, deems to be in the best interests of the Partners.
Notwithstanding the previous sentence, the Tax Matters Partner (i) shall consult
with and consider the views of the Executive Committee prior to taking any
material action in its capacity as the Tax Matters Partner; and (ii) shall not
extend any statute of limitations, file any protest, petition or pleading, or
settle any audit or judicial proceeding without the approval of the Executive
Committee.
The Tax Matters Partner shall cause income and other required
federal, state and local tax returns for the Partnership to be prepared and to
be timely filed with the appropriate authorities and, subject to Section 5.6,
shall make such elections as the Tax Matters Partner shall deem to be in the
best interest of the Partnership and the Partners. The Tax Matters Partner shall
not be liable to the Partnership for any act or omission taken or suffered by it
in the preparation of such tax returns provided it acted in good faith and in
the belief that such act or omission is in or is not opposed to the best
interest of the Partnership and further provided that such act or omission is
not in violation of this Agreement and does not constitute gross negligence,
fraud or a willful violation of law. The Tax Matters Partner shall cause any
such tax return to be submitted to each Partner for review and approval prior to
its due date (including extensions) unless otherwise agreed to by the Partners.
b. The Tax Matters Partner shall cause to be provided to
each Partner information concerning the Partnership's taxable income or loss and
each item of income, gain, loss, deduction or credit which is relevant to
15
<PAGE>
reporting a Partner's share of Partnership income, gain, loss, deduction or
credit for purposes of federal or state income tax. Information required for the
preparation of a Partner's income tax returns shall be furnished to the Partners
as soon as possible after the close of the Partnership's fiscal year and, in any
event, no later than the date on which the income tax return for such fiscal
year is submitted to the Partners for review.
c. The Tax Matters Partner shall cause to be filed timely
all federal, state, and local reports as may be required, including without
limitation, all reports required by licenses and permits, sales and use tax
reports, income tax withholding reports, FICA tax reports, unemployment
compensation reports, information reports, FCC reports and applications and
similar reports, and shall cause all payments required thereunder to be made by
the Partnership from the Partnership's funds.
d. The Tax Matters Partner shall promptly notify each of the
Partners under the following circumstances: (i) if the Tax Matters Partner
caused an amended tax return to be filed on behalf of the Partnership; (ii) if
the Tax Matters Partner extends the statute of limitations on assessments with
respect to any taxable year of the Partnership (which extension may only be made
with the prior consent of the Executive Committee); (iii) if any tax return of
the Partnership is audited or if any adjustments to any such return are
proposed; and (iv) if the Tax Matters Partner enters into a settlement agreement
relating to any Partnership item of income, gain, loss, deduction or credit for
any taxable year of the Partnership (which settlement agreement may only be
entered into with the prior consent of the Executive Committee). The Tax Matters
Partner shall promptly furnish to each of the Partners all notices concerning
administrative or judicial proceedings relating to federal income tax matters as
required under the IRC and the Treasury Regulations thereunder. In
16
<PAGE>
addition, the Tax Matters Partner shall supply such information to the Internal
Revenue Service as may be necessary to identify the Partners as "notice
partners" under IRC Section 6231. During the pendency of any administrative or
judicial proceeding relating to federal income tax matters, the Tax Matters
Partner shall furnish to each of the Partners periodic reports concerning the
status of any such proceeding. Each of the Partners who elects to participate in
any administrative or judicial proceedings shall be responsible for any expenses
incurred by such Partner in connection with such participation. The cost of any
resulting audits or adjustments of any Partner's tax return shall be borne
solely by the affected Partner.
5.5 Fiscal Year. The fiscal year of the Partnership shall be the
-----------
calendar year. Cox represents that its taxable year is the year ended December
31. JINI represents that its taxable year is the year ended May 31. Adelphia
represents that its taxable year is the year ended March 31.
5.6 Tax Elections. The Tax Matters Partner shall make the
-------------
following tax elections on behalf of the Partnership:
(a) To adopt the accrual method of accounting.
(b) Such other elections as the Executive Committee shall
decide.
ARTICLE 6
MANAGEMENT
6.1 Executive Committee.
-------------------
There is hereby established an Executive Committee of five (5)
members which, unless otherwise provided in this Agreement, shall have and
exercise full discretion and final authority with respect to the affairs of the
Partnership (the "Executive Committee"). The members of the Executive Committee
shall consist of two (2) members designated by Cox, two (2) members designated
by JINI and one (1) member designated by Adelphia. The names of the initial
members of the Executive Committee are set forth on Exhibit B hereto. A Partner
may remove, at any time, its representative(s) and,
17
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upon such removal, or the death or resignation of a member of the Executive
Committee, a successor shall be designated by the Partner which appointed the
Executive Committee member being removed or replaced. Each member of the
Executive Committee shall have one vote on all matters, except as provided in
Section 6.5. Each member of the Executive Committee shall comply with, and each
Partner shall cause its representatives on the Executive Committee to comply
with, the terms of this Agreement. In addition, each Partner shall be entitled
to appoint alternate representatives who shall be entitled to attend meetings of
the Executive Committee and, in the event that a Partner's representative is
unable to attend, such alternate representative shall have full authority to act
in the place of the absent representative. Each Partner shall notify the other
Partners in writing of the selection of its representatives and alternate
representatives.
6.2 Chairman of Executive Committee. The Chairman of the Executive
-------------------------------
Committee shall be selected annually, on a rotating basis and shall be one of
the representatives of JINI or Cox on the Executive Committee. The Chairman (or,
if absent, the alternate representative for the Chairman) shall conduct the
meetings of the Executive Committee, shall designate a secretary to the
Executive Committee and shall oversee the preparation and circulation of
notices, if required, agenda and minutes. The initial Chairman shall be
designated by Cox.
6.3 Meetings of Executive Committee.
-------------------------------
a. The Executive Committee may establish meeting dates and
requisite notice requirements, adopt rules of procedure it deems consistent
herewith, and meet by means of conference telephone or similar communications
equipment. The Executive Committee shall meet no less than once each year.
Each Partner shall have the right to call a special meeting of the Executive
Committee by giving five (5) days' advance written notice of the time, date and
location of such meeting to the other General Partner. Notice of any meeting
may be waived in writing.
b. The presence at any meeting of a majority of the
representatives shall constitute a quorum for the taking of any action. Except
as
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provided in Section 6.5, the vote of a majority of the representatives shall
be required to take action at a meeting. Any representative may appoint a proxy
to act on his behalf and to vote in his stead at any meeting.
c. Minutes of each meeting of the Executive Committee shall
be prepared and circulated to the Executive Committee representatives. Upon
their adoption by the Executive Committee, minutes shall be filed in the
principal office of the Partnership. Written consents to any action taken by the
Executive Committee without a meeting shall also be filed with the minutes.
6.4 Business Plan. A business plan of the Partnership (the
-------------
"Business Plan") shall be developed on an annual basis (except for the first
Business Plan) and shall reflect the plans of the Partnership for a calendar
year. The first Business Plan (which is attached to this Agreement as Exhibit
C) includes the first calendar year of operations ending December 31, 1995. The
Business Plan shall include both financial data and a description of the markets
and customers to be targeted for the subject calendar year. The financial data
will consist of a pro forma profit and loss projection and a pro forma cash flow
analysis.
6.5 Actions Requiring Approval of Executive Committee According to
--------------------------------------------------------------
Ownership Interests.
- -------------------
a. Notwithstanding any other provision of this Agreement,
the following actions shall require the approval of the Executive Committee,
with voting thereon done according to the respective Ownership Interests of the
Partners at the time. No action will be deemed approved under this Section 6.5a.
unless it has received the vote of Executive Committee members designated by the
Partners representing at least 75% of the Ownership Interests entitled to vote.
The actions are:
1. Amendment of the Partnership agreement.
2. Admission of a new partner.
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3. Sale, pledge or encumbrance of all of substantially all of the
Partnership's assets.
4. Merger or consolidation with any other entity.
5. Approval of the annual Business Plans and amendments thereto. The
Business Plans shall provide for mutually agreed-upon overhead
and transponder costs to be charged to the Partnership,
indicating those instances where a mark-up is to be charged, and
the amount of such mark-up.
6. Selection/replacement of auditors.
7. Unbudgeted expenditures in excess of $15,000 for any single
transaction or unbudgeted expenditures for each fiscal year that
total more than $30,000 in aggregate.
8. Dissolution.
9. Going public and the terms and conditions thereof.
10. Change in the scope of the business of the Partnership.
11. Implementation of capital calls, other than as provided in an
agreed-upon Business Plan. Notwithstanding anything in Section
6.5, there shall be no capital calls from October 1, 1995 to
April 2, 1997 without the vote or consent of Adelphia.
12. Acquisitions and investments or the creation of subsidiaries, in
each case other than those as agreed to in the relevant Business
Plans.
13. Bank accounts and signatories.
14. Term and condition of agreements with affiliates, other than
those covered in clause 5. above.
15. Distributions or redemptions with respect to Ownership Interests.
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16. The initiation or settlement of material litigation.
17. The initiation of any bankruptcy or insolvency filing by the
Partnership.
18. The incurrence or prepayment of any indebtedness of $25,000 or
more in the aggregate, or the issuance of any guarantees of the
indebtedness or obligations of others in an amount of $25,000 or
more in the aggregate, in each case other than pursuant to an
agreed-upon Business Plan.
19. The granting of any material liens or the pledge of assets of the
Partnership.
20. The adoption of, and material modifications to, the form of the
affiliation agreement between the Network and distributors of the
Network's programming.
21. Confirmation of the selection by JINI of the Chief Operating
Officer.
Notwithstanding the foregoing, if as a result of a sale of a portion
of its Ownership Interest, either JINI or Cox has an Ownership Interest of less
than 20%, or if Adelphia has an Ownership Interest of less than 5%, that Partner
shall not be entitled to vote with respect to the actions set forth in Section
6.5 a. until its Ownership Interest is no longer less than 20% in the case of
JINI or Cox, or 5% in the case of Adelphia.
6.6. Action on Programming Content. It is understood and agreed
-----------------------------
that the general content of programming on the Network shall be subject to the
review and approval of the Executive Committee, taking into account the
reasonable requests by cable television system managers not to carry certain
specific, objectionable programming, with any two members of the Executive
Committee having the power to veto, on such basis, the carriage of such
programming by the Network.
6.7. No Authority to Act for Other Partners. No Partner shall have
--------------------------------------
any authority to act for, or to assume any obligation or responsibility on
21
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behalf of another Partner. In addition to the other remedies specified in this
Agreement, each Partner agrees to indemnify and hold the other Partners harmless
from and against any claim, demand, loss, damage, liability or expense of any
kind or nature whatsoever, including attorneys' fees, incurred by or against
such other Partner and arising out of or resulting from any action taken by the
indemnifying Partner in violation hereof.
ARTICLE 7
SERVICES OF PARTNERS
Subject to approval by the Executive Committee (which may be in the
form of the approval of an Annual Plan), the Partnership shall pay any Partner
or its affiliates for goods and services, including the services of any
individuals provided to the Partnership pursuant to Article 8 hereof, an amount
equal to the fair market value of the goods or services provided, as set forth
in the Business Plan or as determined by the Executive Committee. Any amount
agreed to be paid to any Partner for goods or services provided to the
Partnership shall be deemed to be the fair market value of the goods and
services so provided. JINI and its affiliates shall provide to the Partnership
the types of goods and services set forth on Exhibit D hereto (which Exhibit is
hereby incorporated herein by reference). The charges therefor as set forth on
Exhibit D are hereby deemed to be the fair market value for such goods and
services.
ARTICLE 8
DAY-TO-DAY MANAGEMENT; EXPENSES; PARTNER AFFILIATION
AGREEMENTS
8.1 Management Services of JINI. Day-to-day management of the
---------------------------
Partnership will be provided by JINI. JINI will appoint a management team for
the Partnership, including a Chief Operating Officer who shall report to the
Executive Committee. The compensation of such management team and Chief
Operating Officer shall be subject to the provisions of Article 7 above. JINI
shall use its commercially reasonable best efforts to ensure that appropriate
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uplink and satellite facilities and satellite transponder space remains
available, through customary lease or sublease arrangements with satellite
operators, for the carriage of the Network's programming throughout the term of
the Partnership. The Partnership shall use JINI's billing hardware and
software, playback, uplink and satellite facilities, as set forth on Exhibit D
hereto and JINI shall be paid the charges therefor set forth on Exhibit D.
Exhibit D also sets forth the charges to the Partnership for such software and
facilities.
8.2 Partnership Expenses. The Partnership shall pay all expenses
--------------------
directly attributable to the Partnership which are incurred after January 1,
1995, including, but not limited to, all Network development costs, equipment,
personnel costs, marketing and promotion expenses (including sales materials and
advertising) and compensation. In addition, the Partnership shall reimburse the
Partners for their actual out-of-pocket travel and associated costs if employees
of a Partner are required to travel on Partnership business.
8.3 Partnership Affiliation Agreements.
----------------------------------
a. Each of the Partners shall use their commercially
reasonable best efforts to make the cable television subscribers of their
affiliates available to the Partnership. For purposes of this Section 8.3, the
term "subscribers" shall refer to those subscribers to the Network, as set forth
in their respective affiliation agreements.
(i) Cox has caused Cox Communications, Inc. to enter into
an affiliation agreement with the Partnership covering the
cable television systems described in Exhibit E hereto
(which is hereby incorporated herein by reference) owned by
Cox Communications, Inc., and which affiliation agreement
is substantially in the form of Exhibit F attached hereto
(the "Cox Affiliation Agreement").
(ii) JINI has assigned to the Partnership all of JINI's
right, title and interest in and to that certain Affiliate
Agreement, dated as of August 1, 1994 (and as the same has
been amended to conform to the Cox
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Affiliation Agreement, except as to the term thereof, which
shall remain a ten-year term) between JINI and Jones
Intercable, Inc. covering the cable television systems
described in Exhibit E hereto owned or managed by Jones
Intercable, Inc.
(iii) Adelphia shall, upon execution of this Agreement,
enter into the Adelphia Agreement on the terms and
conditions of Exhibit G hereto for a period of five (5)
years.
(iv) Exhibit E also sets forth the subscribers to be
provided by respective affiliates of the Partners to the
Network, along with their specific launch commitments.
Except as provided in this Agreement and the Exhibits
thereto, the Partners intend that their launch commitments
shall be approximately equal and shall cover at least one
million subscribers. If any Partner provides additional
subscribers after the fulfillment of the initial launch
commitment, the Ownership Interests of the Partners shall
not be affected thereby.
b. (i) Notwithstanding anything in Section a. above, JINI
and Cox agree that at all times the number of subscribers covered by agreements
with their respective affiliates shall be at least the lower of (i) one million
or (ii) seventy-five percent (75%) of the subscribers of JINI or Cox's
respective affiliates (the "Bench Mark"). In the event that JINI or Cox is not
in compliance with this provision, it shall have a period of one hundred twenty
(120) days to cure its default. If such default is not cured within such
period, the defaulting party shall pay to the Partnership an amount per month,
determined commencing as of the date of the default, for each subscriber (the
"Shortfall Amount") which is less than the Bench Mark. The Shortfall Amount is
the average of 125% of revenue per month per subscriber, but not less than 10
cents, based on the following formula: gross revenue minus bad debts,
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<PAGE>
commissions and rebates, divided by peak subscribers, equals revenue per
subscriber. The revenue per subscriber shall be calculated for the three-month
period before the party falls below the Bench Mark. Such payments shall
continue for so long as the Bench Mark is not met.
(ii) Notwithstanding anything in Section a. above, Adelphia
agrees (x) that for the period October 2, 1996 through April 1, 1998, the number
of subscribers provided pursuant to the Adelphia Agreement shall be at least ***
(the "First Adelphia Bench Mark") and (xx) that commencing on April 2, 1998 and
continuing thereafter, the number of subscribers provided pursuant to the
Adelphia Agreement shall be at least the number of subscribers on April 1, 1998
(the "Second Adelphia Bench Mark"), but not less than ***. In the event that
Adelphia is not in compliance with this provision, it shall have a period of one
hundred twenty (120) days to cure its default. If such default is not cured
within such period, Adelphia shall pay to the Partnership an amount per month,
determined commencing as of the date of the default, for each subscriber (the
"Adelphia Shortfall Amount") which is less than the Adelphia Bench Mark
involved. The Adelphia Shortfall Amount is the average of *** of revenue per
month per Adelphia subscriber, but not less than ***, based on the following
formula: gross revenue generated by the Adelphia subscribers minus the related
bad debts, commissions and rebates, divided by Adelphia subscribers, equals
revenue per subscriber. The revenue per subscriber shall be calculated for the
three-month period before Adelphia falls below the Adelphia Bench Mark involved.
Such payments shall continue for so long as such Adelphia Bench Mark is not met.
c. Notwithstanding any other provision of this Agreement, Cox
may elect to withdraw from the Partnership upon giving notice to the Partnership
and to the other Partners at least ninety (90) days prior to December 31, 1999
that it will not renew the Cox Affiliation Agreement or provide an affiliate
agreement that would commit, for a period of five years, at least one million
subscribers to the Partnership on and after such date. Upon the giving of such
notice, the rights of Cox pursuant to Article 10 and 11 of this Agreement shall
terminate. If Cox gives such notice, then on December 31,
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1999, Cox shall withdraw from the Partnership and shall have no rights with
respect to the Partnership except as set forth in this Section 8.3c. To the
extent of any conflict between this Section 8.3c and any other provision of this
Agreement, this Section 8.3c shall control.
Upon Cox's withdrawal, (i) the Cox Affiliation Agreement shall
terminate and shall no longer bind the Partnership or belong to the Partnership
and (ii) Cox shall have no interest in the Partnership, its assets or
properties, nor any right to any payment therefor, provided that Cox shall be
entitled to receive its share (based on its Ownership Interest as in effect
immediately prior to such withdrawal) of any undistributed cash balances as of
the date of its withdrawal. In addition, for the two-year period commencing
with its withdrawal, Cox shall not solicit, directly or indirectly, in
connection with the operation of an infomercial network that is substantially
similar to the Partnership's Network, any cable television system operator with
respect to any system which, on the date of such withdrawal, was subject to an
affiliate agreement with the Partnership (the "Covered Systems"). During such
two-year period, Cox shall not, directly or indirectly, compete with the
Partnership in the provision of Infomercials in the areas of the Covered Systems
in connection with the operation of an infomercial network that is substantially
similar to the Partnership's Network.
d. Notwithstanding any other provision of this Agreement, Adelphia
may elect to withdraw from the Partnership upon giving notice to the Partnership
and to the other Partners at least ninety (90) days prior to the end of the term
of the Adelphia Agreement that it will not renew the Adelphia Agreement. Upon
the giving of such notice, the rights and obligations of Adelphia pursuant to
Article 10 and 11 of this Agreement shall terminate. If Adelphia gives such
notice, then at the end of the term of the Adelphia Agreement, Adelphia shall
withdraw from the Partnership and shall have no rights or obligations with
respect to the Partnership except as set forth in this Section 8.3d. To the
extent of any conflict between this Section 8.3d and any other provision of this
Agreement, this Section 8.3d shall control.
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Upon Adelphia's withdrawal, (i) the Adelphia Agreement shall terminate
and shall no longer bind the Partnership or belong to the Partnership and (ii)
Adelphia shall have no interest in the Partnership, its assets or properties,
nor any right to any payment therefor, provided that Adelphia shall be entitled
to receive its share (based on its Ownership Interest as in effect immediately
prior to such withdrawal) of any undistributed cash balances as of the date of
its withdrawal. In addition, for the two-year period commencing with its
withdrawal, Adelphia shall not solicit, directly or indirectly, in connection
with the operation of an infomercial network that is substantially similar to
the Partnership's Network, any cable television system operator with respect to
any Covered System. During such two-year period, Adelphia shall not, directly
or indirectly, compete with the Partnership in the provision of Infomercials in
the areas of the Covered Systems in connection with the operation of an
infomercial network that is substantially similar to the Partnership's Network;
provided that the foregoing shall not apply to showing infomercials on its own
Systems. Further, Adelphia shall not, directly or indirectly have any greater
than a five percent (5%) equity interest in any infomercial network for the 2
year period referred to above. Notwithstanding the above, if Adelphia renews
the Adelphia Agreement for one additional five-year term, at the end of such
five-year term, Adelphia will retain its Ownership Interest in the Partnership,
and shall remain subject to the other terms and conditions of this Agreement
with respect to such Ownership Interest.
e. In the event that a sale of one or more cable television
systems by JINI or Cox causes the number of subscribers covered by the affiliate
agreement attributable to such Partner to fall below 750,000, such Partner
shall, in addition to making the payments called for by Section 8.3b, use its
commercially reasonable efforts to cause the buyer or buyers of such cable
television systems to sign new affiliate agreements with the Partnership. If
the Partnership enters into such an agreement, the number of subscribers covered
thereby shall count toward such 750,000 subscriber level. If the number of such
subscribers remains below 750,000 for a period of one hundred twenty (120) days
following such sale, JINI or Cox, as the case may be, shall have the right,
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<PAGE>
for a period of sixty (60) days following such one hundred twenty (120) day
period, to cause the dissolution of the Partnership if the affected Partner is
the other of them.
f. In the event that a sale of one or more cable television
systems by Adelphia causes the number of subscribers provided by Adelphia to
fall below *** of the First Adelphia Benchmark or the Second Adelphia Benchmark,
as the case may be, Adelphia shall, in addition to making the payments called
for by Section 8.3b, ***. If the Partnership enters into such an agreement, the
number of subscribers covered thereby shall count toward such required
subscriber level. In addition, if the Partnership is unable to enter into such
an agreement, the number of subscribers shall still count toward such required
subscriber level as long as the cable television system continues to carry the
Network on a full-time basis. If the number of such subscribers remains below
the required subscriber level for a period of one hundred eighty (180) days
following such sale, then for a period of sixty (60) days following such one
hundred eighty (180) day period, the Partnership shall have the right during
such sixty (60) day period to purchase the Ownership Interest of Adelphia for an
amount equal to its share (based upon its Ownership Interest as in effect
imediately prior to such withdrawal) of any undistributed cash balances as of
the date of its withdrawal and all rights of Adelphia under this Agreement shall
terminate, but the Adelphia Agreement shall not be terminated.
g. For purposes of determining the number of subscribers provided
by Adelphia under this Agreement, such number shall include those subscribers of
a cable television system acquired by Adelphia which had an
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affiliation agreement with the Network that continues after the acquisition by
Adelphia.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
As of the date hereof, each of the Partners hereby makes each of the
representations and warranties set forth in this Article 9, and such warranties
and representations shall survive the execution of this Agreement.
9.1 Due Incorporation; Authorization of Agreement. Such Partner is
---------------------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority to
own its property and carry on its business as owned and carried on at the date
hereof and as contemplated hereby. Such Partner is duly licensed or qualified
to do business and in good standing in each of the jurisdictions in which the
failure to be so licensed or qualified would have a material adverse effect on
its financial condition or its ability to perform its obligations hereunder.
Such Partner has the corporate power and authority to execute and deliver this
Agreement and each other agreement contemplated hereby and to perform its
obligations hereunder and thereunder and the execution, delivery and performance
of this Agreement and each such other agreement has been duly authorized by all
necessary corporate action. This Agreement constitutes the legal, valid and
binding obligation of such Partner.
9.2 No Conflict; No Default. Neither the execution, delivery and
-----------------------
performance of this Agreement nor the consummation by such Partner of the
transactions contemplated hereby will (a) conflict with, violate or result in a
breach of any of the terms, conditions or provisions of any law, regulation,
order, writ, injunction, decree, determination or award of any court,
governmental department, board, agency or instrumentality, domestic or foreign,
29
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or any arbitrator, applicable to such Partner, (b) conflict with, violate,
result in a breach of or constitute a default under any of the terms, conditions
or provisions of the articles of incorporation or bylaws of such Partner or of
any material agreement or instrument to which such Partner is a party or by
which such Partner is or may be bound or to which any of its material properties
or assets is subject, (c) conflict with, violate, result in a breach of,
constitute a default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required by, or require
any consent, authorization or approval under any indenture, mortgage, lease
agreement or instrument to which such Partner is a party or by which such
Partner is or may be bound, or (d) result in the creation or imposition of any
lien upon any of the material properties or assets of such Partner.
9.3 Litigation. There are no actions, suits, proceedings or
----------
investigations pending or to the knowledge of such Partner, threatened against
or affecting such Partner or any of its properties, assets or businesses in any
court or before or by any governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator which could, if
adversely determined (or, in the case of an investigation could lead to any
action, suit, or proceeding, which if adversely determined could) reasonably be
expected to materially impair such Partner's ability to perform its obligations
under this Agreement.
ARTICLE 10
DISSOLUTION AND LIQUIDATION
10.1 Events of Dissolution and Liquidation. The Partnership shall be
-------------------------------------
dissolved and its affairs wound up pursuant to this Agreement upon the first to
occur of any of the following events ("Events of Dissolution"):
a. Action by the Executive Committee pursuant to Section 6.5a.
of this Agreement;
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b. the sale or other disposition of substantially all of the
assets of the Partnership (excluding a mortgage, pledge or encumbrance of such
assets), unless there are at least two Partners who elect to continue the
business of the Partnership;
c. action by the nondefaulting Partners to cause the dissolution
of the Partnership pursuant to Section 12.2b.;
d. the entry of a final, non-appealable order by a court of
competent jurisdiction declaring Section 2.3 or Articles 6, 11 or 12 invalid or
unenforceable and the Partners are unable to negotiate a new agreement as
contemplated by Section 14.13;
e. the bankruptcy of a Partner, unless in any such instance all of
the remaining Partners (if there be more than one) elect to continue the
business of the Partnership;
f. the entry of an order for relief pursuant to an involuntary
petition against the Partnership under Chapter 7 of the bankruptcy law of the
United States; the filing by the Partnership of a voluntary petition for
liquidation under Chapter 7 of the Bankruptcy Code of the United States; the
general assignment by the Partnership for the benefit of creditors under the
laws of any state; or the appointment of a receiver for all or substantially all
of the assets of the Partnership, unless such receivership is dissolved within
30 days after the appointment of such receiver; however, the filing of a
voluntary petition under Chapter 11 of the Bankruptcy Code of the United States
by the Partnership, or the entry of an order for relief pursuant to a voluntary
or involuntary petition by or against the Partnership under Chapter 11 of the
Bankruptcy Code of the United States, shall not, in itself, cause dissolution of
the Partnership;
g. the happening of any event which makes it unlawful for the
Partnership business to be conducted;
h. the expiration of the term provided in Section 1.5 of this
Agreement; or
i. an election by the non-affected Partner as set forth in
Section 8.3d.
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The Partners agree that except as provided in Section 8.3.c and 8.3.d,
withdrawal by, or dissolution of, a Partner is not permitted and shall not cause
a dissolution of the Partnership.
10.2 Winding-Up. Upon the occurrence of an Event of Dissolution,
----------
the Partnership's affairs shall be wound up by the Chairman of the Executive
Committee, or if there is no such Chairman, by such other person or persons
agreed by the Partners or required by law to wind up its affairs, as follows:
a. A statement of the assets and liabilities of the
Partnership as of the date of dissolution shall be prepared.
b. The assets and properties of the Partnership shall be
liquidated or valued at their fair market value by the Chairman or an appraiser
selected by the Chairman as promptly as possible, and receivables collected, all
in an orderly and businesslike manner so as not to involve undue sacrifice.
c. The assets of the Partnership, including the proceeds of
liquidation, shall be applied and distributed in the following order of
priority:
i. to the payment of the debts and liabilities of the
Partnership to third parties;
ii. to establishing any reserves that the Chairman, in
accordance with sound business judgment, deems
reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership, which
reserves may be paid over by the Chairman to an escrow
agent selected by it to be held by such agent for the
purpose of: (a) distributing such reserves in payment
of the aforementioned contingencies, and (b) upon the
expiration of such period as the Chairman may deem
advisable, distributing the balance thereof in the
manner provided herein;
iii. to the pari passu payment of Deficit Loans;
---- -----
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iv. to payment of any other loans to the Partnership by
the Partners;
v. to the Partners in accordance with Section 4.1 of
this Agreement.
If there are any outstanding Deficit Loans, any amounts otherwise
payable to the Defaulting Partner under this Section 10.2.c. shall be paid to
the Complying Partner until the Deficit Loans are paid in full. No Partner
shall be obligated to make up or satisfy a deficit in its capital account.
Upon dissolution of the Partnership, each Partner hereby grants to the
other Partners an exclusive (other than with respect to the granting Partner),
perpetual, royalty-free license to use any and all intellectual property rights
developed by or contributed to the Partnership, including but not limited to
trademarks, service marks, copyrights, trade secrets, and patents ("Partnership
IP Rights"); provided that the Partners acknowledge and agree that Jones
International, Ltd., which owns the name "Product Information Network," shall at
all times continue to own all rights thereto, subject only to the limited right
of the Partnership to use such name during the terms of the Partnership. Each
Partner agrees that, following the dissolution of the Partnership, it will not
challenge the validity of or right to use any Partnership IP Right by the
Partners as contemplated herein, and further agrees to cooperate in good faith,
and to execute any documents reasonably required to perfect or protect any
ownership interest in a Partnership IP Right. Following the dissolution of the
Partnership, in the event of litigation involving a Partnership IP Right, or
third-party challenge to a Partner's rights thereto, each Partner will cooperate
in good faith with, and at the expense of, the Partner choosing to litigate or
respond to such challenge.
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ARTICLE 11
RESTRICTIONS ON TRANSFER OR SALE OF
PARTNERSHIP OWNERSHIP INTERESTS; GO-ALONG RIGHTS
11.1 Restrictions on Transfer.
------------------------
No Partner shall sell, transfer, pledge or otherwise dispose of
all or any part of or rights in its Ownership Interest at any time except in
accordance with this Article 11. Notwithstanding the foregoing, (i) with the
consent of the Executive Committee, which consent shall not be unreasonably
withheld, a Partner may mortgage, pledge or encumber its Ownership Interest to a
financial institution and (ii) a Partner may transfer all or part of its
Ownership Interest to an affiliate at any time, provided that the transferring
Partner shall remain fully liable to the Partnership for all obligations of such
Partner and of such affiliate. For purposes of this Agreement, an affiliate of a
person is one who controls, is controlled by, or is under common control with,
such person.
11.2 Right of First Refusal.
----------------------
a. Commencing on January 1, 1998, if a Partner shall receive a
bona fide offer in writing from a third party which is not an affiliate of such
Partner (a "Bona Fide Offer") for all or any portion of its Ownership Interest
and shall propose to make a transfer thereof in accordance with such Bona Fide
Offer, then the Partner that received the Bona Fide Offer (the "Selling
Partner") shall afford the other Partners (the "Offeree Partners") a right of
first refusal to acquire such Ownership Interest or portion thereof at the same
price and on substantially the same terms offered to the Selling Partner by such
third party.
b. The Selling Partner shall give notice within three (3) days
of such Bona Fide Offer (an "Offer Notice") to the Offeree Partners, enclosing
with such Offer Notice a complete and correct copy of the Bona Fide Offer
setting forth all the terms thereof.
c. If an Offeree Partner or any other person that an Offeree
Partner may designate (a "Designee") shall desire to exercise the right of first
refusal then it shall do so in accordance with the following provisions:
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i. an Offeree Partner or its Designee shall give written
notice thereof to the Selling Partner within thirty
(30) days after the Offer Notice was received and, if
a Designee is to effect the purchase, the Offeree
Partner shall guarantee the performance of such
Designee;
ii. the Offeree Partner or its Designee shall tender
payment on terms no less favorable than those offered
by such third party, provided that to the extent that
the consideration offered in the Bona Fide Offer is
cash in whole or in part, the tendered payment must
include an amount of cash equal to that in the Bona
Fide Offer, and provided further that any payment must
be tendered within ninety (90) days after the Offer
Notice was received; and
iii. the closing of a purchase of the Selling Partner's
Ownership Interest (or portion thereof) by the Offeree
Partners or Designee(s) shall be held at a mutually
acceptable place on a mutually acceptable date within
such ninety (90) days. At such closing, the Selling
Partner shall, on receipt of the payment therefor,
assign its Ownership Interest (or portion thereof) to
the Offeree Partner or Designee and shall execute such
documents as may be necessary to effectuate the sale.
d. If the Offeree Partners shall elect not to exercise their
rights of first refusal, or if the 90-day period shall lapse without the
tendering of the required payment, then the Selling Partner may transfer its
Ownership Interest (or portion thereof) to the third party; provided that such
transfer is effected in accordance with all provisions hereof and that:
i. the Selling Partner shall sell its Ownership Interest
(or portion thereof) to the third party which made the
Bona Fide Offer;
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<PAGE>
ii. such transfer must be made upon substantially the
same terms set forth in the Offer Notice i.e. the
price called for in the Bona Fide Offer must be no
less than 95% of the price set forth in the Offer
Notice for the transfer to be considered to be made
upon substantially the same terms set forth in the
Offer Notice;
iii. such transfer must be made within sixty (60) days
after the expiration of the 30-day period or the 90-
day period, as the case may be;
iv. the transferee shall be bound by the provisions of
and assume the obligations of the Selling Partner
under this Agreement as fully and to the same extent
as though such transferee had executed this Agreement;
v. the Selling Partner shall not be relieved of any of
its obligations under this Agreement arising prior to
such transfer (except to the extent such obligations
shall be discharged to the reasonable satisfaction of
the Offeree Partner by the transferee), but the
Selling Partner shall be relieved of any obligations
under this Agreement arising subsequent to such
transfer;
vi. the consent of the Offeree Partners to the transfer
must be obtained if any transfer is to be made
hereunder while any Default by the Selling Partner is
pending or any Deficit Loan secured by the Ownership
Interest of the Selling Partner is outstanding or
during any liquidation or dissolution proceeding; and
vii. the Selling Partner and the transferee shall
execute such documents as the Offeree Partners shall
reasonably request to evidence
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the assumption and continuing obligations referred to
herein.
If such sale does not take place in accordance with the foregoing conditions,
then the Selling Partner shall remain a Partner as if the Offer Notice had not
been given.
e. The Selling Partner does not waive any claims or remedies
it may have in law or equity against an Offeree Partner in case an Offeree
Partner elects to purchase (or to cause a Designee to purchase) and wrongfully
fails to so purchase all or part of the Selling Partner's Ownership Interest.
f. In the event that there is more than one Offeree Partner
and they each exercise the right of first refusal provided for above, then all
such Offeree Partners shall be entitled to exercise such rights pro rata
according to their respective Ownership Interests, excluding the Ownership
Interest of the Selling Partner.
11.3 Go-Along Rights. If a Partner proposes to sell, assign, transfer
---------------
or otherwise dispose of his Ownership Interest (which, for purposes of this
Section shall include all or any portion thereof), or any beneficial interest
therein, including a sale of all of the stock of such Partner, to another person
who is not an affiliate (such person hereinafter being referred to as the
"Transferee,") such transferring Partner (the "Transferor") shall provide notice
of such transfer to the other Partners, which notice shall include all of the
material terms and conditions of the proposed transfer and copies of each
agreement or other document pursuant to which such transfer is proposed to be
effected. Within thirty (30) days of receipt of such notice, the other Partners
shall have the right by written notice to the Transferor to require the
Transferor to use its reasonable efforts to cause to be included in the proposed
transfer to the Transferee the correlative Ownership Interests of the other
Partners to that being sold by the Transferor, on the same terms and conditions
as the proposed transfer by the
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<PAGE>
Transferor. The Transferor shall not transfer its Ownership Interest to the
Transferee unless and until the other Partners have been given the right to
participate on the same terms and conditions as the Transferor in the proposed
transfer to the Transferee. In addition, no such transfer by the Transferor
shall be effective unless and until the Transferee agrees to be bound by all of
the terms and conditions of this Agreement, including this Section with regard
to transfers of Ownership Interests. No Transferor shall engage in any
transaction or series of transactions whose intent or effect is to circumvent
the rights granted to the Partners under this Section; provided, however, that
this Section shall not be deemed to apply to or prohibit a sale of substantially
all of the assets of, the sale of shares by, or a transfer of control of, Jones
International Networks, Inc., CableRep, Inc., or the parent or parents of any of
them.
ARTICLE 12
DEFAULT
12.1 Definition of Default. For the purpose of this Agreement,
---------------------
a "Default" shall occur upon:
a. the failure of a Partner to pay, within thirty (30) days of
the time required, the full amount of any additional capital contribution
required by the Executive Committee,
b. a breach by any Partner of a material term of this
Agreement, unless the cure of such breach, if curable, is begun within fifteen
(15) days of receipt of written notice from the other Partner that a breach has
occurred,
c. the bankruptcy or insolvency of a Partner, or
d. the failure of the Partnership to timely make any payments
under any loan from a Partner or its affiliates to the Partnership, including
any Deficit Loan, or to timely perform any of its obligations under any
documents relating to any loan from a Partner or its affiliates to the
Partnership, including any Deficit Loan. The Partnership shall not have failed
to timely make
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any payments within the meaning of the prior sentence if funds for such purpose
were available and the payments were not made due to the improper actions of the
Partner to whom the payments were owed.
12.2 Remedies. Upon a Default, in addition to the remedies provided
--------
elsewhere in this Agreement, the nondefaulting Partners shall have:
a. all rights and remedies provided by law or in equity,
including, where applicable, the rights and remedies of a secured creditor under
the Colorado Uniform Commercial Code; and
b. the right to dissolve the Partnership.
ARTICLE 13
FORCE MAJEURE
13.1 Force Majeure. No Partner hereto shall be liable to the
-------------
other Partner and no Partner hereto shall be deemed in default hereunder for any
failure or delay in the performance of any of its covenants, agreements or
obligations, caused by or arising out of any of the following conditions of
force majeure: disaster, labor disturbances, shortage of labor or equipment,
strikes, lockouts, other industrial disturbances, acts of God, acts of a public
enemy, war, blockade, riot, insurrection, lightning, fire, storm, flood,
inclement weather, physical loss of satellite carriage, explosion, or any
regulations, restrictions or acts of governmental agencies, or on account of any
eventualities or conditions, whether enumerated or not, beyond the reasonable
control of such Partner.
13.2 Notice of Force Majeure. The Partner affected by any
-----------------------
condition of force majeure as described in this provision shall promptly notify
the other Partners in writing and hereby agrees to use reasonable diligence to
remove any such conditions of force majeure as may occur from time to time. No
right of a Partner shall be affected for failure or delay of that Partner to
meet any condition of this Agreement where such failure or delay is caused by a
condition of force majeure as defined herein, and such Partner shall be excused
from performance of any obligation affected by such condition of force majeure
during the period required to overcome the delay; and the time limits provided
in this Agreement to meet any condition affected by force majeure shall be
deemed and treated as extended for a period commensurate with the delay caused
by
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<PAGE>
force majeure; provided, however, nothing contained herein shall require the
settlement of strikes, lockouts, or other labor difficulties by the Partner
affected contrary to its wishes, and the disposition or manner of handling or
remedying any and all such labor difficulties is hereby expressly acknowledged
to be entirely within the discretion of the Partner concerned.
ARTICLE 14
MISCELLANEOUS
14.1 Limits of Partnership. The relationship between the Partners
---------------------
shall be limited to the performance of matters stated in this Agreement. Nothing
in this Agreement shall be construed to create a partnership for other matters
between the Partners, nor to authorize any Partner to act as general agent for
the other Partners, nor to permit any Partner to bid for or undertake any other
contract for the other Partners, nor to borrow money on behalf of or to use the
credit of the other Partners for any purposes. Should any Partner commit acts
relating to the Partnership beyond the scope of this Agreement which cause
liability to be imposed on the other Partner, the Partner committing such acts
shall indemnify the other Partner against any lost profits, damages, losses,
claims, costs, attorneys' fees and other expenses incurred by reason of such
acts.
14.2 Insurance. The Partnership shall obtain sufficient
---------
insurance to protect the Partnership from and against such liabilities and risks
as are customarily insured against by prudent persons engaged in similar
businesses.
14.3 Confidential Information.
------------------------
a. Each Partner has acquired, and the Partnership is expected
to acquire, certain knowledge and information, developed and experimental, not
generally known in the business, relating to the business of the Partnership
which provides each Partner, and will provide the Partnership, with a
competitive advantage relating to methods, processes, technology, formulas,
know-how, research and development programs, plans, sales and requirements and
other confidential business information, trade secrets and data (collectively,
40
<PAGE>
"Confidential Information"). Confidential Information shall include the
confidential business information of each Partner that is not directly related
to the business of the Partnership but is disclosed to the other Partners as a
result of being a party to this Partnership ("Confidential Partner
Information"). Confidential Information shall not include:
i. information known to a Partner prior to formation of
the Partnership and not obtained or derived directly
from another Partner;
ii. information which is or becomes available to the
general public other than through acts or omissions
attributable to a Partner; or
iii. information obtained from a third party who is
lawfully in possession of the same and who is not
subject to a confidentiality or nonuse obligation owed
to a Partner, the Partnership or others with respect
to that information.
For purposes of this Agreement, specific information disclosed shall not be
deemed to be within the foregoing exceptions merely because it is embraced by
general information in the public domain. The Partners recognize that as a
result of being a party to this Partnership each Partner will obtain access to
some of the other Partners' Confidential Information as well as to the
Confidential Information of the Partnership, and that the other Partners or the
Partnership would suffer great loss and irreparable harm upon disclosure or
improper use of such Confidential Information. Each Partner agrees to keep
secret all Confidential Information of the other Partners and the Partnership
and agrees (x) not to disclose the same, except to its affiliates who agree to
be bound to maintain such Confidential Information in confidence to the same
extent the Partner is bound hereunder, during or after the term of this
Agreement and (y) not to use or permit its personnel, agents or others to use
such Confidential Information for any project which competes with the
Partnership. Each Partner also agrees not to use such Confidential Information
to its own advantage during or after the term of this Agreement. In addition,
each Partner shall require all
41
<PAGE>
employees of the Partner or its affiliates who will have access to Confidential
Information to agree to be bound to maintain Confidential Information in
confidence to the same extent each Partner is bound hereunder. Upon termination
of this Agreement, all memoranda, notes, records, writings, reports, manuals,
drawings and any other items of information in any form belonging to each
Partner, including all copies thereof, shall upon written request be returned to
their respective owner.
b. Notwithstanding the foregoing, without prior agreement of the
other Partner or the Partnership, each Partner may make such disclosures of
Confidential Information which it is required to make by law, including by any
regulatory authority, or pursuant to financial disclosure requirements, and such
disclosures as are reasonably necessary to accomplish the overall business
purposes of this Agreement in connection with the following types of activities,
business individuals and entities: (i) appropriate consultants, contractors,
suppliers, accountants, and the like, engaged to perform services or furnish
equipment for the Network; (ii) potential lenders of funds for any operations or
activities proposed to be conducted hereunder; (iii) individuals or entities
with whom the Partner is negotiating for resale, transfer or assignment of the
Partner's Ownership Interest, it being understood that any individuals and
entities to whom disclosure is made shall agree in writing to observe the
confidentiality of the disclosures to them; (iv) governmental agencies to the
extent that such disclosure is lawfully required by such agencies or to the
extent that such Confidential Information is inextricably contained in
information lawfully required by such agencies, provided that the Partner will
make reasonable efforts to make such disclosures to such agencies in confidence
if possible and if not possible to request such agencies to refrain from
publishing and to minimize access by others to such Confidential Information;
and (v) pursuant to any public or private offering of securities of a Partner or
any affiliate thereof or the Partnership, it being understood that in a public
offering the disclosing party will take reasonable steps consistent with those
in clause (iv) to preserve the confidentiality of such Confidential Information
and that in a
42
<PAGE>
private offering any individuals and entities to whom disclosure
is made shall agree in writing to observe the confidentiality of the disclosures
to them.
14.4 Publicity. No Partner shall make any announcement, press
---------
release or public statement relating in any manner to the Partnership or
operations under this Agreement (except routine marketing-related announcements)
without first furnishing the proposed text thereof to the other Partner and
obtaining the other Partners' approval in writing, which approval shall not be
unreasonably withheld; provided, however, and without limitation of Section 14.3
above, that the requirement for written approval is waived when public
disclosure by any Partner is required by law or governmental regulation,
judicial order or similar pronouncement, or the rules of an established stock
exchange. Whenever practicable, such announcements, press releases and public
statements shall be issued jointly by the Partners.
14.5 Modification. No change, modification or amendment to
------------
this Agreement shall be valid unless the same is in writing and signed by all of
the Partners.
14.6 Gender and Number. Each pronoun shall include any gender
-----------------
or number thereof as the situation requires.
14.7 Benefits and Obligations. All provisions of this Agreement
------------------------
shall be binding upon, inure to the benefit of and be enforceable by and against
the parties hereto, their permitted successors and permitted assigns.
14.8 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which when so executed shall be considered as an original
and all of which together shall constitute one agreement.
14.9 Captions. The captions at the beginning of the sections of
--------
this Agreement are not a part of this Agreement but are included for convenience
only, and shall be ignored in construing this Agreement.
14.10 Further Performance. The Partners covenant and agree to
-------------------
execute any further instruments and documents and perform acts which are or may
become necessary to carry out the purposes of this Agreement.
14.11 Governing Law. The Partnership will be formed and will be
-------------
governed under the laws of the State of Colorado. All questions concerning
43
<PAGE>
the intention, validity and meaning of this Agreement relating to the rights and
obligations of the Partners with respect to performance under this Agreement
shall be construed and resolved according to the laws of the State of Colorado.
14.12 Notices. All notices and other communications required or
-------
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or by receipted overnight courier
providing for next business day delivery, or mailed, postage prepaid, by
registered or certified mail, return receipt requested:
i. If to JINI:
9697 E. Mineral Avenue
Englewood, Colorado 80112
Attn: President
With a courtesy copy to:
General Counsel
ii. If to Cox:
1400 Lake Hearn Drive
Atlanta, Georgia 30319
Attn: Mr. Patrick Esser
With a courtesy copy to:
General Counsel
iii. If to Adelphia:
5 West Third Street
Coudersport, PA 16915
Attn: Director of Programming
With a courtesy copy to:
General Counsel
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others. Notices delivered personally shall be
44
<PAGE>
effective upon delivery. Notices sent by courier shall be effective on the next
business day after delivery to the courier service. Notices transmitted by
facsimile shall be effective when received. Notices delivered by registered or
certified mail shall be effective on the date set forth on the receipt of
registered or certified mail, or three days after mailing, whichever is earlier.
14.13 Severability. Each provision of this Agreement shall be
------------
considered severable and if for any reason any provision of this Agreement is
determined to be invalid, such invalidity shall not impair the operation or
affect other provisions of the Agreement and the parties further agree that if a
court of competent jurisdiction shall declare Section 2.3 or Articles 6, 11 or
12 to be invalid or unenforceable, the parties shall in good faith renegotiate
such Sections to carry out the intent of the parties at the time of the signing
of this Agreement and if the parties fail to reach such agreement, the
Partnership shall be dissolved.
14.14 Title to Property. Title to the property owned by the
-----------------
Partnership shall be held in the name of the Partnership.
14.15 No Commissions. Each Partner hereto represents and warrants
--------------
to the other Partners that it has not incurred any obligations or liabilities,
contingent or otherwise, for brokerage or finder's fees or agent's commissions
or other like payment in connection with this Agreement or the transaction
contemplated hereby for which any Partner will have any liability hereunder.
Each Partner hereto agrees to indemnify and hold the other Partners harmless
against and in respect of any breach by it of the provisions of this Section.
14.16 Plan for a Public Offering.
--------------------------
(a) The Partners presently intend that after approximately
five years from the date of this Agreement the Partnership will prepare to make
a public offering of its equity securities. Any such offering, including the
terms and conditions thereof, will be subject to Executive Committee approval
under Section 6.5a., as well as to market conditions and other conditions that
may be determined by the Executive Committee.
(b) To effect such an offering, the Executive Committee may
cause the incorporation of all of the Partnership's assets pursuant to a
45
<PAGE>
Reorganization. As used herein, a "Reorganization" shall include each of the
following transactions:
(i) the contribution and/or sale, exchange, lease, transfer,
disposition or conveyance, to any corporation(s) formed by or under the
direction of the Executive Committee, of all of substantially all of the
Partnership's assets and liabilities or all of the Ownership Interests in the
Partnership;
(ii) the merger or consolidation of the Partnership with or
into any corporation formed by or under the direction of the Executive
Committee; or
(iii) any other transaction or series of transactions
involving the Partnership that has the effect of any of the transactions
described in (i) or (ii) above or which otherwise causes or results in the
incorporation of the Partnership's assets.
(c) The Executive Committee shall be entitled, upon prior notice to
each of the Partners, to cause a registration statement for a public offering
and sale of securities in any such corporation formed pursuant to a
Reorganization that has succeeded to the Partnership's assets.
14.17 Powers of the Partners. The Partners shall have only those rights and
----------------------
powers expressly set forth in this Agreement.
14.18 Partners' Own Infomercials. If a Partner creates its own
--------------------------
Infomercials which are used on the Network, the Partnership shall acquire no
interest in such Infomercials, and all rights therein shall remain with the
Partner who created them.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Partnership Agreement as of the date first set forth above.
46
<PAGE>
JONES INFOMERCIAL NETWORK VENTURES, INC.
By: /s/ Gregory J. Liptak
Title: President
COX CONSUMER INFORMATION NETWORK, INC.
By: /s/ Agit M. Dalvi
Title: Vice President
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Timothy Rigas
Title: Executive Vice President
47
<PAGE>
EXHIBIT A.1 TO PARTNERSHIP AGREEMENT
CAPITALIZATION EFFECTIVE OCTOBER 1, 1995
JINI Cox Adelphia Total
---- --- -------- -----
Estimated fair market
value of the
Partnership (1) $19,200,000 $19,200,000 $1,600,000 $40,000,000
=========== =========== ========== ===========
Ownership Interests 48% 48% 4% 100%
(1) The estimated fair market value of the Partnership was calculated using a
terminal value of 8 times operating cash flow discounted at 15% to present
value.
<PAGE>
Exhibit 10.10
Portions of this exhibit have been omitted pending a determination by the
Securities and Exchange Commission that certain information contained herein
shall be afforded confidential treatment. The omitted portions are indicated
by three asterisks.
<PAGE>
Exhibit 10.10
GREAT AMERICAN COUNTRY
AFFILIATE AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1996, by and between GREAT
AMERICAN COUNTRY, INC., a Colorado corporation ("G*A*C"), and JONES PROGRAMMING
SERVICES, INC. and JONES INTERCABLE, INC., both Colorado corporations
(collectively, "Affiliate"), whose address is 9697 E. Mineral Avenue, Englewood,
Colorado 80112.
IN CONSIDERATION OF THE MUTUAL COVENANTS, STIPULATIONS AND REPRESENTATIONS
CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS:
1. GRANT OF LICENSE
----------------
(a) Subject to the terms and conditions of this Agreement, G*A*C hereby
grants to Affiliate the non-exclusive license to distribute the "Great
American Country" service (the "Service") within the operating area (as
hereinafter defined) of any cable or satellite master antenna television
system(s) owned or managed by Affiliate as listed on the attached
Exhibit A, as such list may be amended from time to time (the "System(s)")
---------
by mutual agreement of G*A*C and Affiliate. Affiliate shall give written
notice to G*A*C within thirty (30) days of the date Affiliate desires to
add a System to Exhibit A. Affiliate shall not delete any System from
---------
Exhibit A during the term of this Agreement.
---------
(b) For purposes of this Agreement, the "Operating Area" of any System
shall mean, with respect to a cable television system, the geographical
area where Affiliate is authorized to construct, operate, manage or
maintain a cable television system by appropriate governmental authority,
and with respect to a satellite master antenna television system, the
geographical area where Affiliate is authorized to construct, operate,
manage or maintain a satellite master antenna television system by
agreement with a third party.
<PAGE>
2. TERM
----
(a) The term of this Agreement shall commence on January 1, 1996, and
terminate fifteen (15) years thereafter. This Agreement shall
automatically renew for successive one (1) year terms unless either party
gives written notice of termination at least forty-five (45) days prior to
the expiration of the then current term.
(b) Except as otherwise provided herein, neither Affiliate nor G*A*C may
terminate this Agreement except upon sixty (60) days prior written notice
and then only if the other has made a material misrepresentation herein or
breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice) is
not or cannot be cured within sixty (60) days of such notice.
3. CONTENT OF SERVICE
------------------
(a) G*A*C shall have the exclusive authority to determine the content and
format of the Service, and the selection, scheduling, substitution and
withdrawal of any program or advertisement shall remain within the sole
discretion of G*A*C. Notwithstanding the foregoing, the Service shall
consist of a twenty-four (24) hour a day, satellite-delivered country music
television network that features current and past country music videos,
information on country music artists and occasional short-form programming
that focuses on both country music and country music's performing artists.
Affiliate shall distribute the Service without addition, deletion,
alteration, editing or amendment, including any copyright notices, credits
and similar notices, trademarks or trade names contained therein.
(b) G*A*C shall make available to Affiliate not less than four (4) minutes
of commercial advertising time in each programming hour for use by
Affiliate in inserting local advertising or promotions. All such
availabilities shall be at such points in the transmission of the Service
as G*A*C determines in its sole discretion. G*A*C shall signal Affiliate's
commercial advertising time by a hidden cue tone. Affiliate shall use its
best efforts to assure that all commercial matter or advertisements it
inserts with the Service (i) are not offensive in nature; (ii) do not
suggest
-2-
<PAGE>
an affiliation between G*A*C or any programming contained in the Service,
and third party advertisers, and (iii) are generally compatible with the
commercial standards of G*A*C including, but not limited to, a prohibition
on advertising related to adult entertainment. Affiliate's commercial
advertising time shall be fixed, nonrecapturable and nonpreemptible except
in the event that G*A*C gives thirty (30) days' notice to Affiliate
preempting Affiliate's specific commercial time, provided that G*A*C makes
available to Affiliate, within sixty (60) days of such preemption, an equal
amount of commercial time in a like time period.
4. RATES AND PAYMENTS
------------------
(a) On or before the thirtieth (30th) day following each month throughout
the term of this Agreement, Affiliate shall pay to G*A*C for each Service
Subscriber of each System during the preceding month, at the address
specified. by G*A*C, license fees in an amount calculated in accordance
with the attached Exhibit B.
---------
(b) G*A*C's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Affiliate of its obligation to make any
payment in a timely manner consistent with the terms of this Agreement.
Past due payments shall bear interest at a rate equal to the lesser of (i)
one and one-half percent (1-1/2%) per month or (ii) the maximum legal
rate permitted under law, and Affiliate shall be liable for all reasonable
costs and expenses (including, without limitation, reasonable court costs
and attorneys' fees) incurred by G*A*C in collecting any past due payments.
(c) G*A*C shall have the right to increase the applicable monthly rates to
be paid by Affiliate above the rate set forth in Exhibit B attached hereto
---------
by giving Affiliate ninety (90) days prior written notice of the increased
rate (a "Rate Notice") and the effective date of such increase (the
"Effective Date"). Affiliate shall then have the right, by written notice
given to G*A*C within thirty (30) days of the date of the Rate Notice, to
elect to terminate this Agreement as of the Effective Date specified in the
Rate Notice (a "Termination Notice"). Notwithstanding the foregoing, an
election by Affiliate to terminate this Agreement pursuant to this
Paragraph 4(c) shall be of no force and effect and this Agreement shall
-3-
<PAGE>
continue in full force and effect, without the rate increase specified in the
Rate Notice, if G*A*C elects, by delivery of written notice to Affiliate within
thirty (30) days after receipt of a Termination Notice, to rescind the proposed
rate increase.
(d) For purposes of this Agreement, the term "Subscriber" shall mean (i) each
residential customer and commercial or business establishment (including any
restaurant, barbershop, lounge, tavern, social, athletic or country club, bar,
business office, sales office, store or shop) receiving and separately paying
for basic cable television service from each System (excluding those receiving
only a lifeline service consisting solely of public, educational and
governmental access channels and other public affairs programming such as
C-SPAN), and (ii) the number of basic equivalent subscribers computed by
dividing the monthiy revenue for basic cable television service paid by bulk
accounts (such as apartment buildings, cooperatives, condominiums, mobile home
parks, hotels, and motels) of each System by the standard residential rate for
basic cable television service of that System. For purposes of this Agreement,
the term "Service Subscriber" shall mean any Subscriber receiving the Service on
any level of cable television service in any System.
(e) Accompanying each payment during the term of this Agreement, Affiliate
shall provide to G*A*C a true and complete monthly report, signed by the chief
financial officer of Affiliate or his/her authorized designee, in a form
satisfactory to G*A*C, specifying for each System the average number of Service
Subscribers of each System during the subject payment period (computed by
dividing the sum of the number of Service Subscribers on the first and last day
of the payment period by two) and certifying the accuracy of such information
and containing such other information as may be reasonably required by G*A*C for
accurate billing purposes.
(f) Affiliate shall keep true and accurate books and records directly relating
to this Agreement in accordance with generally accepted accounting principles.
All such books and records shall be maintained by Affiliate for a period of
three (3) years following the year to which such books and records relate. G*A*C
or its authorized representatives shall have the right to inspect, audit and
copy any such books and records of
-4-
<PAGE>
Affiliate Acceptance by G*A*C of any payment by Affiliate shall not be
construed as acceptance of any calculation thereof or any aforementioned
Subscriber count supplied in the monthly report, or as a waiver of any
rights of G*A*C hereunder.
5. DELIVERY AND DISTRIBUTION
-------------------------
(a) During the term of this Agreement, each of the Systems shall,
commencing with each such Systems' first date of carriage of the Service as
listed on Exhibit A ("Launch Date"), and subject to compliance with the
---------
terms of this Agreement, offer the Service either as part of such System's
Basic Service, Expanded Basic Service or on an A La Carte basis. "Basic
Service" shall mean the television service package which is received by all
of Affiliate's customers in a particular System. "Expanded Basic Service"
shall mean the cable television service package which is received by the
second greatest number of Affiliate's customers in a particular System and
which does not include any "pay services" (e.g., HBO, Cinemax, The Disney
Channel). "A La Carte" basis shall mean that the Service is available
individually to a Subscriber without any requirement that the Subscriber
subscribe to any service or package beyond Basic Service; provided,
--------
however, that the Service is also available in any such System as part of a
-------
package composed of at least three (3) other satellite delivered services,
which additional services are also available for purchase individually by a
Subscriber. Affiliate shall designate one (1) channel on each System for
the carriage of the Service prior to the commencement of the delivery of
the Service on such System. Affiliate may change, from time to time, the
channel designation on which the Service is carried; provided, however,
-------- -------
that Affiliate shall give G*A*C written notice of the change and the new
channel designation at least sixty (60) days prior to the effective date of
such change.
(b) Affiliate agrees to deliver the Service at least 18 hours per day,
from 7 a.m. to 1 a.m. in local time zones.
(c) G*A*C will initially transmit the Service by means of domestic
communications satellite GE American C-3, Transponder 20, and may, from
time to time, transmit the Service by means of other satellites. G*A*C will
notify Affiliate of any change in satellite not less than thirty
-5-
<PAGE>
(30) days prior to the scheduled change. In the event of any such change,
Affiliate agrees to make such arrangements as may be necessary to receive the
signal from the new satellite. Notwithstanding the above, if G*A*C delivers the
Service to a domestic communications satellite which does not carry the signal
transmission of (i) HBO or SHOWTIME or (ii) at least three (3) of the following
basic services: ESPN, MTV, Lifetime, The Family Channel, The Weather Channel,
C-Span, CNN, TNT, or Headline News; and where it reasonably appears that
Affiliate will incur expenses for additional receiving equipment that will not
be reimbursed by any third party for a particular System to receive the Service,
then in that event, Affiliate will be entitled to delete the affected System
from Exhibit A of this Agreement within thirty (30) days of receiving notice
---------
from G*A*C of the satellite selected for delivery of the Service, unless G*A*C
agrees to pay its pro rata share (based on number of signals to be received by
any System from such new satellite) of the costs associated with the additional
receiving equipment. If G*A*C agrees to pay such costs, then the affected System
may not be deleted from Exhibit A and such System shall continue to distribute
---------
the Service through the remaining term of this Agreement. G*A*C and Affiliate
shall each use their respective best efforts to maintain a high quality of
signal transmission for the Service.
(d) Subject to then existing law, Affiliate shall not itself, and shall not
authorize others to, copy, tape or otherwise reproduce any part of the Service
without G*A*C's prior written authorization, and shall take reasonable and
practical security measures to prevent the unauthorized copying or taping by
others; provided, however, that nothing herein shall prohibit Affiliate from
-------- -------
assisting its residential subscribers in connecting video cassette recorders to
record the Service. G*A*C shall endeavor to advise Affiliate of copyright,
literary and dramatic rights of, and restrictions and limitations imposed by,
program originators (including but not limited to G*A*C) affecting the
distribution of the Service, as they exist from time to time ("Intellectual
Property Rights and Requirements"). As between the parties to this Agreement,
Affiliate shall be solely responsible for compliance with any and all
Intellectual Property Rights and Requirements of which it has been given notice.
Affiliate shall not distribute or exhibit, and shall not authorize, license or
permit the distribution or exhibition of, the Service by any means or device,
whether
-6-
<PAGE>
now known or hereafter devised, other than through the Systems now or
hereafter listed in Exhibit A hereto and in accordance with the terms of
---------
this Agreement.
6. PROMOTION AND RESEARCH
----------------------
(a) Affiliate shall use reasonable efforts to promote, market and sell the
Service to Subscribers and to the general public within the Operating Area
of each System. Advertising, promotional, marketing and/or sales materials
concerning the Service which are provided to Affiliate by G*A*C shall be
used without any alteration, deletion, addition or any other change, unless
such changes are approved by G*A*C prior to use by Affiliate.
(b) At G*A*C's request, Affiliate shall provide G*A*C with all available
data regarding the marketing and promotion of the Service by Affiliate.
Subject to applicable federal, state and local law (including the
franchises, if any, pursuant to which the Systems are operated), Affiliate
also agrees to render such other assistance to G*A*C as G*A*C may request
and which Affiliate may reasonably provide in connection with any marketing
test, survey, poll or other research which G*A*C may undertake in
connection with the Service. G*A*C shall treat as confidential any names
and addresses of Subscribers which G*A*C receives from Affiliate, and shall
not utilize any such names or addresses except in connection with such
research.
7. NOTICES
-------
All notices, statements and other communications given hereunder shall be
in writing and shall be delivered by facsimile transmission, telegraph,
personal delivery, certified mail, return receipt requested, or by next day
express delivery, addressed, if to G*A*C at 9697 East Mineral Avenue,
Englewood, Colorado 80112, Attn: President, G*A*C, (Fax: 303-799-1644),
with a copy to the Legal Department and, if to Affiliate, at its address
set forth herein or by facsimile at 303-799-1644. The date of such
facsimile transmission, telegraphing or personal delivery or the next day
if by express delivery, or the date three (3) days after mailing, shall be
deemed the date on which such notice is given and effective.
-7-
<PAGE>
8. TRADEMARKS
----------
All right, title and interest in and to the Service, and all materials,
ideas, formats and concepts, computer software or other rights of whatever
nature related thereto shall remain the property of G*A*C. Further,
Affiliate acknowledges and agrees that all names, logos, marks, copyright
notices or designations utilized by G*A*C in connection with the Service
(the "Marks") are the sole and exclusive property of G*A*C and/or its
affiliates, and no rights or ownership are intended to be or shall be
transferred to Affiliate. Affiliate's use of the Marks shall be limited to
the advertising and promotion of its carriage of the Service over the
Systems pursuant to this Agreement. G*A*C shall provide Affiliate with
samples of the Marks which Affiliate shall use in their entirety (including
all service mark and trademark notices) whenever the Marks are used by
Affiliate.
9. REPRESENTATIONS AND INDEMNIFICATION
-----------------------------------
(a) G*A*C represents and warrants to Affiliate that (i) it is a
corporation duly organized and validly existing under the laws of the State
of Colorado; (ii) G*A*C has the corporate power and authority to enter into
this Agreement and to fully perform its obligations hereunder; (iii) G*A*C
is under no contractual or other legal obligation which in any way
interferes with its ability to fully, promptly and completely perform
hereunder; and (iv) nothing contained in the Service shall violate the
civil or property rights, copyrights, trademark rights or right of privacy
of any person, firm or corporation except that no representation and
warranty is given with respect to music performance rights.
(b) Affiliate represents and warrants to G*A*C that (i) Affiliate is a
corporation duly organized and validly existing under the laws of the State
of Colorado; (ii) Affiliate has the requisite power and authority to enter
into this Agreement and to fully perform its obligations hereunder; (iii)
Affiliate's Systems are operating, with respect to any cable television
system, pursuant to valid franchise agreements, or licenses or other
permits duly authorized by proper local authorities, or with respect to any
satellite master antenna television systems, pursuant to valid agreements
-8-
<PAGE>
with third parties granting affiliate all necessary rights; and (iv) Affiliate
is under no contractual or other legal obligation which in any way interferes
with its ability to fully, promptly and completely perform hereunder.
(c) Affiliate and G*A*C shall each indemnify and forever hold harmless the
other, the other's affiliate companies and their respective officers, directors,
employees and agents from all liabilities, claims, costs, damages and expenses
(including, without limitation, reasonable counsel fees) arising out of any
breach or claimed. breach by it of any representation or any of its obligations
pursuant to this Agreement. G*A*C will credit Affiliate for any continuous
interruption of Service caused by G*A*C of twenty-four (24) hours or longer,
such interruption measured from the time Affiliate notifies G*A*C of the
interruption or from the time a major outage is known to G*A*C. The amount so
credited shall be an amount equal to that portion of the monthly license fees
applicable to the period during which the Service was interrupted. G*A*C's
liability for damages arising out of its inability or failure to deliver the
Service shall be limited to the license fee credits set forth in the preceding
sentence.
(d) The party entitled to indemnification hereunder (the "Indemnified Party")
shall notify the other party hereto (the "Indemnifying Party") in writing of the
claim or action for which such indemnity allegedly applies. The Indemnifying
Party shall undertake the defense of any such claim or action and permit the
Indemnified Party to participate therein at the Indemnified Party's own expense.
The settlement of any such claim or action by an Indemnified Party without the
Indemnifying Party's prior written consent shall release the Indemnifying Party
from its obligations hereunder with respect to such claim or action so settled.
(e) Neither party hereto shall be liable to the other for the failure to
fulfill its obligations hereunder (other than the obligation to make all
payments when due hereunder) to the extent such failure is caused by or arises
out of an act of God, war, strike, riot, labor dispute, national disaster,
technical failure (including the failure of all or part of any domestic
communications satellite on which the Service is delivered), or
-9-
<PAGE>
any other reason beyond the control of the party whose obligation is
prevented during the period of such occurrence.
10. CONFIDENTIALITY
---------------
Neither Affiliate nor G A C shall disclose to any third party (other than
its respective employees, in their capacity as such), any information with
respect to the terms and provisions of this Agreement, including by way of
press release(s), except: (i) to the extent necessary to comply with law or
legal reporting or disclosure requirements (including those relating to the
public or private offering of securities) or the valid order of a court of
competent jurisdiction, in which event the party making such disclosure
shall so notify the other as promptly as practicable (and, if possible,
prior to making such disclosure) and shall seek confidential treatment of
such information; (ii) as part of its normal reporting or review procedure
to its parent company, its auditors and its attorneys; provided however,
-------- --------
that such parent company, auditors and attorneys agree to be bound by the
provisions of this Section; (iii) in order to enforce its rights pursuant
to this Agreement; and (iv) if mutually agreed by Affiliate and G A C in
writing.
11. GENERAL
-------
(a) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, this Agreement may not be assigned by Affiliate without the
prior written consent of G A C In the event that Affiliate sells,
transfers or otherwise disposes of some or all of the Systems distributing
the Service during the term of this Agreement, Affiliate's obligations
under this Agreement with respect to such Systems shall continue unless and
until the persons or entities to whom such Systems are sold or transferred
have entered into agreements with G A C for the continued distribution of
the Service for a period at least equal to the remaining term of this
Agreement at the time of such sale, transfer or other disposition.
(b) Nothing contained herein shall be deemed to create, and the parties do
not intend to create, any relationship of partners or joint venturers as
-10-
<PAGE>
between Affiliate and G A C. Neither Affiliate nor G A C shall be or hold
itself out as the agent of the other under this Agreement. The obligations
of Affiliate and G A C under this Agreement are subject to all applicable
federal, state and local laws, rules and regulators including, but not
limited to, the Communications Act of 1934, as amended and the rules and
regulations of the Federal Communications Commission.
(c) A waiver by either party of any term or condition of this Agreement in
any one instance shall not be deemed or construed as a continuing waiver or
a waiver of any subsequent breach thereof. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter
hereof and supersedes all prior understandings and agreements, oral or
written between the parties hereto. This Agreement may not be modified
except in a writing executed by both parties hereto.
(d) This Agreement and all collateral matters shall be construed in
accordance with the internal laws of the State of Colorado applicable to
agreements fully made and to be performed therein, irrespective of the
place of actual execution or performance.
(e) The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other
provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first set forth above.
GREAT AMERICAN COUNTRY, INC.,
a Colorado corporation
By: /s/ Gregory J. Liptak
------------------------------
Title: President
----------------------------
Date: ______________________________
-11-
<PAGE>
JONES PROGRAMMING
SERVICES, INC.,
a Colorado corporation
By: /s/ Phillip Laxar
------------------------------------
Title: V.P. PROGRAMMING
----------------------------------
Date:
----------------------------------
JONES INTERCABLE, INC.,
a Colorado corporation
By: /s/ Elizabeth M. Steele
------------------------------------
Title: V.P. President
----------------------------------
Date:
----------------------------------
-12-
<PAGE>
EXHIBIT A
---------
List Each
Franchise Area No. of
Served by Each System Launch Date Subscribers
--------------------- ----------- -----------
<PAGE>
EXHIBIT B
---------
LICENSE FEES
------------
Period Base Rate
----------------
December 1, 1995 through December 30, 1997 *** Service Subscriber/Month
December 31, 1997 through December 30, 1999 *** Service Subscriber/Month
An increase of $.01 in the monthly license fee during each successive twenty
four month period thereafter during the term of the agreement.
VOLUME DISCOUNTS
----------------
An additional discount will be available based on the number of Great American
Country Subscribers as follows:
<TABLE>
<CAPTION>
250,000 500,000 1,000,000 1,500,000
--------------------------------------
Base
Year Rate 10% 20% 25% 30%
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1, 1995 through December 30, 1997 $.10 $.090 $.080 $.075 $.070
December 31, 1997 through December 30, 1999 $.11 $.099 $.088 $.083 $.077
December 31, 1999 through December 30, 2001 $.12 $.108 $.096 $.090 $.084
December 31, 2001 through December 30, 2003 $.13 $.117 $.104 $.098 $.091
December 31, 2003 through December 30, 2005 $.14 $.126 $.112 $.105 $.098
December 31, 2005 through December 30, 2007 $.15 $.135 $.120 $.113 $.105
December 31, 2007 through December 30, 2009 $.16 $.144 $.128 $.120 $.112
December 31, 2009 through December 30, 2011 $.17 $.153 $.136 $.128 $.119
</TABLE>
<PAGE>
Exhibit 10.15
Portions of this exhibit have been omitted pending a determination by the
Securities and Exchange Commission that certain information contained herein
shall be afforded confidential treatment. The omitted portions are indicated by
three asterisks.
<PAGE>
EXHIBIT 10.15
[LETTERHEAD OF PRODUCT INFORMATION NETWORK APPEARS HERE]
August 23, 1996
Mr. Steve Toth, Jr.
Seventh Medium, Inc.
2100 N. Woodward Avenue West 201
Bloomfield Hills, MI 48304-2263
Re: Revised Letter of Agreement for Purchase of Air Time on the Product
Information Network
Dear Rick:
The following sets forth the revised terms of the agreement between
Jones Infomercial Network Ventures, Inc., d/b/a Product Information Network
("PIN"), a Colorado partnership, and Seventh Medium, Inc., d/b/a Consumer
Resource Network ("CRN"), a Vermont corporation, regarding the purchase by CRN
of air time on the cable television network owned by PIN (the "Network").
1. CRN Programming. CRN will provide long-form programming for airing
---------------
on the Network. Such programming (the "CRN Programming") shall consist entirely
of long-form (approximately thirty minutes in length) infomercials featuring the
products and/or services for the so-called CRN charter participants (the "CRN
Participants"), namely Ford Motor Company, State Farm Insurance Company,
Schering-Plough Pharmaceuticals and other participants that may be added in the
future. The types of products and/or services featured in the CRN Programming
will be of high quality, presented in a manner conforming to general standards
of good taste and suitable for general audiences. CRN represents that nothing
contained in the CRN Programming shall violate the civil or property rights,
copyrights, trademark rights, music performance or synchronization rights or
right of privacy of any person, firm or corporation. PIN agrees to provide air
time on the Network for the CRN Programming on the terms and conditions of this
Agreement.
2. Air Times: Billing Rates. PIN agrees to provide, and CRN agrees to
------------------------
purchase, at least eight (8) hours per day of air time on the Network between
the hours
<PAGE>
August 23, 1996
Page 2
of 4:00 p.m. to 12:00 a.m. ET (the "Minimum Commitment Level") at the rates set
forth below:
3rd Quarter 1996
----------------
*** per Network subscriber ("Subscribers") per half hour
4th Quarter 1996
----------------
*** per Network subscriber per half hour
1997
----
*** per Network subscriber per half hour
(a) For the purpose of determining the monthly billing to CRN,
Subscribers will be determined based on the actual month's ending "equivalent"
basic subscriber count and will be measured and billed for each half hour that
CRN Programming is aired (it being understood that there will be no billing for
any programming that is preempted or otherwise prevented from being aired).
To be counted as a Subscriber, the cable system must carry PIN
for a period of time during which CRN Programming is aired. CRN shall have the
option, based upon non-contracted available air time and upon ninety (90) days
prior written notice to PIN, of increasing the amount of purchased air time
above the Minimum Commitment Level in half hour increments, up to a total of
twelve hours of air time per day, including the Minimum Commitment Level. In
order to increase the amount of purchased air time, CRN shall provide at least
ninety (90) days prior written notice to PIN as to the time slot(s) CRN desires
to expand into. Promptly upon receipt of CRN's notice, PIN shall notify CRN in
writing as to the availability of the desired time slot(s). Provided such time
slot(s) is not otherwise allocated, PIN shall reserve such time slot(s) for CRN
and notify CRN of such availability. Billing for such additional air time shall
commence as of the day CRN begins to air its programming in the expanded time
slot(s), but shall be invoiced in arrears pursuant to Paragraph 3 of this
Agreement. If the airing of such expanded programming begins on a day other than
the first day of the month, billing shall be pro rated based on the number of
days in the month in which the expanded programming occurs. Each added half hour
increment shall immediately precede 4 p.m., or the earliest start time for CRN
Programming, and shall be billed at the applicable rates set forth above.
Furthermore, CRN shall have the option of returning half hour increments to PIN
upon ninety (90) days prior written notice; provided, however, that CRN shall at
all times maintain the Minimum Commitment Level.
<PAGE>
August 23, 1996
Page 3
(b) In computing the number of Subscribers for purposes of the
above, there shall be excluded Subscribers served by the CRN affiliates in the
following areas which will receive the CRN Programming on the Network; Fairfax
County, VA; Knoxville, TN; Colorado Springs, CO; York, PA (the "CRN Systems").
For 1996, arrangements regarding the CRN Systems added to the Network shall be
as follows:
(i) CRN will continue to make payments directly to the CRN
Systems through December 31, 1996.
(ii) For 1996, all amounts ordinarily earned by the CRN Systems
under PIN's revenue sharing plan (i.e. sharing 50% of revenues) will be paid to
CRN. This would only include income earned by PIN from non-CRN Programming
actually aired by the CRN Systems. The calculation of this payment would be
determined using those hours which are strictly PIN broadcast hours. PIN will
not give credit for CRN Programming broadcast hours.
(c) During the term of this Agreement, including any renewal
thereof, CRN agrees not to solicit, negotiate or enter into any affiliation
agreements or carriage agreements with any cable television system or
alternative television distribution system, except for broadcast television
stations. Notwithstanding the foregoing, if the parties have not agreed to renew
this agreement by August 31, 1997 as provided in Paragraph 4 herein, CRN may
enter into discussions at that time with cable television systems and
alternative television distribution systems. However, in no event shall CRN
solicit or enter into discussions with PIN affiliated systems until the
expiration of PIN's contract with such affiliate. In no event, shall CRN Systems
receive the CRN Programming from the Network satellite feed (Satcom C-3;
Transponder 20) without PIN's written consent.
(d) CRN will be afforded the same rights to audit and/or
inspect PIN's revenue information as are usually given to PIN affiliates.
(e) Beginning on January 1, 1997, PIN will offer affiliate
status to all former CRN Systems pursuant to the then standard PIN affiliate
agreement. In addition, effective January 1, 1997, the subscribers served by the
systems entering into affiliate agreements with PIN will be included in the
subscriber counts for the purposes of determining the base rates set forth above
in Paragraph 2.
(f) Should CRN affiliates in Fairfax County, Virginia and
Colorado Springs, Colorado decline PIN affiliation after good faith efforts are
made by CRN to secure such affiliation, CRN will have the right to retain those
systems as CRN affiliates pursuant to the terms of Paragraph 2(b)(ii) above.
(g) The air time hours for the CRN Programming shall be
contiguous, (i.e. in consecutive periods of time). However, CRN will use its
reasonable efforts to incorporate PIN network identification (Network ID's) into
CRN's own on-air
<PAGE>
August 23, 1996
Page 4
promotional efforts, subject to client preferences and creative requirements.
The parties agree that CRN will use its reasonable efforts to explain to viewers
that CRN Programming is presented on the PIN Network. CRN agrees to produce the
PIN Network ID's and present them on the average of no less than two times per
hour during CRN programming hours. PIN shall have the exclusive right to approve
the content and presentation of these Network ID's to the extent they refer to
PIN.
(h) All air time not used by CRN will be used for infomercial
and/or informational programming generally consistent with PIN's prior
practices. However, during the term of the Agreement, PIN agrees that during the
periods of time one hour immediately prior to or one hour immediately following
the airing of CRN Programming, PIN shall not air other infomercial programming
which would be directly competitive with respect to the products and services of
those of the CRN Participants. For the purposes of this provision, "directly
competitive" shall mean: for Ford-U.S. and foreign automobile manufacturers;
for State Farm-homeowners, automobile and life insurance and for
Schering-Plough-allergy medicine and respiratory prescription pharmaceuticals.
3. Timing of Payments. PIN agrees to invoice CRN each month, in
------------------
arrears, for PIN air time, with the exception of any payment obligations to
affiliates which may require advance payment in connection with PIN's efforts on
behalf of CRN, which will in turn permit PIN to bill CRN in advance for such
payment obligations. Payment shall be due within twenty (20) days of the date of
the invoice and shall be based upon the actual number of Subscribers for the
month previous to the invoice date. PIN shall be entitled to charge interest at
the rate of 1.5% per month for any payments not made within ten (10) days of the
date due.
4. Term. This Agreement shall be effective as of July 1, 1996 and shall
----
continue through December 31, 1997. Both parties agree to commence renewal
negotiations in good faith no later than July 1, 1997. If, by August 31, 1997,
the parties are: (i) unable to agree upon the terms of renewal after good faith
efforts have been made by each party; or (ii) the parties have not agreed in
writing to extend the duration of renewal negotiations, this Agreement shall
terminate as of December 31, 1997. Additionally, this Agreement may be
terminated by either party in the event the other party materially breaches its
obligations hereunder and such breach is not cured within thirty (30) days after
notice of such breach is provided to the breaching party by the non-breaching
party.
5. Indemnification.
---------------
(a) CRN will defend, indemnify and hold harmless PIN and PIN
affiliates, and their respective officers, directors and shareholders, against
any and all claims, damages, litigation, liability, loss and expense, including
reasonable attorney's fees, arising out of: (i) the breach of CRN's
representations, warranties and agreements
<PAGE>
August 23, 1996
Page 5
contained herein; (ii) the contents of any CRN Programming: and/or (iii) the use
of any of the products promoted in CRN Programming.
(b) FIN will defend, indemnify and hold harmless CRN, its employees and
partners and their officers, directors, shareholders and employees, against any
and all claims, damages, litigation, liability, loss and expense, including
reasonable attorney's fees, arising out of: (i) the breach of any of PIN's
representations, warranties and agreements contained herein and/or (ii) the
content of any programming, other than CRN Programming, aired on the Network.
6. Miscellaneous.
-------------
(a) Any press releases concerning this Agreement or the arrangements
contemplated herein must be mutually agreed to in advance by both parties.
Additionally, any press releases in any way relating to PIN, PIN affiliates or
the participation of any affiliates in the program contemplated under this
Agreement shall require the prior written approval of PIN.
(b) This Agreement representing the entire understanding of the parties
with respect to the subject matter hereof, superseding any prior agreements,
including, without limitation, that certain letter agreement between the parties
dated November 3, 1995. This Agreement may not be modified or amended, except in
writing signed by both parties.
(c) Each of the parties represents and warrants to the other that it is
duly authorized to enter into and perform this agreement, and that no third
party licenses, approvals or consents (other than those that have been obtained)
are required for such party to fulfill its obligations hereunder.
(d) PIN shall provide to CRN on a monthly basis the following types of
information regarding the carriage of the CRN Programming on the Network: name
of market, number of homes, affiliate cable television systems, contiguous hours
per days -- days of week and channel number of the Network. PIN shall provide to
CRN on a quarterly basis an affidavit certifying that the CRN Programming was
aired by PIN according to the written schedule provided to PIN by CRN. PIN shall
also provide to CRN on a monthly basis a list of any cable systems that added or
deleted the CRN Programming on the Network including: name of market, number of
homes, ZIP code, contiguous hours per day-days of week and channel number of the
Network.
(e) Neither PIN nor any person, firm or corporation acting pursuant to
its authority, shall use the name "Consumer Resource Network", "CRN" or any
other name deceptively similar to such names or any logo, tradename or trademark
used to identify CRN Programming, in connection with any marketing campaigns,
endorsements or promotions, conducted by, or on behalf of, PIN unless PIN shall
have received prior written approval from CRN.
<PAGE>
August 23, 1996
Page 6
(f) Except as otherwise permitted under the Agreement, neither PIN nor
any person, firm or corporation acting pursuant to its authority shall use at
any time any name, tradename, logo or trademark of any client of CRN in
connection with any marketing campaigns, endorsements or promotions conducted
by, or on behalf of, PIN or otherwise associate PIN's business or programming
with any client of CRN, or in any way imply any endorsement by CRN's clients of
PIN or the products or services promoted on PIN.
(g) This Agreement shall be binding upon and insure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that no assignment of this Agreement shall serve to extinguish or in
any way limit the primary liability of the parties hereto.
(h) Each of the parties are acting as independent contractors. Nothing
herein shall be construed to create a partnership between the parties, and
neither party shall have the right to legally bind or otherwise contractually
commit the other party, without such other party's express written permission.
(i) Any viewer mail concerning CRN or its programs or sponsors that is
delivered to PIN will be deemed the property of CRN and promptly forwarded to
CRN.
(j) Nothing herein shall be deemed to transfer to or create in PIN any
right, title or interest in CRN or the CRN programming. All such rights shall be
retained by CRN and/or its sponsors.
7. ***
If the foregoing accurately sets forth your understanding of the Agreement,
please confirm by signing below and returning a copy of this Agreement to the
undersigned.
Sincerely,
JONES INFOMERCIAL NETWORK VENTURES, INC.
a Colorado corporation
By: /s/ GREGORY J. LIPTAK
---------------------
Gregory J. Liptak
President
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
August 23, 1996
Page 7
Accepted and Agreed:
SEVENTH MEDIUM, INC.
a VERMONT corporation
-------
By: /s/ T.W. MARQUIS
----------------
Name: T.W. Marquis
--------------
Title: CFO
-------------
<PAGE>
ADDENDUM "A" TO REVISED LETTER OF AGREEMENT FOR PURCHASE OF
AIR TIME ON THE PRODUCT INFORMATION NETWORK
THIS ADDENDUM is made effective the 23rd day of August, 1996, between Jones
Infomercial Network Ventures, Inc., d/b/a Product Information Network ("PIN"), a
Colorado partnership, and Seventh Medium, Inc., d/b/a Consumer Resource Network
("CRN"), a Vermont corporation.
WHEREAS, PIN and CRN have entered into a Revised Letter Agreement (the
"Agreement") contemporaneously with this Addendum, whereby CRN has agreed to
purchase air time on the Product Information Network; and
WHEREAS, PIN and CRN desire to agree upon certain provisions regarding
marketing support dollars in addition to the terms specified in the Agreement.
NOW, THEREFORE, for and in consideration of the premises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree to the following:
1. Marketing Support
-----------------
(a) Commencing July 1, 1996, cable affiliates located within
the top 25 DMAs, who, subsequent to the date of the Agreement, subscribe to PIN
for such periods of time as to include 100% of the then-available CRN
Programming on the PIN Network will be eligible for *** per subscriber per
year in marketing support dollars. For affiliates located within the top 25
DMAs subscribing to PIN subsequent to the date of the Agreement for periods of
time which include a portion but not all of the then-available CRN Programming,
such affiliate shall be eligible for a pro rated portion of the marketing
support dollars calculated by multiplying *** by a fraction, the numerator of
which is the amount of CRN Programming actually carried by the affiliate
(measured in half hour increments) and the denominator of which is the total
amount of CRN Programming available on the PIN Network (measured in half hour
increments) as of the date the affiliate subscribes to PIN. Thus, the formula
would appear as follows:
<PAGE>
Amount of CRN Programming actually carried by Affiliate*
--------------------------------------------------------
*** X Total amount of CRN Programming then available on PIN*
*Measured in half hour increments.
For example, if an affiliate subscribes to PIN as of August 1,
1996 for carriage of PIN which includes the hours of 4 p.m. and 12 a.m. EST and
CRN Programming is carried on PIN between the hours of 4 p.m. and 12 a.m., the
affiliate would be entitled to *** of the available marketing support dollars
or *** per subscriber per year. If the same affiliate subscribes to PIN as of
August 1, 1996 for carriage only during the hours of 6 p.m. and 12 a.m. EST and
CRN Programming is carried on PIN between the hours of 4 p.m. and 12 a.m., the
affiliate would be entitled to *** of the available marketing support dollars or
*** per subscriber per year, ie., *** x 12/16 (12 being equal to the amount
of actual carriage of CRN Programming by the affiliate, measured in half hour
increments and 16 being equal to the amount of total available time of CRN
Programming on PIN, measured in half hour increments, as of the date the
affiliate subscribes to PIN, that is, August 1, 1996). Conversely, if the same
affiliate subscribes to PIN as of October 1, 1996 for carriage which includes
the hours of 4 p.m. and 12 a.m. EST but CRN Programming has expanded its
programming to the hours of 3 p.m. to 12 a.m. EST, the affiliate would not be
entitled to 100% of the available marketing support dollars but instead *** or
*** per subscriber per year, i.e. *** x 16/18 (16 being equal to the amount
of actual carriage of CRN Programming by the affiliate, measured in half hour
increments and 18 being equal to the amount of total available time of CRN
Programming on PIN, measured in half hour increments, as of the date the
affiliate subscribers to PIN, that is, October 1, 1996).
For purposes of the Agreement and this Addendum, DMA shall be as
defined in the 1995 Television and Cable Television Factbook(R). Of the total
annual marketing support contribution, CRN shall contribute ***, not to exceed
*** per subscriber per year, and PIN shall contribute ***, not to exceed ***
per subscriber per year. It is agreed and understood that CRN's contribution to
the marketing support dollars shall be used to purchase local spot-market avails
to promote CRN's then-current advertising clients. PIN's contribution to the
marketing support dollars shall be used to purchase local spot-market avails to
promote PIN's Network and CRN's programming.
(b) Commencing January 1, 1997, CRN and PIN shall contribute up
to a total of *** per subscriber per year in marketing support dollars to
eligible affiliates of PIN who, as of the date of the Agreement: (i) are located
within the top 25 DMAs and (ii) carry some portion of CRN Programming
("Pre-existing Affiliates"). Pre-existing Affiliates, as listed on Exhibit A,
attached to and made a part hereof, shall be eligible for the marketing support
dollars pursuant to the formula described in Paragraph 1(a) of this Addendum and
based upon the actual amount of
-2-
<PAGE>
carriage of CRN Programming by the Pre-existing Affiliate as of the date of the
Agreement; provided, however, that payment of the marketing support dollars for
eligible Pre-existing Affiliates shall not commence until January 1, 1997.
For PIN affiliates existing as of the date of the Agreement who
do not carry PIN during hours which include CRN Programming, but, who subsequent
to the date of the Agreement, expand their PIN carriage to include hours which
include CRN Programming ("Expanded Affiliates"), eligibility for the marketing
support dollars will become effective as of the date the affiliate expands its
PIN carriage to include CRN Programming. In which case, the amount of marketing
support dollars to be paid shall be calculated using the formula outlined in
Paragraph 1(a) of this Addendum. Similarly, Pre-existing Affiliates who expand
their carriage of CRN Programming shall be eligible for marketing support
dollars, using the formula in Paragraph 1(a) of this Addendum, for the amount of
expanded carriage containing CRN Programming effective as of the date of
expanded carriage, but only for that portion of CRN Programming added subsequent
to the date of the Agreement. Such affiliates will therefore be eligible for
immediate payment of marketing support dollars for that portion of CRN
Programming added subsequent to the date of the Agreement and shall additionally
be eligible for payment of marketing support dollars as of January 1, 1997 for
that portion of CRN Programming carried as of the date of the Agreement.
(c) PIN shall be responsible for administering and managing the
payment of the marketing support dollars to the affiliates. PIN shall ensure
that CRN's obligations to provide its portion of the marketing support dollars
contemplated under this Addendum does not extend beyond the term of the
Agreement, other than a renewal thereof upon mutual written agreement. CRN shall
pay to PIN CRN's portion of the contribution on a monthly basis, regardless of
whether spots are actually aired during the month in question, and PIN shall
forward the total marketing support dollars to the affiliates. All checks paid
to affiliates for marketing support dollars shall identify CRN's contribution
and amounts thereof. PIN shall have exclusive control over the content of any
other correspondence with affiliates. Each month, PIN shall provide a statement
to CRN detailing the payments of marketing support dollars to affiliates and
a summary affidavit of the number of spots aired by each system receiving
marketing support dollars under the terms of Paragraphs 1(a) and 1(b) of this
Addendum. PIN additionally agrees to manage the verification and reporting
process with PIN cable television affiliates to ensure the compliance of those
affiliates with the marketing support program contemplated under this Addendum.
(d) PIN agrees to use its reasonable efforts to cause the CRN
Programming to be included in weekly television programming schedules which
describe the Network's programming and scheduling. PIN also agrees to use its
reasonable efforts to run :30 second spots promoting CRN on the Network, which
spots will be produced by CRN. PIN also agrees to make reasonable efforts to
cause PIN cable television affiliates to offer CRN the lowest spot-market
advertising rate
-3-
<PAGE>
offered by such affiliate to its other programmers, plus 20% in bonus spots. In
addition, PIN agrees to cooperate with and generally assist CRN in connection
with its other marketing efforts.
(c) In 1997, PIN shall not obligate CRN to provide marketing
support dollars in excess of $2,250,000 to cable affiliates in the top 25 DMAs
without the prior written consent of CRN. PIN shall not obligate CRN to any
marketing support dollars beyond 12/31/97.
2. In the event of a conflict between the terms and conditions of
the Agreement and the terms and conditions of this Addendum, the Addendum shall
prevail.
Except as expressly addressed herein, all of the terms and
conditions of the Agreement shall remain in full force and effect and unaltered
by this Addendum.
IN WITNESS WHEREOF, the parties have signed this Addendum "A" as of the
day and year first written above.
JONES INFOMERCIAL NETWORK VENTURES, INC.
a Colorado corporation
By: /s/ GREGORY J. LIPTAK
---------------------
Gregory J. Liptak
President
SEVENTH MEDIUM, INC.
a Vermont corporation
-------
By: /s/ T.W. MARQUIS
----------------
Name: T.W. Marquis
--------------
Title: CFO
-------------
-4-
<PAGE>
Exhibit B
GUARANTY
--------
Visual Services, Inc., a Michigan corporation ("Guarantor"), whose address is
2100 N. Woodward Avenue, West 201, Bloomfield Hills, MI, as a material
inducement to and in consideration of Product Information Network, a Colorado
Partnership ("PIN") entering into that certain Purchase of Air Time Agreement
dated October 23, 1995 (the "Agreement") with Seventh Medium, Inc., d/b/a
Consumer Resource Network ("CRN"), unconditionally guarantees and promises to
pay to PIN all amounts that CRN owes PIN from time-to-time and at any time under
the Agreement and Guarantor further unconditionally guarantees to PIN that CRN
shall perform its obligations under the Agreement.
The provisions of the Agreement may be changed by written agreement between PIN
and CRN at any time without the consent of or without notice to Guarantor;
provided, however, that Guarantor's liability shall not be modified except upon
guarantor's prior written consent. Permitted assignment of the Agreement shall
not affect this Guaranty.
If CRN defaults under the Agreement, PIN can proceed immediately against
Guarantor or CRN, or both, or PIN can enforce against Guarantor or CRN, or both,
any rights that it has under the Agreement, or pursuant to applicable laws.
Guarantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this guaranty; and
Without limiting the generality of the foregoing, the obligations of Guarantor
hereunder shall in no way be released, diminished or otherwise affected by
reason of any voluntary or involuntary proceedings by or against CRN in
bankruptcy or from any arrangement or reorganization or for any other relief
under any provision of the Bankruptcy Act as from time to time in effect.
However, nothing herein shall require Guarantor to act in any manner prohibited
by law or court proceeding.
Guarantor further agrees that if any of its obligations hereunder shall be held
to be unenforceable, the remainder of this guaranty and its application to all
obligations other than those with respect to which it is held unenforceable
shall not be affected thereby and shall remain in full force and effect.
This Guaranty shall continue and remain unconditionally unaffected by any
assignment of the Agreement by CRN or any change in the entity comprising CRN.
Upon any assignment of the Agreement, approved by PIN. Guarantor shall continue
to remain liable and obligated for the full performance by CRN's
<PAGE>
Exhibit B
successor of the guaranteed obligations. "CRN" as used in this Guaranty shall
include all successors and assigns of CRN.
PIN may not, without notice, assign, transfer, hypothecate, encumber or
otherwise dispose of, in whole or in part, any of PIN's rights, claims or
interests in the Guaranty without the written approval of Guarantor. No
assignment, hypothecation, encumbrance, disposition or other transfer of the
Agreement or this Guaranty shall operate to extinguish or diminish, in any way,
the obligations of Guarantor hereunder.
If PIN is required to enforce Guarantor's obligations by legal proceedings,
Guarantor shall pay to PIN all costs incurred, including, without limitation,
reasonable attorneys' fees if awarded by the court.
Guarantor's obligations under this guaranty shall be binding on Guarantor's
successors and assigns.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty this 23rd day of
August, 1996, with the intent to be legally bound thereby.
GUARANTOR:
VISUAL SERVICES, INC.
By: /s/ Steve Toth, Jr. By: /s/ T.W. Marquis
-------------------------- ----------------------------
Its: President Its: Chief Financial Officer
------------------------- ---------------------------
Date: 11/3/96 Date: 8/23/96
------------------------ --------------------------
<PAGE>
Exhibit 10.19
Portions of this exhibit have been omitted pending a determination by the
Securities and Exchange Commission that certain information contained herein
shall be afforded confidential treatment. The omitted portions are indicated by
three asterisks.
<PAGE>
C-3/C-4 SATELLITE TRANSPONDER SERVICE AGREEMENT
-----------------------------------------------
THIS AGREEMENT, is made and entered effective the 28 day of July 1989,
between GE AMERICAN COMMUNICATIONS, INC., a corporation organized under the laws
of Delaware, having its principal place of business at Four Research Way,
Princeton, New Jersey, 08540-6684 ("GE Americom") and JONES SPACE SEGMENT, INC.,
a corporation organized under the laws of Colorado, having its principal place
of business at 9697 E. Mineral Avenue, Englewood, Colorado, 80112 ("Jones").
WITNESSETH:
WHEREAS, GE Americom desires to provide to Jones and Jones desires to take
from GE Americom satellite transponder service on certain transponders on GE
Americom's communications satellites designated "C-3" and "C-4" expected to be
launched in 1992 as replacements for GE Americom's Satcom IIIR and Satcom IV
satellites, respectively; and
WHEREAS, the parties desire to define the terms and conditions under which
the service will be provided;
<PAGE>
-2-
NOW, THEREFORE, the parties, in consideration of the mutual covenants
herein expressed, agree with each other as follows:
ARTICLE 1. DEFINITIONS
- -----------------------
As used in this Agreement:
A. "Agreement" means this C-3/C-4 Satellite Transponder Service Agreement and
the Attachments hereto.
B. "C-3" means a domestic communications spacecraft designed to have twenty-
four (24) transponders, each of which has no less than sixteen (16) watts of
power, and a spare transponder amplifier arrangement of eight (8) for six (6),
to be constructed, launched and operated by GE Americom as a successor for its
in-orbit satellite commonly referred to as "Satcom IIIR."
C. "C-4" means a domestic communications spacecraft designed to have twenty-
four (24) transponders, each of which has no less than sixteen (16) watts of
power, and a spare transponder amplifier arrangement of eight (8) for six (6),
to be constructed, launched and operated by GE Americom as a successor for its
in-orbit satellite commonly referred to as "Satcom IV."
D. "Commercially Operational" means a Satellite or a transponder which is
capable of carrying audio and video including associated audio traffic with the
parameters as described in the Transponder Performance Specifications, and which
is not Commercially Unusable. GE Americom will
<PAGE>
-3-
provide Jones with test results verifying that the Transponder(s) meet the
Transponder Performance Specifications.
E. "Commercial Operational Date" means the date for each Satellite when one or
more Transponders on a Commercially Operational C-3 or C-4 Satellite first are
made available to carry customer communications traffic.
F. "Commercially Unusable" means a condition in which the Satellite so fails to
conform to its design specifications or any Transponder so fails to conform to
the Transponder Performance Specifications as to render use of the Satellite
impractical in the exercise of reasonable business judgment or preclude use of
the Transponder for its intended purpose.
G. "Earth Station" means the antennas and associated ground facilities
equipment used to transmit telecommunications signals via a communications
satellite in space.
H. "End-of-Life" or "EOL" means the first to occur of the following: when in GE
Americom's reasonable judgment the Satellite should be taken out of service
because of lack of fuel or the Satellite has become a Failed Satellite.
I. "Failed Satellite" or "Satellite Failure" means a satellite on which one or
more of the basic subsystems fail, rendering the satellite Commercially Unusable
or on which more than twelve (12) transponders are Transponder
<PAGE>
-4-
Failures.
J. "Failed Transponder" or "Transponder Failure" means, with respect to any
Transponder used by Jones under this Agreement, any of the following events:
1. If such Transponder fails to meet the Transponder Performance
Specifications in any material respect for any period of five (5) consecutive
days.
2. Twenty (20) or more "Outage Units" shall occur within any ninety (90)
consecutive days (an Outage Unit being an interruption of such Transponder of
fifteen (15) minutes or more, except that (a) each interruption of fifteen (15)
minutes or more shall be counted as a separate outage unit and (b) interruptions
caused by double illumination of the Transponder(s) used by Jones shall not be
considered an outage unit for purposes of determining Transponder Failure).
3. Such Transponder shall fail to meet the Transponder Performance
Specifications in any material respect for any period of time under
circumstances that make it clearly ascertainable or predictable that either
failure set forth in Paragraphs (1) or (2) will occur.
4. Any other event resulting in such Transponder being rendered
Commercially Unusable.
K. "Full Protection" means the in-orbit protection plan set out in Article 8 of
this Agreement.
<PAGE>
-5-
L. "Fully Protected Transponder" means a transponder which has Full Protection.
M. "Launch Failure" means a Satellite Failure or Transponder Failure which
occurs after the first intentional ignition of the launch vehicle and before the
satellite becomes Commercially Operational.
N. "Interruption" or "Outage" means any period during which a Transponder fails
to meet the Transponder Performance Specifications and such circumstances
preclude the use of the Transponder for its intended purpose.
O. "Party" means one of the signatories to this Agreement or one of its
permitted assignees or transferees.
P. "Preemptible Transponder" means a Transponder that may be preempted at any
time to restore (1) a Fully-Protected Transponder or a Transponder-Protected
Transponder which becomes a Transponder Failure or (2) other service offerings
of GE Americom, including construction delay protection and launch protection.
Q. "Protection Satellite" means the in-orbit C-band satellite designated by GE
Americom as the satellite to be used to restore a Failed Satellite. The
Protection Satellite will be either the satellite commonly referred to as Satcom
IR or C-l, unless both of these satellites are unavailable at the time the
Satellite becomes a Failed Satellite.
R. "Protection Transponder" means a Replacement
<PAGE>
-6-
Transponder, Preemptible Transponder or unassigned transponder used to restore a
failed transponder. Where a Protection Transponder is provided on a Protection
Satellite other than C-3 or C-4, it will perform to the technical specifications
of that satellite and such specifications shall be substituted for those in
Attachment A. Access to Protection Transponders will be in accordance with
Articles 8, 9, 10 and 11. With respect to simultaneous events, priority among
Protected Transponders for access to Protection Transponders shall be determined
in the order of entering into binding agreements with GE Americom for purchase
of or long term service on C-3 or C-4, except that as to Jones, the following
companies shall be deemed to have already entered into such binding agreements:
Viacom International, Inc., The Weather Channel, Inc., Hearst/ABC-Viacom
Entertainment Services, The Disney Channel, Inc., Pay-Per-View Networks, Inc.,
CBN Family Channel, National Cable Satellite Corporation (C-SPAN), Arts and
Entertainment Cable Network and Home Box Office, Inc.
S. "Replacement Transponder" means an available spare transponder amplifier and
its associated components, which is accessible for purposes of restoral and
which is capable of carrying audio and video including associated audio traffic
with the parameters as described in the Transponder Performance Specifications,
and which is not Commercially Unusable.
<PAGE>
-7-
T. "Satellite" means either C-3 or C-4, as the context of this Agreement
requires. When used in the lower case, "satellite" means a domestic
communications satellite operating in C-band (4/6 GHz).
U. "Transponder" means a radio frequency transmission channel on C-3 or C-4,
having a nominal bandwidth of 36 MHz, used to provide service to Jones pursuant
to the terms of this Agreement, or a Protection Transponder used to provide
service to Jones in the event the Transponder is or becomes a Transponder
Failure. When used in the lower case, "transponder" means a radio frequency
transmission channel on a domestic communications satellite operating in C-band.
V. "Transponder-Protected Transponder" means a Transponder which will be
restored if, at the time it becomes a Transponder Failure, a Replacement
Transponder, a Preemptible Transponder or an unassigned transponder is available
on the same Satellite. A Transponder-Protected Transponder may not be preempted
to restore another Failed Transponder, but will not be restored if the Satellite
on which it resides becomes a Satellite Failure.
W. "Transponder Performance Specifications" means the specifications for the
performance of the Transponder set forth in Attachment A.
X. "TT&C Services" or "TT&C" means tracking, telemetry and control services for
C-3 and C-4 to be provided by GE
<PAGE>
-8-
Americom, including periodic stationkeeping and attitude control maneuvers,
power management and fuel management. TT&C Services will be provided from GE
Americom's facilities in Vernon Valley, New Jersey or South Mountain,
California, or such other locations as GE Americom may determine.
Y. "Unprotected Transponder" means a transponder for which there is no
Protection Transponder in the event of a Transponder Failure or a Satellite
Failure but which is not subject to preemption by any other transponder that has
failed.
ARTICLE 2. SCOPE
- -----------------
A. GE Americom agrees to provide satellite transponder service to Jones and
Jones agrees to take such service from GE Americom, in accordance with the terms
and conditions set forth in this Agreement, on one Fully Protected Transponder
on GE Americom's C-3 Satellite and on one Fully Protected Transponder on GE
Americom's C-4 Satellite. The Transponder numbers shall be established by GE
Americom at least six (6) months prior to the launch of C-3 or C-4, as the case
may be.
B. Technical performance criteria for the C-3 and the C-4 Transponders
referred to in Article 2.A. are described in the Transponder Performance
Specifications contained in Attachment A.
C. Jones shall have the exclusive right to use the
<PAGE>
-9-
Transponders for all purposes allowable under this Agreement for the Term hereof
specified in Article 4.
ARTICLE 3. PRICE AND PAYMENT
- -----------------------------
A. Jones shall pay GE Americom each month according to the following schedule
for service on each Transponder provided hereunder, which price includes all
charges for TT&C and Full Protection:
Year of Term Payment for Transponder
------------ -----------------------
One ***
Two ***
Three ***
Four ***
Five ***
Six ***
Seven ***
Eight ***
Nine ***
Ten ***
Eleven ***
Twelve ***
In the event Jones gives notice of its intent to exercise its option specified
in Article 4, to take service beyond Year Twelve of the Term, GE Americom will
advise Jones at least four (4) months prior to the end of the Term of GE
Americom's proposed rate for service for the following year; provided, however,
that the proposed increase over
<PAGE>
- 10 -
the rate for Year Twelve may not exceed the greater of ten (10) percent or the
increase in the Consumer Price Index for all Urban Users ("CPI-U") during the
twelve (12) months preceding GE Americom's notice. The parties will negotiate
regarding the increase until three (3) months prior to the end of the Term. If
no agreement on the increase is reached by then, this Agreement will terminate
at the end of the Term. If such an agreement is reached and Jones subsequently
exercises again its option to extend the Term, subsequent increases for
following years shall be determined in the same manner as specified in this
Paragraph.
B. In addition, a prepaid Construction Delay Protection and Launch Protection
fee will be required. This fee will entitle Jones to Construction Delay
Protection for each Transponder as set out in Article 9, and Launch Protection,
as set out in Article 10, in the event of construction delay or launch vehicle
delay or Launch Failure. This fee shall be payable in thirteen equal quarterly
installments of eighty-two thousand five-hundred dollars ($82,500) beginning
August 1, 1989 and ending August 1, 1992.
C. GE Americom will render bills to Jones thirty (30) days prior to the due
date for payment of amounts owing from Jones to GE Americom under this
Agreement. GE Americom will assess a late payment charge of 1.5 percent per
month compounded monthly on payments not received by
<PAGE>
- 11 -
the payment due date. The payment due date for service in a particular month is
the first day of that month. If charges based on a monthly rate cover a period
which does not commence on the first day of a month or end on the last day of a
month, the monthly rate for the fractional part of the month shall be calculated
at a daily rate of one-thirtieth (1/30) of the monthly charge.
D. GE Americom's failure to bill or delay in billing Jones for any charge due
under this Agreement shall not relieve Jones of its obligation to pay the same
on a timely basis; provided, however, that no late payment charge shall be due
for any period for which GE Americom has failed to bill or has delayed in
billing.
E. Unless otherwise agreed in writing by the Party entitled to payment, all
transfers of funds in accordance with this Agreement from one Party to the other
shall be sent to the receiving Party at its address designated in Article 21 or
by wire transfer of immediately available funds to an account designated by the
transferee, and shall be deemed to be made upon receipt.
ARTICLE 4. TERM
- ----------------
A. The term for Transponder service on each Transponder provided under this
Agreement ("Term") shall commence on the Commercial Operational Date of the
Satellite and continue until the sooner of (1) the expiration of twelve
<PAGE>
- 12 -
(12) years or (2) the End-of-Life of C-3 (as to C-3) or the End-of-Life of C-4
(as to C-4).
B. Jones shall have an option to extend the Term for an additional twelve (12)
months beyond the expiration of the twelfth year of the Term, unless the Term
has sooner ended pursuant to Article 4.A., and subject to the parties agreeing
on an increase in the rate for service pursuant to Article 3.A. A notice of
intent to exercise this option must be provided to GE Americom at least five (5)
months prior to the end of the Term. Jones shall have similar options to extend
the Term for additional periods of twelve (12) months until the End-of-Life of
each Satellite.
C. The Term shall not, however, commence unless all payments due under this
Agreement to GE Americom as of the Commercial Operational Date of the Satellite
have been made including any interest owing on late payments. If the Term does
not commence on the Commercial Operational Date because of Jones's failure to
make all the payments then due to GE Americom including any applicable interest,
the Term shall commence upon the date GE Americom receives
<PAGE>
- 13 -
all amounts then owing from Jones, unless this Agreement is earlier terminated
by GE Americom pursuant to Article 22.C.3.
ARTICLE 5. TAXES
- -----------------
A. Except as provided in Article 5.B., prices are exclusive of all taxes and
duties, and Jones shall pay directly, or reimburse GE Americom, for all taxes
and duties which are usually and customarily paid by transponder service takers
or purchasers, including any privilege or excise taxes based on gross revenue,
pertaining to the Transponders. GE Americom shall notify Jones of any demand by
any taxing authority of which GE Americom has knowledge in connection with a tax
audit or otherwise for payment of any of the taxes for which Jones is liable
under this Article 5.A. Jones may participate, at its expense, in any
proceedings or tax audits brought against GE Americom by any taxing authority in
connection with the Transponders, the outcome of which may affect Jones's tax
liability hereunder. Jones may pay such taxes or duties for which it is
responsible in such installments and in such manner as would be available to GE
Americom.
B. GE Americom warrants that, as of the date of execution of this Agreement, it
is not aware of any taxes or duties hereunder which are or could be assessable
as of that date by any taxing authorities on the transponder service
<PAGE>
- 14 -
described in Article 2.A. GE Americom will indemnify Jones for any such taxes or
duties which are or could be so assessable as of that date and which Jones is
subsequently called upon to pay. Jones shall notify GE Americom of any demand by
any taxing authority of which Jones has knowledge in connection with a tax audit
or otherwise for payment of any of the taxes or duties for which GE Americom is
liable under this Article 5.B. GE Americom may participate, at its expense, in
any proceedings or tax audits brought against Jones by any taxing authority in
connection with Jones's Transponders, the outcome of which may affect GE
Americom's tax liability hereunder.
ARTICLE 6. SATELLITE LOCATION AND LAUNCH DATE
- ----------------------------------------------
A. GE Americom's Satcom IIIR satellite is now located at 131 degrees W.L. and
GE Americom expects to locate C-3 at the same position, subject to approval by
the Federal Communications Commission ("FCC"). GE Americom's Satcom IV satellite
is now located at 82 degrees W.L. and is permanently assigned to 81 degrees W.L.
GE Americom has filed a request with the FCC to locate C-4 at either 127 degrees
W.L. or l35 degrees W.L. Both C-3 and C-4 are expected to be launched in the
second half of 1992 and to become Commercially Operational by no later than the
second quarter of 1993.
B. GE Americom shall use reasonable efforts to locate C-3 at 131 degrees W.L.,
or at another orbital position in the
<PAGE>
- 15 -
western segment of the U.S. orbital arc no farther west than 13l degrees W.L.,
and to locate C-4 at either 127 degrees W.L. or 135 degrees W.L., and to
maintain its schedule for launch and operation of both C-3 and C-4, provided,
however, that GE Americom assumes no liability to Jones, except as expressly set
forth in this Agreement, in the event either C-3 or C-4 is not constructed, is
delayed in construction, is delayed in launch, is delayed in operation or is
positioned at an orbital location other than as specified above.
ARTICLE 7. USE OF TRANSPONDERS
- -------------------------------
A. The C-3 and C-4 Satellites are intended to be used as major cable
television programming satellites by cable services to distribute their
programming to their affiliated cable systems.
B. Jones agrees that it will use each of the Transponders provided under this
Agreement for the transmission of a primary feed of Jones's or Jones's
affiliates' principal cable programming services. Affiliate as used herein means
an entity controlled by, controlling or under common control with Jones. Primary
as used herein means an outbound feed of the programming content of a service
intended to be distributed to cable subscribers.
C. Except as otherwise provided herein, the Transponders shall be used only
for the transmission of video
<PAGE>
- 16 -
programming and associated audio, provided that separate audio may be carried on
the subcarriers and the vertical blanking interval. Jones shall have the right,
however, to use the Transponder on C-4 for audio-only programming. The
Transponder on C-3 may be used for such programming, in lieu of the C-4
Transponder, with GE Americom's approval, which shall not be unreasonably
withheld.
D. Jones shall not assign or transfer its rights or obligations under this
Agreement without first obtaining GE Americom's written consent to such
assignment or transfer, which consent shall not be unreasonably withheld,
provided that the prospective assignee or transferee assumes all of Jones'
obligations under and agrees to be bound by this Agreement, including the
restrictions on use of the Transponder(s) contained in Article 7, and furnishes
evidence reasonably satisfactory to GE Americom regarding its ability to meet
Jones' financial commitments hereunder. Any transfer or assignment pursuant to
this Article 7.D. shall relieve the transferring or assigning Party of all of
its obligations under this Agreement. The restrictions in this Article 7.D.
shall not apply to:
1. Any transfer or assignment by Jones to one or more of its affiliates,
which includes any entity controlled by, controlling or under common control
with Jones;
<PAGE>
- 17 -
2. Any security interest in the Agreement or other transfer, assignment or
encumbrance of the Agreement to financial institution(s) for financing purposes,
provided that any subsequent transfer or assignment by or to any such financial
institution, upon foreclosure or otherwise, shall constitute a transfer or
assignment which is subject to the restrictions contained in this Article 7.D.;
and
3. Any license or other permission from Jones to allow third parties to
use the Transponder(s) for part time (not to exceed six (6) hours in any one
twenty-four (24) hour period) video and audio cable television programming
during periods when the Transponder(s) are not being used by Jones.
E. GE Americom's satellites, transponders, facilities, services or equipment
shall not be used for an unlawful purpose.
F. GE Americom represents and covenants that all others, including the
entities listed in Article l.R., which have taken service on or purchased C-3 or
C-4 transponders will be required to adhere to no less restrictive conditions on
the use of C-3 or C-4 transponders than those contained in the first sentences
of Paragraph B and Paragraph C of this Article 7.
ARTICLE 8. IN-ORBIT PROTECTION
- -------------------------------
A. In the event a Fully Protected Transponder becomes a Transponder Failure,
GE Americom shall use all reasonable
<PAGE>
- 18 -
efforts to restore the Transponder Failure by utilizing any available
Replacement Transponder on the same Satellite as the Failed Transponder on a
first-needed, first-served basis. If no Replacement Transponder is available, GE
Americom shall restore the Transponder Failure by using an unassigned or
Preemptible Transponder on that Satellite, if available. If none of these
options are available, Jones shall be offered Restored Satellite Service in
accordance with the Terms of Article 11.
B. The Protection Satellite shall be maintained for the purpose of restoring
Transponder Failures and Satellite Failures and protecting against Launch
Failures and construction and launch delays for the Satellite and other
satellites owned by GE Americom or third parties. If GE Americom provides
protection to satellites owned by third parties (other than a satellite owned by
Alascom, Inc. or its affiliates), such protection shall be subordinate to and
shall not diminish in any way the protection provided to Jones. The protection
Satellite shall be used on a first-needed, first-served basis. Unless the
Protection Satellite has been used to restore a prior Satellite Failure, it may
be moved in GE Americom's sole discretion to the orbital location of a satellite
which has become a Satellite Failure.
<PAGE>
- 19 -
C. Satcom IR is GE Americom's existing in-orbit Protection Satellite as of the
date of this Agreement. GE Americom shall launch Satcom C-1 as the replacement
for Satcom IR prior to the EOL of Satcom IR as determined by GE Americom's
projections of remaining stationkeeping fuel. If Satcom IR becomes a Satellite
Failure or is used to restore a Satellite Failure prior to its EOL, as
determined by GE Americom's projections of remaining stationkeeping fuel, GE
Americom shall attempt to launch C-1 as soon as possible. GE Americom shall
have no obligation to provide Protection Satellites other than Satcom IR and
C-1.
D. If, at any time during the Term of this Agreement, there is no Protection
Satellite available or the Protection Satellite cannot be used to restore one or
both of Jones's Transponders because it previously has been used to restore
other service offerings of GE Americom, service under this Agreement shall
continue as to the affected Transponder(s) at Jones's election (1) on a
Transponder-Protected basis, provided that the applicable rate for service on
the affected Transponder(s) under Article 3.A. shall be reduced by *** per
Transponder per month, or (2) on an Unprotected basis, provided that the
applicable rate for service on the affected Transponder under Article 3.A. shall
be reduced by *** per Transponder per month. The reduced rate shall remain
<PAGE>
- 20 -
in effect until such time as protection is available on a Protection Satellite,
at which time the regular rate set forth in Article 3.A. shall be reinstated.
E. In the event either C-3 or C-4 becomes a Satellite Failure, or in the event
more than one transponder on C-3 or C-4 becomes a Transponder Failure under
circumstances which prevent all such Failed Transponders from being restored,
Protection Transponders shall be assigned in accordance with Article l.R.
F. For any period service is provided on the Protection Satellite, the rate
provided in Article 9.B. shall apply in lieu of the rate in Article 3.
ARTICLE 9. CONSTRUCTION DELAY PROTECTION
- -----------------------------------------
A. In the event that the construction of C-3 and/or C-4 is delayed, such that
it is not Commercially Operational and available for Jones's use prior to the
time that the satellite on which Jones's service currently resides reaches end-
of-life, GE Americom shall provide Jones, upon request, with Interim Transponder
Service which shall be on an Unprotected Transponder on the Protection
Satellite, until such time as the delayed satellite has been launched and has
become operational. Interim Transponder Service shall be provided only to the
extent that the Protection Satellite previously has not been used to restore
other transponders or other service offerings of GE Americom such as would
prevent the provision of service to Jones's. If Interim Transponder Service
cannot be
<PAGE>
- 21 -
provided on the Protection Satellite for every transponder on any delayed
satellite for which such service is requested, transponders on the Protection
Satellite shall be assigned in accordance with Article 1.R.
B. In the event Interim Transponder Service is provided to Jones on the
Protection Satellite, in accordance with this Article 9, Jones shall pay to GE
Americom a monthly rate of $150,000 per Transponder per month.
C. To the maximum extent technically or operationally possible, consistent
with the design specifications of the Protection Satellite, transponder(s) on
the Protection Satellite provided to Jones for Interim Transponder Service shall
be of the same frequency, polarization and performance characteristics as
Jones's Transponder on the delayed Satellite(s); provided that, unless otherwise
determined by GE Americom, the odd-numbered transponders on the Protection
Satellite shall be used first.
ARTICLE 10. LAUNCH PROTECTION
- ------------------------------
A. Jones shall have Launch Protection for launch vehicle or other delays or
Launch Failure. In the event that the launch of C-3 or C-4 is delayed because
of the launch vehicle or for other reasons or there is a Launch Failure, so that
the Satellite is not operational prior to the end-of-life of the satellite on
which Jones's service currently resides, GE Americom shall provide Jones, upon
request, with Interim Transponder Service which shall be on an Unprotected
Transponder on the Protection Satellite,
<PAGE>
- 22 -
provided that the Protection Satellite previously has not been used to restore
other transponders or other service offerings of GE Americom such as would
prevent the provision of service to Jones. If Interim Transponder Service cannot
be provided on the Protection Satellite for every transponder on any delayed
satellite for which such service is requested, transponders on the Protection
Satellite shall be assigned in accordance with Article l.R.
B. In the event of a launch vehicle or other delay, service on the Protection
Satellite shall be provided to Jones for a term not to extend beyond thirty (30)
days after the delayed Satellite becomes Commercially Operational. The charges
for the service actually used by Jones shall be at the rates provided for
Interim Transponder Service under Article 9.B.
C. In the event of a Launch Failure, service on the Protection Satellite, if
requested by Jones, shall be for a minimum period of twelve (12) months. Jones
may cancel service by providing GE Americom with written notice at least six (6)
months prior to the expiration of the minimum service period requesting such
cancellation. The charges for the service actually used by Jones shall be at the
rates provided for Interim Transponder Service under Article 9.B. If not
cancelled by Jones, service shall be renewed for successive renewal terms of six
(6) months each, provided that GE Americom may increase the rate at renewal
<PAGE>
- 23 -
by the lesser of (1) ten (10) percent or (2) the increase in the Consumer Price
Index For All Urban Consumers during the prior renewal term.
D. To the maximum extent technically or operationally possible, consistent
with the design specifications of the Protection Satellite, transponder(s) on
the Protection Satellite provided to Jones for Launch Protection shall be of the
same frequency, polarization and performance characteristics as Jones's
Transponder(s) being replaced on the delayed Satellite(s), provided that, unless
otherwise determined by GE Americom, the odd-numbered transponders on the
Protection Satellite shall be used first.
ARTICLE 11. RESTORED SATELLITE SERVICE OPTION
- ----------------------------------------------
A. In the event C-3 or C-4 become a Satellite Failure, Jones's Fully Protected
Transponder on the Failed Satellite will be restored on the Protection Satellite
to the extent that the Protection Satellite and transponders on that satellite
are then available.
B. Restored Satellite Service provided as a result of C-3 or C-4 becoming a
Satellite Failure shall be provided to Jones, upon request, for a minimum period
of twelve (12) months. Jones may cancel service by providing GE Americom with
written notice at least six (6) months prior to the expiration of the minimum
service period requesting such cancellation. The charges for the service
actually
<PAGE>
- 24 -
used by Jones shall be at the rates provided for Interim Transponder Service
under Article 9.B. If not cancelled by Jones, service shall be renewed for
successive renewal terms of six (6) months each, provided that GE Americom may
increase the rate at renewal by the lesser of (1) ten (10) percent or (2) the
increase in the CPI-U during the prior renewal term.
C. In the event that one or both of Jones's Transponders become a Transponder
Failure, other than as part of a Satellite Failure, and cannot be restored on
the same Satellite as provided in Article 8.A., service on such Failed
Transponder(s) shall, at Jones's request, be restored on the Protection
Satellite, if capacity thereon is available, on a first-needed, first-served
basis. Restored Satellite Service for Failed Transponders shall be provided on
the terms and at the charges provided under Paragraph B. of this Article 11. In
the event of a Satellite Failure or a simultaneous failure of more than one
transponder including Jones's Transponders, and Restored Satellite Service
cannot be provided for every transponder for which such service is requested,
transponders on the Protection Satellite shall be assigned in accordance with
Article l.R.
D. To the maximum extent technically or operationally possible, consistent
with the design specifications of the
<PAGE>
- 25 -
Protection Satellite, transponder(s) on the Protection Satellite provided to
Jones for Restored Satellite Service shall be of the same frequency,
polarization and performance characteristics as Jones's Transponder(s) being
replaced; provided that, unless otherwise determined by GE Americom, the odd-
numbered transponders on the Protection Satellite shall be used first.
E. Restored Satellite Service is provided on Unprotected Transponders.
Further protection will be provided only if and to the extent appropriate
facilities are available at the time of failure.
F. GE Americom shall use all reasonable efforts to obtain launch insurance for
the launch of C-1, C-3 and C-4 if such insurance is available on reasonable
terms and conditions. Such insurance is intended to cover the cost of the
satellite, launch and insurance. If any of these satellites become Launch
Failures, GE Americom will apply any insurance proceeds towards providing a
replacement satellite and promptly negotiate in good faith with the entities
taking service or owning transponders on the Failed Satellite or using the
Failed Satellite for Protection with the objective of retaining them as
customers for a replacement satellite. GE Americom shall have no commitment to
replace a failed satellite unless the negotiations are successful.
<PAGE>
- 26 -
ARTICLE 12. SATELLITE SYSTEM AND AUTHORIZATIONS
- ------------------------------------------------
A. GE Americom shall have sole and exclusive control and operation of C-3 and
C-4. If circumstances occur which in GE Americom's reasonable judgment pose a
threat to the stable operation of C-3 or C-4, GE Americom shall have the right
to take appropriate action to protect the Satellite, including discontinuance or
suspension of operation of the Satellite, Jones's Transponder or any other
transponder, without any liability to Jones, except as expressly provided in
Articles 8 and 17 of this Agreement. GE Americom shall give Jones as much
notice as possible of any such discontinuance or suspension.
B. If it becomes necessary to discontinue or suspend service on one or more
transponders on C-3 or C-4, or on the Protection Satellite if Jones is then
taking service on that Satellite, and operational circumstances allow GE
Americom to select the transponder or transponders to be discontinued or
suspended, GE Americom will use reasonable efforts to make such selection in
reverse order of the dates on which legally-binding agreements for use of the
Satellite were entered into with GE Americom, in accordance with Article l.R.
("first on, last off").
C. Construction, launch, location and operation of C-3 and C-4 and GE
Americom's satellite system are subject to all applicable laws and regulations,
including without limitation, the Communications Act of 1934, as amended,
<PAGE>
- 27 -
and the Rules and Regulations of the FCC. Both parties shall comply with all
such applicable laws and regulations.
D. GE Americom agrees that, at Jones's request to do so, it will file with the
FCC an appropriate request to modify its FCC authorization(s) for C-3 and/or C-4
to permit the reception of signals from Jones's Transponders in non-United
States locations. Jones will provide to GE Americom information concerning
Jones's arrangements necessary for such a request, and will provide any
additional assistance GE Americom may need to prosecute such a request with the
FCC.
ARTICLE 13. OPERATING PROCEDURES
- ---------------------------------
A. Jones agrees to abide by and adhere to the Spacecraft Service Requirements
set forth in Attachment B of this Agreement, as such may be amended from time-
to-time for technical or operational reasons upon written notice to Jones. In
the event of any failure of Jones to comply with such operating procedures or
operation by Jones of its Transponder interferes materially with GE Americom's
other satellite services, or with the use of other transponders, Jones agrees to
discontinue such interfering operation immediately upon discovery or receiving
notice from GE Americom of the interference. In the event of Jones's failure to
discontinue, GE Americom may take such action reasonable and necessary in the
circumstances to eliminate such interference, including suspending Jones's
<PAGE>
- 28 -
use of its Transponder, without any liability for loss or damage whatsoever,
until such time as Jones is able to operate in a non-interfering manner.
B. When signals are being transmitted from a Jones-provided Earth Station,
Jones shall be responsible for proper illumination of the Transponder. Should
improper illumination be detected by GE Americom, Jones will be notified of this
and corrective action must be taken immediately. If Jones unreasonably and
repeatedly fails to correct immediately improper illumination after notification
by GE Americom, GE Americom may terminate this Agreement pursuant to Article
22.C.2.
C. Earth Station and other equipment furnished by Jones shall be so
constructed, maintained and operated as to work properly with GE Americom's
facilities. For purposes hereof, Jones's existing Earth Station located at
Morrison, Colorado, shall be considered to be in conformance with the
requirements of this Article 13.C. Jones shall provide, at its expense, the
personnel, power and space required to operate all facilities installed on the
premises of Jones. Jones shall ensure the presence of a qualified technician
knowledgeable in satellite uplinking at its transmitter locations at all times
when signals are being transmitted from any of its Earth Stations to any GE
Americom satellite or GE Americom-provided transponder. Jones at its expense
shall provide GE Americom with any descrambling or decoding devices which may be
required for signal monitoring.
<PAGE>
- 29 -
D. Satellite access specifications are set forth in Attachment B. Jones agrees
to conform its uplink Earth Station transmissions to the specifications. In
addition, at a mutually agreed to time, and prior to transmitting from a Jones-
provided Earth Station, Jones will contact GE Americom's Vernon Valley, New
Jersey communications technician and demonstrate Jones's ability to perform in
accordance with the access specifications.
E. GE Americom may, upon reasonable notice to Jones, make such inspections of
Jones's facilities accessing or operating in conjunction with the Transponder as
may be necessary to maintain the Satellites, the Transponders or GE Americom's
other facilities used in connection therewith, in satisfactory operating
condition. GE Americom will use reasonable efforts to schedule and conduct such
inspections so as not to disrupt the operation of Jones's facilities.
F. Jones may, upon adequate notice to GE Americom, conduct a reasonable number
of visits (1) to the GE facilities used to construct the satellites and (2) to
GE Americom's TT&C and other facilities used to operate and maintain the
Satellites.
ARTICLE 14. TRANSITION TO C-3/C-4
- ----------------------------------
A. To ensure the efficient and orderly transfer of service from the satellite
on which Jones's service currently resides to C-3 and C-4, a Technical Committee
<PAGE>
- 30 -
may be formed by GE Americom and Jones for the purpose of discussing and
resolving matters relating thereto as well as other technical operating matters
which may arise.
B. The matters to be covered and the composition of the Technical Committee
shall be determined from time-to-time by mutual agreement of the Parties.
C. GE Americom agrees to provide Jones with periodic progress reports at least
every six (6) months on the status of C-3 and C-4. Such reports will include
information concerning the status of the construction and launch of C-3 and C-4,
pertinent technical data, End-of-Life projections, and the current status of
customer commitments to C-3 and C-4 as well as any other relevant information.
GE Americom will also give Jones as much advance notice as possible, but no less
than thirty (30) days, of the dates that C-3 and C-4 are scheduled to become
Commercially Operational.
ARTICLE 15. INDEMNIFICATION
- ----------------------------
A. Because Jones has control of the content of the communications transmitted
over the Transponders, and any Protection Transponder which may be provided
hereunder, during any period Jones accesses any transponder, GE Americom shall
be indemnified and saved harmless by Jones from and against all loss, liability,
damage and expense, including reasonable counsel fees and disbursements, due to:
<PAGE>
- 31 -
1. Claims for libel, slander, infringement of copyright or other
intellectual property rights arising from the material transmitted over any
Transponder by Jones, by its customers or by any third party permitted to use
the transponders by Jones; and
2. Any other claim arising from any use of transponders furnished by GE
Americom by Jones, by any customer of Jones or by any third party permitted by
Jones to use the Transponders.
B. Any Party obligated to provide indemnification pursuant to this Article 15
or Article 16 (the "indemnitor") shall promptly defend any claims against the
Party entitled to indemnification from the indemnitor pursuant to this Article
15 or Article 16 (the "indemnitee") with counsel of the indemnitor's choosing at
its own cost and expense. The indemnitee shall cooperate with, and assist as
reasonably requested by, the indemnitor in the defense of any such claim,
including the settlement thereof on a basis stipulated by the indemnitor (with
the indemnitor being responsible for all costs and expenses of defending such
claim or making such settlement); provided, however, that (1) the indemnitor
will not, without the indemnitee's consent, settle or compromise any claim or
consent to any entry of judgment which does not include the giving by the
claimant or the plaintiff to the indemnitee of an unconditional release from all
liability with respect to such claim, (2) the
<PAGE>
- 32 -
indemnitee shall be entitled to participate at its sole expense in the defense
of any such claim and to employ counsel at its own expense to assist in the
handling of such claim, and (3) the indemnitee shall have the right to pay,
settle or compromise any such claim as to itself, provided that in such event
the indemnitor shall be relieved of any liability or obligation which would
otherwise then or thereafter have existed or arisen under this Article 15 or
Article 16 in respect of such claim. The indemnitor shall be relieved of its
obligations under this Article unless the indemnitee notifies the indemnitor
promptly in writing of any claim, suit or proceeding covered by Article 15.A.
and at the indemnitor's expense, gives the indemnitor such information and
assistance to settle and/or to defend any such claim, suit or proceeding as the
indemnitor may reasonably request.
ARTICLE 16. PATENT INDEMNITY
- ----------------------------
A. Jones shall be indemnified and saved harmless by GE Americom from and
against all loss, liability, damage and expense, including reasonable counsel
fees and disbursements, due to any claim, suit or proceeding brought against
Jones on the issue of infringement of any United States or foreign patent by any
product, or any part thereof, supplied by GE Americom to Jones under this
Agreement. For purposes hereof, "product" shall be defined as any satellite,
transponder, earth station or other
<PAGE>
- 33 -
communications facility, or any component or subsystem thereof. GE Americom
agrees to pay, subject to the limitations hereinafter set forth in this Article
16, any loss, liability, damage or expense, including any final judgment entered
against Jones or any settlement agreed to by GE Americom on such issue in any
such suit or proceeding defended by GE Americom. Jones agrees that GE Americom,
shall be relieved of the foregoing obligations unless Jones notifies GE Americom
promptly in writing of any such claim, suit or proceeding, and at GE Americom's
expense, gives GE Americom such information and assistance to settle and/or to
defend any such claim, suit or proceeding as GE Americom may reasonably request.
B. If the product, or any part thereof, furnished by GE Americom to Jones
becomes, or in the opinion of GE Americom may become, the subject of any claim,
suit or proceeding for infringement of any United States or foreign patent, or
in the event of an adjudication that such product or part infringes any United
States or foreign patent, or if the use of such product or part is enjoined, GE
Americom may, at its option and its expense: (1) procure for Jones the right
under such patent to use such product or part, or (2) replace such product or
part, or (3) modify such product or part, or (4) if options (1)-(3) are
infeasible, suspend service and refund any monies paid for any service not
provided.
C. GE Americom shall have no liability for any infringement arising from the
combination of such a
<PAGE>
- 34 -
product or part with a product or part furnished by Jones to GE Americom.
D. Jones shall hold GE Americom harmless against any expense, judgment or loss
for infringement of any United States or foreign patents or trademarks which
result from GE Americom's compliance with Jones's instructions regarding any
product or part furnished by Jones to GE Americon.
E. In no event shall GE Americom's total liability to Jones under, or as
a result of compliance with, the provisions of this Article exceed the aggregate
sum paid to GE Americom by Jones for service hereunder. exclusive of any refund
under option (4) in Article 16.B. above. Neither party shall be liable to the
other for loss of use, or for incidental, indirect, or consequential damages,
whether in contract or in tort.
F. The foregoing states the entire warranty by GE Americom and the exclusive
remedy of Jones, with respect to any alleged patent infringement by such product
or part.
G. No sale or service hereunder shall convey any license by implication,
estoppel or otherwise, under any proprietary or patent rights of GE Americom to
practice any process with such product or part, or for the combination of such
product or part with any other product or part.
<PAGE>
- 35 -
ARTICLE 17. LIMITATION OF LIABILITY
- ------------------------------------
A. Except as expressly otherwise provided in this Agreement, GE Americom shall
have no liability for damages or losses arising out of its failure or inability
to provide any Satellite, Transponder, or other satellites, transponders,
facilities, services and equipment, in accordance with this Agreement.
B. GE Americom shall be liable for direct damages or losses, such as the cost of
obtaining alternate satellite capacity, with respect to its performance
hereunder, when such damages or losses are due to GE Americom's willful
misconduct. Otherwise, GE Americom's entire liability for damages or losses
arising out of mistakes, omissions, interruptions, delays, errors or defects of
any kind with respect to its performance of this Agreement, or the use or
operation of C-3 or C-4, the Transponder(s) provided to Jones hereunder, or of
other satellites, transponders, facilities, services or equipment furnished to
Jones by GE Americom, including but not limited to TT&C facilities or services,
or anything done in connection therewith, regardless of whether occasioned by GE
Americom's negligence, shall be limited to a refund or waiver of the applicable
charges for service under Article 3. Credits for Interruptions or Outages shall
be determined in accordance with Article 18 hereof.
<PAGE>
- 36 -
C. Any other provision in this Agreement notwithstanding, neither party shall
be liable, in connection with this Agreement, or the arrangements contemplated
hereby, for any indirect, incidental, consequential, special or other similar
damages, whether in contract or tort, including but not limited to damages
resulting from loss of actual or anticipated revenues or profits, or loss of
business, customers or good will.
D. GE Americom shall not be liable for any damages or losses due to: (1) the
fault of Jones or of any third party; or (2) the failure or unavailability of
satellites, transponders, facilities, services or equipment furnished to Jones
by any other entity which may be used in conjunction with GE Americom's
satellites, transponders, facilities, services or equipment, or any act or
omission of such other entity.
E. It is agreed and understood that the price paid by Jones is a consideration
in limiting GE Americom's liability.
ARTICLE 18. CREDITS FOR INTERRUPTIONS OR OUTAGES
- -------------------------------------------------
A. Where a credit for Interruptions or Outages is provided under this
Agreement, such credit shall be computed as set out in this Article 18.
B. The length of the Interruption shall be measured from the time Jones
notifies GE Americom of the Interruption.
<PAGE>
- 37 -
For the purpose of calculating the credit, a month is considered to have thirty
(30) days.
1. Interruptions of 24 Hours or Less
---------------------------------
Credit for Interruptions will be allowed as follows:
Length of Interruption Credit
---------------------- ------
Less than 15 minutes ***
15 mins. up to but not including 3 hours ***
3 hrs. up to but not including 6 hours ***
6 hrs. up to but not including 9 hours ***
9 hrs. up to but not including 12 hours ***
12 hrs. up to but not including 15 hours ***
15 hrs. up to 24 hrs. inclusive ***
Two or more Interruptions of fifteen (15) minutes or more, during any
period up to but not including three (3) hours, shall be considered as one
Interruption.
2. Interruptions Over 24 Hours
---------------------------
Credit will be allowed in *** day multiples for each *** period of
Interruption or fraction thereof.
No more than *** full day's credit will be allowed for any period of
*** hours.
3. An allowance will not be made where the Interruption is a result of, or
attributable in whole or in primary part, to:
(a) Jones's negligence or willful acts, or the negligence or willful
acts of its officers, directors, agents, employees, subsidiaries, parents,
affiliates, customers and viewers, or any of them; or
<PAGE>
- 38 -
(b) The failure of local television channels or transmission lines or
equipment provided by Jones; or
(c) The failure or nonperformance of any earth station not provided by
GE Americom; or
(d) Any cause for which GE Americom otherwise is not responsible under
this Agreement.
ARTICLE 19. FORCE MAJEURE
- --------------------------
A. Neither party shall be liable to the other for any failure of or delay in
performance hereunder due to causes beyond its reasonable control. These causes
include but are not limited to: acts of God; fire, flood or other natural
catastrophes; the need to comply with any law or any rule, order, regulation or
direction of the United States Government, or of any other government, including
state and local governments having jurisdiction over either party, or of any
department, agency, commission, bureau, court or other instrumentality thereof,
or of any civil or military authority; national emergencies; insurrections;
riots; acts of war; quarantine restrictions; embargoes; or strikes, lockouts,
work stoppages or other labor difficulties.
B. The parties recognize that authority to construct, launch, position and/or
operate the C-3 and C-4 Satellites and the C-1 Protection Satellite will be
needed from the FCC and that GE Americom's ability to perform is subject to the
receipt of such FCC authority. GE Americom will
<PAGE>
- 39 -
proceed in good faith to obtain on a timely basis and continue in effect all FCC
and other governmental and regulatory authorizations, approvals, licenses and
permits which it requires to meet its obligations hereunder, and has no reason
to believe that it will not obtain all such authorizations, approvals, licenses
and permits in accordance with its operational schedule.
ARTICLE 20. CONFIDENTIALITY AND NONDISCLOSURE
- ----------------------------------------------
A. Jones shall issue a public announcement of its plans to use the C-3 and C-4
Satellites for distribution of its programming, appropriate for release to cable
television trade publications, the specific language and date of release of
which shall be agreed to in advance with GE Americom. Except as provided in the
preceding sentence, both Parties shall hold in strict confidence and neither
Party shall disclose to third parties the prices, payment terms, schedules,
protection arrangements, restoration provisions and other material terms and
conditions of this Agreement, without the prior written consent of the other
Party. The restrictions on disclosure to third parties shall apply to each
Party's affiliates (including their respective employees, agents,
representatives, independent auditors or legal counsel).
B. Jones hereby acknowledges that all information provided to Jones related to
the design and performance characteristics of the Satellite, and any subsystems
or
<PAGE>
- 40 -
components thereof including the Transponders, is confidential and proprietary
and is not to be disclosed to third persons, without the prior written consent
of GE Americom.
C. To the extent that either Party discloses to the other any other information
which it considers proprietary, said Party shall identify such information as
proprietary when disclosing it to the other Party by marking it clearly and
conspicuously as proprietary information. Any proprietary disclosure to either
Party, if made orally, shall be promptly confirmed in writing and identified as
proprietary information, if the disclosing Party wishes to keep such information
proprietary under this Agreement. Any such information disclosed under this
Agreement shall be used by the recipient thereof only in its performance under
this Agreement. Neither Party shall be liable for disclosure or use of such
information marked as proprietary information as provided above which:
1. is or becomes available to the public from a source other than the
receiving Party before or during the period of this Agreement;
2. is released without restrictions in writing by the disclosing Party;
3. is lawfully obtained by the receiving Party from a third party or
parties;
4. is known by the receiving Party prior to such disclosure; or
<PAGE>
- 41 -
5. is at any time developed by the receiving Party completely
independently of any such disclosure or disclosures from the disclosing Party.
D. Neither Party shall be liable for the inadvertent or accidental disclosure
of such information marked as proprietary, if such disclosure occurs despite the
exercising of the same degree of care as the receiving Party normally takes to
preserve and safeguard its own proprietary information.
E. Notwithstanding any other provisions of this Article, neither Party shall be
liable for the disclosure of any information which it receives under this
Agreement pursuant to judicial action or decree, or pursuant to any requirement
of any Government or any agency or department thereof, having jurisdiction over
such Party, provided that in the opinion of counsel for such Party such
disclosure is required, and provided further that such Party shall have given
the other Party notice prior to such disclosure, to the extent reasonably and
legally possible.
F. No license to the other Party, under any patents, is granted or implied by
conveying proprietary information or other information to that Party and none of
such information which may be transmitted or exchanged by the respective Parties
shall constitute any representation, warranty, assurance, guaranty, or
inducement by either Party to the other with respect to the infringement of
patents or other rights of others.
<PAGE>
- 42 -
G. Except as otherwise provided in this Article, neither Party shall issue a
public notice or a news release concerning this Agreement and the transactions
contemplated hereby without the prior approval of the other, which approval
shall include the right to approve the form, content and timing of any such
release.
ARTICLE 21. NOTICES
- --------------------
A. Notice of Interruptions or Outages, or of other technical or operational
matters requiring immediate attention, may be given by telephone. GE Americom
will designate a point or points of contact where Jones may call on a 7 day-a-
week, 24 hour-a-day basis. Any notice given verbally will be confirmed in
writing as soon as practicable thereafter pursuant to the procedures set out in
Article 21.B.
B. Except as otherwise provided in Article 21.A., all necessary notices,
demands, reports, orders and requests required hereunder to be given by one
Party to the other shall be in writing and deemed to be duly given on the same
business day if sent by electronic means (i.e., telex, electronic mail or
facsimile) or delivered by hand during the receiving Party's regular business
hours, or on the date of receipt if sent by pre-paid overnight, registered or
certified mail, and addressed as follows:
<PAGE>
- 43 -
If to be given to Jones:
Vice President
Jones Space Segment, Inc.
9697 E. Mineral Avenue
Englewood, Colorado 80112
Fax No. (303) 799-1644
Phone (303) 792-3111
With a copy to:
General Counsel
Jones Space Segment, Inc.
9697 E. Mineral Avenue
Englewood, Colorado 80112
If to be given to GE Americom:
Vice President, Cable Services
GE American Communications, Inc.
Four Research Way
Princeton, NJ 08540-6684
Fax No. (609) 987-4517
Phone (609) 987-4070
C. Each Party may, on written notice to the other, specify another address or
individual to serve as a point of contact for that Party.
ARTICLE 22. TERMINATION
- ------------------------
A. Either Party may terminate this Agreement within ninety (90) days after it
acquires knowledge of an event listed below and upon ten (10) days' prior
written notice of intent to terminate to the other Party:
1. If the FCC denies, revokes or suspends any authorization, approval,
license or permit required to construct, launch, position or operate the
Satellites, or otherwise to provide service to Jones on the terms and conditions
contained in this Agreement, and GE Americom is
<PAGE>
- 44 -
unable to obtain relief from the FCC's action enabling performance of GE
Americom's obligations hereunder within one hundred twenty (120) days of the
FCC's action becoming administratively final and not subject to further FCC
review.
2. If the other Party is unable to perform its obligations under this
Agreement as a result of its becoming insolvent or the subject of insolvency
proceedings, including, without limitation, if the other Party shall be
judicially declared bankrupt or insolvent according to law, or if any assignment
shall be made of the property of the other Party for the benefit of creditors,
or if a receiver, conservator, trustee in bankruptcy or other similar officers
shall be appointed to take charge of all or any substantial part of the other
Party's property by a court of competent jurisdiction, or if a petition shall be
filed for the reorganization of the other Party under any provisions of the
Bankruptcy Act now or hereafter enacted, and such proceeding is not dismissed
within sixty (60) days after it is begun, or if the other Party shall file a
petition for such reorganization or for an arrangement under any provisions of
the Bankruptcy Act now or hereafter enacted and providing a plan for a debtor to
settle, satisfy or extend the time for the payment of debts.
3. If the entities specified in Article l.R. have not signed agreements to
take service on or to purchase at
<PAGE>
- 45 -
least six (6) transponders on C-3 and on C-4 Transponders (a) within six (6)
months of the date of execution of this Agreement, or (b) within twelve (12)
months of the date of execution of this Agreement; provided that the right to
terminate shall apply only to the Satellite(s) for which the entities specified
in Article l.R. have not signed such agreements for such number of transponders.
4. If on the projected Commercial Operational Date, fewer than twelve (12)
Transponders on C-3 and/or C-4 meet the Transponder Performance Specifications
in Attachment A, provided that the right to terminate shall apply only to the
affected Satellite(s).
5. If before the date of the launch of C-3 and/or C-4, as the case may be,
the Viacom Group (i.e. Viacom International, Inc.; The Weather Channel, Inc.
Hearst/ABC-Viacom Entertainment Services and National Cable Satellite
Corporation (C. Span)) terminates its agreement for service on or purchase of
transponders on C-3 or C-4 provided that the Jones's right to terminate shall
apply only to the satellite(s) for which the Viacom Group so terminates.
B. Jones may terminate this Agreement within ninety (90) days after Jones
acquires knowledge of an event listed below and upon ten (10) days' prior
written notice of intent to terminate to GE Americom:
1. If one or both of Jones's Transponders provided under this Agreement
does not meet in all material respects the Transponder Performance
Specifications set forth in Attachment A on the projected Commercial Operational
Date of C-3 or C-4, as the case may be, but
<PAGE>
- 46 -
only as to that Transponder which does not meet in all material respects the
Transponder Performance Specifications. In the event Jones terminates under this
Article B.l., this Agreement shall remain in full force and effect as to any
other Transponder which is provided to Jones hereunder and which meets the
Transponder Performance Specifications in all material respects.
Provided, however, that before Jones may terminate for reasons specified in
Article 22.B.1., GE Americom shall be given thirty (30) days either to bring
Jones's Transponder(s) into compliance in all material respects with the
Transponder Performance Specifications or to make available to Jones a
Protection Transponder on C-3 or C-4 which meets in all material respects the
Transponder Performance Specifications in Attachment A.
2. If C-3 or C-4 is assigned to an orbital location from which 50 state
coverage is not possible; provided that Jones's right to terminate shall apply
only to the Satellite(s) which is so assigned.
3. If C-3 and/or C-4 has not been launched by December 31, 1994, provided
that Jones's right to terminate shall apply only to the Satellite(s) which have
not been so launched.
C. GE Americom may terminate this Agreement within ninety (90) days after GE
Americom acquires knowledge of an event listed below and, as to Paragraph C.2.,
below, upon ten (10) days' prior written notice of intent to terminate to Jones:
<PAGE>
- 47 -
1. If Jones defaults in making any of the payments due to GE Americom
hereunder; provided that in such a case GE Americom shall give Jones thirty (30)
days written notice of intent to terminate and Jones may within that thirty (30)
day period cure the default.
2. If Jones's use of any transponder provided hereunder fails to conform:
(a) with the Spacecraft Service Requirements set forth in Article 13 and
Attachment B, and such nonconforming use, in GE Americom's reasonable judgment,
harms or presents a threat of harm to the Satellite and Jones does not
immediately upon being notified by GE Americom of such nonconforming use, bring
Jones's operations into compliance with such Spacecraft Service Requirements; or
(b) with the Use of Transponders specified in Article 7, and Jones does not
within five (5) business days of notice by GE Americom comply with such Use of
Transponders.
D. In the event of termination by either party due to causes specified in
Article 22.A.l prior to the Commercial Operational Dates of the Satellites, by
either party due to causes specified in Article 22.A.3,.4 and .5, by Jones due
to causes specified in Article 22.A.2 prior to the Commercial Operational Dates
of the Satellites on which Jones's Transponders reside or Article 22.B., GE
Americom shall refund in full Jones's advance payments, if any, made under
Article 3, in respect of any Transponder which is not made available to Jones.
In the event of
<PAGE>
- 48 -
termination by Jones due to causes specified in Article 22.A.2, 22.A.4 or
22.B.1, GE Americom shall also pay to Jones interest at ten (10) percent per
annum on any refund of Jones's advance payments.
E. In the event Jones terminates service on any Transponder provided hereunder
for reasons other than those for which termination by Jones is provided under
this Agreement, or in the event of termination of transponder service to Jones
by GE Americom due to causes specified in Article 22.A.2, 22.C.l or 22.C.2, GE
Americom shall be entitled to reclaim the Transponder(s) and to retain so much
of Jones's payments made under Article 3 not previously applied against service
received by Jones as liquidated damages. In such circumstances, Jones shall
immediately surrender the Transponder(s) to GE Americom. In addition, Jones
shall be obligated to pay for service for the remainder of the Term, which
payments may be prepaid, at Jones's option, using a discount factor of ten (10)
percent. GE Americom shall use all reasonable efforts to find a replacement
customer to take service on the surrendered Transponder(s). If GE Americom does
find a replacement customer, Jones will be relieved from the obligation to pay
for service, except that Jones will be responsible for payment of the difference
(1) if the total amount to be paid by the replacement customer for its service
is less than the total amount agreed to be paid by Jones hereunder; or (2) if
the replacement customer defaults in making any payment.
<PAGE>
- 49 -
F. Except for access to protection Transponders in accordance with Articles 8,
9, 10, and 11, when a payment of a refund to Jones under this Article 22, is
provided, it shall be Jones's sole and exclusive remedy under this Agreement.
G. The termination of this Agreement will not relieve either Party from
fulfilling any outstanding financial obligations to the other, or constitute a
waiver by either Party of any other rights and remedies, which have accrued
prior to the termination, that it may have against the other under this
Agreement.
H. GE Americom shall pay any refunds due to Jones under this Agreement within
thirty (30) days of the event giving rise to the refund. GE Americom shall pay
an interest charge of 1.5 percent per month on any amounts not refunded within
the above thirty (30) day period.
ARTICLE 23. PURCHASE OPTION
- ----------------------------
Jones shall have an option, exercisable at anytime prior to the End of Life
of the Satellite(s), to purchase one or both of the Transponders. The purchase
price of the Transponder shall be the net present value (using a ten (10)
percent discount factor) of the then remaining lease payments (assuming no rate
increase after the twelfth year of the Term) through the then projected End of
Life of the Satellite. With the exception of the purchase price, the other terms
and conditions of this Agreement shall apply to any purchase under this Article.
<PAGE>
- 50 -
ARTICLE 24. LIABILITY WITH RESPECT TO ARIANESPACE
- --------------------------------------------------
Jones shall have no right of action against Arianespace, other customers of
Arianespace ("third party customers") or their respective associates, for
damages for bodily harm and damage to property suffered by Jones resulting from
the performance of the Ariane launch services agreement between GE Americom and
Arianespace. Jones further irrevocably agrees to a no-fault, no-subrogation
waiver of liability and waives the right to make any claims or to instigate any
judicial proceedings in connection with such claims against Arianespace, the
third party customers of Arianespace or their associates. In the event that one
or more associates of Jones shall proceed against Arianespace, the third party
customers or their associates as a result of bodily harm or property damage
caused by Arianespace, the third party customers or their associates resulting
from the performance of the Ariane launch services agreement by such named
parties, Jones shall indemnify, hold harmless, dispose of any such claim and
defend when not contrary to the governing rules of procedures where the action
takes place, Arianespace, such third party customers and their associates from
any loss, damage, liability or expense, including attorney's fees, on account
of such damage or injury, and shall pay all expenses and satisfy all judgments
which may be incurred by or rendered against said indemnitees. As used herein,
the term "associates" means individuals of legal
<PAGE>
- 51 -
entities which act, directly or indirectly, on behalf of or at the direction of
an entity to fulfill the obligations of that entity, including the entity's
employees, suppliers and subcontractors. Nothing in this Article 24 shall limit
or alter the rights and remedies of Jones against GE Americom pursuant to this
Agreement.
ARTICLE 25. GENERAL PROVISIONS
- -------------------------------
A. Nothing contained in this Agreement shall be deemed or construed by the
Parties or by any third party to create any rights, obligations or interests in
third parties; or to create the relationship of principal and agent, partnership
or joint venture or any other fiduciary relationship or association between the
Parties.
B. No failure on the part of either Party to notify the other Party of any
noncompliance hereunder, and no failure on the part of either Party to exercise
its rights hereunder shall prejudice any remedy for any subsequent
noncompliance, and any waiver by either Party of any breach or noncompliance
with any term or condition of this Agreement shall be limited to the particular
instance and shall not operate or be deemed to waive any future breaches or
noncompliance with any term or condition. All remedies and rights hereunder and
those available in law or in equity shall be cumulative and the exercise by a
Party of any such right or remedy shall not preclude the exercise of any other
right or remedy available under this Agreement in law or in equity.
<PAGE>
- 52 -
C. This Agreement shall be construed and enforced in accordance with the
substantive laws of the State of New York. The Parties hereby consent to and
submit to the jurisdiction of the federal and state courts located in the State
of New York, and any action or suit under this Agreement may be brought by the
Parties in any federal or state court with appropriate jurisdiction over the
subject matter established or sitting in the State of New York.
D. All headings in this Agreement are inserted as a matter of convenience and
for reference purposes only, are of no binding effect, and in no respect define,
limit or describe the scope of this Agreement or the intent of any article,
paragraph or subparagraph hereof.
E. All attachments attached to this Agreement shall be deemed part of this
Agreement and incorporated herein as if fully set forth herein, and in the event
of a variation or inconsistency between the text of this Agreement and the
Attachments attached hereto, this Agreement shall govern.
F. This Agreement may be signed in any number of counterparts with the same
effect as if the signatures to each were upon the same Agreement.
G. Where appropriate, the use of the plural word shall include its singular and
the use of the singular word shall include its plural.
<PAGE>
- 53 -
H. In the event GE Americom assigns or otherwise transfers this Agreement to a
third party, GE Americom will provide sixty (60) days notice of the assignment
or transfer to Jones and will require the assignee or transferee to assume and
to promise to fulfill all of the duties and obligations of GE Americom under
this Agreement.
I. This Agreement is subject to all applicable laws and regulations, including
without limitation, the Communications Act of 1934, as amended, and the Rules
and Regulations of the FCC.
J. Unless specifically provided otherwise herein, each party shall bear its
respective costs and expenses in connection with the preparation, execution,
delivery and performance of this Agreement.
K. This Agreement, including all attachments, represents the entire
understanding and agreement between the Parties with respect to the subject
matter hereof, supersedes all prior negotiations and agreements between the
parties concerning that subject matter, and can be amended, supplemented or
changed only by an agreement in writing which makes specific reference to this
Agreement and which is signed by both Parties. To the extent that the
Attachments may be inconsistent with the text of the Agreement, the text of the
Agreement shall control.
<PAGE>
- 54 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective on the date first above written.
GE AMERICAN COMMUNICATIONS, INC.
By: /s/ Martin C. Lafferty
---------------------------------
Name: Martin C. Lafferty
----------------------------
Title: VP, Cable Services
---------------------------
Date: July 28, 1989
----------------------------
JONES SPACE SEGMENT, INC.
By: /s/ Glenn R. Jones
---------------------------------
Name: Glenn R. Jones
----------------------------
Title: President
---------------------------
Date: July 27, 1989
----------------------------
<PAGE>
Exhibit 10.20
Portions of this exhibit have been omitted pending a determination by the
Securities and Exchange Commission that certain information contained herein
shall be afforded confidential treatment. The omitted portions are indicated
by three asterisks.
<PAGE>
TRANSPONDER LICENSE AGREEMENT
-----------------------------
THIS TRANSPONDER LICENSE AGREEMENT is made and entered into this 28
day of October, 1992, by and between Jones Space Segment, Inc., a Colorado
corporation ("Licensor"), and Deutsche Welle, a public radio and television
service ("Licensee").
RECITALS
--------
A. Licensor is leasing Transponder No. 5V, a full-time, Non-
preemptible Transponder (as defined in Article 9), on the GE American
Communications, Inc. ("GE") domestic communications satellite SATCOM IV ("C-4")
pursuant to a Satellite Transponder Service Agreement dated July 28, 1989, by
and between GE and Licensor (such agreement, as amended from time to time, the
"Transponder Service Agreement"), a copy of which is attached hereto as Exhibit
A.
B. Licensor is willing to allow Licensee to take, and Licensee
desires to so take, satellite service over C-4 Transponder No. 5V (the
"Transponder") on the terms and conditions hereinafter set forth.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto do agree as
follows:
ARTICLE 1. PROVISION OF SERVICE.
---------------------
1.1 Provision of Service. Licensor hereby agrees to make the
--------------------
Transponder available on a full-time basis (twenty-four
<PAGE>
(24) hours per day, seven (7) days per week) for the purposes set forth in
Section 1.2 hereof during the term of this Agreement. Notwithstanding the
foregoing, Licensee shall not have the right to the use of two Panda 1
compatible 15KHZ subcarriers on the Transponder as designated on Exhibit B (as
described below), such subcarriers being hereby excluded from this Agreement and
reserved for use or other disposition by Licensor. Attached hereto as Exhibit B
is a Video Baseband Frequency Plan with respect to the subcarriers on the
Transponder.
1.2 Use of Transponder. Licensee shall use the Transponder for the
------------------
transmission of cable television and radio programming. Any television
programming shall conform to the requirements of the Communications Act of 1934,
as amended (the "Communications Act"), and rules and regulations of the Federal
Communication Commission (the "FCC") and any other governmental body having
jurisdiction with respect to the matters covered hereby. Licensee shall not make
use of the Transponder for any unlawful purpose and shall at all times comply
with all applicable laws and regulations, including the Communications Act and
the rules and regulations of the FCC. All programming shall bear the name and/or
identifying symbols of Licensee.
1.3 Transponder Service Protection. Licensee shall be entitled to
------------------------------
all protections granted to Licensor in the Transponder Service Agreement with
respect to the Transponder. Any Substitute Transponder provided to Licensor
pursuant to the Transponder Service Agreement shall be provided to Licensee
pursuant to this Agreement. Except to the extent GE provides
-2-
<PAGE>
Licensor with a Substitute Transponder, Licensor shall have no obligation to
undertake any action or expense to repair or otherwise render the Transponder
Commercially Operational, to procure or otherwise make available a Substitute
Transponder or to repair or otherwise render a Substitute Transponder
Commercially Operational. If a Substitute Transponder is procured or otherwise
made available by Licensor other than through the Transponder Service Agreement,
no representation or agreement is or shall be made by Licensor with respect to
the quality, design, characteristics, performance or suitability of any such
Substitute Transponder; however, Licensor will not make a Substitute Transponder
available other than through the Transponder Service Agreement without the
consent of the Licensee. If a Substitute Transponder is made available by
Licensor through the Transponder Service Agreement, Licensor does not and cannot
represent that a Substitute Transponder will be a Non-preemptible Transponder.
Notwithstanding the foregoing, Licensor shall retain all right to make any and
all elections and decisions, including, but not limited to, the elections and
decisions set forth in Articles 8, 11, and 22, under the Transponder Service
Agreement; provided, however, that in the event either C-4 or the Transponder
becomes Commercially Unusable and Licensor has the right to request restored
service on a Substitute Transponder pursuant to Article 11 B. or 11 C. of the
Transponder Service Agreement, Licensor agrees to request such service unless
such request will result in Licensor being
-3-
<PAGE>
obligated to pay GE for such Substitute Transponder beyond the Term of this
Agreement.
ARTICLE 2. TERM.
----
2.1 Commencement Date. Licensee's use of the Transponder shall
-----------------
commence on the date GE certifies to the Licensor that the Transponder is
commercially Operational (as defined in Article 9) for customer communications
(traffic (the "Commencement Date"); provided, however, that if the Commencement
Date does not occur on or before June 30, 1993, this Agreement shall terminate
and neither party shall have any obligation to the other.
2.2 Term. The term of this Agreement (the "Term") shall commence
----
on the date hereof and, unless extended in accordance with Section 2.4 hereof,
shall terminate upon the earliest of (i) 11:59 p.m. on the day prior to the
fifth (5th) anniversary of the Commencement Date, (ii) termination in accordance
with Section 2.3 hereof, or (iii) expiration of the Transponder Service
Agreement as to the Transponder.
2.3 Termination. Notwithstanding the foregoing, (a) this Agreement
-----------
shall terminate, and neither party shall thereafter have any further obligation
to the other hereunder, at such time as the Transponder Service Agreement is
terminated with respect to C-4 or Licenser's right to use the Transponder or a
Substitute Transponder is terminated or expires (other than by reason of
Licenser's willful misconduct), and Licensor elects not to obtain a Substitute
immediately due and payable the
-4-
<PAGE>
License Fee (as defined herein) for each month remaining in the originally
scheduled five (5) year Term on and after the date of such termination, if
Licensee fails (i) to make payment of any amount due hereunder within ten (10)
business days after receiving from Licensor a notice of such nonpayment, or (ii)
to cease any other activity in violation of Licensee's obligations under this
Agreement within twenty (20) days after receiving from Licensor a notice of such
violation.
2.4 Extension of Term. During the final eighteen (18) months of the
-----------------
originally scheduled five (5) year Term, Licensor shall give consideration to
offers from, and engage in discussions with, Licensee regarding the extension of
such Term. If the parties do not reach an agreement regarding the extension of
the Term at least ninety (90) days prior to the fifth (5th) anniversary of the
Commencement Date, Licensor shall have no further obligation to consider offers
from, or engage in discussions with, Licensee regarding any extension of this
Agreement.
ARTICLE 3. PAYMENTS.
---------
3.1 License Fee. For each month of the Term, Licensee agrees to pay
-----------
to Licensor, in advance, a fee of U.S. *** (the "License Fee"). The License Fee
includes payment for the Turnaround Service (as defined in Article 4 hereof). If
the Commencement Date is' a day other than the first day of a month, or this
Term ends on a day other than the last day of a month, the License Fee for such
month shall be pro-rated to reflect the actual number of days (on and after such
beginning
-5-
<PAGE>
day, or on and before such termination day, as the case may be) during which the
Transponder was made available for use by Licensee in such month. In the event
Licensor provides Licensee with a Substitute Transponder pursuant to the
Transponder Service Agreement, the License Fee will be adjusted on a dollar for
dollar basis for any increase or decrease in the fee payable by Licensor to GE
for such Substitute Transponder. For example, if Licensor must pay $5000 more
per month for a Substitute Transponder, the License Fee shall be increased by
$5000 per month. Likewise, if Licensor must pay $5000 less per month for a
Substitute Transponder under the Transponder Service Agreement, the License Fee
shall be reduced by $5000 per month. In addition, Licensee shall pay promptly
when due, or reimburse Licensor promptly on demand for, any taxes, duties or
other fees assessed or payable with respect to the taking and/or use of
Transponder services, including any privilege or excise taxes based on gross
revenues and all charges imposed by governmental authorities, including the FCC.
3.2 Security Deposit. Licensee shall pay to Licensor upon the
----------------
execution and delivery of this Agreement by the parties hereto a security
deposit in the amount of U.S. *** which deposit shall be applied to the
License Fee payable for the final three (3) months of the Term.
3.3 Credits for Interruptions or Outages. If and only if Licensor
------------------------------------
receives a credit from GE due to an Interruption (as defined in Article 9
hereof), Licensee shall be entitled to a credit against the License Fee, which
credit shall be calculated
-6-
<PAGE>
in accordance with this Section. The length of the Interruption shall be
measured from the time Licensor notifies GE of the Interruption. Licensor shall
promptly pass on to GE any notice of an Interruption it receives from Licensee.
(a) Credit for Interruptions will be allowed as follows:
<TABLE>
<CAPTION>
Length of Interruption Credit
- ---------------------- ------
<S> <C>
Less than 15 minutes ***
15 mins. up to but not including 3 hours ***
3 hrs. up to but not including 6 hours ***
6 hrs. up to but not including 9 hours ***
9 hrs. up to but not including 12 hours ***
12 hrs. up to but not including 15 hours ***
15 hrs. up to 24 hrs. inclusive ***
</TABLE>
Two or more Interruptions of fifteen (15) minutes or more, during any period up
to but not including three (3) hours, shall be considered as one Interruption.
No more than one full day's credit will be allowed for any period of twenty-four
(24) hours.
(b) If the License Fee is adjusted pursuant to Section 3.1 as a result
of a Substitute Transponder, the credit will be adjusted likewise. The amount
of the credit will be determined by calculating the daily amount of the increase
or decrease in the License Fee (the "Daily Adjustment" or "DA") assuming a
thirty (30) day month. The proportionate part of the Daily Adjustment which
corresponds to the Interruption shall be added to or subtracted from (depending
on whether the License Fee was increased or decreased) the credit amount set
forth in (a) above as follows:
-7-
<PAGE>
<TABLE>
<CAPTION>
Length of Interruption Credit
- ---------------------- ------
<S> <C>
Less than 15 minutes ***
15 mins. up to but not including 3 hours ***
3 hrs. up to but not including 6 hours ***
6 hrs. up to but not including 9 hours ***
9 hrs. up to but not including 12 hours ***
12 hrs. up to but not including 15 hours ***
15 hrs. up to 24 hrs. inclusive ***
</TABLE>
(c) An allowance will not be made for any disruption in service,
including an Interruption, which is a result of, or attributable in whole or in
primary part, to:
(i) Deutsche Welle's negligence or willful acts, or the negligence
or willful acts of its officers, directors, agents, employees, subsidiaries,
parents, affiliates; customers and viewers or any of them;
(ii) the failure of the Turnaround Service, except as provided in
Section 3.4; or
(iii) the failure of the Intelsat-K transmission.
3.4 Credits for Outages of the Turnaround Service. Any agreement with
---------------------------------------------
a Turnaround Service provider shall contain a provision for a credit for a
disruption in the Turnaround Service. If and only if Licensor receives a credit
from the provider of the Turnaround Service due to a failure or disruption of
the Turnaround Service, Licensee shall be entitled to a credit against the
portion of the License Fee which the Licensor must pay to the Turnaround Service
provider. The length of the disruption shall be measured from the time Licensor
notifies the provider of the Turnaround Service of the disruption. Licensor
shall promptly pass on to the Turnaround Service provider any
-8-
<PAGE>
notice of a disruption in service it receives from Licensee. The amount of the
credit will be determined by calculating the daily cost of the Turnaround
Service assuming a thirty (30) day month. Credit will be given on a portion of
such daily cost as follows:
<TABLE>
<CAPTION>
Length of Disruption Credit
- -------------------- --------
<S> <C>
Less than 15 minutes ***
15 mins. up to but not including 3 hours ***
3 hrs. up to but not including 6 hours ***
6 hrs. up to but not including 9 hours ***
9 hrs. up to but not including 12 hours ***
12 hrs. up to but,not including 15 hours ***
15 hrs. up to 24 hrs. inclusive ***
</TABLE>
Two or more disruptions of fifteen (15) minutes or more, during any period up to
but not including three (3) hours, shall be considered as one disruption. No
more than one full day's credit will be allowed for any period of twenty-four
(24) hours. As soon as Licensor enters into a signed agreement with a
Turnaround Service provider, Licensor shall provide Licensee with a credit
schedule as set forth above with dollar amounts included.
3.5 Payments. All payments made by Licensee hereunder shall be made
--------
to Licensor at its principal place of business, as designated in Section
10.11(b) hereof, by cashier's or certified check payable in U.S. currency, or
shall be made by wire transfer of immediately available funds to such account as
Licensor shall designate and shall be deemed to be made only upon receipt by
Licensor of collected funds.
3.6 Late Payment. If Licensor has not received all
------------
of the License Fee from Licensee on the date that such License Fee is due, then
the overdue amount shall be subject to a delinquency charge at the rate of one
and one-half percent (1.5%)
-9-
<PAGE>
per month, compounded monthly, on such overdue amount from the date such overdue
amount was originally due until the date it is actually received by Licensor.
Licensee acknowledges that such delinquency charges are reasonable under all the
circumstances existing at the time at which this Agreement is entered into by
Licensor and Licensee. Licensee agrees that acceptance of all or any portion of
any such delinquency charge by Licensor shall in no event constitute a waiver by
Licensor of Licensee's default with respect to such overdue amount nor shall it
prevent Licensor from exercising any or all other rights or remedies it may
have.
ARTICLE 4. TURNAROUND SERVICE.
-------------------
4.1 Turnaround Service. Licensor shall arrange for the reception of
------------------
the Licensee's signal from Intelsat-K satellite and the subsequent uplinking to
C-4 (the "Turnaround Service"). The Licensor shall use all reasonable efforts to
make the permanent facilities for the Turnaround Service available on the
Commencement Date or as soon thereafter as possible, and such facilities shall
in any event be available no later than forty-five (45) days after the date of
this Agreement. Licensor shall pay any and all charges relating to the
Turnaround Service that are imposed by the FCC, which charges shall then be
reimbursed by Licensee upon invoice by Licensor. The Turnaround Service shall
be performed by Licensor or an affiliate of Licensor at a site either owned or
leased by Licensor or an affiliate of Licensor, or by GE or other third party,
in the discretion of Licensor. If the Turnaround Service is performed by a
third party, Licensor shall require such party to agree to perform the
Turnaround
-10-
<PAGE>
Service in accordance with all of the terms and conditions of this Agreement.
In all events, the Turnaround Service shall be performed by a licensed operator
and the reception of the Intelsat-K signal and the uplinking to C-4 shall, with
all audio subcarriers removed, meet EIA RS-250-C satellite specifications, a
copy of which is attached hereto as Exhibit C; provided, however, that the
percentage availability (as defined in Exhibit C) shall be 99.95% percent and
not 99.99%. Licensee and Licensor acknowledge that use of the Transponder's
subcarriers by Licensee and Licensor may cause such reception and uplink to fail
to meet such specifications. Licensee and Licensor agree that any such failure
due in whole or in part to such use shall not constitute a breach of this
Agreement by Licensor and the parties shall work together to minimize any
disruption caused by the use of the subcarriers In addition, Licensee
acknowledges that its sole remedy for any disruption in the Turnaround Service
is as set forth in Section 3.4; however, if the Turnaround Service is not
provided for any period of five consecutive days during the term of this
Agreement for any reason other than (i) the failure of the Intelsat-K
transmission or (ii) Deutsche Welle's negligent or willful acts or the negligent
or willful acts of its officers, directors, agents, employees, subsidiaries,
parents, affiliates, customers and viewers or any of them, Licensor shall use
its best efforts to provide the Turnaround Service as soon thereafter as is
reasonably practicable, which efforts shall include arranging for the use of
alternative facilities for the Turnaround Service. Licensor or any other
provider of the Turnaround Service shall
-11-
<PAGE>
not alter, scramble or encrypt the programming transmitted by Licensee on the
Transponder.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF
LICENSOR AND LICENSEE.
---------------------------------
Licensor and Licensee each represents and warrants to, and agrees with
the other that:
5.1 Authority. It has the right, power and authority to enter into,
---------
and perform its obligations under, this Agreement.
5.2 Action. It has taken all requisite action to approve the
------
execution, delivery and performance of this Agreement, and this Agreement
constitutes a legal, valid and binding obligation enforceable against it in
accordance with its terms.
5.3 Consents. The execution, delivery and performance by it of its
--------
obligations hereunder and the consummation of the transactions contemplated
hereby will not result in a material violation of, or material default under, or
constitute the occurrence of an event which would constitute a material default
under, or material noncompliance with, any applicable law, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it or any material portion of its property is
bound, its articles of incorporation or by-laws or other charter documents, as
the case may be, or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over it or any of its properties.
-12-
<PAGE>
5.4 No Broker. It has not entered into any agreement or incurred any
---------
obligations or liabilities, contingent or otherwise, for brokerage or finder's
fees or agent's commission or other like payment in connection with this
Agreement or the transactions contemplated hereby, and it is not otherwise
obligated to pay such a fee or commission or to make such a payment. Each party
hereto agrees to indemnify and hold the other hereto harmless against and in
respect of any breach by it of the provisions of this Section 5.4.
ARTICLE 6. LIMITATION OF LIABILITY.
------------------------
6.1 Remedies. Licensor shall be liable for direct damages or losses
--------
with respect to its performance hereunder, including the Turnaround Service,
only when such damages or losses are due solely to Licenser's willful
misconduct; provided, however, in no event shall Licensor be liable for an
amount in excess of the License Fee paid to Licensor hereunder.
6.2 Limitation of Liability. IT IS EXPRESSLY AGREED
-----------------------
THAT LICENSER'S SOLE OBLIGATIONS, AND LICENSEE'S EXCLUSIVE REMEDIES, FOR ANY
CAUSE WHATSOEVER ARISING OUT OF OR RELATING TO THIS AGREEMENT AND/OR THE
TRANSACTIONS PROVIDED FOR HEREIN OR CONTEMPLATED HEREBY, REGARDLESS OF WHETHER
OCCASIONED BY LICENSER'S NEGLIGENCE, ARE LIMITED TO THOSE SET FORTH IN SECTIONS
2.3 AND 3.3 HEREOF AND IN THIS ARTICLE 6, AND ALL OTHER REMEDIES OF ANY KIND ARE
EXPRESSLY EXCLUDED. In no event shall Licensor be liable for any special,
indirect, incidental or consequential damages (including, but not limited to,
lost profits), regardless of the foreseeability thereof. In addition,
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Licensor shall have no liability for any damages occasioned by (a) any defect in
the Transponder or C-4, (b) any failure of the Transponder or C-4 to perform, or
(c) any fault of Licensee or of any third party.
6.3 Disclaimer of Warranties. EXCEPT AS SET FORTH HEREIN, LICENSOR
------------------------
DOES NOT MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE
LICENSOR OR ANY OTHER PERSON OR ENTITY CONCERNING THE TRANSPONDER, C-4, ANY
SUBSTITUTE TRANSPONDER OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE.
6.4 Indemnification. Licensee shall defend and indemnify Licensor
---------------
and/or GE from any claims, liabilities, losses, costs, or damages, including
attorneys fees and costs, (a) arising out of any misrepresentation, breach of
warranty, or nonfulfillment of any agreement or covenant on the part of Licensee
under this Agreement, (b) caused by the fault or negligence of Licensee, (c)
arising under a warranty, representation, or statement by Licensee to any third
party in connection with transmissions over C-4, or (d) with respect to the
Transponder, any libel, slander, infringement of copyright, patents and other
intellectual property rights, or breach in the privacy or security of
transmissions by Licensee. The limitations of liability set forth herein shall
apply to, and the indemnification's set forth herein shall run in favor of,
Licensor and all affiliates of Licensor and GE and all affiliates of GE.
6.5 Limitation of Remedies Against Arianespace. Licensee acknowledges
------------------------------------------
that pursuant to the Transponder Service
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Agreement, Licensor has no right of action against Arianespace, a French
company, responsible for launching C-4 and Licensor is obligated to indemnify
Arianespace and its customers in the event Licenser's associates assert claims
as a result of the launch services. Therefore, Licensee hereby agrees that it
shall have no right of action against Arianespace, other customers of
Arianespace ("third party customers") or their respective associates, for
damages for bodily harm and damage to property suffered by Licensee resulting
from the performance of the Ariane launch services agreement between GE and
Arianespace. Licensee further irrevocably agrees to a no-fault, no-subrogation
waiver of liability and waives the right to make any claims or to instigate any
judicial proceedings in connection with such claims against Arianespace, the
third party customers of Arianespace or their associates. In the event that one
or more associates of Licensee shall proceed against Arianespace, the third
party customers or their associates as a result of bodily harm or property
damage caused by Arianespace, the third party customers or their associates
resulting from the performance of the Ariane launch services agreement by such
named parties, Licensee shall indemnify, hold harmless, dispose of any such
claim and defend when not contrary to the governing rules of procedure where the
action takes place, Licensor, Arianespace, such third party customers and their
associates from any loss, damage, liability of expense, including attorney's
fees, on accounts of such damage or injury, and shall pay all expenses and
satisfy all judgments which may be incurred by or rendered against said
indemnities.
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As used herein, the term "associates" means individuals or legal entities which
act, directly or indirectly, on behalf of or at the direction of an entity to
fulfill the obligations of that entity, including the entity's employees,
suppliers and subcontractors.
ARTICLE 7. FORCE MAJEURE.
--------------
Neither party shall be liable to the other and no party shall be
deemed in default hereunder for any failure of or delay in the performance of
any of its covenants, agreements or obligations (other than the payment of
amounts due hereunder, subject to Sections 3.3 and 3.4), caused by or arising
out of any of the following conditions of force majeure: disaster, labor
disturbances, shortage of labor or equipment beyond the reasonable control of
such party, strikes, lockouts, other industrial disturbances, acts of God, acts
of a public enemy, war, blockade, riot, insurrection, lightning, fire, storm,
flood, inclement weather, explosion, the need to comply with any law or any
rule, order, regulation or direction of any government, including state and
local governments, having jurisdiction over either party, or of any department,
agency, commission, bureau, court or other instrumentality thereof, or of any
civil or military authority, or on account of any eventualities or conditions,
whether enumerated or not, beyond the reasonable control of such party;
'provided, however, that a loss or Interruption of the Transponder or a
Substitute Transponder shall be governed by Sections 1.3, 2.3 and 3.3 and a
disruption of the Turnaround Service shall be governed by Sections 3.4 and 4.1.
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The party affected by any condition of force majeure as described in
this Article shall promptly notify the other party in writing and hereby agrees
to use reasonable diligence to remove any such condition of force majeure as may
occur from time to time. No right of a party shall be affected for failure or
delay of that party to meet any condition of this Agreement where such failure
or delay is caused by a condition of force majeure as defined herein, and such
party shall be excused from. performance of any obligation affected by such
condition of force majeure during the period required to overcome the delay; and
the time limits provided in this Agreement to meet any condition affected by
force majeure shall be deemed and treated as extended for a period commensurate
with the delay caused by force majeure; provided, however, nothing contained
herein shall extend the Term or require the settlement of strikes, lockouts, or
other labor difficulties by the party affected contrary to its wishes, and the
disposition or manner of handling or remedying any and all such labor
difficulties is hereby expressly acknowledged to be entirely within the
discretion of the party concerned.
ARTICLE 8. CONFIDENTIALITY.
----------------
8.1 Confidentiality. Each party agrees to hold in strict confidence
---------------
the information contained in this Agreement and any information obtained
pursuant to the performance by it of the agreements and obligations contained
herein or the transactions contemplated hereby, and each party hereby
acknowledges and agrees that all such information, including, without
limitation, information regarding the other party, GE and/or their respective
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affiliates, and all information related to the design and performance
characteristics of C-4 and any subsystems or components thereof including the
transponders, not otherwise known to the public, is confidential and proprietary
and is not to be disclosed to third persons without the prior written consent of
the party owning such information and shall not be used by the other party other
than as contemplated hereunder. Without limiting the generality of the
foregoing, neither party shall disclose to any person, including independent
auditors, legal counsel, lenders and agents, any of the prices, payment terms
and other material terms of this Agreement except:
(a) to the extent necessary to comply with law or regulations
promulgated thereunder, the valid order of a governmental agency or court
of competent jurisdiction, or the rules of an established stock exchange or
in connection with any placement of securities or filing or report under
state or federal securities laws or regulations, provided that, in the
opinion of counsel for such party, disclosure is required, and further
provided that such disclosing party shall have given the other party notice
prior to such disclosure, to the extent reasonably and legally possible,
and shall seek confidential treatment of such information;
(b) as part of its normal reporting or review procedure to its
parent company, its auditors and its attorneys and it lenders;
(c) to the extent necessary to obtain appropriate insurance, to
its insurance agent, provided
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that, prior to such disclosure, such agent shall be advised in writing of
the confidentiality of the information disclosed to it and, if requested by
the owner of such information, such agent shall execute a confidentiality
agreement with the disclosing party reasonably acceptable to the owner of
such information with respect to the information to be disclosed; and
(d) in order to enforce its rights and perform its obligations
pursuant to this Agreement.
8.2 GE Confidential Information. Licensee acknowledges that all
---------------------------
information provided to it related to the design and performance characteristics
of the C-4, and any subsystems or components thereof, including the Transponder,
is confidential and proprietary and may not be disclosed to third persons,
without the prior written consent of GE except if the conditions set forth in
Section 8.1(a) above are applicable.
8.3 Press Releases. Neither party shall make any announcement, press
--------------
release or public statement relating in any manner to the Agreement or the
parties' operations under this Agreement without first furnishing the proposed
text thereof to the other party and obtaining the other party's approval in
writing, which approval shall not be unreasonably withheld; provided, however,
that no such written approval shall be required when public disclosure by either
party may be required, in the judgment of such party's counsel, by law or
regulations promulgated thereunder, judicial order or similar pronouncement, the
rules of an established stock exchange or in connection with
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any placement of securities or filing or report under state or federal
securities laws or regulations. Whenever practicable, such announcements, press
releases and public statements shall be issued jointly by the parties.
Notwithstanding any other provision of this Agreement, the obligations of this
Section 8 shall continue after termination of this Agreement.
ARTICLE 9. DEFINITIONS.
------------
9.1 "Commercially Operational" means capable of carrying audio and
video including associated audio traffic with the parameters as described in the
Transponder Performance Specifications and which is not Commercially Unusable.
9.2 "Commercially Unusable" means a condition in which C-4 so fails
to conform to its design specifications or the Transponder so fails to conform
to the Transponder Performance Specifications as to render use of C-4
impractical in the exercise of reasonable business judgment or preclude use of
the Transponder for its intended purpose.
9.3 "Interruption" means any period during which the Transponder or a
Substitute Transponder fails to meet the Transponder Performance Specifications
and such circumstances preclude use of the Transponder for its intended purpose.
9.4 "Non-preemptible Transponder" means a Transponder that (i) may
not be preempted under the Transponder Service Agreement to restore a
Transponder which becomes Commercially Unusable or to satisfy other customers of
GE and (ii) is fully protected under the Transponder Service Agreement in that
GE is obligated to make Substitute Transponders available
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to Licensor in the event the Transponder becomes Commercially Unusable to the
extent such substitutes are available and subject to the rights of other parties
who have priority over Licensor.
9.5 "Substitute Transponder" means any Transponder other than the
Transponder (which may be a Transponder on a satellite other than C-4) made
available to Licensee pursuant to the Transponder Service Agreement or
otherwise.
9.6 "Transponder Performance Specifications" means the specifications
attached hereto as Exhibit D.
ARTICLE 10. MISCELLANEOUS.
--------------
10.1 Limitation on Rights: Independent Contractors. Licensee agrees
---------------------------------------------
that it shall have no rights with respect to the Transponder except as are
expressly granted hereunder and that in no event shall such rights be greater
than the rights of Licensor under the Transponder Service Agreement. The
relationship between the parties shall be that of independent contractors.
Nothing in this Agreement shall be construed to create a partnership or joint
venture or authorize one party to act as agent for the other.
10.2 Entire Agreement; Amendment; and Waiver. This Agreement and all
---------------------------------------
attachments hereto constitute the entire agreement between the parties, are
intended as the complete and exclusive statement of the terms of the agreement
between the parties, and supersede all previous or contemporaneous
understandings, commitments or representations concerning the subject matter
hereof. The parties each acknowledge that the other party has not made any
representations or warranties other
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than those which are contained herein. This Agreement may not be amended or
modified in any way, and none of its provisions may be waived, except by a
writing signed by an authorized officer of the party against whom the amendment,
modification or waiver is sought to be enforced. No such waiver shall
constitute a continuing waiver of similar or other breaches. A waiving party
may at any time, upon notice given in writing to the breaching party, direct
future compliance in accordance with the terms of this Agreement, in which event
the breaching party shall comply as directed from such time forward.
10.3 Assignment. Prior to any Transfer (as defined below) of this
----------
Agreement, the transferring party shall discuss the proposed Transfer with the
other party and obtain the express written consent of the other party, which
consent shall not be unreasonably withheld. "Transfer" shall mean to grant,
sell, assign, encumber, permit the utilization of, license, sublease or
otherwise convey, directly or indirectly, in whole or in part. Any purported
Transfer by either party not in compliance with the terms of this Agreement
shall be null and void and of no force and effect.
10.4 No Third-Party Beneficiary. The provisions of this Agreement
--------------------------
are for the benefit only of the parties hereto, and no third party may seek to
enforce, or benefit from, these provisions.
10.5 Benefits and Obligations. Subject to Section 10.3, all
------------------------
provisions of this Agreement shall be binding upon, inure to the benefit of and
be enforceable by and against
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the parties hereto, their permitted successors and permitted assigns.
10.6 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which when so executed shall be considered as an original
and all of which together shall constitute one agreement.
10.7 Captions. The captions at the beginning of the Sections of this
--------
Agreement are not a part of this Agreement but merely labels to assist in the
locating and reading of those paragraphs and shall be ignored in construing this
Agreement.
10.8 Further Performance. Each of the parties hereto agrees to
-------------------
execute and deliver any further instruments and documents and perform acts which
are or may be necessary to carry out the purposes of this Agreement.
10.9 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made by Licensor or Licensee in connection
herewith shall survive any independent investigation made by Licensee or
Licensor.
10.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE
-------------
INTERNAL LAWS OF THE STATE OF COLORADO.
10.11 Notices.
--------
(a) Notice of Interruptions, or of other technical or
operational matters requiring immediate attention, may be given by telephone.
Licensor will designate a point or points of contact where Licensee may call on
a 7 day-a-week, 24 hour-a-day basis. Any notice given verbally will be confirmed
in
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writing as soon as practicable thereafter pursuant to the procedures set out in
Section 10.11(b).
(b) All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed received when actually
received if personally delivered, when receipt is electronically confirmed if
sent by telecopy, or upon the expiration of the fifth business day after being
deposited in the mail, postage prepaid, certified or registered mail, return
receipt requested, addressed to the other party as follows:
If to Licensor:
Jones Space Segment, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: President
Fax No.: (303) 799-1644
with a copy to:
Elizabeth M. Steele, Esq.
Vice President and General Counsel
The Mind Extension University, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Fax No.: (303) 799-1644
If to Deutsche Welle:
Deutsche Welle
Raderberggurtel 50
5000 Kbln 51
Germany
Attention: Dieter Weirich
Fax No.: (0221) 389-3000
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others.
10.12 Severability. Each provision of this Agreement shall be
------------
considered severable and if for any reason any provision
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of this Agreement is determined to be invalid, such invalidity shall not impair
the operation or affect other provisions of this Agreement.
10.13 Taxes. Licensee is solely responsible for any taxes, charges
-----
or levies which may be asserted by any local, state, national or international,
public or quasi-public governmental entity solely as a result of the
transmission of signal via the Transponder.
IN WITNESS WHEREOF, the parties hereto have executed this Transponder
License Agreement on the date first above written.
JONES SPACE SEG
By:/s/ GLENN R. JONES
---------------------------
Title: C.E.O.
-----------------------
DEUTSCHE WELLE
By:/s/ SIGNATURE APPEARS HERE
----------------------------
Title: J.G.
------------------------
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Exhibit 21
SUBSIDIARIES OF JONES INTERNATIONAL NETWORKS, LTD.
Great American Country, Inc.
Jones Audio Services, Inc.
Jones Earth Segment, Inc.
Jones Galactic Radio, Inc.
Jones Galactic Radio Partners, Inc.
Jones Radio Network, Inc.
Jones Radio Network Ventures, Inc.
Jones/Owens Programming LLC
Jones Infomercial Networks, Inc.
Jones Infomercial Network Ventures, Inc.
Product Information Network Venture
