<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 2, 1993
JONES INTERCABLE, INC.
(Exact name of registrant as specified in its charter)
COLORADO 1-9953 84-0613514
(State of (Commission (IRS Employer
Organization) File No.) Identification No.)
P.O. BOX 3309, ENGLEWOOD, COLORADO 80155-3309 (303) 792-3111
(Address of principal executive office and Zip Code) (Registrant's
telephone no.
including area code)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(1) Letter of Intent with attached term sheets dated December 2,
1993 between, among others, BCE Telecom International and Jones Intercable,
Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JONES INTERCABLE, INC.
By: /s/ ELIZABETH M. STEELE
-------------------------
Elizabeth M. Steele,
Dated: January 10, 1994 Vice President
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EXHIBIT 1
EXECUTED COPY
BCE TELECOM INTERNATIONAL
1000, RUE DE LA GAUCHETIERE
MONTREAL, QUEBEC
CANADA H3B 4Y8
December 2, 1993
Glenn R. Jones
Jones International, Ltd.
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80155-3309
Dear Sirs:
This will confirm our understanding with respect to the transactions
described in the attached term sheets (the "Term Sheets"). The Parties
acknowledge that the transactions described in the Term Sheets have been
approved by the respective Boards of Directors of BCE Telecom International
("Purchaser"), Jones International, Ltd. ("International") and Jones
Intercable, Inc. (the "Company"), subject to the negotiation of mutually
acceptable definitive agreements and satisfactory completion of due diligence
by Purchaser. For purposes of this letter agreement, "Parties" means Purchaser,
International, the Company and Glenn R. Jones ("Jones").
1. Each of the Parties agrees to use its respective reasonable
best efforts to negotiate definitive agreements based on the Term Sheets. Such
definitive agreements shall cover all of the transactions contemplated by all
of the Term Sheets and no definitive agreement shall become effective unless
all of the definitive agreements contemplated by all of the Term Sheets shall
have been entered into and become effective. As soon as practicable following
the execution of this letter, the relevant reporting entities will file a
Notification and Report Form with the Federal Trade Commission and the
Department of Justice in accordance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
2. The Company and International acknowledge that Purchaser is
entitled to conduct its own due diligence review of the business conducted by
the Company and Jones Spacelink, Ltd. ("Parent") and agree to afford to
Purchaser
<PAGE> 2
and its representatives full and complete access to such material as will
enable them to investigate the accuracy of financial data and other information
provided by or on behalf of the Company or Parent. Any such investigations by
the Purchaser and its representatives will be conducted so as not to
unreasonably disrupt the business operations of the Company or Parent.
Purchaser acknowledges that the confidentiality agreements executed prior to
the date hereof will remain in full force and effect.
3. Subject to paragraph 4, during the Term (as defined in
paragraph 12 below) none of the Company, International, any Affiliated Entity
and the officers, directors, employees or other agents of the Company,
International and any Affiliated Entity, and the employees or agents of Jones
(collectively, the "Blackhawk Persons") will, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Acquisition Proposal (as
defined below) or (ii) subject, in the case of the Company, to the fiduciary
duties of the Board of Directors of the Company under applicable law as advised
by counsel to the Company, with a view to pursuing an Acquisition Proposal with
any person (x) engage in negotiations with, or (y) disclose any nonpublic
information relating to the Company, Parent or any entity controlled or more
than 50% owned by the Company or Parent (a "Subsidiary") to, or (z) afford
access to the properties, books or records of the Company, Parent or any
Subsidiary to, any such person or its directors, officers, employees or agents.
The Company and International will promptly notify Purchaser after receipt by a
Blackhawk Person of (A) any Acquisition Proposal or (B) actual notice that any
person is giving serious consideration to making an Acquisition Proposal or (C)
any request for nonpublic information relating to the Company, Parent or any
Subsidiary or for access to the properties, books or records of the Company,
Parent or any Subsidiary by any person that a Blackhawk Person reasonably
believes is considering making or has made, an Acquisition Proposal and will
keep Purchaser fully informed of the status and details of any such Acquisition
Proposal, notice or request. Nothing in this paragraph 3 shall prevent a
Blackhawk Person from discussing, negotiating and otherwise pursuing
transactions that will involve the acquisition by the Company of businesses
that are in the same line of business as the Company. For purposes of this
letter of intent, (A) "Acquisition Proposal" means a bona fide offer or
proposal for, or indication of interest in, a merger or other business
combination involving the Company, Parent or any Subsidiary or the acquisition
of any equity interest in, or a substantial portion of the assets of, the
Company, Parent or any Subsidiary, other than the transactions contemplated by
the Term Sheets and this letter of intent and other than the Company/Parent
Business Combination (as defined in
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paragraph 11 below), and (B) "Affiliated Entity" means any entity controlled or
more than 50% owned, directly or indirectly, by Jones or International, other
than the Company, Parent and the Subsidiaries. In no event will International
be liable under this paragraph 3 for amounts in excess of $5,000,000 in the
aggregate.
4. The Company acknowledges that its business plan does not
anticipate any need to raise equity financing during the Term. If during the
Term the Company believes that its sources of funds may be insufficient to meet
its projected cash requirements, the Company will discuss potential sources of
financing to fund such projected shortfall. If after such discussions the
Company reasonably believes that equity financing is its preferred alternative,
the Company may sell up to 1,500,000 shares of Class A Common Stock, provided
that prior to any such sale it first offers such shares to Purchaser.
Purchaser's initial investment in the Company will be reduced by the number of
any shares purchased pursuant to this paragraph 4.
5. During the Term, each of International and Jones agree (i) not
to directly or indirectly sell, pledge or otherwise dispose of Class B Common
Stock in Parent or Common Stock in the Company, (ii) not to directly or
indirectly enter into any proxy or voting arrangement with respect to any
equity securities of Parent or Company or vote shares in either entity in any
manner inconsistent with the transactions contemplated by the Term Sheets,
(iii) to use reasonable best efforts to cause Parent not to sell, pledge or
otherwise dispose of its shares of Common Stock in the Company, or enter into
any proxy or voting arrangement with respect to such shares or vote such shares
in any manner inconsistent with the transactions contemplated by the Term
Sheets (except in each case pursuant to the Company/Parent Business
Combination) and (iv) not to enter into any agreement with respect to the
foregoing.
6. During the Term, Jones, International and the Company will use
reasonable efforts to keep Purchaser informed as to material developments
affecting the business of the Company and Parent.
7. None of the Parties shall issue (or allow their affiliates to
issue) any press release or make any public statement with respect to this
letter of intent or the transactions contemplated hereby without the consent of
the other parties hereto, except as may be required by applicable law, listing
agreement with any securities exchange or similar agreement or requirement, in
which case the parties hereto shall consult on the content of any such
disclosure prior to its public dissemination.
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8. The Company agrees that in the event it enters into an
agreement relating to a Material Financing Transaction prior to 45 days after
the termination of the Term, the Company will pay to Purchaser an amount in
cash equal to $5,000,000. "Material Financing Transaction" means any
transaction pursuant to which (i) the Company issues (or is obligated to issue
pursuant to the terms of a convertible or similar security) more than 1,000,000
shares of its common stock at a price greater than $27.50 per share (not
including any shares issued pursuant to paragraph 4), (ii) the Company sells
substantially all of its assets to a third party, or (iii) the Company
consummates a merger, recapitalization, restructuring or other business
combination involving the Company pursuant to which any class of common stock
of the Company is valued at a price greater than $27.50 per share.
9. Jones and International agree that in the event they or any of
their affiliates enter into an agreement relating to a Material Sale
Transaction prior to 45 days after the termination of the Term, International
(but not Jones) will pay, or cause to be paid, to Purchaser an amount in cash
equal to $5,000,000, provided that in no event will Purchaser be entitled to
receive more than one payment pursuant to this paragraph and the immediately
preceding paragraph. "Material Sale Transaction" means any transaction pursuant
to which International, Parent or Jones, directly or indirectly, sell, or agree
to sell, or grant an option or similar right with respect to, or enter into any
voting arrangement with an unaffiliated party covering, either (x) a majority
of the outstanding shares of Common Stock of the Company or (x) a majority of
the outstanding shares of Class B Common Stock of Parent.
10. During the Term, none of Purchaser or any entity controlled or
more than 50% owned, directly or indirectly, by Purchaser, and the officers,
directors, employees or other agents of Purchaser or any such entity will,
directly or indirectly, (i) take any action to solicit, initiate or encourage
any Cable Acquisition Proposal (as defined below) or (ii) with a view to
pursuing a Cable Acquisition Proposal with any person, engage in negotiations,
or exchange information, with any such person or its directors, officers,
employees or agents. Purchaser will promptly notify the Company after receipt
by it of (A) a Cable Acquisition Proposal or (B) actual notice from a third
party that it is seriously considering making or is interested in receiving a
Cable Acquisition Proposal. Purchaser will keep the Company fully informed of
the status and details of any such Cable Acquisition Proposal or notice. For
purposes of this paragraph 10, "Cable Acquisition Proposal" means any bona fide
offer or proposal for, or indication of interest in, (x) a merger or other
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business combination involving Purchaser (or any entity controlled or more than
50% owned by Purchaser) and any of the companies listed on Schedule I hereto or
any entity controlled or more than 50% owned by any such companies or (y) the
acquisition of any equity interest in, or a substantial portion of the assets
of, any such companies or entities.
11. The Term Sheets and this letter of intent are only statements
of intent and do not constitute a contractual commitment of the parties hereto
or an agreement to enter into a contractual commitment. This letter of intent
and the Term Sheets do not address all matters upon which agreement must be
reached in order to enter into definitive agreements or consummate the
transactions contemplated by the Term Sheets. A binding commitment with respect
to such transactions will be set forth only in definitive agreements mutually
acceptable to the parties hereto, which agreements will not be entered into
until after the proposed asset purchase transaction between Company and Parent
(the "Parent/Company Business Combination") has been approved by the Board of
Directors of each company, and the definitive agreement covering such
transaction has been executed. The Parties agree that the definitive agreements
which are the subject of this letter of intent will provide that no party shall
be obligated to consummate the transactions covered by such agreements if the
Parent/Company Business Combination shall not have been completed on the terms
set forth in the definitive agreement covering such transaction.
Notwithstanding the foregoing, the provisions of this letter of intent set
forth in paragraphs 2 through 15 hereof are intended to be binding on the
parties hereto.
12. This letter of intent terminates on the earliest of (i)
February 18, 1993, (ii) the execution and delivery of definitive agreements and
(iii) the mutual agreement of the Parties to terminate this letter agreement.
For purposes of this letter agreement, "Term" means the period from the date
hereof to the termination of this letter agreement.
13. This letter of intent shall be governed by the laws of the
State of Colorado without regard to its conflict of law rules.
14. Except as otherwise specified herein and in the Term Sheets,
all costs and expenses incurred in connection with the transactions
contemplated hereby shall be paid by the Party incurring such costs or
expenses.
15. This letter of intent may be executed in two or more
counterparts, each of which shall be deemed an
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original, but all of which together shall constitute one and the same
instrument.
If the foregoing properly sets forth our understanding, please so
indicate by signing a copy of this letter in the space provided below and
returning such copy us.
Very truly yours,
BCE TELECOM INTERNATIONAL
By: /s/ DEREK H. BURNEY
Name: Derek H. Burney
Title: Chairman and
Chief Executive Officer
By: /s/ DANIEL E. SOMERS
Name: Daniel E. Somers
Title: Senior Vice-President and
Chief Financial Officer
ACCEPTED AND AGREED:
JONES INTERCABLE, INC.
By: /s/ ELIZABETH M. STEELE
Name: Elizabeth M. Steele
Title: Vice President and
General Counsel
JONES INTERNATIONAL, LTD.
By: /s/ GLENN R. JONES
Name: Glenn R. Jones
Title: Chairman and
Chief Executive Officer
Only as to paragraphs 1, 5, 6, 7 and 9
/s/ GLENN R. JONES
Glenn R. Jones
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SCHEDULE I
<TABLE>
<CAPTION>
BASIC
MSO (MULTIPLE SYSTEM OPERATOR) SUBSCRIBERS
- ------------------------------ -----------
<S> <C>
Tele-Communications, Inc. (TCI) 10,171,000
Time Warner Cable 7,070,000
Continental Cablevision, Inc. 2,913,000
Comcast Corporation 2,647,000
Cablevision Systems Corporation 2,070,000
Cox Cable Communications 1,729,000
Newhouse Broadcasting Corporation 1,353,000
Cablevision Industries, Inc. 1,299,000
Times Mirror Cable Television 1,194,000
Adelphia Communications 1,183,000
Falcon Cable TV 1,099,000
Viacom Cable 1,083,000
Sammons Communications, Inc. 979,000
Century Communications Corp. 919,000
Crown Media, Inc. 823,000
Colony Communications, Inc. 765,000
TeleCable Corporation 699,000
Scripps Howard Cable 678,000
TKR Cable 608,000
Lenfest Group 591,000
KBLCOM, Inc. (Houston Industries) 589,000
InterMedia Partners 537,000
Prime Cable 520,000
Post-Newsweek Cable, Inc. 478,000
TCA Cable TV, Inc. 469,000
Tele-Media Corporation 453,000
Womelco Cable Corp. 428,000
Madison Hunter Cable TV 421,000
Multimedia Cablevision 411,000
Rifkin & Associates, Inc. 366,000
Triax Communications Corp. 334,000
Western Communications, Inc. 318,000
C-TEC Cable 257,000
</TABLE>
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FINAL
DECEMBER 1, 1993
TERM SHEET
FOR
SHAREHOLDER AND
OPTION AGREEMENT
VOTING Each of BCETI and Jones will take all action
as may be required to vote for all of their
respective nominees to the Board of
Directors.
RIGHT TO PURCHASE Subject to terms and conditions set forth
COMMON STOCK OF below, at any time between the seventh and
BLACKHAWK eighth anniversary of the closing, Investor
will have the right (the "Control Option") to
purchase from Chairman/CEO and International
(collectively, the "Grantors"), all of the
shares of Common Stock of Blackhawk (the
"Optioned Shares") and all options on shares
of Common Stock of Blackhawk (the "Optioned
Options"), in each case owned by the Grantors
after consummation of the proposed
transaction between Blackhawk and its
immediate Parent. The parties understand that
the Control Option will cover (i)
approximately 2,500,000 Optioned Shares and
(ii) Optioned Options exercisable into
approximately 600,000 shares of Common Stock.
The Optioned Shares and the Optioned Options
are referred to herein as the "Optioned
Securities".
At the time Grantors grant the Control
Option, which is anticipated to be
immediately following consummation of the
proposed asset purchase transaction between
Blackhawk and its immediate Parent, Investor
will pay to Grantors an amount in cash equal
to (i) $20.00 for each Optioned Share and
(ii) for each Optioned Option, the product of
(A) the number of shares of Common Stock
covered by such Optioned Option and (B) the
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difference between $20.00 and the exercise
price of such Optioned Option. Such amount
shall not be applied to the purchase price
for the Optioned Securities described below.
Such right will be non-assignable (except as
otherwise contemplated herein), may only be
exercised in full, and failure to exercise
such right before the eighth anniversary of
the closing shall result in termination of
this option.
1. In the event of death or
incapacitation (an "Event") of
Chairman/CEO, Investor shall have
the immediate right to purchase the
Optioned Securities. Such right
shall be effective for a period of
nine months following an Event,
after which period Investor's right
to purchase the Optioned Securities
shall terminate.
2. In the event the Chairman/CEO
resigns from the Company, Investor
will have the immediate right to
purchase the Optioned Securities.
Such right shall be effective for a
period of three months following the
date of such resignation. The
failure of Investor to exercise its
right during such three month period
will not terminate the option.
3. At any time after the fifth
anniversary of the closing, the
Grantors may request that Investor
exercise its right to purchase the
Optioned Securities. Investor shall
then have a period of six months to
exercise its right, after which
period Investor's right to purchase
the Optioned Securities shall
terminate.
PURCHASE PRICE The purchase price per share for each of the
PER SHARE Optioned Shares will be equal to the sum of:
(i) the product of two-thirds and the
Option Price on the Trigger Date; plus
(ii) the product of one-third and 120%
of Fair Market Value on the Trigger Date.
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The purchase price for each share covered by
an Optioned Option shall be equal to the
price per share paid for the Optioned Shares.
The purchase price shall be payable in cash
or, by mutual agreement, in shares of
Investor's Parent or ultimate Parent.
"Fair Market Value" means the average of the
reported closing prices during the 30 day
period immediately preceding the Trigger Date
for Class A Shares. If no liquid public
market for the Class A Shares exists, then
Fair Market Value shall be determined by
appraisal pursuant to an agreed process.
"Option Price" has the meaning set forth in
Schedule I.
"Trigger Date" means (i) the date of an Event
in the case of paragraph 1, (ii) the date
Chairman/CEO resigns in the case of paragraph
2, (iii) the date Grantors deliver a request
notice in the case of paragraph 3, (iv) the
date Investor delivers an exercise notice in
the case of an exercise by it after the
seventh anniversary, and (v) in the case of a
purchase of Class A Shares because of a
Change in Law, the date Investor delivers the
Offer Notice (as defined in the next
paragraph).
CHANGE IN LAW If a Change in Law (to be defined) requires,
directly or indirectly, Investor to divest
the Control Option, or would prevent Investor
from exercising the Control Option, the
Control Option will become transferable on
the terms and conditions described herein,
provided that this provision will not apply
if it was triggered by the entry by Investor
(or its affiliates) into a new line of
business. In any such event, if Investor
elects to dispose of the Control Option and
its Class A Shares, Investor and Grantors
will use reasonable efforts to identify a
suitable partner to purchase the Control
Option and the Class A Shares held by
Investor. Investor will give Grantors written
notice of such election (the "Offer Notice").
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Prior to transferring the Control Option to a
third party, Investor will first offer the
Control Option to Grantors at a specified
price. Grantors will then have nine months to
decide whether to purchase the Control
Option. If Grantors elect to purchase the
Control Option, they may also elect to
purchase all (but not less than all) of the
shares of common stock of Blackhawk then held
by Investor at a price per share equal to
Fair Market Value. In the event Grantor
elects not to purchase the Control Option,
Investor has a period (to be agreed) during
which it may sell the Control Option to a
third party at a price not less than 95% of
the offering price to Grantors, provided that
Investor will consult with Jones before
making any such sale and consider Jones'
views as to the suitability of potential
purchasers.
RIGHT TO PURCHASE Investor acknowledges that Grantors own a
CLASS A COMMON number of shares of Class A Common Stock
STOCK OF BLACKHAWK of Blackhawk (the "Class A Shares"), which
Grantors may wish to sell over time. Subject
to the terms and conditions described below,
until the eighth anniversary of the Closing
Date, Grantors may not sell any Class A
Shares without first offering such Class A
Shares to Investor.
(i) Grantors may sell up to 15,000
Class A shares in any calendar month, without
any obligation to offer such Class A Shares
to Investor.
(ii) If a Grantor wishes to sell any
Class A Shares in a transaction not described
in paragraph (i), such Grantor will first
offer such Class A Shares to Investor.
Grantor shall first deliver a written offer
notice to Investor specifying the number of
Class A Shares offered for sale (the "Offered
Shares") and the average of the closing bid
and asked prices for the Class A Shares as of
the last business day preceding the day the
offer notice is delivered (the "Offered
Price"). Investor will have 24 hours to
decide whether to purchase the Offered Shares
at the Offered Price, provided that Investor
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will have five business days to make such
determination if the aggregate purchase price
of the Offered Shares, together with any
other amounts paid by Investor to the
Grantors pursuant to this paragraph (ii)
during the immediately preceding 30 days,
exceeds $10,000,000.
If Investor fails to deliver a written
purchase notice to a Grantor within the time
periods described in paragraph (b), such
Grantor is free to sell the Offered Shares in
open market transactions or private
transactions to any company or individual not
primarily engaged in North American cable
television or North American
telecommunications businesses.
Investor shall have five business days to
close the purchase of Offered Shares, except
that such period will be extended to 30 days
in the case of offers for which Investor has
five business days to respond. The purchase
price shall be payable in cash or, by mutual
agreement, in shares of Investor's Parent or
ultimate parent.
In no event will Grantors be permitted to
sell more that 900,000 Class A Shares in any
12 month period without Investor's consent.
If Grantors wish to sell more than 900,000
Class A Shares in any 12 month period for tax
or estate planning purposes or for other
unanticipated bona fide liquidity needs,
Grantors, Investor and the Company will use
reasonable efforts to develop a plan of
orderly disposition that takes into account
the Company's projected offerings of equity
securities during such 12 month period, if
any.
PURCHASE OF SHARES If Investor decides to purchase more than
BY INVESTOR 15,000 Class A Shares in any calendar month,
Investor will first give Grantors the
opportunity to sell Class A Shares. Grantors
will have 48 hours to respond pursuant to
procedures similar to those described above.
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SCHEDULE I
The Option Price on any Trigger Date will be based on the following table:
<TABLE>
<CAPTION>
ANNIVERSARY
OF THE
CLOSING DATE BASE PRICE
------------ ----------
<S> <C>
0 $30.00
1 40.32
2 45.16
3 50.58
4 56.65
5 63.44
6 71.06
7 79.58
8 89.13
</TABLE>
The Option Price will equal the sum of:
(i) the Base Price on the anniversary of the Closing Date
immediately preceding the Trigger Date, and
(ii) a pro rata portion of the difference between such Base Price
and the Base Price on the immediately succeeding anniversary
of the Closing Date.
The Base Price will be reduced by the amount of any special dividends paid or
declared by the Company to Grantors prior to the purchase of the Optioned
Securities.
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FINAL
DECEMBER 1, 1993
TERM SHEET
FOR
STOCK PURCHASE AGREEMENT
BETWEEN
BCETI AND BLACKHAWK
INITIAL At Closing, BCETI (the "Investor") will
TRANSACTIONS purchase (i) 8,400,000 shares of Class A
Common Stock (the "Class A Shares") of
Blackhawk (the "Company") and (ii) a number
of Class A Shares equal to 30% of the Class A
Shares issued pursuant to the proposed asset
purchase transaction with the Parent of
Blackhawk (approximately 1,600,000 Class A
Shares).
The purchase price for these initial
investments will be $27.50 per Class A Share.
INVESTMENT In addition to the initial transactions
COMMITMENT described above, Investor will subscribe for
30% of any shares sold pursuant to subsequent
equity offerings by the Company, provided
that this subscription obligation will
terminate when the aggregate amount of
Investor's purchases of equity securities
from the Company (including the approximately
10,000,000 Class A shares purchased pursuant
to the initial investments) equals $400
million.
PRE-EMPTIVE Investor will have the right to maintain its
RIGHTS then percentage equity interest in the case
of all issuances by the Company of equity
securities (other than routine grants of
stock options and related issuances).
REGISTRATION Investor will have customary demand
RIGHTS registration rights with respect to any
equity securities of Blackhawk purchased
from time to time.
<PAGE> 15
STANDSTILL Investor will agree to vote all equity
AGREEMENT securities of the Company held by it in favor
of the Company's nominees to the Board of
Directors. Without the written consent of the
Company, in no event will Investor solicit
proxies with respect to the Company's equity
securities, become a participant in any
election contest or join any group seeking to
acquire, hold or dispose of equity securities
of the Company.
BOARD The Board of Directors of the Company will
REPRESENTATION initially have ten directors, elected as
follows:
(i) six directors will be nominated
by Glenn Jones and Jones International, Ltd.
(collectively, "Jones"), one of which will
not be affiliated with Jones,
(ii) three directors will be
nominated by Investor, and
(iii) one unaffiliated director will
be nominated jointly by Investor and Jones.
Each of Investor, Jones and the Company will
use all reasonable efforts to elect the
foregoing nominees to the Board. If the
holders of the Class A Shares elect three
directors that are not nominated by Company,
(i) five of the seven remaining directors
will be nominated by Jones and two by
Investor and (ii) at Jones' option, the Board
of Directors may be increased to twelve, in
which case seven of the directors to be
nominated by holders of Common Stock will be
nominated by Jones and two by Investor. The
Board of Directors will have an executive
committee, audit committee and compensation
committee and Investor will have not less
than one director on each such committee.
Investor undertakes, to the extent permitted
by law, to vote its shares in the Company and
direct its nominees to the Board so as to
insure that the directors nominated by Jones
will represent at least a majority of the
members of the Board.
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CONSENT RIGHTS Investor to have the right of consent to the
following actions by the Company:
(i) the authorization or issuance
of equity securities (including stock splits
and stock dividends, but other than routine
grants of stock options and related
issuances),
(ii) any amendments to the Articles
of Incorporation or By-Laws of the Company,
(iii) the placement of new long-term
indebtedness exceeding in any single case
$100,000,000 and $200,000,000 in the
aggregate, but excluding bank credit
arrangements entered into from time to time
to finance general corporate purposes having
a principal amount not exceeding
$500,000,000,
(iv) the acquisition or sale of any
cable television system having a purchase
price exceeding $50,000,000 in any single
case and $250,000,000 in the aggregate for
acquisitions and $250,000,000 in the
aggregate for sales,
(v) the acquisition or sale of any
Business (as defined below) (other than a
cable television system) having a purchase
price exceeding $5,000,000 in any single case
and $50,000,000 in the aggregate for
acquisitions and $50,000,000 in the aggregate
for sales,
(vi) the entry by the Company into a
line of business other than a Business,
(vii) the taking of any action that
would reasonably be expected to, as a result
of a law or regulation, (x) require Investor
to divest any of its equity interest in the
Company or (y) prevent the Investor from
obtaining control of the Company, or
(viii) the sale of substantially all of
the assets of the Company, a liquidation, a
merger where the Company is not the surviving
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corporation and such other fundamental
changes as agreed by the parties.
CONSULTATION The Company will regularly advise and
ON BUSINESS consult with Investor in respect of its
STRATEGIES strategic, operating and financial plans,
including plans for system acquisitions and
sales (both as they relate to managed limited
partnerships and third party transactions);
equity, debt, joint venture and other
financing strategies; business plans for
operations, marketing and technology
deployment; and personnel, compensation and
related decisions. Each year, management of
the Company will present to the Board of
Directors for approval a business plan
including the elements described above.
SCOPE OF Investor and Jones recognize that the cable
RELATIONSHIP television and telecommunications businesses
are rapidly evolving. The parties will consult
with each other regarding possible new
converging business segments and markets,
such as the delivery of value added,
inter-exchange and wireless services.
OBLIGATION TO Each of BCETI and Jones will have an
REFER BUSINESS obligation to refer, and will cause
OPPORTUNITIES entities owned or controlled by them to
refer, to the Company business opportunities
in (A) any Business described in paragraphs
(i), (ii) and (iii) of the definition, (B)
any business that has a fair market value
less than the then market capitalization of
the Company and is primarily engaged in
wireline local exchange communications
businesses in geographic markets in the
United States where the Company does not own
or operate a cable television or wireline
local exchange communications business, and
(C) such other businesses as may be agreed by
the Investor and Jones. Prior to closing,
Investor and Jones will review the businesses
described in clause (iv) of the definition of
"Business" and discuss whether any such
businesses should be added to this referral
obligation.
4
<PAGE> 18
BUSINESS "Business" means the following lines of
business in the United States of America:
(i) cable television businesses,
(ii) wireline local exchange
communications businesses in geographic
markets where the Company owns or operates a
cable television business, and
(iii) transport of broadband
inter-active multi-media businesses in
geographic markets where the Company owns or
operates a cable television or wireline local
exchange communications business, and
(iv) any other existing businesses
conducted by the Company and its immediate
Parent.
The parties agree that Business does not
include (i) the provision of PCS/PCN
services, but includes the lease of
distribution systems to PCS/PCN service
providers and (ii) the provision of content
(other than existing businesses described in
paragraph (iv) above).
If a party votes against an investment by the
Company in any of the foregoing business
opportunities, such party will not
independently invest in such business
opportunity.
SECONDMENT OF Investor will have rights to second an agreed
PERSONNEL BY number of qualified personnel at appropriate
INVESTOR levels of responsibility into the various
business disciplines of the Company. Company
to have reasonable consent rights over the
identity of such secondees. The parties
agree that one of such secondees to the
Company will interface with FinCo to identify
and pursue investment opportunities for the
Company.
5
<PAGE> 19
EMPLOYMENT OF Company will enter into employment agreement
CHAIRMAN/CEO with Chairman/CEO, pursuant to which he will
receive annual compensation commensurate with
his aggregate current compensation from the
Company and its immediate Parent. The
agreement will expire at the earlier of (i)
the end of the eighth year after closing or
(ii) the closing of the exercise of the
option granted by Jones to Investor on the
Common Stock of the Company. Investor agrees
that Chairman/CEO will spend part of his time
performing similar duties on behalf of
affiliated companies.
PROGRAMMING Programming services of affiliates of BCETI
SERVICES PROVIDED and Jones will be carried on the Company's
BY AFFILIATES OF cable television systems on the following
BCETI AND JONES basis:
(i) Programming services provided
by affiliates of Jones will be given access
to six channels. Jones will have priority
over Investor with respect to these channels.
(ii) Investor will have the right to
two channels for programming services
provided by its affiliates.
(iii) Investor will have no rights
under clause (ii) to designate a programming
service that has substantially similar
content to the services provided by Jones in
clause (i).
CABLE BROKERAGE Investor and Jones will collaborate and
SERVICES consult on potential acquisitions and
dispositions by the Company. The Company will
pay fees to financial services affiliates of
Jones (collectively, "FinCo") for cable
brokerage services to the Company in
connection with future acquisitions and/or
sales that are identified or pursued on
behalf of the Company by FinCo and for which
it provides to the Company customary
brokerage, finders and investment banking
services. The fees paid in connection with
such transactions will be approximately
90%
6
<PAGE> 20
of the fees that would be charged by
unaffiliated third parties, subject to
approval by the independent directors. No
fees will be payable to FinCo in respect of
any transactions involving the Company's
managed limited partnerships.
FinCo will pay to Investor 50% of any fees
received by it under this arrangement, net of
reasonable and customary expenses incurred by
FinCo.
TRANSACTIONS WITH Investor to acknowledge that certain services
AFFILIATES have historically been provided by the
OF JONES Company to affiliates of Jones, and by such
affiliates to the Company. Services provided
by the Company principally include certain
management, operational, aviation and
financial and investor services in the U.S.,
U.K. and Spain. Services provided to the
Company principally include the lease of
certain real estate, the lease of
satellite transponder capacity, management
information services and certain financial
services. Such services (which are described
in the draft proxy statements delivered to
Investor) will continue to be provided for a
period of eight years following closing, on
terms and conditions consistent with those as
are currently in effect.
Transactions with affiliates of Jones other
than those described in the immediately
preceding paragraph would be subject to
approval by the Board, excluding directors
nominated by Jones other than the
unaffiliated directors.
TECHNICAL SERVICES The Company and Investor will negotiate a
TO BE PROVIDED BY technical services agreement pursuant to
INVESTOR which Investor will receive an annual fee of
$2,000,000 for such services.
SUPPLIER The Company will give Investor and its
ARRANGEMENTS affiliates the first opportunity to supply
services, compatible network equipment and
systems to the Company on competitive terms
7
<PAGE> 21
and conditions which will, at the Company's
discretion, be made pursuant to competitive
bidding or other processes. Nothing herein
will adversely affect the Company's ability
to obtain services, equipment and systems on
open and competitive terms.
TRANSACTIONS Transactions with affiliates of Investor
WITH AFFILIATES would be subject to approval by the Board,
OF INVESTOR excluding directors nominated by Investor.
FINANCIAL Upon closing of the initial investment,
ADVISORY Company will pay (i) a financial advisory fee
FEE of $2,000,000 to its financial services
affiliate and (ii) $600,000 to Investor to
cover its expenses. Investor and Company will
each be responsible for other brokerage,
financial services or similar fees and
expenses which each may incur in connection
with the transaction.
INVESTMENT Investor may assign its rights to a
ENTITY controlled affiliated entity (which entity
must continue to be controlled by Investor),
but no such assignment will relieve Investor
of its obligations hereunder. The investing
entity used by Investor will not, directly or
indirectly, issue debt or equity interests
to, nor invest in or lend money to, entities
primarily engaged in the cable television,
telecommunications or educational programming
businesses. Investor will notify Jones if it
issues equity interests to unaffiliated third
parties.
TERMINATION The rights of Investor will terminate as
OF INVESTOR'S described in Schedule I.
RIGHTS
TERMINATION OF If Investor purchases the Optioned Securities
RELATIONSHIPS (as defined in the other term sheet), the
WITH JONES rights and obligations described above of
Jones and its affiliates will terminate,
provided that the contracts relating to
programming services provided by affiliates
8
<PAGE> 22
of Jones will survive for fifteen years after
the closing of the initial investment by
Investor in the Company. After the closing of
the purchase of the Optioned Securities, the
rates and other terms and conditions for any
such programming services will be no less
favorable to Jones than those in effect
immediately prior to such closing and will be
subject to adjustments thereafter that are
similar to adjustments obtained by Jones from
other cable operators with comparable
distribution, if any.
9
<PAGE> 23
Schedule I
Termination of Investor's Rights:
<TABLE>
<CAPTION>
Ownership Percentage Time Existence of Board
Paragraph or Number of Shares Period Option Seats Consent Rights
- --------- -------------------- ------ ------------ ----- --------------
<S> <C> <C> <C> <C> <C>
1 Ownership of at least
10,000,000 shares 5 years Yes or no 3 All
2 Ownership of at least
10,000,000 shares Years 6-8 Yes 3 All
3 Ownership of at least
10,000,000 shares Years 6-? No Depends on % ownership below
</TABLE>
If Investor owns less than 10,000,000 shares, or Paragraph 3 applies, the
following matrix will govern:
<PAGE> 24
<TABLE>
<CAPTION>
Ownership Percentage Time Existence of Board
Paragraph or Number of Shares Period Option Seats Consent Rights
- --------- -------------------- ------ ------------ ----- --------------
<S> <C> <C> <C> <C> <C>
A Ownership of at least
20% of total O/S shares All times Yes or No 3 All
B Ownership of less than
20% but at least 15%
of total O/S shares All times Yes 3 All
C Ownership of less than
20% but at least 15%
of total O/S shares All times No 2 (ii), (vii)
D Ownership of less than
15%, but at least 10%,
of total O/S shares All times Yes 1 (ii), (vii), (viii)
E Ownership of less than
15%, but at least 10%,
of total O/S shares All times No 1 (vii)
F Ownership of less than
10% of total O/S shares All times Yes 1 (ii), (vii), (viii)
G Ownership of less than
10% of total O/S shares All times No 0 None
</TABLE>
<PAGE> 25
TERM SHEET DECEMBER 1, 1993
FOR FINAL
INVESTMENTS IN
JONES LIGHTWAVE, LTD.
INVESTMENT At Closing, BCETI (the "Investor") will purchase a
number of shares of Class A Common Stock of Jones
Lightwave, Ltd. (the "Company") equal to 50% of the
outstanding common shares of the Company.
The purchase price for the shares will be $5,000,000.
PRE-EMPTIVE RIGHTS Investor will have the right to maintain its then
percentage equity interest in the case of all issuances
by the Company of equity securities (other than routine
grants of stock options and related issuances).
TAG ALONG RIGHTS Investor will receive prior notice of any sales by
Glenn R. Jones or Jones International, Ltd.
("Blackhawk") of equity securities in the Company.
Investor will have the right to participate, on a pro
rata basis, in any such sales and will receive
the same price per share paid to Blackhawk.
RIGHT OF FIRST OFFER If Investor or Blackhawk elects in its discretion, to
sell or dispose of its equity interest in the Company
to an unaffiliated third party, the other party will
have a right of first offer on the selling party's
equity interest.
BOARD REPRESENTATION Blackhawk shall have the right to name the Chairman of
the Board (who shall also be a Board member). Remaining
Board members shall be nominated 50% by Blackhawk and
50% by Investor.
DISPUTE RESOLUTION If the parties are unable, after a reasonable period of
consultation and discussion, to reach agreement on a
material business issue confronting the Company,
Investor agrees that it will offer to sell to Blackhawk
its equity interests in the Company at fair market
value pursuant to an agreed procedure.
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<PAGE> 26
CONSENT RIGHTS Investor to have the right of consent to the following
actions by the Company (so long as the investor owns at
least 50% of equity securities of the Company or so
long as investor's interests are at least equal to
Blackhawk's interests):
(i) The authorization or issuance of equity
securities (including stock splits and stock
dividends, but other than routine grants of
stock options and related issuances),
(ii) any amendment to the Articles of Incorporation
or By-Laws of the Company,
(iii) the placement of material new long-term
indebtedness exceeding in any single case
$1,000,000 and $2,500,000 in the aggregate, but
excluding bank credit arrangements entered into
from time to time to finance general corporate
purposes having a principal amount not
exceeding $2,500,000,
(iv) any material acquisitions or sales,
(v) the annual business plan of the Company,
(vi) the entry by the Company into a new line of
business,
(vii) the taking of any action that would reasonably
be expected to, as a result of a law of
regulation, require Investor to divest any of
its equity interest in the Company, or
(viii) The sale of substantially all of the assets of
the Company, a liquidation, a merger where the
Company is not the surviving corporation and
such other fundamental changes as agreed by the
parties.
CONSULTATION ON The Company will regularly advise and consult with
BUSINESS STRATEGIES Investor in respect of its strategic, operating and
financial plans: equity, debt, joint venture and other
financing strategies; buisness plans for operations,
marketing and technology deployment; and personnel,
compensation and related decisions.
-2-
<PAGE> 27
Investor acknowledges that Company currently utilizes
and would anticipate continuing to utilize limited
partnerships for the raising of capital for
subsidiaries and affiliates of Company.
SECONDMENT OF Investor will have rights to second an agreed number of
PERSONNEL BY INVESTOR personnel at appropriate levels of responsibility.
Company will have reasonable consent rights over the
identity of secondees.
TRANSACTIONS WITH Transactions with affiliates of Blackhawk would be
AFFILIATES OF subject to approval by the Board, excluding directors
BLACKHAWK nominated by Blackhawk.
TRANSACTIONS WITH Transactions with affiliates of Investor would be
AFFILIATES OF INVESTOR subject to approval by the Board, excluding directors
nominated by Investor.
LOAN BY INVESTOR Investor shall lend U.S.$5,000,000 to Company at
Closing on terms and conditions reasonably acceptable
to Investor.
- 3 -
<PAGE> 28
TERM SHEET December 1, 1993
FOR FINAL
INVESTMENT IN
JONES EDUCATION NETWORKS, INC.
INVESTMENT At Closing, BCETI (the "Investor") will purchase a
number of shares of Class A Common Stock of Jones
Education Networks, Inc. (the "Company") equal to 15%
of the outstanding shares of the Company.
The purchase price of the shares will be $18,000,000.
If during the twelve month period following Closing the
Company issues new equity securities solely for cash at
a price per share less than the price paid by Investor,
then the Company will pay to Investor an amount in cash
equal to the difference (which amount, in Company's
discretion, may be paid in equity securities of the
Company at the most recent valuation). If during the
twelve month period following Closing the Company
issues new equity securities for consideration, in
whole or in part, other than cash at a price share less
than 90% of the price by Investor, then the company
will pay to Investor an amount in cash equal to the
difference between 90% of the price paid by Investor
and the value of the consideration paid by the other
party (which amount, in the Company's discretion, may
be paid in equity securities of the Company at the most
recent valuation). The valuation of any non-cash
consideration will be determined under normal and
appropriate industry standards, such valuation to be
approved by the Company's Board of Directors.
PRE-EMPTIVE RIGHTS Investor will have the right to maintain its then
percentage equity interest in the case of all issuances
by the Company of equity securities (other than routine
grants of stock options and related issuances and other
than through an initial public offering).
Investor will receive registration rights subsequent to
an initial public offering.
-1-
<PAGE> 29
HYPOTHECATION Investor recognizes that Glenn R. Jones and Jones
International, ("Blackhawk") reserve the right to
pledge or hypothecate its ownership interests in
Company for financing purposes.
BOARD Investor will be entitled to nominate one member
REPRESENTATION to the Board.
Investor will have one representative on all
committees of the Board of Directors.
DIVESTITURE In the event that Investor wishes to divest ownership
in Company for any reason, Investor will offer its
interests in Company to Blackhawk at a specified
price. Blackhawk will have three months to accept,
reject or renegotiate the purchase of Investor's
interests. If Blackhawk accepts the offer it will have
an additional six months to close on the purchase of
the interests. If Blackhawk rejects the offer, or if
Blackhawk is unable to close on the purchase, Investor
may, after reasonable consultation with Blackhawk, sell
its interests at a price no less than 95% of the
offered price referred to above for a period of nine
months subsequent to such rejection or failure to
close.
MOST FAVORED For a period of five years subsequent to closing, any
NATIONS CLAUSE Board of Director consent rights granted to a
subsequent 15% or less investor in Company shall also
be awarded to Investor.
NOTICE OF AFFILIATE Company will give Investor notice of any material
TRANSACTIONS affiliated transactions.
AUDITED FINANCIAL Commencing with the fiscal year ended May 31, 1994,
STATEMENTS Company will deliver audited financial statements
to Investor.
CONSULTATION ON The Company will regularly advise and consult with
BUSINESS STRATEGIES Investor in respect of its strategic operating and
financial plans; equity, debt, joint venture and other
financing strategies; business plans for operations,
marketing and technology deployment; and personnel,
compensation and related decisions. Each year,
management of the Company will present to the Board of
Directors for approval a business plan including the
elements described above.
-2-
<PAGE> 30
TAG ALONG RIGHTS In the event that, through a single sale or a series of
sales, Blackhawk has divested or will divest more than
50% of its ownership of Company or has divested or will
divest control of the Company, Investor shall have the
right to (i) participate on a pro rata basis in such
sales by Blackhawk, or (ii) sell all of its interests,
all upon the same terms and conditions as Blackhawk. In
the event that Blackhawk sells all of its interests, it
may require that Investor sell all of its interests
concurrently.
Tag along rights will expire upon the event of a public
offering.
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