<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _________)
JONES INTERCABLE, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
and
Class A Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
480206101
480206200
- --------------------------------------------------------------------------------
(CUSIP Numbers)
Elizabeth M. Steele
9697 E. Mineral Avenue, Englewood, Colorado 80112
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
December 20, 1994
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13D-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
(COMMON STOCK) PAGE 2 OF 61 PAGES
CUSIP NO. 480206101
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OF I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Glenn R. Jones.
Social Security No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES -------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,878,151
PERSON -------------------------------------------
WITH
9 SOLE DISPOSITIVE POWER
0
-------------------------------------------
10 SHARED DISPOSITIVE POWER
2,878,151
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,878,151 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
(CLASS A COMMON STOCK) PAGE 3 OF 61 PAGES
CUSIP NO. 480206200
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OF I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Glenn R. Jones.
Social Security No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 397,110
SHARES --------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,372,568
PERSON --------------------------------------------
WITH
9 SOLE DISPOSITIVE POWER
397,110
--------------------------------------------
10 SHARED DISPOSITIVE POWER
2,372,568
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,769,678 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
SCHEDULE 13D
(COMMON STOCK) PAGE 4 OF 61 PAGES
CUSIP NO. 480206101
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OF I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jones International, Ltd.
I.R.S. Identification No. 84-0595284
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Jones International, Ltd., a Colorado corporation. Principal business
and address: A holding company; 9697 E. Mineral Avenue,
Englewood, Colorado 80112.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY --------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,878,151
PERSON
WITH --------------------------------------------
9 SOLE DISPOSITIVE POWER
0
--------------------------------------------
10 SHARED DISPOSITIVE POWER
2,878,151
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,878,151 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
HC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 5
SCHEDULE 13D
(CLASS A COMMON STOCK) PAGE 5 OF 61 PAGES
CUSIP NO. 480206200
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OF I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jones International, Ltd.
I.R.S. Identification No. 84-0595284
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Jones International, Ltd., a Colorado corporation. Principal business
and address: A holding company; 9697 E. Mineral Avenue,
Englewood, Colorado 80112.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY --------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,372,568
PERSON
WITH --------------------------------------------
9 SOLE DISPOSITIVE POWER
0
--------------------------------------------
10 SHARED DISPOSITIVE POWER
2,372,568
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,372,568 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
HC
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 6
ITEM 1. SECURITY AND ISSUER
The classes of equity securities to which this statement
relates are (i) the Common Stock, $.01 par value per share, of Jones
Intercable, Inc., a Colorado corporation (the "Company"), and (ii) the Class A
Common Stock, $.01 par value per share, of the Company. The address of the
Company's principal executive offices is 9697 E. Mineral Avenue, Englewood,
Colorado 80112.
ITEM 2. IDENTITY AND BACKGROUND:
The names of the persons filing this statement are:
1. Glenn R. Jones*, an individual residing in the State
of Colorado.
2. Jones International, Ltd., a Colorado corporation
("International"). Mr. Jones is the Chairman of the Board of Directors and
Chief Executive Officer of International and owns all of the outstanding shares
of International. The principal business of International is acting as a
holding company.
3. Jones Entertainment Group, Ltd., a Colorado
corporation ("JEG"), is wholly owned by Jones Digital Century, Inc., a Colorado
corporation 81% owned by International, 14% owned by Mr. Jones and 5% owned by
a member of Mr. Jones' family. The principal business of JEG is the production
of entertainment programming.
4. Jones Space Segment, Inc., a Colorado corporation
("JSS"), is 81% owned by International and 19% by Mr. Jones. The principal
business of JSS is leasing satellite space on a communications satellite.
5. Jones Global Group, Inc., a Colorado corporation
("JGG"), is 62% owned by International and 38% by Intercable. The principal
business of JGG is acting as a holding company.
_______________
*Through Mr. Jones' direct and indirect ownership of International and
Intercable, Mr. Jones may be deemed to be the beneficial owner of all the
Common Stock and Class A Common Stock held by each of the Jones Entities (as
defined on the following page).
6
<PAGE> 7
6. Jones Interdigital, Inc., a Colorado corporation
("Interdigital"), is wholly owned by International. The principal business of
Interdigital is leasing equipment for the various Jones companies.
The foregoing persons (Nos. 1 through 6 above) are hereinafter
collectively referred to as the "Jones Entities". The name, business address,
present principal occupation or employment, and citizenship of each director
and executive officer of each of the Jones Entities are set forth on Schedules
A through E attached hereto. The address of the principal business office for
each of the Jones Entities is 9697 E. Mineral Avenue, Englewood, Colorado
80112.
During the last five years, none of the Jones Entities, nor
any other person controlling any of the Jones Entities, nor, to the best of the
Jones Entities knowledge, any of the persons listed on Schedules A through E
attached hereto, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Jones Entities acquired 2,393,382 shares of the Common
Stock and all of the Class A Common Stock reported herein pursuant to an
Exchange Agreement and Plan of Reorganization and Liquidation (the
"Reorganization Agreement") dated as of May 31, 1994, as amended, between the
Company and Jones Spacelink, Ltd., a Colorado corporation ("Spacelink"),
whereby the Jones Entities exchanged their shares of Class A Common Stock of
Spacelink for shares of Common Stock and Class A Common Stock of the Company.
ITEM 4. PURPOSE OF TRANSACTION
As a result of the Reorganization Agreement described in Item
3, and upon the dissolution and liquidation of Spacelink, the Jones Entities
acquired the shares reported herein by operation of law.
On March 25, 1994, Bell Canada International Inc., a
corporation incorporated under the Canada Business Corporations Act ("BCI")
purchased 2,500,000 shares of Class A Common Stock of the Company for $22.00
per
7
<PAGE> 8
share. BCI acquired the shares of the Company's Class A Common Stock for the
purposes of investment and as part of a proposed strategic relationship with
the Company and certain of its affiliates. On May 31, 1994, the Company
entered into a Stock Purchase Agreement with BCI (the "BCI Agreement"), whereby
BCI agreed to acquire shares of Class A Common Stock of the Company to maintain
a 30% equity interest in the Company. The BCI Agreement closed on December 20,
1994 (the "Closing"), and BCI acquired 7,414,300 shares of the Company's Class
A Common Stock for $27.50 per share. BCI currently owns 31.7% of the
outstanding capital stock of the Company. Simultaneously with the Closing, BCI
also acquired options from the respective Jones Entities to purchase 2,878,151
shares of the Company's Common Stock, representing all of the Company's Common
Stock owned by the Jones Entities (the "Option Agreements"). See Item 5.
In connection with the Closing, Patrick J. Lombardi, Howard O.
Thrall and George J. Feltovich resigned from the Company's Board of Directors,
and Derek H. Burney and Daniel E. Somers (both designated by BCI), and Robert
S. Zinn, David K. Zonker and Christine Jones Marocco (all designated by Mr.
Jones) were appointed to the Board of Directors of the Company. BCI has the
right to designate an additional member to the Company's Board of Directors and
expects to exercise that right in 1995. In addition, BCI and Mr. Jones have
the right to jointly designate three independent directors to the Board of
Directors of the Company. This right is also expected to be exercised in 1995.
Pursuant to the terms of the Shareholders Agreement dated
December 20, 1994, between Mr. Jones, International, BCI and the Company (the
"Shareholders Agreement"), BCI has committed to invest a total of $400 million
in the Company, of which $259 million has already been invested. The remaining
$141 million is expected to be invested from time to time to maintain BCI's 30%
equity interest in the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The Jones Entities believe that as of December 20, 1994, there
were outstanding 5,113,021 shares of Common Stock and 26,131,388 shares of
Class A Common Stock.
8
<PAGE> 9
(a) Amount Beneficially Owned:
(i) Common Stock:
<TABLE>
<CAPTION>
Number of
shares of Number of Shares
Common Stock of Common Stock Percent
Name owned Directly owned Indirectly of Ownership
---- ------------- ---------------- ------------
<S> <C> <C> <C>
Glenn R. Jones(1) 0 2,878,151(2) 56.3%
International(1) 0 2,878,151(2) 56.3%
BCI(3) 0 2,878,151 56.3%
</TABLE>
(1) For purposes of Rule 13d-3, Mr. Jones may be deemed to have beneficial
ownership of the shares of Common Stock owned by International, JEG, JSS, JGG
and Interdigital. Also for purposes of Rule 13d-3, International may be deemed
to have beneficial ownership of the shares of Common Stock owned by JEG, JSS,
JGG and Interdigital. All of the shares of Common Stock held by Mr. Jones are
owned of record by a trust. See Item 6.
(2) Includes 474,400 shares held by Mr. Jones, 2,239,416 shares held by
International, 100,400 shares held by JEG, 35,707 shares held by JSS, 27,585
shares held by JGG and 643 shares held by Interdigital. All of the shares of
Common Stock held by International are owned of record by a trust. See Item 6.
(3) For purposes of Rule 13d-3(d)(1)(i), the Jones Entities are informed
that BCI may be deemed to have beneficial ownership of the 2,878,151 shares of
Common Stock covered by the Option Agreements (as defined in Item 6). By
virtue of BCI being an indirect wholly-owned subsidiary of BCE Inc., a
corporation incorporated under the Canada Business Corporations Act ("BCE"),
the Jones Entities are informed that BCE may be deemed to beneficially own the
30% equity interest in the Company which is beneficially owned by BCI, and the
2,878,151 shares of Common Stock covered by the Option Agreements.
9
<PAGE> 10
Because of the existence of the Shareholders Agreement (see Item 4),
Mr. Jones and International may be deemed, pursuant to Rule 13d-(5)(b)(1), to
be members of a "group" with BCI. Mr. Jones and International, however,
disclaim that they are members of a "group" with BCI. See also, Footnote 5
below.
The beneficial ownership of the Common Stock of the Company by
each director and executive officer of the Jones Entities are set forth on
Schedule F attached hereto.
(ii) Class A Common Stock:
<TABLE>
<CAPTION>
Number of
shares of Number of Shares of
Class A Common Class A Common
Stock owned Stock owned Percent
Name Directly Indirectly of Ownership
---- -------- ---------- ------------
<S> <C> <C> <C>
Glenn R. Jones(1) 397,110(2) 2,372,568(3) 10.6%
International(1) 2,148,414 224,154(4) 9.1%
BCI 9,914,300(5) 37.9%
</TABLE>
(1) For purposes of Rule 13d-3, Mr. Jones may be deemed to have beneficial
ownership of the shares of Class A Common Stock owned by International, JEG,
JSS, JGG and Interdigital. Also for purposes of Rule 13d-3, International may
be deemed to have beneficial ownership of the shares of Class A Common Stock
owned by JEG, JSS, JGG and Interdigital.
(2) Includes Mr. Jones' vested options to purchase 134,677 shares.
(3) Includes 2,148,414 shares held of record by International, 136,946
shares held of record by JEG, 48,705 shares held of record by JSS, 37,626
shares held of record by JGG and 877 shares held of record by Interdigital.
(4) Includes 136,946 shares held of record by JEG, 48,705 shares held of
record by JSS, 37,626 shares held of record by JGG and 877 shares held of
record by Interdigital.
10
<PAGE> 11
(5) Under Rule 13d(5)(b)(1) the group is deemed to have acquired
beneficial ownership of all of the equity securities of the Company
beneficially owned by the other members of the group. However, Mr. Jones and
International disclaim beneficial ownership of any shares of Common Stock or
Class A Common Stock through any beneficial ownership by BCI. Information
contained herein relating to BCI is provided to the best of the Jones Entities'
knowledge.
The beneficial ownership of the Class A Common Stock of the
Company by each director and executive officer of the Jones Entities are set
forth on Schedule G attached hereto.
(b) (i) Voting Power and Disposition Power of the Common
Stock:
<TABLE>
<CAPTION>
Sole Power to Shared Power to
Sole Power to Shared Power to Dispose or to Dispose or to
Vote or to Direct Vote or to Direct Direct the Direct the
Name of Entity the Vote the Vote Disposition Disposition
- -------------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Glenn R. Jones 0 2,878,151 0 2,878,151
International 0 2,878,151 0 2,878,151
BCI 0 0 0 2,878,151
</TABLE>
11
<PAGE> 12
(ii) Voting Power and Disposition Power of the Class A Common
Stock:
<TABLE>
<CAPTION>
Sole Power to Shared Power to
Sole Power to Shared Power to Dispose or to Dispose or to
Vote or to Direct Vote or to Direct Direct the Direct the
Name of Entity the Vote the Vote Disposition Disposition
- -------------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Glenn R. Jones 397,110 2,372,568 397,110 2,372,568
International 0 2,372,568 0 2,372,568
</TABLE>
(c) The following transactions in the Common Stock and
Class A Common Stock have been effected during the last 60 days as follows (see
Item 6 also):
(i) Mr. Jones purchased 57,000 shares of Common
Stock on the open market in November 1994.
(ii) On December 6, 1994, Mr. Jones exercised a
stock option to purchase 200,000 shares of Common Stock at an exercise
price of $6.125 per share.
(iii) As a result of the Reorganization Agreement,
Mr. Jones and International acquired 2,393,382 shares of the Common
Stock and all of the Class A Common Stock being reported herein.
(iv) Except as stated above and in Item 6, no
transactions in the Common Stock or the Class A Common Stock have been
effected during the last 60 days by any other person controlling the
Jones Entities, or to the best of the Jones Entities' knowledge, any
of the persons named in the attached Schedules hereto.
(d) Not applicable.
(e) Not applicable.
12
<PAGE> 13
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
a. Pursuant to the Reorganization Agreement, the Jones
Entities exchanged their shares of Class A Common Stock of Spacelink for shares
of Common Stock and Class A Common Stock of the Company.
b. On December 20, 1994, pursuant to the BCI Agreement,
the Company entered into the Shareholders Agreement.
c. On December 20, 1994, BCI, through its agent, Morgan
Guaranty Trust Company ("MGT"), entered into Option Agreements with each of the
following entities: (i) Glenn Jones Grantor Business Trust ("GJ Trust"); (ii)
Jones International Grantor Business Trust ("JI Trust"); (iii) JEG; (iv) JSS;
(v) JGG; and (vi) Interdigital. The number of shares of Common Stock covered
by each Option Agreement is as follows:
<TABLE>
<CAPTION>
GRANTOR NUMBER OF SHARES
------- ----------------
<S> <C>
GJ Trust 474,400
JI Trust 2,239,416
JEG 100,400
JSS 35,707
JGG 27,585
Interdigital 643
</TABLE>
The Reorganization Agreement is Exhibit 1. The BCI Agreement
is Exhibit 2. The form of Shareholders Agreement is Exhibit 3. The Option
Agreement between MGT and JI Trust is Exhibit 4. All of the other Option
Agreements are substantially similar except for the number of shares of Common
Stock covered thereby, which is described above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1: Exchange Agreement and Plan of Reorganization and
Liquidation dated as of May 31, 1994, as amended,
between Spacelink and the Company. (1)
13
<PAGE> 14
Exhibit 2: Stock Purchase Agreement dated as of May 31, 1994, as
amended, between BCI and the Company. (1)
Exhibit 3: Form of Shareholders Agreement dated as of December
20, 1994, between Mr. Jones, International, BCI and
the Company. (2)
Exhibit 4: Option Agreement dated as of December 20, 1994,
between MGT and JI Trust.
______________
(1) Incorporated by reference from the Company's Current Report on Form
8-K, electronically filed on June 6, 1994, and the amendments to said
agreements are hereby incorporated by reference from Amendment No. 2
to Form S-4 Registration Statement and Proxy Statement of the Company
filed with the Securities and Exchange Commission (Commission File No.
1-9953 and Registration No. 33-54527).
(2) Incorporated by reference from the Company's Current Report on Form
8-K, electronically filed on June 6, 1994, and identified as Exhibit C
to the Stock Purchase Agreement filed as an Exhibit to such Form 8-K.
14
<PAGE> 15
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Date: December 30, 1994
/s/ Glenn R. Jones
Glenn R. Jones
JONES INTERNATIONAL, LTD.
By: /s/ Robert S. Zinn
Robert S. Zinn
Vice President/Legal Affairs
15
<PAGE> 16
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF
JONES INTERNATIONAL, LTD.
The name and title(s) of each of the directors and executive officers
of Jones International, Ltd. are set forth below. Unless otherwise indicated
below, the principal address, present principal occupation and citizenship of
each of the directors and executive officers are 9697 E. Mineral Avenue,
Englewood, CO 80112, cable television executive and USA, respectively.
<TABLE>
<CAPTION>
Name Title(s)
---- --------
<S> <C>
Glenn R. Jones Chairman of the Board, Chief
Executive Officer and
President
Gregory J. Liptak Group President
Patrick J. Lombardi Group Vice President/Finance and
Director
Robert S. Zinn Vice President/Legal Affairs
Elizabeth M. Steele Secretary
Christine Jones Marocco Director
Homemaker
25 East End Avenue
Apartment 14F
New York, NY 10028
</TABLE>
16
<PAGE> 17
SCHEDULE B
DIRECTORS AND EXECUTIVE OFFICERS
OF
JONES ENTERTAINMENT GROUP, LTD.
The name and title(s) of each of the directors and executive officers
of Jones Spacelink, Ltd. are set forth below. Unless otherwise indicated
below, the principal address, present principal occupation and citizenship of
each of the directors and executive officers are 9697 E. Mineral Avenue,
Englewood, CO 80112, cable television executive and USA, respectively.
<TABLE>
<CAPTION>
Name Title(s)
---- --------
<S> <C>
Glenn R. Jones Chairman of the Board, Chief Executive
Officer and President
Philip D. Fehrle Executive Vice President
Entertainment Production
5300 Melrose Avenue
Third Floor
Hollywood, CA 90038
Theodore A. Henderson Vice President, Business Affairs
and Treasurer
Lani Daniels Vice President, Creative Affairs
Entertainment Production
5300 Melrose Avenue
Third Floor
Hollywood, CA 90038
Nancy Anderson Vice President/Marketing
Robert S. Zinn Vice President/Legal Affairs
Elizabeth M. Steele Secretary
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
Bernard J. Luskin Director
Wilfred N. Cooper, Sr. Director
Investor
3158 Redhill Avenue
Suite 120
Costa Mesa, CA 92626
</TABLE>
18
<PAGE> 19
SCHEDULE C
DIRECTORS AND EXECUTIVE OFFICERS
OF
JONES SPACE SEGMENT, INC.
The name and title(s) of each of the directors and executive officers
of Jones Intercable, Inc. are set forth below. Unless otherwise indicated
below, the principal address, present principal occupation and citizenship of
each of the directors and executive officers are 9697 E. Mineral Avenue,
Englewood, CO 80112, cable television executive and USA, respectively.
<TABLE>
<CAPTION>
Name Title(s)
---- --------
<S> <C>
Glenn R. Jones Chairman of the Board
and President
Elizabeth M. Steele Vice President and Secretary
Robert S. Zinn Vice President/Legal Affairs
Jay B. Lewis Treasurer
Gregory J. Liptak Director
</TABLE>
19
<PAGE> 20
SCHEDULE D
DIRECTORS AND EXECUTIVE OFFICERS
OF
JONES GLOBAL GROUP, INC.
The name and title(s) of each of the directors and executive officers
of Jones U.K. Holdings, Inc. are set forth below. Unless otherwise indicated
below, the principal address, present principal occupation and citizenship of
each of the directors and executive officers are 9697 E. Mineral Avenue,
Englewood, CO 80112, cable television executive and USA, respectively.
<TABLE>
<CAPTION>
Name Title(s)
---- --------
<S> <C>
Glenn R. Jones Chairman of the Board and
Chief Executive Officer
Patrick J. Lombardi President and Director
James B. O'Brien Group Vice President/
Operations and Director
Elizabeth M. Steele Vice President/General
Counsel and Secretary
J. Timothy Bryan Vice President/Finance and Treasurer
Robert S. Zinn Vice President/Legal Affairs
Raphael M. Solot Director
Attorney
55 Madison Street
Suite 410
Denver, CO 80206
</TABLE>
20
<PAGE> 21
SCHEDULE E
DIRECTORS AND EXECUTIVE OFFICERS
OF
JONES INTERDIGITAL, INC.
The name and title(s) of each of the directors and executive officers
of Jones Intercable of Leeds, Inc. are set forth below. Unless otherwise
indicated below, the principal address, present principal occupation and
citizenship of each of the directors and executive officers are 9697 E. Mineral
Avenue, Englewood, CO 80112, cable television executive and USA, respectively.
<TABLE>
<CAPTION>
Name Title(s)
---- --------
<S> <C>
Glenn R. Jones Chief Executive Officer, President and Director
Elizabeth M. Steele Vice President and Secretary
Jay B. Lewis Treasurer
Timothy J. Burke Director
</TABLE>
21
<PAGE> 22
SCHEDULE F
BENEFICIAL OWNERSHIP OF THE
COMMON STOCK
Set forth below are the directors and executive officers of the Jones
Entities who beneficially own shares of Common Stock at December 20, 1994. The
ownership below does not set forth shares of the Common Stock that will be
acquired pursuant to the Reorganization Agreement.
<TABLE>
<CAPTION>
Number of Shares
----------------
Name of Common Stock
---- ---------------
<S> <C>
Patrick J. Lombardi 1,300
</TABLE>
The foregoing shares are not included in the Jones Entities' ownership
because the foregoing individual has the sole power to vote and dispose of his
shares shown above.
22
<PAGE> 23
SCHEDULE G
BENEFICIAL OWNERSHIP OF THE
CLASS A COMMON STOCK
Set forth below are the directors and executive officers of the Jones
Entities who beneficially own shares of Class A Common Stock at December 20,
1994. The ownership below does not set forth shares of the Class A Common
Stock that will be acquired pursuant to the Reorganization Agreement
<TABLE>
<CAPTION>
Number of Shares
----------------
Name of Class A Common Stock
---- -----------------------
<S> <C>
Gregory J. Liptak 85,600(1)
Patrick J. Lombardi 30,123(2)
Nancy Anderson 800(3)
James B. O'Brien 19,376(4)
J. Timothy Bryan 837(5)
Timothy J. Burke 1,125(6)
</TABLE>
___________
(1) Includes 50,000 shares pursuant to a vested stock option.
(2) Includes 28,000 shares pursuant to a vested stock option.
(3) Represents shares pursuant to a vested stock option.
(4) Includes 9,376 shares pursuant to a vested stock option.
(5) Represents shares pursuant to a vested stock option.
(6) Represents shares pursuant to a vested stock option.
The foregoing shares are not included in International's or
Mr. Jones' ownership because each of the foregoing individuals has the sole
power to vote and dispose of his or her respective shares shown above.
23
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit PAGE
------ ------- ----
<S> <C> <C>
Exhibit 1: Exchange Agreement and Plan of Reorganization and
Liquidation dated as of May 31, 1994, as amended,
between Spacelink and the Company. (1)
Exhibit 2: Stock Purchase Agreement dated as of May 31, 1994, as
amended, between BCI and the Company. (1)
Exhibit 3: Form of Shareholders Agreement dated as of December
20, 1994, between Mr. Jones, International, BCI and
the Company. (2)
Exhibit 4: Option Agreement dated as of December 20, 1994, 25
between MGT and JI Trust.
</TABLE>
______________
(1) Incorporated by reference from the Company's Current Report on Form
8-K, electronically filed on June 6, 1994, and the amendments to said
agreements are hereby incorporated by reference from Amendment No. 2
to Form S-4 Registration Statement and Proxy Statement of the Company
filed with the Securities and Exchange Commission (Commission File No.
1-9953 and Registration No. 33-54527).
(2) Incorporated by reference from the Company's Current Report on Form
8-K, electronically filed on June 6, 1994, and identified as Exhibit C
to the Stock Purchase Agreement filed as an Exhibit to such Form 8-K.
24
<PAGE> 1
EXHIBIT 4
OPTION AGREEMENT
dated as of
December 20, 1994,
between
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as agent for
Bell Canada International Inc.
and
JONES INTERNATIONAL GRANTOR BUSINESS TRUST
25
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . 1
ARTICLE II
GRANT OF THE CONTROL OPTION
SECTION 2.1. Grant of Control Option . . . . . . . . . . . . 6
ARTICLE III
EXERCISE OF THE CONTROL OPTION
SECTION 3.1. Exercise Periods . . . . . . . . . . . . . . . . 6
SECTION 3.2. Exercise of Control Option . . . . . . . . . . . 7
SECTION 3.3. Purchase Price For the Optioned Shares . . . . . 9
SECTION 3.4. Determination of Market Value . . . . . . . . . 10
SECTION 3.5. Closing . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.6. Termination of Control Option . . . . . . . . . 12
SECTION 3.7. Adjustment Upon Changes in Capitalization
or Merger . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
COVENANTS
SECTION 4.1. No Proxies for or Encumbrances on Optioned
Shares . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.2. Further Assurances . . . . . . . . . . . . . . . 14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GRANTOR
SECTION 5.1. Valid Title . . . . . . . . . . . . . . . . . . 14
SECTION 5.2. Existence . . . . . . . . . . . . . . . . . . . 14
</TABLE>
26
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5.3. Binding Effect . . . . . . . . . . . . . . . . 14
SECTION 5.4. Governmental Authorization . . . . . . . . . . 14
SECTION 5.5. Non-Contravention . . . . . . . . . . . . . . 15
SECTION 5.6. Finder's Fees . . . . . . . . . . . . . . . . 15
SECTION 5.7. Validity, Perfection and Priority of
Security Interest . . . . . . . . . . . . . 15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 6.1. Acquisition for Purchaser's Account . . . . . 16
ARTICLE VII
CHANGE IN LAW
SECTION 7.1. Change in Law . . . . . . . . . . . . . . . . 16
SECTION 7.2. Right of First Offer . . . . . . . . . . . . . 17
SECTION 7.3. Closing Procedures . . . . . . . . . . . . . . 18
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
SECTION 8.1. Survival . . . . . . . . . . . . . . . . . . . 19
SECTION 8.2. Indemnification . . . . . . . . . . . . . . . 19
SECTION 8.3. Procedures . . . . . . . . . . . . . . . . . . 19
ARTICLE IX
PLEDGE OF OPTIONED SHARES
SECTION 9.1. The Security Interest . . . . . . . . . . . . 20
SECTION 9.2. Delivery of Collateral . . . . . . . . . . . . 21
SECTION 9.3. Further Assurances . . . . . . . . . . . . . . 21
SECTION 9.4. Right to Vote and Receive Dividends on
Collateral . . . . . . . . . . . . . . . . . 21
SECTION 9.5. Limitation on Duty of Purchaser in Respect
of Collateral . . . . . . . . . . . . . . . 22
SECTION 9.6. Termination of Security Interest; Release
of Collateral . . . . . . . . . . . . . . . 22
SECTION 9.7. Successors and Assigns . . . . . . . . . . . . 22
</TABLE>
27
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
ARTICLE X
MISCELLANEOUS
<S> <C> <C>
SECTION 10.1. Termination . . . . . . . . . . . . . . . . . 23
SECTION 10.2. Successors and Assigns . . . . . . . . . . . 23
SECTION 10.3. Specific Performance . . . . . . . . . . . . 24
SECTION 10.4. Notices . . . . . . . . . . . . . . . . . . . 24
SECTION 10.5. Expenses . . . . . . . . . . . . . . . . . . 25
SECTION 10.6. Amendments and Waivers . . . . . . . . . . . 25
SECTION 10.7. Governing Law . . . . . . . . . . . . . . . . 26
SECTION 10.8. Counterparts; Effectiveness . . . . . . . . . 26
SECTION 10.9. Headings . . . . . . . . . . . . . . . . . . 26
SECTION 10.10. Entire Agreement . . . . . . . . . . . . . 26
SECTION 10.11. Separability . . . . . . . . . . . . . . . 26
SECTION 10.12. Agency Capacity of Purchaser . . . . . . . 26
SCHEDULES
SCHEDULE I Option Price
EXHIBITS
EXHIBIT A Exercise Period Notice
EXHIBIT B Exercise Notice
EXHIBIT C Offer Notice
EXHIBIT D Acceptance Notice
</TABLE>
28
<PAGE> 5
OPTION AGREEMENT
AGREEMENT dated as of December 20, 1994 between Morgan Guaranty Trust
Company of New York, as agent for BCI (in such capacity, "PURCHASER"), and
Jones International Grantor Business Trust, a Delaware business trust
("GRANTOR").
WITNESETH:
WHEREAS, concurrently with the execution of this Agreement, Purchaser is
purchasing (i) 7,414,300 shares of Class A Common Stock of Jones Intercable,
Inc., a Colorado corporation (the "COMPANY"), for an aggregate purchase price
of $203,893,250, (ii) 2,410 shares of Class A Common Stock of Jones Education
Networks, Inc., a Colorado corporation, for an aggregate purchase price of
$18,000,000, (iii) 12,592 shares of Class A Common Stock of Jones Lightwave,
Ltd., a Colorado corporation, for an aggregate purchase price of $5,000,000 and
(iv) 747,500 shares of Class A Common Stock of Jones Entertainment Group, LTD.,
a Colorado corporation, for an aggregate purchase price of $7,000,000;
WHEREAS, the parties hereto acknowledge that Purchaser would not enter
into the Stock Purchase Agreement (as defined below) unless Grantor also
granted the option set forth herein; and
WHEREAS, in order to induce the Purchaser to enter into this Agreement,
Grantor has agreed to grant a continuing security interest in and to the
Optioned Shares to secure its obligations under this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. (a) The following terms, as used herein, have
the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person.
29
<PAGE> 6
"BCI" means Bell Canada International Inc., a corporation organized under
the Canada Business Corporations Act.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks are authorized to close in Montreal, Canada, New York,
New York or Denver, Colorado.
"CAPITAL STOCK" means, at any time, Common Stock, Class A Common Stock and
any other authorized capital stock of the Company.
"CHANGE IN LAW" means on or after the date of this Agreement the adoption
of any applicable treaty, law, rule or regulation, or any change in any
applicable treaty, law, rule or regulation, or any change in the interpretation
or administration thereof by any Governmental Authority (whether by opinion,
order, policy statement or other similar documents), or any directive of any
Governmental Authority relating to the business or assets of BCI or its
Affiliates and not the Purchaser.
"CLASS A COMMON STOCK" means the Class A Common Stock of the Company, par
value $0.01 per share.
"COMMON STOCK" means the Common Stock of the Company, par value $0.01 per
share.
"CONTROL OPTION" means the option to purchase the Optioned Shares pursuant
to the terms and conditions of this Agreement.
"DOLLARS" and sign "$" means United States dollars.
"EVENT" means the death or Incapacity of Glenn R. Jones. For purposes of
this Agreement, "INCAPACITY" shall be deemed to exist if Glenn R. Jones becomes
physically or mentally incapacitated and is therefore unable for a period of
six consecutive months, or for an aggregate of 12 months in any 24 consecutive
month period, to perform his duties as Chief Executive Officer with the
Company. Any question as to the existence of Incapacity shall be determined in
writing by a qualified independent physician mutually acceptable to Grantor and
Purchaser. If Grantor and Purchaser cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians shall
select a third who shall make such determination. The determination of
Incapacity made by any
30
<PAGE> 7
such physician shall be fianl and conclusive for all purposes of this
Agreement.
"EXON-FLORIO ACT" means Section 721 of Title VII of the Defense Production
Act of 1950, as amended, together with the rules and regulations promulgated
thereunder.
"GOVERNMENTAL AUTHORITY" means any local, county, estate, commonwealth,
federal or foreign court, judicial, executive, or legislative instrumentiality,
or any agency, authority, commission, board or official thereof, including,
without limitation, any franchising authority.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INTERCABLE GROUP" means, at any time, the Company and each Person that is
a Subsidiary of the Company at such time.
"INTERCABLE GROUP ENTITY" means, at any time, each Person included in the
Intercable Group at such time.
"JONES" means Glenn R. Jones, a resident of Colorado, or in the event he
is not then alive or legally competent, his executor, the administrator of
his estate or his legal representative (including, without limitation, his
guardian, conservator or other similar fiduciary).
"JONES BANKRUPTCY EVENT" means (i) Grantor, Glenn Jones Grantor Business
Trust, Jones or Jones International shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or substantially all of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing, (ii)
an involuntary case or other proceeding shall be commenced against Grantor,
Glenn Jones Grantor Business Trust, Jones or Jones International seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law nor or hereafter in
effect or seeking the appointment of a trsutee, receiver, liquidator, custodian
or other similar official of it or substantially all of its
31
<PAGE> 8
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 90 days or (iii) an order for relief
shall be entered against Grantor, Gleen Jones Grantor Business Trust, Jones or
Jones International under the federal bankruptcy laws as now or hereafter in
effect.
"JONES INTERNATIONAL" means Jones International, Ltd., a Colorado
corporation.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset.
"OPTION PRICE" means, at any time, the Option Price described on Schedule
I at such time.
"OPTIONED SHARES" means the 2,239,416 shares of Common Stock owned by
Grantor on the date hereof and delivered to Purchaser pursuant to Section 9.1
(as the same may be adjusted pursuant to Section 3.7).
"OPTIONOR" means Grantor and the Grantors under the Related Option
Agreements.
"PERSON" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PURCHASE PRICE" means the aggregate amount payable to Grantor in
connection with the purchase of the Optioned Shares, as calculated pursuant to
Section 3.3.
"RELATED OPTION AGREEMENTS" means the Option Agreements dated as of the
date hereof between Purchaser and each of Gleen Jones Grantor Business Trust,
Jones Space Segment, Inc., Jones Global Group, Inc., Jones Interdigital, Inc.
and Jones Entertainment Group, Ltd.
"RESIGNATION EVENT" means the resignation of Glenn R. Jones as Chief
Executive Officer of the Company.
"SECURED OBLIGATIONS" means the obligations of Grantor to deliver the
Optioned Shares at the Closing, free and clear of any Lein and any other
limitation or restriction under this Agreement.
32
<PAGE> 9
"SECURITIES ACT" means the Securities Act of 1933, as amended, and rules
and regulations promulgated thereunder.
"SECURITY INTEREST" means the security interest in the Collateral granted
hereunder securing the Secured Obligations.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated as of the
date hereof among BCI, the Company, Jones and Jones International.
"SPA CLOSING" means December 20, 1994.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated as of
May 31, 1994, as amended on October 20, 1994, between the Company and BCI.
"SUBSIDIARY" means, as to any Person, (i) any entity of which securities
or other ownership interests having ordinary voting pwoer to elect a majority
of the board of directors or other persons performing similar functions are,
directly or indirectly, owned or controlled by such Person, (ii) any
partnership of which such Person is, directly or indirectly, a general or
managing partner or (iii) any other entity that is, directly or indirectly,
controlled by such Person. The parties hereto acknowledge that (i) Glenn R.
Jones and Jones International are not Subsidiaries of any Intercable Group
Entity and (ii) BCE Inc. is not a Subsidiary of BCI.
"TRUST AGREEMENT" means the Trust Agreement dated as of the date hereof
among Robert S. Zinn and Christine Jones Marocco, as Managing Trustees, John P.
Garniewski, Jr. as Independent Trustee, and Jones International.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
ACCEPTANCE NOTICE 7.2
ADDITIONAL SECURITIES 7.3
CLOSING 3.2
COLLATERAL 9.1
DAMAGES 8.2
ELIGIBLE ASSIGNEE 10.2
EXERCISE NOTICE 3.2
EXERCISE PERIOD 3.1
FINAL DETERMINATION 3.4
</TABLE>
33
<PAGE> 10
<TABLE>
<S> <C>
INDEMNIFIED PARTY 8.3
INDEMNIFYING PARTY 8.3
GRANTOR'S NOTICE 3.1
MARKET VALUE 3.4
OFFER NOTICE 7.2
OFFER PRICE 7.2
RESTRICTED BUSINESS 10.2
TERMINATION TIME 3.6
TRIGGER DATE 3.3 and 7.2
WITHDRAWAL PERIOD 3.4
</TABLE>
(c) Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code as in effect on the date hereof shall have the meanings therein
stated.
ARTICLE II
GRANT OF THE CONTROL OPTION
SECTION 2.1. GRANT OF CONTROL OPTION. (a) Subject to the terms and
conditions of this Agreement, Grantor hereby grants to Purchaser an irrevocable
option to purchase all, but not less than all, of the Optioned Shares.
(b) In consideration of the grant by Grantor of the Control Option,
Purchaser hereby pays to Grantor an amount in cash equal to $19.00 per Optioned
Share.
(c) Amounts paid by Purchaser pursuant to this Section 2.1 shall not be
deducted from the Purchase Price payable at the Closing.
ARTICLE III
EXERCISE OF THE CONTROL OPTION
SECTION 3.1. EXERCISE PERIODS. (a) The Control Option may be
exercised either as provided in Section 7.2(c), or by Purchaser at any time
during any of the following periods (each, an "EXERCISE PERIOD"):
(i) the period commencing on the day of an Event and ending 270
days after Purchaser receives written notice from or on behalf of any
Option or of the occurrence of an Event;
34
<PAGE> 11
(ii) the period commencing on the day of a Resignation Event and
ending 90 days after Purchaser receives a written notice from (or on
behalf of) any Optionor of the occurrence of a Resignation Event;
(iii) the period commencing on the day that Purchaser receives a
written notice from (or on behalf of) Grantor requesting that Purchaser
exercise the Control Option (the "GRANTOR'S NOTICE"), which notice may be
delivered only on or after the fifth anniversary of the SPA Closing, and
ending 180 days after such day;
(iv) the period commencing on the seventh anniversary of the SPA
Closing and ending on the eighth anniversary of SPA Closing; and
(v) the period commencing on the day of a Jones Bankruptcy Event and
ending 30 days after Purchaser receives written notice of the occurrence
of a Jones Bankruptcy Event.
provided that no Exercise Period will expire if immediately preceding such
expiration there is in effect a law, regulation or order that stays or
otherwise prohibits Purchaser from delivering an Exercise Notice after (or as a
result of) the occurrence of a Jones Bankruptcy Event.
(b) The notices delivered pursuant to clauses (i), (ii), (iii) and (v)
will be in the form attached hereto as Exhibit A. A Grantor's Notice delivered
pursuant to clause (iii) will be effective only if a similar notice is
simultaneously delivered to Purchaser under the Related Option Agreements. Once
delivered to Purchaser, a Grantor's Notice will be irrevocable.
(c) Subject to the termination provisions of Section 3.6, the parties
acknowledge that at any given time there may be more than one Exercise Period
in effect at such time.
SECTION 3.2 EXERCISE OF CONTROL OPTION. (a) Purchaser may exercise the
Control Option at any time during the Exercise period by delivery to Grantor of
an irrevocable written notice in the form attached hereto as Exhibit B (the
"EXERCISE NOTICE"). Purchaser has no obligation to deliver an Exercise Notice
and may allow the Control Option to expire and terminate without purchasing the
Optioned Shares. The Control Option may only be exercised simultaneously with
the exercise of the option
35
<PAGE> 12
granted under the Related Option Agreements and the Closing hereunder will only
take place simultaneously with the closing of the exercise of the option under
the Related Option Agreements.
(b) The closing for the exercise of the Control Option (the "CLOSING")
will take place not more than 20 Business Days after the date that the Exercise
Notice is delivered to Grantor, provided that (x) if it is necessary to
determine Market Value pursuant to Section 3.4(b), the Closing will be
postponed as provided in Section 3.4(c) and (y) so long as Purchaser is using
its reasonable efforts to consummate the Closing promptly, and subject to
Section 3.6 hereof, Purchaser may postpone the Closing until such time as the
following conditions have been satisfied or waived by Purchaser:
(i) The waiting period (including any extension thereof resulting
from additional inquiries, if any) under the HSR Act applicable to the
purchase of the Optioned Shares by Purchaser shall have expired or been
earlier terminated.
(ii) All other actions by, in respect of or filing with any
Governmental Authority in the United States, England or Spain, or any
other country where the Intercable Group conducts material business,
required to permit the consummation of the Closing shall have been taken
or obtained, as the case may be, and shall be in full force and effect.
(iii) There shall not then be in effect any applicable law, rule or
regulation or any judgment, injunction, order or decree that has one or
more of the effects described in clauses (a), (b) or (c) of the following
paragraph (iv), provided that if after the date hereof BCI or any of its
Affiliates enters into a new line of business and at such time there is
a law, rule or regulation that has, or is reasonably expected to have,
one or more of such effects, then this clause (iii) will not apply to
any such law, rule or regulation.
(iv) There shall not then be instituted or pending any action or
proceeding before any federal or state court or other Governmental
Authority brought by a Governmental Authority challenging the
consummation of the Closing or seeking to (a) prevent BCI (or its agent)
from exercising the Control Option, (b) require BCI (or its agent) to
divest, or otherwise limit BCI's (or its agent's) ability to exercise
full rights of
36
<PAGE> 13
ownership over, the shares of Capital Stock owned by BCI and its
Affiliates, the Control Option or the Optioned Shares or (c) require,
after the exercise of the Control Option, the Intercable Group to divest
any material business or assets or would impose a material limitation on
the conduct of Intercable Group's business, provided that (A) if after the
date hereof BCI or any of its Affiliates enters into a new line of
business and at such time there is a law, rule or regulation that has, or
is reasonably expected to have, one or more of the foregoing effects, then
this paragraph (iv) will not apply to actions or proceedings that seek to
enforce such law, rule or regualtion and (B) any actions or proceedings
described in clause (a) or (b) will be based on the business or assets of
BCI of its Affiliates and not the Purchaser.
(v) The Intercable Group Entities shall have received all material
third party consents required to be obtained in connection with the
Closing, in each case in form and substance reasonably satisfactory to
Purchaser.
(vi) The representations and warranties of Grantor contained in
Article V shall be true at and as of the date of the Closing, as if made at
and as of such date.
SECTION 3.3. PURCHASE PRICE FOR THE OPTIONED SHARES. (a) The
purchase price per Optioned Share will be calculated as follows:
(i) (A) if the Trigger Date occurs prior to or on June 18, 1995,
200% of the Market Value of a share of Class A Common Stock on the
applicable Trigger Date, or (B) if the Trigger Date occurs after June 18,
1995, the sum of (x) two-thirds of the Option Price on the applicable
Trigger Date and (y) one-third of 120% of the Market Value of a share of
Class A Common Stock on the applicable Trigger Date(1), in each case reduced
by
(ii) the amount (or in the case of property other than cash, fair
market value) of any dividends and
_____________
(1)As an example of the calculation described in clause (i)(B), if on the
applicable Trigger Date the Option Price were $50 per Share and the Market Value
of a share of Class A Common Stock were $60 per share, the purchase price would
be 2/3 of $50 ($33.3333) plus 1/3 of 120% of $60 ($24), or $57.3333 (computed to
four decimal places).
37
<PAGE> 14
distributions other than stock dividends paid, declared or otherwise
distributed by the Company in respect of the Optioned Shares between the
date hereof and the date of Closing. In the event any such dividends or
distributions are made in property other than cash, the fair market value
of such dividends or distributions will be determined pursuant to the
valuation procedures described in Section 3.4(b).
(b) The applicable "TRIGGER DATE" will depend on the Exercise Period under
which Purchaser is delivering an Exercise Notice and will be earliest of the
following days:
(i) in the case of an Exercise Period described in clauses (i) or
(ii) of Section 3.1(a), the day of an Event or Resignation Event, as the
case may be;
(ii) in the case of an Exercise Period described in clause (iii) of
Section 3.1(a), the day immediately preceding the day on which Grantor
delivers a Grantor's Notice;
(iii) in the case of an Exercise Period described in clause (iv) of
Section 3.1(a), the day immediately preceding the day on which Purchaser
delivers an Exercise Notice; or
(iv) in the case of an Exercise Period described in clause (v) of
Section 3.1(a), the day immediately preceding the day of a Jones Bankruptcy
Event.
SECTION 3.4. DETERMINATION OF MARKET VALUE. (a) For purposes of this
Agreement, "MARKET VALUE" of a share of Class A Common Stock means, on any
Trigger Date, the average of the daily closing prices on the NASDAQ National
Market System (or other principal exchange on which shares of Class A Common
Stock are listed or approved for trading) for the shares of Class A Common
Stock for the 20 consecutive trading days immediately prior to the Trigger
Date. The daily closing price for each such trading day shall be the closing
price, if reported, or, if the closing price is not reported, the average of
the closing "bid" and "asked" prices as reported by NASDAQ (or other principal
exchange). If the daily closing price per share of Class A Common Stock is
determined during a period following the declaration of a dividend,
distribution, recapitalization, reclassification or similar transactions, then
the Market Value shall be properly adjusted to take into accont ex-dividend
trading.
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(b) In the event that the shares of Class A Common Stock are not traded on
a national securities exchange, promptly after delivery of an Exercise Notice
Grantor and Purchaser shall in good faith negotiate the Market Value on the
applicable Trigger Date. If they are unable to reach agreement within 10
Business Days, each of Grantor and Purchaser shall promptly select a nationally
recognized independent investment banking firm to determine the Market Value of
a share of Class A Common Stock, which will be based on a public market
valuation of the Company and its Subsidiaries as if the Class A Shares were
traded on the NASDAQ National Market System and a non-controlling block of
approximately 1,000,000 Class A Shares had been purchased on the Trigger Date
by a willing institutional purchaser. If 20 Business Days after their selection
such firms cannot agree as to such Market Value, each firm will submit to
Grantor and Purchaser a proposed Market Value and within 10 Business Days they
shll mutually select a third nationally recognized independent investment
banking firm which shall be engaged to make such determination, which Market
Value shall be within the range of values proposed by the two investment
banking firms. Such third investment banking firm shall make such determination
(the "FINAL DETERMINATION") by written notice to Grantor and Purchaser within
20 Business Days of its engagement and its judgment as to all matters relating
to its determination shall be binding upon the parties hereto. Each party will
pay the fees and expenses of the initial investment banking firm hired by such
party. The fees and out-of-pocket expenses of the third investment banking firm
shall be paid equally by Grantor and Purchaser, provided that if Purchaser
withdraws an Exercise Notice pursuant to the following paragraph (c), Purchaser
shall pay the fees and expenses of such third investment banker.
(c) At any time prior to 10 Business Days after the receipt by Purchaser
of a written determination of the Market Value pursuant to the immediately
preceding paragraph (b) (the "WITHDRAWAL PERIOD"), Purchaser shall have the
right to withdraw its Exercise Notice by written notice to Grantor.
Notwithstanding the immediately preceding sentence, in the event the investment
banking firm selected by Purchaser submits a proposed Market Value pursuant to
such paragraph (b), Purchaser may withdraw its Exercise Notice only for 10
Business Days after the receipt by Purchasor of such proposed Market Value,
provided that if (but only if) the Final Determination is greater than 110% of
such proposed Market Value, Purchaser will have 10 Business Days after the
receipt by Purchaser of such Final Determination to withdraw its Exercise
Notice. If Purchaser does not withdraw such Exercise Notice pursuant to this
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paragraph (c), Purchaser will notify Grantor within five Business Days after
the expiration of such Withdrawal Period as to the time and place of the
Closing, which shall be not more than 20 Business Days after the expiration of
such Withdrawal Period, provided that, subject to Section 3.6, Purchaser may
postpone such closing until such time as the conditions described in Section
3.2(b) have been satisfied or waived by Purchaser.
SECTION 3.5. CLOSING. (a) At the Closing, Grantor shall deliver to
Purchaser a certificate or certificates or other documentation representing the
Optioned Shares, accompanied by stock powers duly execucted in blank or other
appropriate assignment documentation reasonably satisfactory to Purchaser.
(b) At the Closing, Purchaser shall deliver to Grantor an amount in cash
equal to the purchase price for such Optioned Shares, calculated pursuant to
Section 3.3(a). Such purchase price will be paid by wire transfer to a bank
account designated by Grantor not later than five Business Days prior to the
Closing. Notwithstanding the foregoing, upon the mutual agreement of Purchaser
and Grantor, all or a portion of the Purchase Price may be paid in shares of
common stock of BCE Inc.
SECTION 3.6. TERMINATION OF CONTROL OPTION. (a) The Control Option shall
terminate at 5:00 p.m. Denver time when the first Exercie Period described in
clauses (i), (iii) or (iv) of Section 3.1 expires (the ""TERMINATION TIME"),
provided that, subject to the following paragraph (b), the Control Option will
not terminate if Purchaser has previously delivered to Grantor an Exercise
Notice. The Control Option shall also terminate (A) at such time as Purchaser
withdraws an Exercise Notice pursuant to Section 3.4(c), or (B) if the Closing
has been postponed pursuant to Section 3.2(b), ten Business Days after Grantor
has delivered written notice to Purchaser stating that it believes Purchaser is
not using its reasonable efforts to consummate the Closing promptly (which
notice will set forth the basis for such claim) and Purchaser has failed to use
its reasonable efforts prior to the expiration of such period to cure the
problem identified by Grantor. The Control Option will not terminate upon the
expiration of the Exercise Periods described in clauses (ii) and (v) of Section
3.1.
(b) Notwithstanding anything in this Agreement to the contrary, (i) if an
Exercise Period is extended pursuant to the proviso in Section 3.1(a), the
Termination Time will occur twenty Business Days after such stay or prohibition
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has been lifted and Purchaser has received notice of such action and (ii) each
Exercise Notice shall terminate, and be of no further force or effect, 18
months after its delivery, unless a Closing shall have occurred by such time.
SECTION 3.7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR MERGER. If any
change in the Company's capital stock shall occur by reason of stock dividends,
stock splits, mergers, consolidations, recapitalizations, combinations,
conversions, exchanges of shares, dividends or other changes in the corporate
or capital structure of the Company, the number and kind of shares or
securities subject to the Control Option and the Purchase Price shall be
adjusted so that Purchaser shall receive upon exercise of the Control Option
the number and class of shares or other securities or property that Purchaser
would have received in respect of the Optioned Shares purchasable upon exercise
of the Control Option if the Control Option had been exercised immediately
prior to such event.
ARTICLE IV
COVENANTS
SECTION 4.1. NO PROXIES FOR OR ENCUMBRANCES ON OPTIONED SHARES. Except
as contemplated by this Agreement, until the termination of this Agreement
pursuant to Section 10.1, Grantor shall not, directly or indirectly, (i) grant
any proxies (other than a revocable proxy granted in connection with a meeting
of stockholders) or enter into any voting trust or other agreement or
arrangement with respect to the voting of any Optioned Shares, (ii) sell,
assign, transfer, encumber or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the direct or
indirect sale, assignment, transfer, encumbrance or other disposition of, any
Optioned Shares or (iii) seek or solicit any transaction or arrangement
described in clauses (i) and (ii). Grantor will notify Purchaser promptly (and
provide all details reasonably requested by Purchaser) if Grantor is approached
or solicited, directly or indirectly, by any person with respect to any of the
foregoing. Nothing herein shall be deemed to prevent or restrict (x) Grantor or
its Affiliates from voting its shares in its sole discretion on all matters,
except as otherwise agreed to between Grantor, its Affiliates and BCI in the
Shareholders Agreement or otherwise or (ii) any Affiliate of Grantor from
taking or refraining from taking any other action not provided herein or
otherwise agreed to between Grantor, its Affiliates and BCI in the Shareholders
Agreement or otherwise.
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SECTION 4.2. FURTHER ASSURANCES. BCI (and its agent) and Grantor will
each execute and deliver or cause to be executed and delivered all futher
documents and instruments and use their reasonable best efforts to secure such
consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby or to enable Purchaser
and BCI to enjoy all benefits and rights of the Optioned Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTS
OF GRANTOR
Grantor represents and warrants to Purchaser that, except as disclosed in
the Schedules to the Stock Purchase Agreement, as of the date hereof and, in
the case of Sections 5.1, 5.2 and 5.6 the date of the Closing:
SECTION 5.1. VALID TITLE. Grantor is the sole record and beneficial owner
of the Optioned Shares, free and clear of any Lien (other than the Security
Interest) and any other limitation or restriction (including any limitation or
restriction on the right to vote, sell or otherwise dispose of or transfer any
Optioned Share). At the Closing, Grantor will convey good and valid title to
the Optioned Shares, free and clear of any Lien and any such limitation or
restriction (other than offer and sale restrictions imposed by securities laws).
SECTION 5.2. EXISTENCE. Grantor is a trust duly organized, validly
existing and in good standing under the laws of Delaware and has all material
governmental licenses, authorization, permits, consents and approvals required
to carry on its business as now conducted. Grantor has heretofore delivered to
Purchaser true and complete copies of its Trust Agreement and trust certificate
as currently in effect.
SECTION 5.3. BINDING EFFECT. The execution, delivery and performance by
Grantor of this Agreement are within Grantor's power and have been duly
authorized by all necessary action on the part of Grantor. This Agreement has
been duly executed and delivered by Grantor, and assuming the accuracy of
Purchaser's representations and warranties herein, is a valid and binding
agreement of Grantor.
SECTION 5.4. GOVERNMENTAL AUTHORIZATION. Assuming the accuracy of BCI's
representations and warranties in the Shareholders Agreement, the execution,
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delivery and performance by Grantor of this Agreement requires no action by
Grantor in respect of, or filing by Grantor with, any Governmental Authority
other than (i) compliance with any applicable requirements of the HSR Act and
(ii) any such action or filing as to which the failure to make or obtain would
not reasonably expected to have, individually or in the aggregate, a material
adverse effect on the business, assets, results of operations, properties or
condition (financial or otherwise) of Grantor.
SECTION 5.5 NON-CONTRAVENTION. The execution, delivery and performance
by Grantor of this Agreement do not: (i) violate the Trust Agreement or trust
certificate of Grantor, (ii) assuming the accuracy of Pruchaser's
representations and warranties herein and compliance with the matters referred
to in Section 5.4, violate any applicable law, rule, regulation, judgment,
injunction, order or decree binding on Grantor, (iii) assuming the accuracy of
Purchaser's representations and warranties herein, require any consent or other
action by any Person under, or constitute a default under, any material
agreement or other instrument binding upon Grantor, or (iv) except as
contemplated by Article IX, result in the creation or imposition of any Lien on
any material asset of Grantor, except in the case of clauses (ii), (iii) and
(iv), to the extent that any such violation, failure to obtain any such
consent or other action, default, right, loss or Lien would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect
on the business, assets, results of operations, properties or financial
condition of Grantor.
SECTION 5.6 FINDER'S FEES. Except as disclosed to BCI, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Grantor or its Affiliates who
might be entitled to any fee or commission from Purchaser, BCI or any
Intercable Group Entity in connection with the grant or exercise of the Control
Option.
SECTION 5.7 VALIDITY, PERFECTION AND PRIORITY OF SECURITY INTEREST. (a)
Upon the delivery of the certificates representing the Optioned Share to
Purchaser in accordance with Section 9.2, Purchaser will have a valid and
perfected security interest in the Collateral subject to no prior Lien. No
registration, recordation or filing with any governmental body, agency or
official is required in connection with (i) the execution or delivery of this
Agreement or necessary for the validity or enforceability hereof (except as
covered in Sections 5.4 and 5.5) or (ii) for the perfection or enforcement of
the Security Interest.
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Neither Grantor nor any of its Affiliates has performed or will perform any
acts which would prevent Purchaser from enforcing any of the terms and
conditions of this Agreement or which would materially limit Purchaser in any
such enforcement. Without limiting the generality of the foregoing, the parties
hereto acknowledge that in matters relating to Franchise Agreements (as defined
in the Shareholders Agreement) and material contracts, an Affiliate of Grantor
will not be in breach of the immediately preceding sentence if it is in
compliance with its obligations under Section 5.2 of the Shareholders Agreement
concerning such matters.
(b) The chief executive office of Grantor is located at its address set
forth in Section 10.4. Under the Uniform Commerical Code as in effect in the
State in which such office is located, no local filing is required to perfect a
security interest in collateral consisting of general intangibles other than any
such collateral arising from or relating to farm products.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 6.1. ACQUISITION FOR PURCHASER'S ACCOUNT. Purchaser represents
and warrants to Grantor that as of the date hereof and the date of the Closing
the Optioned Shares to be acquired upon exercise of the Control Option will be
acquired by Purchaser as the agent for BCI's own account and not with a view to
the public distribution thereof and will not be transferred except in
compliance with the Securities Act.
ARTICLE VII
CHANGE IN LAW
SECTION 7.1. CHANGE IN LAW. (a) If a Change in Law after the execution
and delivery of this Agreement and prior to the delivery of an Exercise Notice
would be reasonably likely to (i) prevent BCI (or its agent) from exercising
the Control Option, (ii) require BCI (or its agent) to divest, or otherwise
limit BCI's (or its agent's) ability to exercise full rights of ownership over,
the shares of Capital Stock owned by BCI and its Affiliates, the Control Option
of the Optioned Shares or (iii) after the exercise of the Control Option,
require the Intercable Group to divest any material business or assets or
impose a
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material limitation on the conduct of Intercable Group's business, BCI may
instruct the Purchaser to dispose of the Control Option and any other
securities of the Intercable Group Entities owned by BCI and its Affiliates
pursuant to the terms and procedures of this Article VII.
(b) Purchaser acknowledges that it will have no rights under this Article
VII if after the date hereof BCI or any of its Subsidiaries enters into a new
line of business and at such time there is a law, rule or regulation that has
one or more of the effects described in clauses (i), (ii) or (iii) of the
preceding paragraph (a).
SECTION 7.2. RIGHT OF FIRST OFFER. (a) In the event Purchaser is
instructed by BCI to dispose of the Control Option after the occurrence of an
event described in Section 7.1, Purchaser shall, by written notice to Grantor,
first offer the Control Option to Grantor at a price equal to the aggregate
consideration paid by Purchaser pursuant to Section 2.1, plus interest from the
date of this Agreement to and including the date the Control Option is
purchased by Grantor (or an Affiliate of Grantor), at a rate per annum equal to
12%, compounded annually (the "OFFER PRICE"). Any such written notice shall be
in the form of Exhibit C hereto (the "OFFER NOTICE"), but will be effective
only if a similar notice is simultaneously delivered by Purchaser under the
Related Option Agreements.
(b) For a period of 270 days after receipt of the Offer Notice, Grantor
(or, if Grantor elects not to purchase the Control Option, Jones
International or any of its Affiliates, including the Company) may, by a
written notice to Purchaser in the form attached as Exhibit D hereto (an
"ACCEPTANCE NOTICE"), elect to purchase the Control Option at the Offer Price
and, if it so elects, may also purchase all (but not less than all) of (i) the
shares of Common Stock and Class A Common Stock then held by BCI and its
Subsidiaries at a price per share equal to the Market Value of such shares
(calculated pursuant to Section 3.4 and assuming that the Trigger Date is the
day immediately preceding the day the Offer Notice is delivered) and (ii) any
other debt or equity securities of the Intercable Group Entities then held by
BCI and its Subsidiaries at a price equal to the fair market value of such
securities on the day immediately preceding the day on which the Offer Notice
is delivered (such value to be determined pursuant to the valuation procedures
described in Section 3.4(b)).
(c) If Grantor, Jones International or any of its Affiliates (including
the Company) fail to elect to purchase the Control Option within 270 days after
receipt of the
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Offer Notice, then Purchaser may, for a period of 360 days following the
expiration of such time period, sell (or enter into an agreement to sell) the
Control Option to a third party, provided that in the event of any such sale the
third party purchaser must simulatneously exercise the Control Option and
deliver the Option Price to Grantor in exchange for the Optioned Shares (in such
event, the "TRIGGER DATE" will be the day which is 270 days after receipt by
Grantor of an Offer Notice).
(d) If Grantor fails to elect to purchase the Control Option at the Offer
Price and Purchaser shall not have sold or entered into an agreement to sell the
Control Option prior to the expiration of the 360 day period specified in
paragraph (c) above, Purchaser must, prior to selling the Control Option, again
offer the Control Option to Grantor pursuant to the terms and procedures of this
Section 7.2.
(e) In the event Purchaser is instructed by BCI to exercise its rights
under Sections 7.1 and 7.2, Purchaser and Grantor will use reasonable efforts to
identify a suitable partner to purchase the Control Option and the shares of
Class A Common Stock held by Purchaser. Purchaser will consult with Jones before
selling the Control Option to a third party and will consider Jones' views as to
the suitability of potential purchasers.
SECTION 7.3 CLOSING PROCEDURES. (a) The delivery of an Acceptance Notice
will constitute a contract between Purchaser and Grantor (and any Affiliate of
Grantor that delivers the Acceptance Notice) for the purchase and sale of (i)
the Control Option at the Offer Price, and (ii) if applicable, the securities
described in clauses (i) and (ii) of Section 7.2(b) (the "ADDITIONAL
SECURITIES") at the price described therein.
(b) If Grantor (or its Affiliate) timely delivers an acceptance Notice, the
closing for the purchase and sale of the Control Option and the Additional
Securities will take place 20 Business Days after delivery of such Acceptance
Notice.
(c) The Purchase price for the Control Option and the Additional Securities
will be paid by wire transfer in immediately available funds to a bank account
designated by Purchaser not less than five Business Days prior to Closing.
(d) At any closing hereunder, Purchaser will deliver to the purchaser good
and valid title to the Control
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Option and the Additional Securities, free and clear of any Lien.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
SECTION 8.1. SURVIVAL. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certifificate or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing until one year after the date of the
Closing, provided that the representation and warranty contained in Section 5.1
shall survive indefinitely. Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of which indemnity
may be sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time. Any such notice shall set forth the basis of the claim for
indemnification (including reference to the specific details regarding the
manner in which the covenants, agreements, representations or warranties are
alleged to have been breached).
SECTION 8.2 INDEMNIFICATION. Grantor hereby indemnifies Purchaser
against and agrees to hold it harmless from any and all damage, loss,
liability and expense other than consequential damages (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding) ("DAMAGES")
incurred or suffered by Purchaser arising out of any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by Grantor
pursuant to this Agreement.
SECTION 8.3 PROCEDURES. The party seeking indemnification under Section
8.2 (the "INDEMNIFIED PARTY") agrees to give prompt notice to the party against
whom indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The Indemnifying Party may,
and at the request of the Indemnified Party shall participate in and control
the defense of any such suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 8.2 for any settlement
affected
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without its consent of any claim, litigation or proceeding in respect of which
indemnity may be sought hereunder.
ARTICLE IX
PLEDGE OF OPTIONED SHARES
SECTION 9.1. THE SECURITY INTEREST. In order to secure the performance
of the Secured Obligations in accordance with the terms thereof, and to secure
the performance of all the obligations of Grantor hereunder:
(a) Grantor hereby assigns and pledges to Purchaser and grants to
Purchaser a security interest in the Optioned Shares, and all of its rights and
privileges with respect to the Optioned Shares, and all income and profits
thereon (other than dividends paid by the Company in respect of the Optioned
Shares prior to any exercise by the Purchaser of its remedies hereunder, which
will be paid over to Grantor as provided in Section 9.4) and all proceeds of the
foregoing, and any and all property referred to in Section 9.1(b) (the
"Collateral").
(b) In the event any change in the Company's capital stock described in
Section 3.7 shall occur, Grantor will immediately pledge and deposit with
Purchaser any securities (and any share certificates or other instruments
evidencing such securities) issued by the Company in respect of the Optioned
Shares, and all income and profits thereon (other than dividends paid by the
Company in respect of the Optioned Shares prior to any exercise by the
Purchaser of its remedies hereunder), as additional security for the Secured
Obligations. All such securities, share certificates, instruments and other
property constitute Collateral and are subject to all provisions of this
Agreement.
(c) The Security Interest is granted as security only and shall not
subject Purchaser to, or transfer or in any way affect or modify, any
obligation or liability of Grantor with respect to any of the Collateral or
any transaction in connection therewith.
(d) In the event Grantor fails to perform any Secured Obligation,
Purchaser shall be entitled to exercise all rights of a secured party under the
Uniform Commercial Code (whether or not in effect in the jurisdiction where the
rights are exercised) and such other rights as may otherwise be provided to a
secured party under applicable law.
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SECTION 9.2. DELIVERY OF COLLATERAL. All certificates representing
Optioned Shares (or securities described in Section 9.1(b)) delivered to
Purchaser by Grantor pursuant hereto shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, with signatures appropriately guaranteed, and accompanied
by any required transfer tax stamps, all in form and substance satisfactory to
Purchaser.
SECTION 9.3. FURTHER ASSURANCES. (a) Grantor agrees that it will, at
Purchaser's expense and in such manner and form as Purchaser may reasonably
require, execute, deliver, file and record any financing statement, specific
assignment or other paper and take any other action that may be necessary or
desirable that Purchaser may request, in order to create, preserve, perfect or
validate the Security Interest or to enable Purchaser to exercise and enforce
its rights hereunder with respect to any of the Collateral. To the extent
permitted by applicable law, Grantor hereby authorizes Purchaser to execute and
file, in the name of Grantor or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic, photostatic or other
reproductions of this Agreement or of a financing statement relating to this
Agreement) which Purchaser in its reasonable discretion may deem necessary or
appropriate to further perfect the Security Interest.
(b) Grantor agrees that it will not change (i) its name, identity or
structure in any manner or (ii) the location of its chief executive office
unless it shall have given Purchaser not less than 30 days' prior notice
thereof.
(c) In connection with an exercise of rights pursuant to Section 9.1(d),
Purchaser may cause any or all of the Optioned Shares to be transferred of
record into the name of Purchaser, BCI or any of their nominees. After notice
thereof, Grantor will promptly give to the Purchaser (or its designee) copies
of any notices or other communications received by it with respect to the
Optioned Shares registered in the name of Grantor, and Purchaser will promptly
give to Grantor copies of any notices and communications received by Purchaser
(or BCI or a nominee) with respect to any Optioned Shares registered in the
name of Purchaser (or BCI or a nominee).
SECTION 9.4. RIGHT TO VOTE AND RECEIVE DIVIDENDS ON COLLATERAL. (a)
Until such time (if ever) that Purchaser shall have exercised, pursuant to
Section 9.1(d), any of its remedies in respect of the Collateral, Grantor
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shall retain all voting rights with respect to the Optioned Shares and shall
have the right to receive all dividends paid by the Company in respect of the
Collateral and Purchaser shall take all such action as Grantor may deem
necessary or appropriate to give effect to such right. All such dividends which
are received by Purchaser shall be received in trust for the benefit of Grantor
and shall promptly be paid over to Grantor.
(b) In the event Purchaser exercises, pursuant to Section 9.1(d), any of
its remedies in respect of the Collateral, Purchaser shall thereafter be
entitled to receive all dividends paid by the Company in respect of the
Collateral, but there will be no Option Price adjustment pursuant to Section
3.3(a)(ii) in respect of any such dividends retained by Purchaser.
SECTION 9.5. LIMITATION ON DUTY OF PURCHASER IN RESPECT OF COLLATERAL.
Beyond the exercise of reasonable care in the custody thereof, Purchaser shall
have no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. Purchaser shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which it accords its own
property, and shall not be liable or responsible for any loss or damage to any
of the Collateral, or for any diminution in the value thereof, by reason of the
act or omission of any agent or bailee selected by Purchaser in good faith.
SECTION 9.6. TERMINATION OF SECURITY INTEREST; RELEASE OF COLLATERAL.
The Security Interest granted hereunder shall terminate, and all rights to the
Collateral shall revert to the Grantor, at the termination of this Agreement
pursuant to Section 10.1 (unless the Optioned Shares have been purchased as
provided herein). Upon any such termination of the Security Interests or
release of Collateral, Purchaser will deliver the Collateral to Grantor and
will execute and deliver to Grantor such documents as Grantor shall reasonably
request to evidence the termination of the Security Interest or the release of
such Collateral, as the case may be.
SECTION 9.7. SUCCESSORS AND ASSIGNS. The provisions of this Article IX
are for the benefit of Purchaser and Grantor and their respective successors
and assigns, and in the event of an assignment permitted by Section 10.2 of all
or any of the Secured Obligations, the
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rights hereunder, to the extent applicable to the indebtedness so assigned, may
be transferred with such indebtedness.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. TERMINATION. (a) This Agreement will terminate
automatically and will be of no further force or effect at the time the Control
Option terminates (at the Termination Time or otherwise) or a closing pursuant
to Section 7.2 or 7.3, provided that Sections 5.1, 5.6 and 6.1 will survive any
such termination.
(b) The termination of this Agreement pursuant to Section 10.1 shall be
without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to any other party
to this Agreement, provided that no such termination shall relieve any party
for any liability such party may have for a material willful breach hereof.
SECTION 10.2. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors. No party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
written consent of the other parties hereto, provided that (i) Purchaser may
assign its rights, but not its obligations, hereunder to any Eligible Assignee
(or an agent of such Eligible Assignee), (ii) Purchaser may assign its rights
and obligations hereunder as provided in Article VII and (iii) Purchaser may
assign its rights (but not its obligations) hereunder at any time after the
delivery by it of an Exercise Notice to Grantor if at the time of any such
assignment pursuant to this clause (iii) the assignee purchases the Optioned
Shares pursuant to Section 3.5.
(b) For purposes of this Agreement, "ELIGIBLE ASSIGNEE" means BCI and any
entity which at the time of such assignment is, and thereafter during the term
of this Agreement remains, (i) controlled, directly or indirectly, by BCI and
(ii) not primarily engaged in, or a Subsidiary of BCI primarily engaged in, the
direct operation or management of (x) cable television systems located in North
America, (y) wireline local communications services located in the United
States of America or (z) educational programming services, other than BCI and
any Person that is an
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Intercable Group Entity or a JI Group Entity (each a "RESTRICTED BUSINESS").
The parties hereto acknowledge that the foregoing provisions are not intended
to restrict the Purchaser from assigning its rights hereunder to a Subsidiary
of BCI that is a holding company of an entity or entities primarily engaged in
a Restricted Business.
SECTION 10.3 SPECIFIC PERFORMANCE. The parties agree that (i) Purchaser
would be irreparably damaged if for any reason Grantor failed to sell the
Optioned Shares upon exercise of the Control Option or to perform any of
Grantor's other obligations under this Agreement, and that Purchaser would not
have an adequate remedy at law for money damages in such event and (ii) Grantor
would be irreparably damaged if for any reason Purchaser failed to maintain the
Collateral in accordance with the terms of this Agreement or to perform any of
Purchaser's other obligations under this Agreement, and that Grantor would not
have an adequate remedy at law for money damages in such event. Accordingly,
each party shall be entitled to specific performance and injunctive and other
equitable relief to enforce the performance of this Agreement by the other
party. This provision is without prejudice to any other rights that each party
may have against the other party for any failure to perform their obligations
under this Agreement.
SECTION 10.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram or telex, or by registered or certified mail
(postage prepaid, return receipt requested):
if to Grantor, to each of:
Robert S. Zinn
431 Leyden Street
Denver, CO 80220
Telephone and Fax: (303) 333-5054
Christine Jones Marocco
25 East End Avenue
Apt. 14F
New York, New York 10028
Telephone: (212) 737-4722
John P. Garniewski, Jr.
2625 Concord Pike
P.O. Box 7108
Wilmington, Delaware 19803
Telephone: 302-477-1260
302-478-8524
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<PAGE> 29
with a copy to:
Jones International, Ltd.
9697 East Mineral Avenue
Englewood, Colorado 80155
Fax: 303-784-8510
Attention: Glenn R. Jones and General
Counsel
if to Purchaser:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Fax: 212-648-5111
Attention: Jack Fruchtman
with copies to:
Bell Canada International Inc.
1000, rue de la Gauchetiere West
Suite 1100
Montreal, Quebec
Canada H3B 4Y8
Fax: 514-392-2342
Attention: Chief Financial Officer
and General Counsel
Any notice delivered after business hours or on any day which is not a Business
Day shall be deemed for purposes of computing any time period hereunder to have
been delivered on the succeeding Business Day.
SECTION 10.5 EXPENSES. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
SECTION 10.6 AMENDMENTS AND WAIVERS. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be
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cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10.7 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without
regard to the conflicts of law rules of such state.
SECTION 10.8 COUNTERPARTS; EFFECTIVENESS. 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.
This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.
SECTION 10.9 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 10.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 10.11 SEPARABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 10.12 AGENCY CAPACITY OF PURCHASER. Grantor expressly acknowledges
and agrees that Purchaser is acting solely as agent on behalf of BCI and not in
a principal capacity. Grantor further acknowledges and agrees that in executing
and delivering this Agreement, making any payment, delivering any notice or
instruction, making any determination or taking any other action provided for
or contemplated herein, Purchaser is acting and shall act solely upon the
instruction and at the direction of BCI.
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
JONES INTERNATIONAL GRANTOR
BUSINESS TRUST
By: _________________________________
Name: Robert S. Zinn
Title: Managing Trustee
By: _________________________________
Name: Christine Jones Marocco
Title: Managing Trustee
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as agent for Bell Canada
International Inc.
By: _________________________________
Title:
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<PAGE> 32
SCHEDULE I
THE OPTION PRICE
The Option Price on any Trigger Date will be based on the following table:
<TABLE>
<CAPTION>
Anniversary
of the
SPA Closing Base Price
----------- ----------
<S> <C>
June 19, 1995 28.50
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 on any Trigger Date will equal the sum of:
(i) the Base Price on the anniversary of the SPA Closing immediately
preceding the Trigger Date, and
(ii) a pro rata portion (based on the number of days elapsed between the
most recent anniversary of the SPA Closing and the Trigger Date) of
the difference between such Base Price and the Base Price on the
immediately succeeding anniversary of the SPA Closing.
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<PAGE> 33
EXHIBIT A
[Form of Exercise Period Notice]
[Date]
To Morgan Guaranty Trust Company of New York:
Reference is made to the Option Agreement (the "Agreement") dated as of
December 20, 1994 between Morgan Guaranty Trust Company of New York, as agent
for Bell Canada International Inc., and Jones International Grantor Business
Trust. Capitalized terms used but not defined herein have the meanings set
forth in the Agreement. This Grantor's Notice is being delivered to you
pursuant to Section 3.1 of the Agreement.
Grantor hereby irrevocably notififes Purchaser that [an Event has occured
on [date] and an Exercise Period has commenced pursuant to subsection 3.1(a)(i)
of the Agreement. Such Exercise Period will expire on 270 days from receipt by
you of this Grantor's Notice.]* [a Resignation Event has occurred on [date] and
an Exercise Period has commenced pursuant to subsection 3.1(a)(ii) of the
Agreement. Such Exercise Period will expire on ___________, which is 90 days
from receipt by you of this Grantor's Notice]** [pursuant to subsection
3.1(a)(iii) of the Agreement, Grantor hereby requests that Purchaser determine
whether it wishes to exercise the Control Option on or prior to ___________,
which is 180 days from receipt by you of this Grantor's Notice.]*** [a Jones
Bankruptcy Event has occurred on [date] and an Exercise Period has commenced
pursuant to subsection 3.1(a)(v) of the Agreement. Such Exercise Period will
expire on ___________, which is 30 days from receipt by you of this Grantor's
Notice.]****
If Purchaser wishes to exercise the Control Option pursuant to the terms
and conditions of the Agreement, please respond by delivery of an Exercise
Notice in
____________
* Insert if Section 3.1(a)(i) Grantor's Notice.
** Insert if Section 3.1(a)(ii) Grantor's Notice.
*** Insert if Section 3.1(a)(iii) Grantor's Notice.
**** Insert if Section 3.1(a)(v) Grantor's Notice.
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<PAGE> 34
accordance with Section 3.2 of the Agreement prior to the expiration of the
Exercise Period.
JONES INTERNATIONAL GRANTOR
BUSINESS TRUST
By: __________________________
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<PAGE> 35
EXHIBIT B
[Form of Exercise Notice]
[Date]
To Jones International Grantor Business Trust:
Reference is made to the Option Agreement (the "Agreement" dated as of
December 20, 1994 between Morgan Guaranty Trust Company of New York, as agent
for Bell Canada International Inc., and Jones International Grantor Business
Trust. Capitalized terms used but not defined herein have the meaning set forth
in the Agreement. This Exercise Notice is being delivered to you pursuant to
Section 3.2 of the Agreement and in response to your Exercise Period Notice
dated as of [date].
Purchaser hereby [irrevocably elects to exercise the Control Option and
purchase the Optioned Shares for an aggregate purchase price of $__________.
Schedule I hereto sets forth our calculation of the purchase price per share
pursuant to Setions 3.3 and 3.4(a) of the Agreement. Please contact us so that
we may agree on a mutally acceptable time and place for closing.] [elects to
exercise the Control Option and purchase the Optioned Shares at a price to be
determined pursuant to Section 3.3 and the procedures described in Section
3.4(b) of the Agreement. Please contact us so that we may attempt to negotiate
the Market Value of ________ within 10 Business Days of the date hereof.]*
Please contact us so that we may agree on a mutually acceptable time
and place for closing.
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as agent for Bell
Canada International, Inc.
By: ______________________________
_________________
* Use second option only if a Market Value must be determined pursuant to
Section 3.4(b).
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<PAGE> 36
EXHIBIT C
[Form of Offer Notice]
[Date]
To Jones International Grantor Business Trust:
Reference is made to the Option Agreement (the "Agreement") dated as of
December 20, 1994 between Morgan Guaranty Trust Company of New York, as agent
for Bell Canada International, Inc., and Jones International Grantor Business
Trust. Capitalized terms used but not defined herein have the meanings set
forth in the Agreement. This Offer Notice is being delivered to you pursuant to
Section 7.2 of the Agreement.
Purchaser wishes to dispose of the Control Option and hereby irrevocably
offers to sell the Control Option to Grantor (or, if Grantor elects not to
purchase the Control Option, Jones International, Ltd. or any of its
Affiliates, including the Company) for the Offer Price (as defined in the
Agreement), which we calculate to be $______ as of the date of this Offer
Notice.
If Grantor (or Jones International, Ltd. or any of its Affiliates) wishes
to pruchase the Control Option for the Offer Price, please respond by delivery
of an Acceptance Notice in accordance with subsection 7.2(b) of the Agreement
on or prior to that date which is 270 days from receipt by you of this Offer
Notice.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as agent for
Bell Canada International Inc.
By:_____________________________________
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<PAGE> 37
EXHIBIT D
[Form of Acceptance Notice]
[Date]
To Morgan Guaranty Trust Company of New York:
Reference is made to the Option Agreement (the "Agreement") dated as of
December 20, 1994 between Morgan Guaranty Trust Company of New York, as agent
for Bell Canada International Inc., and Jones International Grantor Business
Trust. Capitalized terms used but not defined herein have the meaning set forth
in the Agreement. This Acceptance Notice is being delivered to you pursuant to
Section 7.2 of the Agreement and in response to Purchaser's Offer Notice dated
as of [date].
[Grantor]* hereby irrevocably agrees to exercise the Control Option and
purchase the Optioned Shares for the Offer Price, which we calculate to be
$_________ as of the date hereof. [Grantor also hereby elects to purchase (i)
all shares of Common Stock and Class A Common Stock and (ii) any other debt or
equity securities of the Intercable Group Entities held by Purchaser and its
Subsidiaries on the date hereof for an aggregate purchase price to be
determined pursuant to Section 7.2(b) of the Agreement.]**
Please contact us so that we may agree on a mutually acceptable time and
place for closing [and the purchase price of the additional securities]**.
[JONES INTERNATIONAL GRANTOR
BUSINESS TRUST]*
By: __________________________
____________________
*Insert name of Grantor, Jones International, Ltd. or name of Affiliate,
as applicable.
**Insert if appropriate.
61
