SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 13D - Amendment No. 1
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Jones Intercable, Inc.
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(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $.01
COMMON STOCK, PAR VALUE $.01
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(Title of Class of Securities)
480206-200
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(CUSIP Number)
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Stanley Wang
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
(215) 665-1700
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 12, 1998
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(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 [ ]. (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 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>
CUSIP NO. 480206-200
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1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS
Comcast Corporation
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
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NUMBER OF 7. SOLE VOTING POWER
SHARES ------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY ------------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER
REPORTING ------------------------------------------------------
PERSON WITH 10. SHARED DISPOSITIVE POWER
Class A 12,782,500
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Class A 12,782,500
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.5%
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14. TYPE OF REPORTING PERSON
CO
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Page 2 of 12
<PAGE>
CUSIP NO. 480206-200
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1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF
ABOVE PERSONS
Comcast Corporation
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
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NUMBER OF 7. SOLE VOTING POWER
SHARES ------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY ------------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER
REPORTING ------------------------------------------------------
PERSON WITH 10. SHARED DISPOSITIVE POWER
Common 2,878,151
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Common 2,878,151
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.3%
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14. TYPE OF REPORTING PERSON
CO
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Page 3 of 12
<PAGE>
This Amendment No. 1 amends the Schedule 13D (the "Schedule 13D") filed
on June 1, 1998, by Comcast Corporation., a Pennsylvania Corporation, with
respect to Common Stock, par value $.01 per share, and Class A Common Stock, par
value $.01 per share, of Jones Intercable, Inc., a Colorado corporation whose
principal executive office is located at 9697 E. Mineral Avenue, Englewood,
Colorado 80112.
Unless otherwise defined herein, each capitalized term used herein has
the same meaning ascribed to it in the Schedule 13D.
ITEM 1. SECURITY AND ISSUER
-------------------
Item 1 is amended to read as follows: This Statement relates to shares
of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
and Common Stock, par value $.01 per share (the "Common Stock"), of Jones
Intercable, Inc., a Colorado corporation (the "Company").
The address of the Company's principal executive office is 9697 E.
Mineral Avenue, Englewood, Colorado 80112.
ITEM 4 PURPOSE OF TRANSACTION
----------------------
Comcast acquired its right to acquire the Shares (as defined in Item 5)
as the result of having entered into the Amended and Restated Purchase and Sale
Agreement and the Comcast/Jones Agreement, both described in Item 6 below.
Comcast entered into the Amended and Restated Purchase and Sale Agreement and
the Comcast/Jones Agreement for the purpose of investing in, and obtaining
control of shares of capital stock sufficient to elect a majority of the board
of directors of, the Company. Upon the consummation of the transactions
contemplated by the Comcast/Jones Agreement, the Amended Option Agreement and
the Amended and Restated Purchase and Sale Agreement (the "Closing"), Comcast
will own a sufficient number of shares of Common Stock to elect a majority of
the board of directors of the Company and pursuant to the terms of the foregoing
agreements, the directors of the Company, other than the three directors jointly
designated by Jones and BTH pursuant to the Shareholders Agreement, will resign
seriatim from the board of directors of the Company at the Closing and will be
replaced by individuals designated by Comcast.
Comcast may, subject to applicable securities laws, market conditions
and its assessment of the business prospects of the Company, acquire additional
shares of Class A Common Stock or Common Stock from time to time through open
market purchases or otherwise, as it determines in its sole discretion. Comcast
has not determined whether it will acquire additional shares or fixed any number
of shares of Class A Common Stock or Common Stock it might seek to acquire or
any amount of money it may be willing to invest in the Company. Comcast is
continuously evaluating the business and business prospects of the Company, and
its present and future interests in, and intentions with respect to, the Company
and, may, at any time decide to dispose of any or all of the Shares.
Page 4 of 12
<PAGE>
Except as specifically described above, Comcast, nor, to the best of
Comcast's knowledge, any of the persons named on Annex A of the Schedule 13D,
has any plan or proposal which would relate to or would result in any of the
following transactions:
a. any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
b. a sale or transfer of a material amount of the assets of the Company
or any of its subsidiaries;
c. any change in the present Board of Directors or management of the
Company, including any change in the number or term of directors or
the filling of any vacancies of the Board of Directors;
d. any material change in the present capitalization or dividend policy
of the Company;
e. any other material change in the Company's business or corporate
structure;
f. any change in the Company's charter, by-laws or instruments
corresponding thereto or any other actions which may impede the
acquisition of control of the Company by any person;
g. the delisting of any class of securities of the Company from a
national securities exchange or the ceasing to be authorized to be
quoted in an interdealer quotation system of a registered national
securities association;
h. any class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
i. any action similar to any of those enumerated above.
Comcast intends periodically to review the Company's business affairs,
financial position and prospects. Based on such review, and on general economic,
industry and market conditions existing at the time, and on such other factors
as it may determine to be relevant, Comcast may consider additional or
alternative courses of action. Such actions may include the items specified in
(a) through (i) above or acquisitions of shares of Class A Common Stock or
Common Stock through open market purchases or otherwise. There can be no
assurance that Comcast will purchase any additional shares of Class A Common
Stock or Common Stock.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
-------------------------------------
(a) Item 5(a) is amended to read as follows: Based on the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1997, filed
with the Securities and Exchange Commission ("SEC") and information provided by
BTH and the Company, Comcast believes that as of August 11, 1998, the Company
had 35,973,892 shares of Class A Common Stock issued and outstanding and
5,113,021 shares of Common Stock issued and outstanding. For purposes of Rule
13d-3 promulgated by the SEC under the Securities Exchange Act of 1934, as
amended, Comcast may be deemed to have the right to acquire, and therefore to be
Page 5 of 12
<PAGE>
the beneficial owner of, 12,782,500 shares of Class A Common Stock (which
represents approximately 35.5% of such class) (the "Class A Shares") and
2,878,151 shares of Common Stock (which represents approximately 56.3% of such
class) (the "Common Shares," collectively with the Class A Shares, the
"Shares"). Comcast's right to acquire the Shares is subject to the fulfillment
of conditions contained in the Amended and Restated Purchase and Sale Agreement,
the Comcast/Jones Agreement and the Amended Option Agreement (each as defined in
Item 6 below).
Because of the existence of the Purchase and Sale Agreement the
Comcast/Jones Agreement and the Amended Option Agreement, Comcast may be deemed
pursuant to Rule 13d-5 (b) (1), to be a member of a "group" with BTH with
respect to the Class A Shares, and/or a member of a "group" with the Jones
Entities (as defined below) with respect to the Common Shares. Comcast, however,
expressly disclaims that it is a member of a "group" with BTH or with the Jones
Entities.
The term the Jones Entities shall mean all of the following
collectively:
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.
3. Jones Entertainment Group, Ltd., a Colorado corporation ("JEG"). JEG
is 80% owned by Jones 21st Century, Inc. (f/k/a Jones Digital Century, Inc.), a
Colorado corporation, and 20% owned by BCI (U.S. Cable) Limited (f/k/a Bell
Canada International BVI III Limited), a British Virgin Islands company. Jones
21st Century, Inc. is 95% owned by International and 5% owned by a member of Mr.
Jones' family.
4. Jones Space Segment, Inc., a Colorado corporation ("JSS"). 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"). JGG is 80%
owned by International and 20% by the Company.
6. Jones Interdigital, Inc., a Colorado corporation ("Interdigital").
Interdigital is wholly owned by International.
7. Jones Grantor Business Trust.
8. Jones International Grantor Business Trust.
To the best of Comcast's knowledge the following table sets forth the
shares of Class A Common Stock and Common Stock beneficially owned by BTH and
the Jones Entities. The following information is based solely on information
provided to Comcast by BTH and the Jones Entities.
Page 6 of 12
<PAGE>
(i) Common Stock:
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<TABLE>
<CAPTION>
Name Number of Shares of Common Number of Shares of Common Percent of
Stock Owned Directly Stock owned Indirectly Class
- ------------------------------- ----------------------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
The Jones Entities (1) 0 2,916,151(2) 57.0%
BTH(3) 0 2,878,151 56.3%
</TABLE>
(1) For purposes of Rule 13d-3, Comcast is informed that 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.
(2) For purposes of Rule 13d-3, Comcast is informed that this number
includes 474,400 shares held by Mr. Jones, 2,277,416 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.
(3) For purposes of Rule 13d-3, Comcast is informed that BTH may be
deemed to have beneficial ownership of the 2,878,151 shares of Common Stock
covered by the Amended Option Agreement. By virtue of BTH being an indirect
wholly-owned subsidiary of BCE Inc., a corporation incorporated under the Canada
Business Corporations Act ("BCE"), Comcast is informed that BCE may be deemed to
beneficially own the 2,878,151 shares of Common Stock covered by the Option
Agreement.
(ii) Class A Common Stock:
---------------------
<TABLE>
<CAPTION>
Name Number of Shares of Common Number of Shares of Common Percent of
Stock Owned Directly Stock owned Indirectly Ownership
- ------------------------------- ----------------------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
Glenn R Jones(1) 828,006(2) 1,497,373(3) 6.5%
International 1,497,373 0 4.2%
BTH 0 12,782,500(4) 35.5%
</TABLE>
(1) For purposes of Rule 13d-3, Comcast is informed that Mr. Jones may
be deemed to have beneficial ownership of the shares of Class A Common Stock
owned by International.
(2) For purposes of Rule 13d-3, Comcast is informed that this number
includes Mr. Jones's vested options to purchase 301,113 shares.
(3) For purposes of Rule 13d-3, Comcast is informed that this number
represents shares held of record by International.
Page 7 of 12
<PAGE>
(4) For purposes of Rule 13d-3, Comcast is informed that by virtue of
BTH being an indirect wholly-owned subsidiary of BCE, BCE may be deemed to
beneficially own such shares.
Other than the Shares, Comcast disclaims beneficial ownership of any
other shares of Class A Common Stock or Common Stock which may be beneficially
owned by BTH or the Jones Entities.
(d) Item 5(d) is amended to read as follows: To the best of Comcast's
knowledge, BTH and US Cable have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the Class A Shares.
To the best of Comcast's knowledge, the Jones Entities have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the Common Shares.
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
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Item 6 is amended by adding the following:
On August 12, 1998, BTH, Comcast, the Company and the Jones Entities
entered into the following documents (the "Transaction Documents"): (1) the
Agreement dated August 12, 1998, by and among Comcast, the Jones Entities and
certain affiliates of the Jones Entities named therein (the "Comcast/Jones
Agreement"); (2) the Amended and Restated Purchase and Sale Agreement, dated
August 12, 1998, by and among Comcast, BTH, US Cable and Intercable (the
"Amended and Restated Purchase and Sale Agreement"); (3) Amendment No. 1 to the
Option Agreements, dated August 12, 1998, by and among certain of the Jones
Entities and The Bank of New York (as successor agent to Morgan Guaranty Trust
Company of New York) as agent for BTH and Comcast (the "Amended Option
Agreement") and (4) the Agreement and Amendment No. 1 to Shareholders Agreement
by and among the Company, the Jones Entities, BTH, US Cable and Intercable. The
Transaction Documents contemplate, among other things, subject to the
satisfaction or waiver of certain conditions precedent, (i) the immediate
exercise of the Control Option and acquisition of the Common Shares by Comcast,
(ii) the acquisition by Comcast of the Class A Shares currently beneficially
owned by US Cable and (iii) the resignation of all of the directors of the
Company other than those certain directors mutually designated by Jones and BTH
pursuant to the Shareholders Agreement and the election of directors designated
by Comcast to fill such vacancies (the consummation of such transactions being
referred to herein as the "Closing"). In the event that the Closing is not
consummated on or prior to June 30, 1999, the Jones/Comcast Agreement will be
terminated and Comcast and BTH will alternatively proceed with the Initial
Purchase and the Final Purchase as more fully described in the Schedule 13D.
Comcast will pay BTH approximately $500 million in cash at the Closing,
and in addition, will pay certain of the Jones Entities an aggregate of $200
million in cash to acquire the Common Shares pursuant to the Amended Option
Agreement. Comcast made a deposit of $50 million on August 12, 1998 under the
Comcast/Jones Agreement and certain of the Jones Entities pledged to Comcast
2,000,000 shares of Class A Common Stock of the Company (the "Pledged Shares")
Page 8 of 12
<PAGE>
as security with respect to such deposit. Such pledged shares are not part of,
or subject to, the Amended Option Agreement. The $50 million plus interest will
be credited towards the $200 million to be paid to the Jones Entities at the
Closing pursuant to the Amended Option Agreement. Upon a termination of the
Comcast/Jones Agreement due to a breach of such Agreement by Comcast, the Jones
Entities can retain the $50 million deposit and Comcast will release the Pledged
Shares. Upon a termination of the Comcast/Jones agreement for any other reason,
the Jones Entities must return the $50 million deposit plus interest. The
Pledged Shares secure the Jones Entities obligation to so return such deposit.
Also on August 12, 1998, the Shareholders Agreement was amended to
provide that at the Closing, certain of the provisions of the Shareholders
Agreement will terminate, principally those with respect to the programming
rights of Mr. Jones and International. As a result, Mr. Jones and International
will receive $25 million compensation from the Company for the termination of
such rights. The amended Shareholders Agreement also contemplates that a number
of other agreements between the Company, Mr. Jones, International and BTH will
also be terminated at the Closing. BTH's programming rights under the
Shareholders Agreement will be assigned to Comcast at the Closing.
The Closing is conditioned on the satisfaction or waiver of certain
conditions precedent, including, without limitation, (i) expiration of all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, (ii) receipt of certain other governmental and
franchise approvals, (iii) absence of any governmental order, injunction or
applicable law prohibiting the transactions contemplated by the Transaction
Documents or requiring any party to divest a material portion of its assets as a
result of the consummation of the transactions, (iv) receipt of all material
third party consents and approvals, (v) truth and accuracy of certain
representations and warranties, (vi) absence of material adverse change to the
Company during the period commencing March 31, 1998 to and including the earlier
to occur of the Closing, the Initial Purchase and December 31, 1998, (vii)
compliance by each party in all material respects with the covenants required of
it pursuant to the Transaction Documents and (viii) certain changes to the
Company's severance plan. Comcast and the Jones Entities are not required to
agree to any consent decree related to objections by the Department of Justice
or the Federal Trade Commission to the contemplated transactions.
Some of the covenants and agreements of Comcast include: entering into
a carriage agreement with Knowledge TV ("KTV") and Great American Country, Inc.
("GAC"), acknowledging certain agreements between the Company and the Jones
Entities and agreeing not to challenge their validity, waiving claims it may
have, if any, against the Jones Entities, using its reasonable best efforts to
cause the Company not to modify certain indemnification rights of officers,
directors and employees of the Company, performing its obligations and enforcing
its rights under the Comcast/BTH Agreement and not amending such agreement
without the consent of the Jones Entities, and paying a $1.5 million fee to
International for financial advisory, brokerage and consulting services rendered
to the Company.
Some of the covenants and agreements of the Jones Entities include:
Jones and the Jones Nominees (as defined in the Shareholders Agreement)
resigning from the Company's board of directors and filling the vacancies with
individuals chosen by Comcast, offering the Company the opportunity to enter
into certain transactions following the Closing, releasing certain claims
against the BTH Entities and Comcast, causing KTV and GAC to amend certain
agreements with the Company, and refraining from entering into agreements with
the Company other than those specifically permitted under the Comcast/Jones
Agreements.
Page 9 of 12
<PAGE>
Some additional covenants of the Jones Entities with respect to the
Company include: using reasonable best efforts to ensure that the Company does
not perform certain actions without the consent of Comcast or pursuant to notice
provisions defined in the Transaction Documents, and using reasonable best
efforts to preserve the business and business organization of the Company.
During the period beginning on August 12, 1998 and ending on the
earlier to occur of the Closing or the Final Purchase, as the case may be, BTH
and its affiliates will continue to own the Class A Shares and the Jones
Entities will continue to own the Common Shares and will continue to exercise
their rights and fulfill their obligations under the Shareholders Agreement. BTH
will consult with Comcast from time to time prior to exercising certain consent
rights, rights of first refusal, tag-along rights, etc., held by BTH under the
Shareholders Agreement as more fully described in the Schedule 13D. BTH has
agreed to cause the directors designated by it pursuant to the Shareholders
Agreement to resign at the Closing and to elect individuals designated by
Comcast to fill such vacancies.
Pursuant to the Transaction Documents and conditioned upon the
consummation of the Closing, the Jones Entities, the Company and BTH have each
agreed to waive and release any claims they may have against each other, except
for those obligations, rights, actions, causes of action, claims, demands,
damages, costs, expenses or liabilities of each such party under the amended
Option Agreement or with respect to any judgment previously obtained in any
court of competent jurisdiction. Moreover, the Jones Entities, the Company, BTH,
US Cable and Intercable have agreed to take or to refrain from taking any and
all actions necessary or advisable to seek a stay of any proceedings relating to
that certain lawsuit brought by BTH against the Company, International, Jones
Internet Channel, Inc. and Glenn R. Jones, which was filed before the U.S.
District Court for the District of Colorado, including the appeal of the order
entered on May 5, 1998, until the earlier to occur of the Closing (at which time
the parties shall dismiss the litigation with prejudice) and the expiration or
termination of the Comcast/ Jones Agreement.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
---------------------------------
Exhibit 1: Purchase and Sale Agreement dated May 22, 1998 by and
among Comcast, BTH, US Cable and Intercable (Incorporated by
Reference to the Schedule 13-D)
Exhibit 2: Amendment to Option Agreements dated as of August 12,
1998, between Bank of New York, as successor agent to Morgan
Guaranty Trust Company of New York, (as agent for BTH and
Comcast) and the Jones Entities
Exhibit 3: Amended and Restated Purchase and Sale Agreement dated as
of May 22, 1998 and amended as of August 12, 1998 among BTH,
U.S. Cable, Intercable, and Comcast.
Page 10 of 12
<PAGE>
Exhibit 4: Agreement dated as of August 12, 1998, among Comcast and
the Jones Entities.
Exhibit 5: Agreement and Amendment No. 1 to Shareholders Agreement,
entered into as of August 12, 1998, amending the
Shareholders Agreement dated as of December 20, 1994, among
the Company, the Jones Entities and BTH.
Page 11 of 12
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 12, 1998
COMCAST CORPORATION
By: /s/ ARTHUR R. BLOCK
--------------------------------------------------
Name: Arthur R. Block
Title: Vice President and Senior Deputy General
Counsel
Page 12 of 12
<PAGE>
Exhibit 2
Execution Copy
AMENDMENT NO. 1 TO OPTION AGREEMENTS
This AMENDMENT to each of those certain Option Agreements described
more fully herein is entered into as of this 12 day of August 1998, by and among
Jones International, Ltd. ("International"), Glenn Jones Grantor Business Trust
(the "Jones Trust"), Jones International Grantor Business Trust (the "JI Trust",
and together with the Jones Trust, the "Trusts"), Jones Space Segment, Inc.
("Space"), Jones Global Group, Inc. ("Global"), Jones Interdigital, Inc.
("Interdigital"), Jones Entertainment Group, Ltd. ("Entertainment" and together
with International, the Trusts, Space, Global and Interdigital, the "Jones
Entities") and The Bank of New York (as successor agent to Morgan Guaranty Trust
Company of New York) (the "Purchaser"), as agent for, in the case of a Section
3.1(a)(vi) Exercise (as defined herein), Comcast Corporation, a Pennsylvania
corporation ("Comcast"), and in all other cases BTH (Intercable) Limited, a
British Virgin Islands corporation f/k/a Bell Canada International BVI VI
Limited ("BTH Intercable") as assignee of BCI Telecom Holdings Inc., a Canadian
corporation, f/k/a Bell Canada International, Inc. ("BTH").
WHEREAS, the Jones Entities have entered into those certain Option
Agreements, each dated as of December 20, 1994 (the "Option Agreements"),
pursuant to which BTH Intercable, as assignee of BTH and through its agent, has
the option (the "Control Option") to purchase the shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Jones Intercable, Inc. (the
"Company") owned beneficially or of record by the Jones Entities (the "Control
Shares");
WHEREAS, BTH, BTH Intercable and BTH (US Cable) Limited, a
British Virgin Islands corporation f/k/a Bell Canada International BVI III,
Limited ("US Cable") have entered into a Purchase and Sale Agreement with
Comcast, dated as of May 22, 1998, and amended and restated as of the date
hereof (the "Comcast/BTH Agreement") in connection with the transactions
contemplated by the Jones/Comcast Agreement (as defined herein), including the
exercise of the Control Option pursuant to the Option Agreements. BTH, BTH
Intercable and US Cable are sometimes referred to herein as the "Bell Entities."
WHEREAS, the Jones Entities have entered into an Agreement with
Comcast, dated August 12, 1998 (the "Jones/Comcast Agreement"), concerning the
exercise of the Control Option;
WHEREAS, in connection with the execution and delivery of the
Comcast/BTH Agreement as so amended and restated and the Jones/Comcast Agreement
and in light of the transactions contemplated thereby, the parties hereto desire
to amend each of the Option Agreements as described herein to provide for, among
other things, a new Exercise Period (as defined in the Option Agreements) which
will cause the Control Option to become currently exercisable;
THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the parties agree as follows.
1. Definitions. All terms used but not otherwise defined herein shall
have the same meanings as ascribed to them in the Option Agreements.
2. Amendment of Preamble. The preamble to the Option Agreements is
hereby amended by:
(a) inserting after the date "December 20, 1994" the phrase
"and amended as of August 12, 1998" and
<PAGE>
(b) inserting after the word "between" the phrase "The Bank of
New York (as successor agent to Morgan Guaranty Trust Company of New York) (the
"Purchaser"), as agent for, in the case of a Section 3.1(a)(vi) Exercise (as
defined herein), Comcast Corporation, a Pennsylvania corporation and in all
other cases BTH (Intercable) Limited, a British Virgin Islands corporation f/k/a
Bell Canada International BVI VI Limited ("BTH Intercable") as assignee of BCI
Telecom Holdings Inc., a Canadian corporation, f/k/a Bell Canada International,
Inc. ("BTH")".
3. Substitution of the term "BCI". All instances of the term "BCI" in
the Option Agreements are hereby deleted and replaced with the term "BTH".
4. Amendment to Section 1.1(a). Section 1.1(a) is amended by:
(a) deleting the definition of "BCI" and inserting in lieu
thereof the following definition:
""BTH" means BCI Telecom Holding Inc. f/k/a Bell Canada
International Inc., a corporation organized under the Canada Business
Corporations Act."
(b) deleting the definition of "Shareholders Agreement" and
inserting in lieu thereof the following definition:
""Shareholders Agreement" means the Shareholders Agreement
dated as of December 20, 1994 among BTH, the Company, Jones and Jones
International, as amended on August 12, 1998."
(c) and adding thereto the following definitions:
""BTH/Comcast Agreement" means that certain Purchase and Sale
Agreement, dated May 22, 1998, and amended and restated as of August 12, 1998 by
and among Comcast, BTH, BTH (US Cable) Limited, a British Virgin Islands
corporation f/k/a Bell Canada International BVI III Limited, and BTH Intercable.
"Comcast" means Comcast Corporation, a Pennsylvania
corporation.
"Franchise Authority" has the meaning that term is given by
Section 602(9) of the Cable Communications Act of 1984 (47 U.S.C. (S) 522(10)).
"Jones/Comcast Agreement" means that certain Agreement dated
August 12,, 1998 by and among Comcast and the Jones Entities (as defined
therein).
"Jones/Comcast Closing" means the "Closing" as defined in the
Jones/Comcast Agreement.
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<PAGE>
"Jones/Comcast Closing Date" means the "Closing Date" as
defined in the Jones/Comcast Agreement.
"Section 3.1(a)(vi) Exercise" shall refer to the exercise of
the Control Option in accordance with Article III hereof pursuant to Section
3.1(a)(vi).
"Simultaneous Closing" means the Simultaneous Closing as such
term is defined in the BTH/Comcast Agreement."
5. Amendment to Section 1.1(b). Section 1.1(b) is hereby amended by
inserting the following:
"Other Transactions 3.2(b)"
6. Amendment of Section 3.1. Section 3.1 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"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 Optionor of the occurrence of an Event;
(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 the SPA Closing;
(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; and
(vi) the period commencing on August 12, 1998, which period
shall only apply to the exercise of the Control Option pursuant to the
Jones/Comcast Agreement; provided, that upon the occurrence of the
Initial Closing as defined in the BTH/Comcast Agreement the Exercise
Period described in this Section 3.1(a)(vi) shall automatically
terminate.
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; provided further however, that the
commencement of any Exercise Period described in Sections 3.1(a)(i) through (v)
inclusive shall be postponed until such time, if ever, on the earlier to occur
of the date the Jones/Comcast Agreement shall have expired or been terminated or
the date of the Initial Closing under the BTH/Comcast Agreement, but in no event
shall such Exercise Periods described in Sections 3.1(a)(i) - 3.1(a)(v) end
later than December 20, 2002.
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<PAGE>
(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.
(d) Grantor acknowledges and agrees that the delivery of an Exercise
Notice pursuant to a Section 3.1(a)(vi) Exercise is being made for the account
of Comcast. BTH shall not be liable to Grantor under this Agreement if the
closing of the Section 3.1(a)(vi) Exercise shall not occur for any reason
provided that this Section 3.1(d) shall not be deemed to be a waiver by Grantor
of any claim which it may have against BTH due to a breach by BTH of its
obligations hereunder or preserved pursuant to the second sentence of Section
1.6 of the Agreement and Amendment No. 1 to Shareholders Agreement of even date
herewith."
7. Amendment of Section 3.2. Section 3.2 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"SECTION 3.2 Exercise of Control Option. (a) Purchaser may exercise the
Control Option at any time during an Exercise Period by delivery to Grantor of
an irrevocable written notice in the form attached hereto as Exhibit B (the
"Exercise Notice"). The execution and delivery of this Agreement as amended on
August 12, 1998 shall be deemed to be delivery by Purchaser of a valid Exercise
Notice as of such date pursuant to a Section 3.1(a)(vi) Exercise. Purchaser has
no obligation to deliver an Exercise Notice pursuant to Section 3.1(a)(i)
through (v) 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 granted under the Related Option
Agreements and the Closing hereunder will only take place simultaneously with
the closing of the exercise of the option granted under the Related Option
Agreements; provided that the Closing pursuant to a Section 3.1(a)(vi) Exercise
will also only take place on the same date as the Jones/Comcast Closing and the
Simultaneous Closing.
(b) The closing for the exercise of the Control Option (the "Closing")
(1) in the case of any exercise of the Control Option other than a Section
3.1(a)(vi) Exercise, 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 and (2) in the
case of a Section 3.1(a)(vi) Exercise, will take place on the same date as the
Jones/Comcast Closing and the Simultaneous Closing at such time as the following
conditions have been satisfied or waived by Purchaser:
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<PAGE>
(i) The waiting period (including any extension thereof
resulting from additional inquiries, if any) under the HSR Act
applicable to (x) the purchase of the Optioned Shares by Purchaser and
(y) in the case of a Section 3.1(a)(vi) Exercise, the consummation of
the transactions contemplated by the Jones/Comcast Agreement and the
BTH/Comcast Agreement including the sale of the Optioned Shares from
Purchaser to Comcast (the "Other Transactions") shall have expired or
been earlier terminated.
(ii) All other actions by, in respect of or filings 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 (x) the consummation of the Closing and (y) in the
case of a Section 3.1(a)(vi) Exercise, the consummation of the Other
Transactions, shall have been taken or obtained, as the case may be,
and shall be in full force and effect; provided that, in the case of a
Section 3.1(a)(vi) Exercise, if all authorizations, consents and
approvals from applicable Franchise Authorities necessary to effect the
change of control of the Franchises (A) relating to the Franchises in
Systems (whether Owned Systems or Managed Systems) set forth on
Schedule F hereto, (B) relating to Franchises in Managed Systems which
as of the date of Closing are subject to a letter of intent or
agreement of sale providing for the sale or other disposition of such
Managed Systems to a person other than the Company (or its wholly owned
Subsidiaries), and (C) relating to Franchises with not less than 10,000
basic subscribers in Systems (whether Owned Systems or Managed Systems)
acquired by any Intercable Group Entity (except for Managed Systems
which, as of the Closing Date, are subject to a letter of intent or
agreement of sale providing for the sale or other disposition of such
Managed System to the Company or one of its wholly owned Subsidiaries)
after the date hereof (the "Required Franchise Approvals") shall have
been so obtained, be in effect and not be subject to withdrawal or
appeal then the condition contained in this paragraph (ii) shall be
deemed to be fulfilled as it relates to authorizations, consents or
approvals from applicable Franchise Authorities on the date on which
all of the Required Franchise Approvals are so obtained and are in
effect and not subject to withdrawal or appeal and provided further
that this condition shall not be satisfied if any Required Franchise
Approval shall not have been obtained.
(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 (x) if after the date
hereof BTH or any of its Affiliates and (y) in the case of a Section
3.1(a)(vi) Exercise, if after August 12, 1998 Comcast 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, in the case of a Section 3.1(a)(vi)
Exercise, the Other Transactions or seeking to (a) prevent BTH (or its
agent) or, in the case of a Section 3.1(a)(vi) Exercise, Comcast (or
its agent) from exercising the Control Option, (b) require BTH (or its
agent) or, in the case of a Section 3.1(a)(vi) Exercise, Comcast (or
its agent) to divest, or otherwise limit BTH's, Comcast's (or their
respective agent's) ability to exercise full rights of ownership over,
the shares of Capital Stock owned by BTH and its Affiliates, Comcast
and its Affiliates, the Control Option or the Optioned Shares or (c)
require, after the exercise of the Control Option, the Intercable Group
or, in the case of a Section 3.1(a)(vi) Exercise the Intercable Group
or Comcast to divest any material business or assets or would impose a
material limitation on the conduct of Intercable Group's or Comcast's
business, provided that (A) if after the date hereof BTH or any of its
Affiliates, or, in the case of a Section 3.1(a)(vi) Exercise, if after
August 12, 1998 Comcast 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 regulation and (B)
any actions or proceedings described in clause (a) or (b) will be based
on the business or assets of BTH and Comcast or their respective
Affiliates and not the Purchaser.
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<PAGE>
(v) The Intercable Group Entities shall have received all
material third party consents required to be obtained in connection
with the Closing, and, in the case of a Section 3.1(a)(vi) Exercise,
the consummation of the Other Transactions 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.
(vii) In the case of a Section 3.1(a)(vi) Exercise only, the
Jones/Comcast Closing and the Simultaneous Closing shall have occurred
on the same date as the Closing hereunder."
8. Amendment of Section 3.3. Section 3.3 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"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) except in the case of a Section
3.1(a)(vi) Exercise, if the Trigger Date occurs after June 18, 1995,
the sum of (x) two-thirds of the Option Price on the applicable Trigger
Date(1) and (y) one-third of 120% of the Market Value of a share of
Class A Common Stock on the applicable Trigger Date1 or (C) in the case
of a Section 3.1(a)(vi) Exercise, $69.4891 per Optioned Share, in each
case reduced by
(ii) (A) the amount (or in the case of property other than
cash, fair market value) of any dividends and 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 and (B) in the case of a Section 3.1(a)(vi) Exercise, the
amount of any Initial Consideration (as such term is used in the
Jones/Comcast Agreement) which has been paid to Jones, Grantor or any
party to the Related Option Agreements (or their respective Affiliates)
in respect of the Optioned Shares plus interest accrued at the
Applicable Rate (as such term is used in the Jones/Comcast Agreement)
from the date such Initial Consideration was paid by Comcast to and
including the date of Closing; provided that the amount of such Initial
Consideration (plus interest) deemed to have been paid in respect of
each Optioned Share shall be equal to the total amount of such Initial
Consideration (plus interest) paid (and accrued) under the
Jones/Comcast Agreement divided by the sum of the aggregate number of
Optioned Shares actually acquired by Purchaser on the date of Closing
under this Option Agreement plus the aggregate number of Optioned
Shares (as such term is used in the Related Option Agreements) actually
acquired by Purchaser on the date of Closing under the Related Option
Agreements.(2) 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).
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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).
2 As an example of the calculation described in clause (ii)(B), if on the
date of Closing the total amount of the Initial Consideration (plus
interest) paid (and accrued) under the Jones/Comcast Agreement is equal
to $51,000,000 and the sum of the aggregate number of Optioned Shares
actually acquired by Purchaser on the date of Closing under this Option
Agreement plus the aggregate number of Optioned Shares (as such term is
used in the Related Option Agreements) actually acquired by Purchaser
on the date of Closing under the Related Option Agreements is equal to
2,700,000 Optioned Shares, the amount of the reduction per Optioned
Share would be $51,000,000 divided by 2,700,000, or $18.8889 (computed
to four decimal places).
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<PAGE>
(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 day on which
Purchaser delivers an Exercise Notice;
(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; or
(v) in the case of a Section 3.1(a)(vi) Exercise, the
date hereof."
9. Amendment of Section 3.5. Section 3.5 is amended by adding a new
subsection (c) thereto as follows:
"(c) In the case of a Section 3.1(a)(vi) Exercise, the transactions
described in paragraphs (a) and (b) of this Section 3.5 shall occur on the same
date as the Jones/Comcast Closing and the Simultaneous Closing. If the
Simultaneous Closing and the Jones/Comcast Closing shall not have occurred on
the same date as the Closing, then the transactions described in paragraphs (a)
and (b) of Section 3.5 shall be rescinded and deemed not to have occurred. In
the case of a Section 3.1(a)(vi) Exercise, the procedures at the Closing shall
be as follows:
(i) the directors of the Company other than the Joint Nominees
(as such term is defined in the Shareholders Agreement) shall resign
seriatim and the remaining directors shall appoint individuals
designated by Comcast to fill the vacancies created thereby, all as
more fully described in the Jones/Comcast Agreement and the BTH/Comcast
Agreement.
(ii) the transactions described in paragraphs (a) and (b) of
Section 3.5 of this Agreement and of the Related Option Agreements
shall occur; and
(iii) the transactions to be effected at the Simultaneous
Closing shall occur."
10. Amendment of Section 3.6 Section 3.6 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"SECTION 3.6 Termination of Control Option. (a) The Control Option
shall terminate at 5:00 p.m. Denver time when the first Exercise 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)(1), 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 solely
because of the expiration of the Exercise Periods described in clauses (ii) and
(v) of Section 3.1, or in the case of a Section 3.1(a)(vi) Exercise, upon the
termination of the Jones/Comcast Agreement and the failure of the Closing
hereunder to occur.
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<PAGE>
(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
has been lifted and Purchaser has received notice of such action and (ii) each
Exercise Notice other than a Section 3.1(a)(vi) 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.
(c) Notwithstanding the foregoing provisions of this Section 3.6, in no
event shall the Control Option expire or terminate prior to the termination of
the Jones/Comcast Agreement."
11. Amendment of Section 4.1. Section 4.1 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"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 BTH in the
Shareholders Agreement or otherwise, or between Grantor, its Affiliates and
Comcast in the Jones/Comcast Agreement or otherwise or (y) 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 BTH in the
Shareholders Agreement, the Jones/Comcast Agreement or otherwise or between
Grantor, its Affiliates and Comcast in the Jones/Comcast Agreement."
12. Amendment of Section 4.2. Section 4.2 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"SECTION 4.2 Further Assurances. BTH (and its agent) and Grantor will
each execute and deliver or cause to be executed and delivered all further
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 BTH or Comcast, as applicable, to enjoy all benefits and rights of the
Optioned Shares."
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<PAGE>
13. Amendment of Section 6.1. Section 6.1 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"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, in the case of a Section 3.1(a)(vi)
Exercise, Comcast's, and in all other instances BTH'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."
14. Amendment of Section 9.3(c). Section 9.3(c) is hereby deleted in
its entirety and the following is substituted in lieu 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, in the case of a Section 3.1(a)(vi)
Exercise, to Comcast and in the case of any other exercise, to BTH, or in any
event, to any of their respective 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, to the extent the same have
been delivered to Purchaser (or Comcast, BTH or a nominee) with respect to any
Optioned Shares registered in the name of Purchaser (or Comcast, BTH or a
nominee)."
15. Amendment of Section 10.2(a). Section 10.2(a) is hereby deleted in
its entirety and the following is substituted in lieu thereof:
"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, (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(a) and (b) and (iv) Purchaser may, at the Closing of a
Section 3.1(a)(vi) Exercise and the consummation of the Jones/Comcast Closing,
assign all its rights and obligations hereunder to Comcast."
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<PAGE>
16. Amendment of Section 10.4. Section 10.4 is hereby amended by (a)
deleting the address of Bell Canada International, Inc. in its entirety and
substituting in lieu thereof the following:
"BCI Telecom Holding Inc.
1000, rue de la Gauchetiere West
Suite 1100
Montreal, Quebec
Canada H3B 4Y8
Fax: 514-392-2342
Attention: Corporate Secretary
with copies to (unless the Initial Closing (as defined in the
BTH/Comcast Agreement) shall have occurred or the
Jones/Comcast Agreement shall have terminated):
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102-2148
Fax: 215-981-7794"
and (b) deleting the name and address of the Purchaser and substituting in lieu
thereof:
"The Bank of New York, as successor agent to
Morgan Guaranty Trust Company of New York
101 Barclay Street
Floor 12E
New York, NY 10286
Fax: 212-815-7181
Attention: Robert W. Rich, Assistant Vice President"
17. Amendment to Section 10.10. Section 10.10 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"Section 10.10 Entire Agreement. This Agreement, together with the
Jones/Comcast Agreement, the Shareholders Agreement (including the Agreement and
Amendment No. 1 to Shareholders Agreement) and the BTH/Comcast 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."
18. Amendment to Section 10.12. Section 10.12 is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"SECTION 10.12 Agency Capacity of Purchaser. Grantor expressly
acknowledges and agrees that Purchaser is acting solely as agent on behalf of,
in the case of a Section 3.1(a)(vi) Exercise, Comcast, and in all other
instances, BTH 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, in the case of a
Section 3.1(a)(vi) Exercise, Comcast, and in all other instances, BTH."
19. Addition of Section 10.13. Immediately following Section 10.12, a
new Section 10.13 is hereby added as follows:
"SECTION 10.13 Termination of Jones/Comcast Agreement. All references
to the Jones/Comcast Agreement, the BTH/Comcast Agreement, the Jones/Comcast
Closing and Closing Date, Comcast and the Section 3.1(a)(vi) Exercise shall be
deemed deleted and of no force or effect if and at such time as the earlier to
occur of the Initial Closing under the BTH/Comcast Agreement and the date the
Jones/Comcast Agreement shall have been terminated."
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed by their duly authorized representatives as of the day and year
first above written.
GLENN JONES GRANTOR BUSINESS TRUST
By:_____________________________________
JONES INTERNATIONAL GRANTOR BUSINESS TRUST
By:_____________________________________
JONES INTERNATIONAL, LTD.
By:_____________________________________
JONES SPACE SEGMENT, INC.
By:_____________________________________
JONES GLOBAL GROUP, INC..
By:_____________________________________
JONES INTERDIGITAL, INC..
By:_____________________________________
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<PAGE>
JONES ENTERTAINMENT GROUP, LTD.
By:______________________________________
THE BANK OF NEW YORK, as successor agent
to MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as agent for BTH Telecom Holding
Inc. f/k/a Bell Canada International Inc.
and Comcast Corporation
By:______________________________________
This Amendment is consented to and approved of by the following:
BCI TELECOM HOLDING, INC.
By:______________________________________
BTH (INTERCABLE) LIMITED
By:______________________________________
COMCAST CORPORATION
By:______________________________________
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SCHEDULE F
Owned Systems
FRANCHISES HELD BY
JONES INTERCABLE, INC.
Panama City Beach, Florida System
City of Panama City Beach
Oxnard, California System
City of Oxnard
FRANCHISES HELD BY
JONES COMMUNICATIONS OF MARYLAND, INC.
Prince George's County System:
North Prince George's County
South Prince George's County
City of Bowie
Chesapeake Bay Group (including Annapolis,
Anne Arundel County and
Charles County Systems):
Anne Arundel County
City of Annapolis
<PAGE>
FRANCHISES HELD BY
JONES COMMUNICATIONS OF
GEORGIA/SOUTH CAROLINA, INC.
Savannah System:
Chatham County
City of Savannah
FRANCHISES HELD BY
JONES COMMUNICATIONS OF VIRGINIA, INC.
Alexandria System:
City of Alexandria
Prince William Group (including
Dale City, Reston and
Manassas Systems):
Fairfax County (Reston)
City of Manassas
FRANCHISES HELD BY
JONES COMMUNICATIONS OF ARIZONA, INC.
Pima County System:
Town of Oro Valley
FRANCHISES HELD BY
JONES COMMUNICATIONS OF MISSOURI, INC.
Independence System:
City of Olathe, KS
City of Raytown
-2-
<PAGE>
FRANCHISES HELD BY
JONES COMMUNICATIONS OF NEW MEXICO, INC.
Albuquerque System:
City of Albuquerque
FRANCHISES HELD BY
JONES OF WISCONSIN, INC.
Manitowoc System:
City of Manitowoc
Managed Systems
FRANCHISES HELD BY
CABLE TV FUND 14-A, Ltd.
Calvert County System:
Calvert County
Naperville System
City of Naperville
FRANCHISES HELD BY
JONES GROWTH PARTNERS, L.P.
Wheaton System
City of Wheaton
Village of Addison
-3-
<PAGE>
FRANCHISES HELD BY
IDS/JONES JOINT VENTURE PARTNERS
Aurora System
City of Aurora
FRANCHISES HELD BY
CABLE TV FUND 12-BCD VENTURE
Palmdale and Littlerock Systems:
Los Angeles County
City of Lancaster
City of Palmdale
FRANCHISES HELD BY
JONES CABLE INCOME FUND 1-A, LTD.
Owatonna/Glencoe System
City of Owatonna
FRANCHISES HELD BY
CABLE TV FUND 12-A, LTD.
Cook County/Orland Park System
Village of Mundelein
FRANCHISES HELD BY
CABLE TV FUND 15-A, LTD.
South Suburban System
Village of Lansing
-4-
<PAGE>
Exhibit 3
Execution Copy
AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
by and among
BCI TELECOM HOLDING INC.,
BTH (U.S. CABLE) LIMITED,
BTH (INTERCABLE) LIMITED
and
COMCAST CORPORATION
<PAGE>
AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I SALE AND PURCHASE.......................................................................................2
Section 1.1. Purchase and Sale...........................................................................2
Section 1.2. Purchase Price..............................................................................3
ARTICLE II EFFECTIVE TIME.........................................................................................4
Section 2.1. Effective Time..............................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BTH.................................................................4
Section 3.1. Organization and Standing...................................................................4
Section 3.2. Ownership of the Class A Shares.............................................................5
Section 3.3. Capitalization..............................................................................5
Section 3.4. No Other Investments; No Liabilities........................................................6
Section 3.5. Corporate Power and Authority...............................................................7
Section 3.6. Conflicts; Consents and Approvals...........................................................7
Section 3.7. Brokerage and Finder's Fees; Expenses.......................................................8
Section 3.8. Shareholders Agreement and Option Agreements................................................8
Section 3.9. Transactions with Affiliates and Jones......................................................9
Section 3.10. Status of the Company......................................................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMCAST..............................................................9
Section 4.1. Organization and Standing...................................................................9
Section 4.2. Corporate Power and Authority..............................................................10
Section 4.3. Conflicts; Consents and Approvals..........................................................10
Section 4.4. Brokerage and Finder's Fees; Expenses......................................................11
Section 4.5. Investment Purpose........................................................................11
Section 4.6. Transactions with Jones...................................................................11
ARTICLE V CONDITIONS TO THE OBLIGATIONS OF COMCAST AT THE INITIAL CLOSING AND THE FINAL CLOSING.................11
Section 5.1. Litigation: No Opposition..................................................................11
Section 5.2. Representations, Warranties and Covenants..................................................11
Section 5.3. Approvals..................................................................................12
Section 5.4. Other Deliveries...........................................................................12
Section 5.5. HSR Act....................................................................................13
Section 5.6. Material Adverse Change....................................................................13
Section 5.7. Litigation.................................................................................13
Section 5.8. Status of the Company......................................................................13
ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF BTH AND THE BTH SUBSIDIARIES AT THE INITIAL CLOSING AND THE FINAL
CLOSING..........................................................................................................14
Section 6.1. Litigation: No Opposition..................................................................14
Section 6.2. Representations, Warranties and Covenants..................................................14
Section 6.3. Approvals.................................................................................14
Section 6.4. Other Deliveries...........................................................................15
Section 6.5. HSR Act...................................................................................15
ARTICLE VII COVENANTS............................................................................................15
Section 7.1. [Intentionally left blank]................................................................15
Section 7.1. [Intentionally left blank]................................................................15
Section 7.3. Consultation with Comcast..................................................................16
Section 7.4. Prohibited Transaction.....................................................................18
Section 7.5. Exercise of the Control Option.............................................................18
Section 7.6. Litigation.................................................................................19
Section 7.7. Covenant Not to Take Certain Actions.......................................................20
Section 7.8 Resignation of Directors....................................................................21
Section 7.9. Covenant to Act in Good Faith..............................................................21
Section 7.10. Tax Matters...............................................................................22
Section 7.11. Other Agreements..........................................................................22
Section 7.12. Updates...................................................................................23
Section 7.13 Programming Rights.........................................................................23
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VIII CLOSINGS............................................................................................23
Section 8.1. Initial Closing............................................................................23
Section 8.2. Deliveries at the Initial Closing..........................................................23
Section 8.3. Final Closing..............................................................................24
Section 8.4. Deliveries at the Final Closing............................................................24
Section 8.5. Conditions to Final Closing of Comcast.....................................................25
Section 8.6. Conditions of BCE and BTH to the Final Closing.............................................28
Section 8.7. Simultaneous Closing.......................................................................29
Section 8.8. Alternative Final Closing Procedures.......................................................30
ARTICLE IX TERMINATION...........................................................................................32
Section 9.1. Termination................................................................................32
Section 9.2. Effect Of Termination......................................................................32
Section 9.3. Right to Proceed...........................................................................32
ARTICLE X RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING...........................................................33
Section 10.1. Survival of Representations, Warranties and Covenants.....................................33
Section 10.2. Regulatory Filings........................................................................33
ARTICLE XI INDEMNIFICATION.......................................................................................33
Section 11.1. Indemnification by BCE....................................................................33
Section 11.2. Limitations on Indemnification by BCE.....................................................34
Section 11.3. Indemnification by Comcast................................................................35
Section 11.4. Limitation on Indemnification by Comcast..................................................35
Section 11.5. Notice: Defense of Claims.................................................................36
Section 11.6. No Right of Contribution..................................................................37
ARTICLE XII DEFINITIONS..........................................................................................37
ARTICLE XIII MISCELLANEOUS.......................................................................................39
Section 13.1. Further Assurances........................................................................39
Section 13.2. Counting of Days..........................................................................39
Section 13.3. Fees and Expenses.........................................................................39
Section 13.4. Dispute Resolution........................................................................39
Section 13.5. Waivers...................................................................................40
Section 13.6. Governing Law and Consent to Jurisdiction.................................................40
Section 13.7. Notices...................................................................................40
Section 13.8. Entire Agreement..........................................................................41
Section 13.9. Assignability; Binding Effect.............................................................42
Section 13.10. Captions and Gender......................................................................42
Section 13.11. Execution in Counterparts................................................................42
Section 13.12. Amendments...............................................................................42
Section 13.13. Publicity and Disclosures................................................................42
Section 13.14. Equitable Relief.........................................................................42
Section 13.15. Severability.............................................................................43
Section 13.16. Surety of Payment........................................................................43
Section 13.17. Miscellaneous............................................................................43
</TABLE>
<PAGE>
49% Subsidiary Stock................................2
Affiliate..........................................38
Affiliate Stock.....................................3
Associate..........................................38
BCE................................................19
BCE Indemnification Cut-Off Date...................36
BCE Indemnified Parties............................36
BTH.................................................2
BTH Indemnified Party..............................36
BTH Subsidiaries....................................2
Claim..............................................38
Class A Shares......................................2
Class A Stock.......................................2
Comcast Indemnification Cut-Off Date...............35
Comcast Indemnified Parties........................34
Comcast Indemnified Party..........................34
Common Stock........................................2
Company.............................................2
Control Option......................................2
Control Option Agreements...........................2
Control Shares......................................2
Fee Letter..........................................3
Final Closing......................................25
Final Closing Date..................................4
Final Closing Payment...............................4
Final Purchase......................................4
Franchise..........................................39
Franchising Authority..............................39
Governmental Authority..............................9
HSR Act.............................................9
Initial Closing....................................24
Initial Closing Date................................4
Initial Closing Payment.............................4
Initial Purchase....................................3
Initial Shares......................................2
Intercable..........................................2
International.......................................2
JEC.................................................2
Jones...............................................2
Jones Companies.....................................2
Jones Companies Shareholders Agreements............39
Jones Sellers.......................................2
Jones/BTH Agreements...............................39
Jones/Comcast Agreement.............................3
Jones/Comcast Closing...............................4
Knowledge..........................................39
Litigation.........................................14
Losses.............................................34
Material Adverse Effect............................39
Notice of Preference...............................17
Payments...........................................39
Person.............................................39
Purchase Price......................................4
Purchased Assets....................................3
Remaining Subsidiary Stock..........................3
SEC.................................................9
Section 3.1(a)(vi) Exercise........................20
Shareholders Agreement..............................2
Simultaneous Closing................................4
Simultaneous Closing Date...........................4
Subsidiary Stock...................................40
Supply Services Agreement...........................3
Transfer...........................................40
US Cable............................................2
<PAGE>
AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
This AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT by and among BCI
Telecom Holding Inc., a Canadian corporation f/k/a Bell Canada International
Inc. (together with any successor thereto permitted pursuant to the last
sentence of Section 7.4, "BTH"), BTH (U.S. Cable) Limited, a British Virgin
Islands corporation f/k/a Bell Canada International BVI III Limited ("US
Cable"), BTH (Intercable) Limited, a British Virgin Islands corporation f/k/a
Bell Canada International BVI VI Limited ("Intercable", and together with US
Cable, the "BTH Subsidiaries") and Comcast Corporation, a Pennsylvania
corporation ("Comcast"), dated as of May 22, 1998, is amended and restated as of
this 12 day of August, 1998.
WHEREAS, the parties entered into a Purchase and Sale Agreement dated
as of May 22, 1998 and desire to amend and restate such Purchase and Sale
Agreement as set forth herein;
WHEREAS, US Cable is the record and beneficial owner of 12,782,500
shares (the "Class A Shares") of Class A Common Stock, par value $.01 per share
(the "Class A Stock") of Jones Intercable, Inc., a Colorado corporation (the
"Company"), and 2,410 shares of Class A Common Stock of Jones Education Company,
a Colorado corporation ("JEC") and 747,500 shares of Class A Common Stock of
Jones Entertainment Group Ltd., a Colorado corporation ("JEG" and, together with
JEC, the "Jones Companies");
WHEREAS, Intercable, as assignee of BTH pursuant to that certain
assignment between Intercable and BTH, is party, through Bank of New York as its
agent, to certain Option Agreements with Jones International, Ltd.
("International"), Glenn Jones Grantor Business Trust, Jones International
Grantor Business Trust, Jones Space Segment, Inc., Jones Global Group, Inc.,
Jones Interdigital, Inc. and Jones Entertainment Group, Ltd. (collectively, the
"Jones Sellers"), all dated as of December 20, 1994 and amended as of August 12,
1998 (the "Control Option Agreements"), pursuant to which Intercable, as
assignee of BTH and through its agent, has the option (the "Control Option"),
under certain circumstances and subject to certain conditions, to purchase
2,878,151 shares (as such number may be adjusted pursuant to the Control Option
Agreements) (the "Control Shares") of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") from the Jones Sellers;
WHEREAS, US Cable, as assignee of BTH pursuant to that certain
Assignment Agreement, dated December 20, 1994 (the "Shareholders Agreement
Assignment"), between US Cable and BTH, is party to that certain Shareholders
Agreement, dated as of December 20, 1994 and amended as of August 12, 1998,
among Glenn R. Jones ("Jones"), International, BTH and the Company (the
"Shareholders Agreement"), whereby, among other things, US Cable has been
granted certain contractual rights relating to its investment in the Company;
WHEREAS, subject to the terms and conditions of this Agreement, BTH
desires to sell, and Comcast desires to purchase (a) at the Initial Closing (i)
from BTH, 49% of the Subsidiary Stock issued and outstanding as of the date of
the Initial Closing (the "49% Subsidiary Stock") and (ii) from US Cable, (x)
6,400,000 of the Class A Shares (the "Initial Shares") and (y) subject to the
right of first refusal contained in Section 4.5 of the Jones Companies
Shareholders Agreements, all of the capital stock of the Jones Companies owned
beneficially or of record by US Cable or its Affiliates (the "Affiliate Stock")
and (b) at the Final Closing from BTH, at Comcast's option, all of the shares of
Subsidiary Stock issued and outstanding as of the Final Closing Date other than
those shares of Subsidiary Stock owned beneficially or of record by Comcast or
its Affiliates as of the Final Closing Date or such other transaction as may be
contemplated by Section 8.4(c) hereof (the "Remaining Subsidiary Stock" and
collectively with the 49% Subsidiary Stock, the Affiliate Stock and the Initial
Shares the "Purchased Assets") each on the terms and conditions set forth
herein;
<PAGE>
WHEREAS, Comcast and the Jones Sellers have entered into the Agreement
dated August 12, 1998 (the "Jones/Comcast Agreement") relating to the investment
by the Jones Sellers in the Company and certain agreements between Comcast and
the Jones Sellers relating to the exercise of the Control Option.
WHEREAS, the parties hereto desire to enter into this Amended and
Restated Purchase and Sale Agreement in connection with the transactions
contemplated by the Jones/Comcast Agreement, including the exercise of the
Control Option pursuant to the Control Option Agreements; and
WHEREAS, BTH also desires to agree to pay over to Comcast certain fees
and other amounts to be received by BTH or its Affiliates pursuant to that
certain Financial Services Agreement dated December 20, 1994, by and between BTH
and Jones Financial Group, Inc. (the "Fee Letter") and that certain Supply
Services Agreement, dated December 20, 1994, by and between BTH and the Company
(the "Supply Services Agreement"), on the terms and conditions set forth herein.
THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties hereto agree as follows.
ARTICLE I
SALE AND PURCHASE
Section 1.1. Purchase and Sale. (a) On the terms and subject to the conditions
of this Agreement, BTH agrees to sell, and Comcast agrees to purchase, for the
Purchase Price (i) the 49% Subsidiary Stock, the Initial Shares and, subject to
any rights pursuant to Section 4.5 of the Jones Companies Shareholders
Agreements, the Affiliate Stock all free and clear of any Claims, together with
all Payments received since the Initial Closing Date by BTH pursuant to the Fee
Letter and the Supply Services Agreement (the "Initial Purchase"), such sale and
purchase to be consummated as soon as reasonably practicable following the later
to occur of (x) the earlier of five Business Days following the expiration or
termination of the Jones/Comcast Agreement, and July 10, 1999 (or such later
date as the parties shall mutually agree to in writing) and (y) the expiration
of the 90-day period (or, at Comcast's option, such earlier time as it may
determine in its sole discretion) commencing on the date of this Agreement, and
in each case, assuming the satisfaction or waiver of the conditions precedent
set forth in Sections 5.1, 5.3, 5.4, 5.5, 6.1, 6.3, 6.4 and 6.5, or such later
date as the parties may agree (the first such day being the "Initial Closing
Date") and (ii) on the first date following the day on which all of the
conditions precedent contained in Sections 8.5 and 8.6 are satisfied or waived
(the "Final Closing Date"), the Remaining Subsidiary Stock (or such alternative
shares as contemplated by Section 8.4(c)) (the "Final Purchase"). Comcast
currently intends to explore the possibility of a consensual transaction with
Jones and/or the Company and BTH during the aforementioned 90-day period
pursuant to which BTH would receive $500,000,000 in exchange for its interests
in the Company and the Affiliate Stock and Comcast has entered into the
Jones/Comcast Agreement to effect such a consensual transaction with Jones.
-2-
<PAGE>
(b) Notwithstanding the foregoing, on the terms and subject to the
satisfaction or waiver of the conditions precedent set forth in this Agreement,
the Initial Closing and the Final Closing shall occur simultaneously (the
"Simultaneous Closing") and on the same date as the closing (the "Jones/Comcast
Closing") of the transactions contemplated by the Jones/Comcast Agreement, or at
such later date as the parties may agree (the date the Simultaneous Closing
occurs being the "Simultaneous Closing Date"). If the Simultaneous Closing shall
not have occurred prior to the earlier of five business days following the
termination or expiration of the Jones/Comcast Agreement, and July 10, 1999,
then, assuming the conditions precedent set forth in Sections 5.1, 5.3, 5.4,
5.5, 6.1, 6.3, 6.4 and 6.5 shall have been satisfied or waived, the Initial
Closing shall take place as soon as reasonably practicable and in any event
within 5 Business Days of the earlier of such occurrence. If the Jones/Comcast
Closing shall not have occurred on the date the Simultaneous Closing occurs,
then the transactions to be effected at the Simultaneous Closing and the
Jones/Comcast Closing shall be rescinded and deemed not to have occurred. In
connection with the Simultaneous Closing, unless Comcast shall have notified BTH
in writing to the contrary at least two days prior to the Simultaneous Closing
Date, Comcast shall be deemed to have made the election described in Section
8.4(c) not to receive the 49% Subsidiary Stock or the Remaining Subsidiary Stock
but to receive instead all of the shares of capital stock of the Company
(including the Control Shares) owned beneficially or of record by US Cable,
Intercable or any of their Affiliates as of the Simultaneous Closing Date. The
Simultaneous Closing Date shall be deemed to be the Initial Closing Date and the
Final Closing Date for purposes of Articles III through XII hereof and the
Simultaneous Closing shall be deemed to be the Initial Closing and the Final
Closing for purposes of Articles III through XII hereof.
Section 1.2. Purchase Price. (a) Comcast agrees to pay BTH an amount equal to
$500,000,000 (the "Purchase Price"), 80% of which shall be payable on the
Initial Closing Date (the "Initial Closing Payment") and 20% of which shall be
payable on the Final Closing Date (the "Final Closing Payment"). In connection
with a Simultaneous Closing, 100% of the Purchase Price, constituting both the
Initial Closing Payment and the Final Closing Payment, shall be payable on the
Simultaneous Closing Date. If a Simultaneous Closing occurs after December 31,
1998, Comcast agrees to also pay BTH interest on the Purchase Price at the
Applicable Rate from December 31, 1998 to the Simultaneous Closing Date.
(b) Amounts payable pursuant to this Section 1.2 and Sections 7.3(e),
8.2(b) and 8.8 shall be made by Comcast in immediately available funds to one or
more accounts designated by BTH at least two days prior to the date any such
payment is due.
(c) The foregoing purchase and sale and the Purchase Price payable with
respect thereto, shall be subject to adjustment as provided in Sections 7.3(e),
8.2(b) and 8.8 of this Agreement.
-3-
<PAGE>
ARTICLE II
EFFECTIVE TIME
Effective Time. This Agreement will become effective immediately.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BTH
BTH hereby represents and warrants to Comcast that:
Section 3.1. Organization and Standing.
(a) BTH is a corporation duly organized, validly existing and in good
standing under the laws of Canada with full corporate power and authority to
own, lease, use and operate its properties (including, without limitation, the
shares of capital stock of its subsidiaries) and to conduct its business as and
where now owned, leased, used, operated and conducted. BTH is duly qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the property it owns, leases or operates requires it
to so qualify, except where the failure to be so qualified or in good standing
in such jurisdiction individually or in the aggregate could not reasonably be
expected to prevent, materially interfere with or materially delay the
consummation of the transactions contemplated hereby. BTH is not in default in
the performance, observance or fulfillment of any provision of its articles of
incorporation or bylaws (or similar organizational documents) which could
reasonably be expected to prevent, materially interfere with or materially delay
the consummation of the transactions contemplated hereby.
(b) Each of the BTH Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the British Virgin
Islands with full corporate power and authority to own, lease, use and operate
its properties (including, without limitation, in the case of US Cable, to own
the Class A Shares and the Affiliate Stock and, in the case of Intercable, to
exercise the Control Option and to purchase and hold the Control Shares) and to
conduct its business as and where now owned, leased, used, operated and
conducted. Each of the BTH Subsidiaries is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it or the property it owns, leases or operates requires it to so qualify,
except where the failure to be so qualified or in good standing in such
jurisdiction individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect on either of the BTH Subsidiaries or prevent,
materially interfere with or materially delay the consummation of the
transactions contemplated hereby. The BTH Subsidiaries are not in default in the
performance, observance or fulfillment of any provision of their memorandum of
association and articles of association which could reasonably be expected to
have a Material Adverse Effect on the BTH Subsidiaries or prevent, materially
interfere with or materially delay the consummation of the transactions
contemplated hereby.
(c) True, complete and correct copies of the memorandum of association
and articles of association for each of the BTH Subsidiaries have been delivered
to Comcast and such memorandum of association and articles of association have
not been amended, modified or rescinded since the date of such delivery to
Comcast and are in full force and effect.
Section 3.2. Ownership of the Class A Shares. US Cable owns beneficially and of
record the Class A Shares, free and clear of any Claims.
-4-
<PAGE>
Section 3.3. Capitalization.
(a) US Cable has authorized share capital of $500,000,000 which is
divided into 500,000,000 shares each having a par value of US $1.00 of which
316,424,250 are issued and outstanding and no shares are issued and held in
treasury.
(b) Intercable has authorized share capital of $50,000 which is divided
into 50,000 shares each having a par value of US $1.00 of which 110 are issued
and outstanding and no shares are issued and held in treasury.
(c) BTH owns beneficially and of record 316,424,250 shares of the
capital stock of US Cable and 110 shares of the capital stock of Intercable, in
each case free of any Claims. Such capital stock represents all of the issued
and outstanding capital stock of US Cable and Intercable, respectively.
(d) Each of the (i) issued and outstanding shares of Subsidiary Stock
and (ii) to the Knowledge of BTH, shares of the Affiliate Stock has been duly
authorized, validly issued, fully paid and is nonassessable and, in the case of
(i) has not been and in the case of (ii) to the Knowledge of BTH has not been
issued in violation of any preemptive or similar rights. There are (i) no
outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale, repurchase or transfer of any capital stock or other
securities of the BTH Subsidiaries or, to the Knowledge of BTH and except as set
forth in the Jones Companies Shareholders Agreements, the Jones Companies, nor
are there outstanding any securities which are convertible into or exchangeable
for any shares of capital stock or other securities of the BTH Subsidiaries or,
to the Knowledge of BTH, the Jones Companies, and (ii) the BTH Subsidiaries and,
to the Knowledge of BTH, the Jones Companies, do not have any obligation of any
kind to issue any additional shares of capital stock or other securities or to
pay for or repurchase any shares of capital stock or other securities. Except as
set forth in the Jones Companies Shareholders Agreements, there are no
preemptive or similar rights available to (i) the existing holders of the
capital stock of the BTH Subsidiaries, (ii) to the Knowledge of BTH, the
existing holders of the capital stock of the Jones Companies, or (iii) to any
other Person in respect of the capital stock or other securities of the BTH
Subsidiaries or, to the Knowledge of BTH, the Jones Companies.
Section 3.4. No Other Investments; No Liabilities.
(a) Other than the Class A Shares (together with any distributions or
dividends received on such shares and any rights to receive declared but unpaid
distributions or dividends on such shares), and any capital stock of the Jones
Companies (together with any distributions or dividends received on such shares
and any rights to receive declared but unpaid distributions or dividends on such
shares), US Cable does not own, beneficially or of record, any capital stock of
or other equity interest in any corporation or other business entity nor does US
Cable own, beneficially or of record, any partnership interests in any general,
limited or limited liability partnership. Except for (i) the Class A Shares
(together with any distributions or dividends received on such shares and any
rights to receive declared but unpaid distributions or dividends on such shares)
and any capital stock of the Jones Companies (together with any distributions or
dividends received on such shares and any rights to receive declared but unpaid
distributions or dividends on such shares) and (ii) the Shareholders Agreement,
the Jones Companies Shareholders Agreements and the Shareholders Agreement
Assignment, US Cable does not own any assets and US Cable does not have any
liabilities or obligations of any nature whatsoever (other than franchise taxes
and customary directors fees which are not material in amount), whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
-5-
<PAGE>
(b) Intercable does not own, beneficially or of record, any capital
stock of any corporation or other business entity nor does Intercable own,
beneficially or of record, any partnership interests in any general, limited or
limited liability partnerships. Except for its interests in the Control Option
Agreements and the Option Agreement Assignment, Intercable does not own any
assets and, except as set forth on Schedule 3.4, Intercable does not have any
liabilities or obligations of any nature whatsoever (other than franchise
taxes), whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due.
(c) US Cable owns beneficially and of record 2,410 shares of the Class
A Common Stock of JEC free and clear of any Claims other than pursuant to
Section 4.5 of the applicable Jones Company Shareholder Agreement, which as of
the date of this Agreement constitutes 11.9% of the issued and outstanding
capital stock of JEC.
(d) US Cable owns beneficially and of record 747,500 shares of the
Class A Common Stock of JEG free and clear of any Claims other than pursuant to
Section 4.5 of the applicable Jones Company Shareholder Agreement, which as of
the date of this Agreement constitutes 20% of the issued and outstanding capital
stock of JEG.
Section 3.5. Corporate Power and Authority. BTH and each of the BTH Subsidiaries
each have all requisite corporate power and authority to enter into and deliver
this Agreement, to perform their obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement by BTH and each of the BTH Subsidiaries have been
duly authorized by all necessary corporate action required to have been taken by
or on behalf of BTH and each of the BTH Subsidiaries under applicable law and
their respective organizational documents. This Agreement has been duly executed
and delivered by BTH and each of the BTH Subsidiaries and constitutes the legal,
valid and binding obligation of BTH and each of the BTH Subsidiaries enforceable
against them in accordance with its terms.
Section 3.6. Conflicts; Consents and Approvals. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will:
(a) conflict with, or result in a breach of, any provision of the
certificate of incorporation, by-laws, memorandum of association or articles of
association or similar organizational documents of BTH or either of the BTH
Subsidiaries;
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, cancel, modify or call a default under, or result in the
creation of any Claim upon any of the properties or assets of BTH, the BTH
Subsidiaries, or any of their respective subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking, agreement, lease or other instrument or
obligation to which any of the foregoing is a party (excluding, for purposes of
this Section 3.6(b), the Jones/BTH Agreements and the Jones Companies
Shareholders Agreements, as to which such agreements no representation or
warranty is made under this paragraph (b)), which could reasonably be expected
to prevent, materially interfere with or materially delay the consummation of
the transactions contemplated by this Agreement;
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(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to BTH, either of the BTH Subsidiaries or any of their
subsidiaries or any of their respective properties or assets the effect of which
could reasonably be expected to, in the case of BTH prevent, materially
interfere with or delay the consummation of the transactions contemplated by
this Agreement, or in the case of each of the BTH Subsidiaries, have a Material
Adverse Effect on such BTH Subsidiary or prevent, materially interfere with or
materially delay the consummation of the transactions contemplated hereby;
(d) require any action or consent or approval of, or review by, or
registration or filing by BTH, either of the BTH Subsidiaries, or any of their
subsidiaries or to the Knowledge of BTH, the Company or the Jones Companies with
(i) any local, domestic, foreign or multi-national court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory body,
agency, instrumentality or authority (a "Governmental Authority"), other than
(w) actions required by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"); (x) the filing of any Schedule 13D with the Securities and Exchange
Commission ("SEC") or the amendment of any Schedule 13D already on file with the
SEC; (y) Franchise Approvals; or (z) actions required as a result of or relating
to the regulatory status of Comcast or (ii) to the Knowledge of BTH, any third
party.
Section 3.7. Brokerage and Finder's Fees; Expenses. Except in connection with
the retention of Bear Stearns & Co., Inc., (the fees of which firm shall be the
sole responsibility of BTH) none of BTH, either of the BTH Subsidiaries or their
respective Affiliates or any stockholder, director, officer or employee of any
of them has incurred or will incur on behalf of BTH, either of the BTH
Subsidiaries, the Company or any of their respective Affiliates any brokerage,
finder's or similar fee in connection with the transactions contemplated by this
Agreement.
Section 3.8. Shareholders Agreement and Option Agreements.
(a) True, correct and complete copies of the Jones/BTH Agreements, the
Jones Companies Shareholders Agreements, the Fee Letter and the Supply Services
Agreement (together with any and all schedules or exhibits to each of the
foregoing) have been delivered to Comcast. Each of the Jones/BTH Agreements and
the Jones Companies Shareholders Agreements (i) has been duly authorized,
executed and delivered by BTH and any of its Affiliates or agents that are
parties thereto, and to the Knowledge of BTH by the other parties thereto, and
(ii) is in full force and effect in the forms previously delivered to Comcast
and has not been amended, terminated or modified in any respect. BTH is the
"Investor" as such term is defined in the Shareholders Agreement and has validly
assigned all of its rights under the Shareholders Agreement to US Cable pursuant
to the Shareholders Agreement Assignment entered into pursuant to Section
7.2(b)(ii) of the Shareholders Agreement. BTH has validly assigned all of its
rights under the Control Option Agreements to Intercable pursuant to that
certain Assignment and Assumption Agreement, dated December 22, 1995 (the
"Option Agreement Assignment"), by and among BTH, Morgan Guaranty Trust Company
of New York, Bank of New York, and Intercable. Except for the subject matter of
the Litigation (as defined in Section 5.7 hereof), neither BTH nor any of its
Affiliates or agents that are parties to or assignees of rights under the
Jones/BTH Agreements, and to the Knowledge of BTH none of the other parties
thereto, have breached or are in default under such agreements. Except for the
Jones/BTH Agreements, there are no other agreements, contracts, arrangements or
understandings which relate in any manner to, the subject matter of the
Jones/BTH Agreements.
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(b) The execution of this Agreement and the consummation of the
transactions contemplated hereby and the exercise of the Control Option
(assuming the Control Option were exercised on the date hereof and on each of
the Initial Closing Date and the Final Closing Date) will not violate or
contravene or constitute, with the passage of time, giving of notice or
otherwise, a default under or give rise to the early termination in whole or in
part of, the Jones/BTH Agreements; provided, however, that Comcast acknowledges
and agrees that the exclusive remedy of any Comcast Indemnified Party for any
breach of this Section 3.8(b) shall be limited to reimbursement of a portion of
the Initial Purchase Price as set forth in Section 8.8 of this Agreement.
(c) Except as set forth on Schedule 3.8 or as specifically disclosed in
the Company Public Reports, none of BTH, either of the BTH Subsidiaries or any
of their respective Affiliates or agents has (i) consented to the taking of any
action for which the consent of such persons is required to be obtained by any
party to the Jones/BTH Agreements, including the actions set forth in Sections
2.6 and 3.6(b) of the Shareholders Agreement or (ii) engaged in any transactions
requiring approval pursuant to Section 3.6 of the Shareholders Agreement, other
than actions or transactions which, individually or in the aggregate, are not
material.
(d) As of the date of this Agreement, BTH has fulfilled not less than
$286,424,250 of its $400,000,000 investment commitment pursuant to Section 3.1
of the Shareholders Agreement.
Section 3.9. Transactions with Affiliates and Jones. Except for the Jones/BTH
Agreements, the Jones Companies Shareholders Agreements, the Fee Letter, the
Supply Services Agreement and the Secondment Agreement, none of BTH or its
Affiliates or their respective agents is a party to any agreements, contracts,
understandings or arrangements with Jones or the Company or with any Affiliate
or Associate of Jones or the Company (i) relating to the subject matter of this
Agreement or any other equity investments, joint ventures or partnership
agreements or (ii) any other material matter, other than in the case of the
foregoing clause (ii) arms-length transactions entered into in the ordinary
course of business.
Section 3.10. Status of the Company. To the Knowledge of BTH, as of the date of
this Agreement and as of the earlier of (i) December 31, 1998, (ii) the
Simultaneous Closing Date and (iii) the Initial Closing Date the statements
contained on Schedule 3.10 are true, complete and correct in all material
respects.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMCAST
Comcast hereby represents and warrants to BTH that:
Section 4.1. Organization and Standing. Comcast is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania with full corporate power and authority to own, lease, use and
operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted. Comcast is duly qualified to do business
and in good standing in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates requires it to so
qualify, except where the failure to be so qualified or in good standing in such
jurisdiction individually or in the aggregate could not reasonably be expected
to prevent, materially interfere with or materially delay the consummation of
the transactions contemplated hereby. Comcast is not in default in the
performance, observance or fulfillment of any provision of its articles of
incorporation or bylaws which could reasonably be expected to prevent,
materially interfere with or materially delay the consummation of the
transactions contemplated hereby.
Section 4.2. Corporate Power and Authority. Comcast has all requisite corporate
power and authority to enter into and deliver this Agreement, to perform its
obligations hereunder and, to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by Comcast
has been duly authorized by all necessary corporate action required to have been
taken by or on behalf of Comcast under applicable law or its articles of
incorporation and bylaws. This Agreement has been duly executed and delivered by
Comcast and constitutes the legal, valid and binding obligation of Comcast
enforceable against Comcast in accordance with its terms.
Section 4.3. Conflicts; Consents and Approvals. Except as set forth in Schedule
4.3, neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby will:
(a) conflict with, or result in a breach of, any provision of the
articles of incorporation or the by-laws of Comcast,
(b) violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle any
party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, cancel, modify or call a default under, or result in the
creation of any Claim upon any of the properties or assets of Comcast under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which Comcast is a party which could reasonably be
expected to prevent, materially interfere with or materially delay the
consummation of the transactions contemplated hereby;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Comcast or any of its properties or assets the effect
of which could reasonably be expected to prevent, materially interfere with or
materially delay the consummation of the transactions contemplated hereby, or
(d) require any action or consent or approval of, or review by, or
registration or filing by Comcast with, any Governmental Authority or to the
Knowledge of Comcast any third party, other than (i) actions required by the HSR
Act; (ii) the filing of any Schedule 13D with the SEC or the Amendment of any
Schedule 13D already on file with the SEC; or (iii) actions or filings required
as a result of or relating to the status of BTH, the BTH Subsidiaries or the
Company.
Section 4.4. Brokerage and Finder's Fees; Expenses. Except in connection with
the retention of Lazard Freres & Co. LLC (the fees of which firm shall be the
sole responsibility of Comcast) none of Comcast, its Affiliates or any
stockholder, director, officer or employee of any of them has incurred or will
incur on behalf of Comcast or any of its Affiliates any brokerage, finder's or
similar fee in connection with the transaction contemplated by this Agreement.
Section 4.5. Investment Purpose. Comcast is acquiring the shares of the Company,
JEC and JEG owned by BTH and the BTH Subsidiaries or alternatively, the Initial
Shares, the Affiliate Shares, the Subsidiary Shares and the Remaining Subsidiary
Shares, solely for the purposes of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
Section 4.6. Transactions with Jones. Except for the acquisition of cable
systems, programming carriage agreements, minority investments in programming or
other content businesses, and advertising interconnect agreements, none of
Comcast or its Affiliates or their respective agents is a party to any
agreements, contracts, understandings or arrangements with Jones or the Company
or with any Affiliate or Associate of Jones or the Company (i) relating to the
subject matter of this Agreement or (ii) any other material matter, other than
arms-length transactions entered into in the ordinary course of business;
provided, however, that any agreement, contract, understanding or arrangement
with Jones or the Company entered into after May 22, 1998 in contemplation of
the acquisition of the Company or shares of its capital stock shall be deemed
not to be a breach of this representation and warranty.
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ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF COMCAST
AT THE INITIAL CLOSING AND THE FINAL CLOSING
(A) The obligations of Comcast to consummate the Initial Closing in
accordance with Article VIII are subject to the fulfillment or waiver of each of
the following conditions at or prior to the Initial Closing:
Section 5.1. Litigation; No Governmental Opposition. No judgment, injunction,
order or decree (i) enjoining or prohibiting BTH, the BTH Subsidiaries or
Comcast from consummating the transactions contemplated hereby or the exercise
of the Control Option (including its exercise pursuant to Section 7.5(a)), (ii)
invalidating or terminating the Control Option or the Jones/BTH Agreements or
(iii) declaring that if the Initial Closing were to occur, the Control Option
would be invalidated or terminated, shall have been entered prior to or on the
Initial Closing Date and no suit, action or proceeding shall be pending or
threatened prior to or on the Initial Closing Date by any Governmental Authority
seeking the relief described in the foregoing clauses (i), (ii) or (iii).
Section 5.2. Representations, Warranties and Covenants.
(a) Each of the representations and warranties of BTH contained in this
Agreement shall, in the case of those representations and warranties that are
not qualified by materiality, be true, complete and correct in all material
respects, and in the case of those representations and warranties that are
qualified by materiality shall be true, complete and correct in all respects, as
of each of (i) the date of this Agreement and (ii) unless otherwise specified as
having been made as of a specific date, the Initial Closing Date, in each case
as though newly made at such time, except to the extent the facts underlying
such representations and warranties have changed (i) with Comcast's consent in
accordance with Section 7.3 or otherwise, or (ii) as a result of the sale of the
Affiliate Stock in accordance with the provisions of Section 7.11(b).
(b) Each of the covenants and agreements to be performed by BTH and the
BTH Subsidiaries hereunder at or prior to the Initial Closing shall have been
duly performed in all material respects.
Section 5.3. Approvals.
(a) Except as could not reasonably be expected to have a Material
Adverse Effect on Comcast or the Company and except for any authorizations,
consents, orders or approvals from applicable Franchise Authorities, all actions
by or in respect of, or filings with, any Governmental Authority required to
permit the consummation of the transactions contemplated hereby shall have been
taken, made or obtained, and any and all other permits, approvals, consents,
licenses or other actions necessary to consummate the transactions hereunder
(including those listed on Schedule 3.6) shall have been received or taken, and
none of such permits, approvals, consents or licenses shall contain any
provisions which would have a Material Adverse Effect on Comcast or the Company.
(b) There shall not be in effect any statute, rule or regulation which
would have the effect of prohibiting Comcast from consummating the transactions
contemplated hereby.
Section 5.4. Other Deliveries. In addition to those documents and instruments
which are required to be delivered to Comcast at the Initial Closing pursuant to
Article VIII, BTH and each of the BTH Subsidiaries shall have executed (where
applicable) and delivered to Comcast (or shall have caused to be executed and
delivered to Comcast by the appropriate Person) the following:
(a) a copy of the memorandum of association and articles of association
of each of the BTH Subsidiaries which is certified as of a recent date by the
applicable British Virgin Islands authority;
(b) a customary certificate of the applicable British Virgin Islands
authority certifying as of a recent date as to matters such as the due
incorporation and good standing of each of the BTH Subsidiaries;
(c) a certificate of the secretary of each of the BTH Subsidiaries,
certifying that the attached copies of their respective memorandum of
association and articles of association and the resolutions of their respective
boards of directors and stockholders authorizing the execution of this Agreement
and the transactions contemplated hereby are true, correct and complete copies
and are each in full force and effect and have not been amended or modified, and
that the officers of each of the BTH Subsidiaries are those persons named in the
certificate;
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(d) a certificate dated as of the Initial Closing Date signed by the
president or chief executive officer of BTH certifying that all of the
conditions in Section 5.2 have been fulfilled prior to or on the Initial Closing
Date;
(e) a customary opinion of counsel to BTH and each of the BTH
Subsidiaries covering such matters as described in Sections 3.1, 3.3 and 3.5;
(f) such other certificates, documents and agreements in connection
with the consummation of the transactions contemplated hereby which are
reasonably requested by Comcast, all in form and substance reasonably
satisfactory to Comcast.
Section 5.5. HSR Act. Any applicable waiting period under the HSR Act (including
any extensions thereof) shall have expired or been terminated.
Section 5.6. Material Adverse Change. During the period beginning March 31, 1998
and ending on the earlier of (i) December 31, 1998 (ii) the Initial Closing Date
and (iii) the Simultaneous Closing Date, there shall have been no change, event
or development which, either individually or in the aggregate with other
changes, events and developments, has had or could reasonably be expected to
have a Material Adverse Effect on the Company; provided, however, that (i) a
decrease in the market price of the shares of the Company's capital stock (but
not any change, event or development underlying such decrease to the extent such
change, event or development would otherwise constitute a Material Adverse
Effect on such party) and (ii) changes, events or developments (including
changes in legal or regulatory conditions) generally affecting the economy as a
whole or the cable industry as a whole, shall be deemed not to be changes,
events or developments having a Material Adverse Effect on the Company for
purposes of this Section 5.6.
Section 5.7. Litigation. The decision and order rendered on May 5, 1998 in that
certain lawsuit brought by BTH against Jones Intercable, Inc., Jones
International, Ltd., Jones Internet Channel, Inc. and Glenn R. Jones, which has
been rendered by the U.S. District Court for the District of Colorado (the
"Litigation") shall not have been reversed and the injunction granted in
connection with such decision shall not have been stayed or dissolved.
Section 5.8. Status of the Company. On the earliest to occur of (i) December 31,
1998, (ii) the Initial Closing Date or (iii) the Simultaneous Closing Date the
statements on Schedule 3.10 shall be true and correct.
(B) The obligations of Comcast to consummate the Final Closing in
accordance with Article VIII are subject to the fulfillment or waiver of each of
the conditions set forth in Section 8.5 at or prior to the Final Closing.
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF BTH AND
THE BTH SUBSIDIARIES AT THE INITIAL CLOSING AND THE FINAL CLOSING
(A) The obligations of BTH and the BTH Subsidiaries to consummate the
Initial Closing in accordance with Article VIII are subject to the fulfillment
or waiver of the following conditions at or prior to the Initial Closing:
Section 6.1. Litigation; No Governmental Opposition. No judgment, injunction,
order or decree (i) enjoining or prohibiting any of BTH, the BTH Subsidiaries or
Comcast from consummating the transactions contemplated hereby or the exercise
of the Control Option (including its exercise pursuant to Section 7.5(a)), (ii)
invalidating or terminating the Control Option or the Jones/BTH Agreements or
(iii) declaring that if the Initial Closing were to occur the Control Option
would be invalidated or terminated, shall have been entered prior to or on the
Initial Closing Date and no suit, action or proceeding shall be pending or
threatened prior to or on the Initial Closing Date by any Governmental Authority
seeking the relief described in the foregoing clauses (i), (ii) or (iii).
Section 6.2. Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Comcast contained in
this Agreement shall, in the case of those representations and warranties that
are not qualified by materiality, be true, complete and correct in all material
respects, and in the case of those representations and warranties that are
qualified by materiality shall be true, complete and correct in all respects, as
of each of (i) the date of this Agreement and (ii) unless otherwise specified as
having been made as of a specific date, the Initial Closing Date, in each case
as though newly made at such time.
(b) Each of the covenants and agreements to be performed by Comcast
hereunder at or prior to the Initial Closing shall have been duly performed in
all material respects.
Section 6.3. Approvals.
(a) Except as could not reasonably be expected to have a Material
Adverse Effect on BTH or the BTH Subsidiaries, and except for any
authorizations, consents, orders or approvals from applicable Franchise
Authorities, all actions by or in respect of, or filings with, any Governmental
Authority required to permit BTH and the BTH Subsidiaries to consummate the
transactions contemplated hereby shall have been taken, made or obtained, and
any and all other permits, approvals, consents, licenses or other actions
necessary to permit BTH to consummate the transactions hereunder shall have been
received or taken.
(b) There shall not be in effect any statute, rule or regulation which
would have the effect of prohibiting BTH or the BTH Subsidiaries from
consummating the transactions contemplated hereby.
Section 6.4. Other Deliveries. In addition to those documents and instruments
which are required to be delivered to BTH at the Initial Closing pursuant to
Article VIII, Comcast shall have executed (where applicable) and delivered to
BTH (or shall have caused to be executed and delivered by the appropriate
Person), the following:
(a) a certificate dated as of the Initial Closing Date signed by the
president or chief executive officer of Comcast certifying that all of the
conditions contained in Section 6.2 have been fulfilled prior to or on the
Initial Closing Date;
(b) a customary opinion of counsel to Comcast, covering such matters as
described in Sections 4.1 and 4.2;
(c) such other certificates, documents and agreements in connection
with the consummation of transactions contemplated hereby which are reasonably
requested by BTH, all in form and substance reasonably satisfactory to BTH.
Section 6.5. HSR Act. Any applicable waiting period under the HSR Act (including
any extensions thereof) shall have expired or been terminated.
(B) The obligations of BTH and the BTH Subsidiaries to consummate the
Final Closing in accordance with Article VIII are subject to the fulfillment or
waiver of each of the conditions set forth in Section 8.6 at or prior to the
Final Closing.
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ARTICLE VII
COVENANTS
Section 7.1 [Intentionally omitted]
Section 7.2. Jones/Comcast Agreement. (a) Comcast agrees that (i) it shall
perform its obligations under the Jones/Comcast Agreement (ii) it shall not,
without the prior written consent of BTH, amend or waive any provision of the
Jones/Comcast Agreement to (x) add any additional conditions to the obligations
of the parties to the Jones/Comcast Agreement to the Jones/Comcast Closing (y)
amend or waive the provisions contained in Sections 9(c), (d), (i), (j), (k) or
10 of the Jones/Comcast Agreement or (z) otherwise adversely affect in a
material way the right or ability of any party thereto to consummate the Closing
or the Simultaneous Closing or cause the Closing or the Simultaneous Closing to
be delayed, (iii) it shall enforce vigorously any rights it may have against the
Jones Entities in respect of any breach of their obligations under the
Jones/Comcast Agreement including seeking specific performance by the Jones
Entities of their obligations thereunder and (iv) it shall provide BTH with
copies of all notices Comcast receives or delivers pursuant to the Jones/Comcast
Agreement.
(b) Comcast agrees that in the event the Closing and the
Simultaneous Closing have not occurred on or prior to June 30, 1999, it shall
terminate the Jones/Comcast Agreement in accordance with the provisions of
Section 16 thereof with a view to alternatively consummating the Initial Closing
as contemplated by Section 1.1(a) hereof.
Section 7.3. Consultation with Comcast.
(a) BTH covenants and agrees that upon BTH, the BTH Subsidiaries or
their designees on the Company's board of directors receiving any notice from
Jones, the Company or their Affiliates pursuant to, under or with respect to
Sections 2.6, 2.8, 3.1, 3.6, 3.8, 4.1, 4.2, 5.1, 5.2 or 5.4 of the Shareholders
Agreement, BTH will promptly notify Comcast of the receipt of such notice and if
so requested by Comcast promptly forward a copy of such notice to Comcast by
facsimile transmission together with telephonic notice to the numbers specified
for Comcast in Section 13.7; provided that if BTH determines in its reasonable
good faith discretion that forwarding any such notice to Comcast would
constitute a breach of its confidentiality obligations under the Shareholders
Agreement, BTH shall only be obligated to notify Comcast of the existence and
general subject matter of such notice and to the extent permitted under its
confidentiality obligations, the contents of such notice.
(b) Comcast shall have the right to deliver a notice of preference
expressing their desire that BTH, the BTH Subsidiaries or their Affiliates
exercise or not exercise their rights or otherwise take or not take certain
actions pursuant to Sections 2.6, 2.8, 3.1(b) or (c), 3.6, 3.8, 4.1, 4.2, 5.1,
5.2 or 5.4, as the case may be, (a "Notice of Preference") of the Shareholders
Agreement within the applicable Preference Period. For purposes hereof, the
"Preference Period" shall be a number of days (or hours) equal to the greater of
(i) two days less than the number of days between the date of receipt of notice
by BTH, the BTH Subsidiaries or their designees on the Company's board of
directors from Jones, the Company or their respective Affiliates and the time
BTH is required to respond to such request under the terms of the Shareholders
Agreement and (ii) one half of the number of days (or hours) between the time of
receipt of notice by BTH, the BTH Subsidiaries or their designees on the
Company's board of directors and the time BTH is required to respond to such
request.
(c) If Comcast has not delivered a Notice of Preference within the
applicable Preference Period, then Comcast shall be deemed to have delivered a
Notice of Preference containing the following advice, as applicable:
(i) in the case of Sections 2.6, 4.1, 5.1(a) or 5.2(d) of the Shareholders
Agreement, BTH and the BTH Subsidiaries should exercise their right not
to consent to the proposed action and in the case of Section 3.1(b),
not to waive the conditions referred to therein;
(ii) in the case of Section 3.6 of the Shareholders Agreement, the Unrelated
Directors (as defined in the Shareholders Agreement) designated by BTH
or the BTH Subsidiaries should exercise their right (subject to their
fiduciary duties as provided in Section 7.3(e)) not to approve the
proposed transaction.
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(d) If Comcast delivers a Notice of Preference within the Preference
Period expressing a desire to have BTH or the BTH Subsidiaries exercise their
rights under Sections 2.8, 3.1(b) or (c), 3.8, 4.2 or 5.1(b) of the Shareholders
Agreement, or if BTH or the BTH Subsidiaries are required to invest in
additional shares of the Company pursuant to Section 3.1(a) of the Shareholders
Agreement, at the time of delivery by Comcast of any such Preference Notice or,
in the case of a notice by BTH of its investment obligations pursuant to Section
3.1(a) of the Shareholder's Agreement within 5 Business Days of receipt by
Comcast thereof. Comcast and BTH agree to enter into a mutually satisfactory
escrow or security arrangement whereby Comcast shall make available to BTH or
the BTH Subsidiaries, as applicable, immediately available funds sufficient to
enable BTH or the BTH Subsidiaries to fulfill their payment obligations pursuant
to the applicable Section of the Shareholders Agreement and such funds shall be
held in escrow until immediately prior to such time as BTH or the BTH
Subsidiaries acquire the securities which are the subject of such transaction
and which further provides that BTH or the BTH Subsidiaries, as applicable,
shall deliver the securities (together with any dividends or distributions
thereon) to Comcast at the first to occur of the Final Closing, including any
alternative final closing pursuant to Section 8.8, or the termination of this
Agreement.
(e) In the event that BTH, the BTH Subsidiaries or their designees on
the Company's board of directors elect not to act in accordance with, or take
any action contrary to, any Notice of Preference of Comcast (whether actually
delivered pursuant to subsection (b) or whether deemed to have been delivered
pursuant to subsection (c) within the Preference Period), then BTH will make a
one-time payment to Comcast, within 5 days of demand by Comcast, of an amount
equal to $150,000,000, plus, if the Initial Closing has occurred interest at the
Applicable Rate accruing from the Initial Closing Date to and including the date
of such payment. No such payment shall be required of BTH with respect to a
transaction described in Section 3.6(b) of the Shareholders Agreement that has
occurred if (i) the directors of the Company designated by US Cable or any of
its Affiliates pursuant to the Shareholders Agreement shall have reasonably
concluded in good faith at the time they approved such transaction, to the
extent such consultation is reasonably practicable under the circumstances after
(x) consultation with and the receipt of advice from a nationally recognized law
firm, and (y) to the extent reasonably practicable under the circumstances
consultation with Comcast, that their fiduciary duties as directors of the
Company require them to approve such transaction and (ii) none of BTH or its
Affiliates has any financial interest in such transaction (other than holding
any capital stock of the Company) or has received remuneration or any other
inducement to approve such transaction. In addition, no such payment shall be
required of BTH with respect to the adoption of the resolutions set forth on
Schedule 7.3.
(f) Except as otherwise expressly provided in Section 8.8, the receipt
of any such payment by Comcast shall be the sole and exclusive remedy of the
Comcast Indemnified Parties with respect to claims based on the matters set
forth in this Section 7.3.
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(g) Notwithstanding any provision to the contrary in this Section 7.3,
with respect to the resolutions set forth on Schedule 7.3 (i) Comcast agrees
that it shall waive any rights it may have under Section 7.3(b) to deliver a
Notice of Preference to BTH regarding BTH's rights under the Shareholders
Agreement in respect of the adoption of the resolutions set forth on Schedule
7.3 and the consummation of the transactions authorized by such resolutions in
accordance with the terms of such resolutions, (ii) Comcast and BTH agree that
Section 7.3(c) shall not be applicable to the resolutions set forth on Schedule
7.3 and Comcast shall not deliver a Notice of Preference or be deemed to have
delivered a Notice of Preference with respect to such resolutions, and (iii)
Comcast and BTH agree that BTH (and any director of the Company designated by
BTH pursuant to the Shareholders Agreement) shall be entitled, in its sole
discretion, to take any such actions or refrain from taking any actions, and
exercise or refrain from exercising any such rights, as it may have under the
Shareholders Agreement with respect to the approval of, or the giving or
withholding of consent to, such resolutions.
Section 7.4. Prohibited Transactions. During the term of this Agreement, BTH
shall not and shall not permit any of its Affiliates or agents to: (i) except as
contemplated by this Agreement, Transfer any interests of BTH, the BTH
Subsidiaries or their Affiliates in, or rights relating to, the Company, (ii)
except in connection with a transaction of the type referred to in the last
sentence of Section 1.1(a), engage in any merger, consolidation or other
business combination involving the Company or any sale of substantially all of
the assets of the Company, (iii) except as contemplated by this Agreement,
Transfer any of the capital stock of either of the BTH Subsidiaries or
participate in any merger, consolidation or other business combination involving
either of the BTH Subsidiaries; (iv) except as contemplated by this Agreement,
Transfer any of the Class A Shares or the Control Shares or any interest in
Jones/BTH Agreements or the Fee Letter or Supply Services Agreement or any
rights, powers or privileges thereunder or waive, modify or fail to reasonably
enforce and to defend any and all such rights, powers or privileges; (v) except
as contemplated by this Agreement, Transfer any of the capital stock of the
Jones Companies or any interest in the Jones Company Shareholders Agreements or
any rights, powers or privileges thereunder or waive, modify or fail to
reasonably enforce and to defend any and all such rights, powers or privileges;
or (vi) grant any option or right to do any of the foregoing. BTH also agrees
that it shall not and shall not permit any of its Affiliates, agents, employees
and representatives (including, without limitation, attorneys and financial
advisors) to solicit offers relating to, or to negotiate, discuss or enter into
or consummate any agreements, arrangements, contracts or understandings relating
to, any of the matters covered by clauses (i) through (vi) of the preceding
sentence. At all times during the term of this Agreement, BTH agrees that it
shall remain a majority-owned subsidiary of BCE, Inc. ("BCE"); provided that BTH
may be liquidated into BCE in a transaction which will not result in the loss of
any rights under the Jones/BTH Agreements.
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Section 7.5. Exercise of the Control Option
(a) BTH shall notify Comcast within twenty-four (24) hours after it
becomes aware that the Control Option becomes exercisable pursuant to the terms
of the Control Option Agreements. If Comcast, in its sole discretion, determines
that the Control Option should be exercised and so notifies BTH, then BTH shall
or shall cause Intercable or their agent to either (as directed by Comcast) (i)
exercise the Control Option and, upon satisfaction or waiver of the conditions
contained in Section 3.2(b) of the Option Agreement, purchase the Control Shares
or (ii) assign their rights under the Control Option Agreements in accordance
with Section 10.2(a)(iii) or 10.2(a)(iv) thereof to Comcast or a person selected
by Comcast. In the event that Comcast decides that the Control Option should be
exercised, it shall deliver to BTH a written notice directing BTH to, or to
cause its Affiliates or agents to, exercise the Control Option on a date
specified in such notice and Comcast shall deposit into an escrow account, with
Bank of New York acting as escrow agent, sufficient funds to consummate the
exercise of the Control Option and the purchase of the Control Shares; provided
however that if BTH or the BTH Subsidiaries fail to consummate the purchase of
the Control Shares such funds provided by Comcast shall be repaid to Comcast
plus any interest earned on such funds while held in escrow. BTH shall not, and
shall cause the BTH Subsidiaries and their agents not to, exercise the Control
Option unless so directed by Comcast. Notwithstanding any provision to the
contrary in this Agreement, Comcast and BTH acknowledge and agree that (i) the
Control Option has become immediately exercisable in certain circumstances
referred to in the Control Option Agreements as a "Section 3.1(a)(vi) Exercise"
and that the Control Option has been deemed to be so exercised as set forth in
the Control Option Agreements, (ii) at the time of the closing of the purchase
of the Control Shares pursuant to a Section 3.1(a)(vi) Exercise, Bank of New
York will be acting as agent for Comcast pursuant to each of the Control Option
Agreements (including the right to purchase the Control Shares), and (iii)
Comcast shall, at the time of the closing of the purchase of the Control Shares
pursuant to a Section 3.1(a)(vi) Exercise, pay the purchase price for the
Control Shares to the Jones Sellers pursuant to the Control Option Agreements
and Comcast shall not be required to deposit such funds in escrow as provided in
this Section 7.5(a).
(b) In the event that Intercable's inability to satisfy one or more of
the conditions contained in Section 3.2(b)(i)-(vi) of the Control Option
Agreements is due to a Change in Law (as defined in the Control Option
Agreements) after the date of this Agreement and prior to the delivery of an
exercise notice pursuant to the Control Option Agreements, and such inability to
satisfy such conditions would prevent Intercable from delivering the Control
Shares to Comcast as provided herein, then Intercable shall have the right to
offer the Control Option to Jones in accordance with the terms, conditions and
procedures specified in Section 7.2 of the Control Option Agreements; provided
that Intercable agrees that it shall not exercise such right to offer the
Control Option to Jones prior to the termination of the Jones/Comcast Agreement.
In the event that Jones fails to elect to purchase the Control Option pursuant
to the offer referred to in the previous sentence, then Intercable shall assign
the Control Option to Comcast (or a Person designated by Comcast) pursuant to
Section 10.2(a)(ii) of the Control Option Agreements and the condition contained
in Section 8.5(f) shall be satisfied. In the event that Jones elects to purchase
the Control Option pursuant to the offer referred to in the first sentence of
this Section 7.5(b), the condition contained in Section 8.5(f) shall not be
satisfied and BTH shall have the right to retain any proceeds of such purchase
by Jones.
Section 7.6. Litigation. BTH shall not take any action or refrain from taking
any action relating to the Litigation without first consulting with Comcast;
provided that, in consideration of Comcast's entering into the Jones/Comcast
Agreement and this Agreement, BTH hereby releases, effective as of the date on
which the Closing Date (as defined in the Jones/Comcast Agreement) and the
Simultaneous Closing Date shall both have occurred, all claims for monetary
damages that it has asserted, or may assert, against the Company, the Jones
Sellers and their respective officers, directors and Affiliates in connection
with the subject matter of the Litigation as provided in the Agreement and
Amendment No. 1 to Shareholders Agreement of even date herewith. BTH agrees to
take any and all actions necessary or advisable to stay any and all proceedings
relating to the Litigation until the first to occur of (i) the date on which the
Closing Date (as defined in the Jones/Comcast Agreement) and the Simultaneous
Closing Date shall both have occurred or (ii) the termination of the
Jones/Comcast Agreement.
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Section 7.7. Covenant Not to Take Certain Actions.
(a) None of BTH or the BTH Subsidiaries shall take, or agree in writing
or otherwise to take, or permit any of their Affiliates to take, or agree in
writing or otherwise to take, any action which will cause any of the conditions
specified in Article V or Section 8.5 not to be fulfilled at and as of the
Initial Closing Date and the Final Closing Date, respectively or which would be
inconsistent with the terms of this Agreement or the transactions contemplated
hereby.
(b) Comcast shall not take, or agree in writing or otherwise to take,
nor permit any of its Affiliates to take, or agree in writing or otherwise to
take, any action which will cause any of the conditions specified in Article VI
and Section 8.6 not to be fulfilled at and as of the Initial Closing Date and
the Final Closing Date, respectively, or which would be inconsistent with the
terms of this Agreement or the transactions contemplated hereby.
(c) BTH shall cause the BTH Subsidiaries to: (i) conduct their
respective business only in the ordinary course consistent with past practice;
(ii) except as contemplated by this Agreement, not make (or incur any obligation
to make) any purchase, sale or disposition of any asset or property or subject
to any Claim any of their properties or assets; (iii) other than obligations for
reasonable director's fees, not incur any contingent or fixed obligations or
liabilities including, without limitation, any liability (contingent or fixed)
as a guarantor or otherwise with respect to the obligations of others; (iv)
except with Comcast's consent in connection with the actions contemplated by
Section 7.10 not make or incur any obligation to make a change in their
certificates of incorporation, by-laws or authorized or issued capital stock;
(v) except for the payment to BTH of any portion of the Purchase Price paid to
the BTH Subsidiaries by Comcast, not declare, set aside or pay any dividend or
distribution, make (or incur an obligation to make) any other distribution in
respect of its capital stock or interests or make (or incur an obligation to
make) any direct or indirect redemption, purchase or other acquisition of their
stock or interests; (vi) not make any change in the compensation payable or to
become payable to any of their respective officers, employees, agents or
independent contractors, or enter into any collective bargaining agreement,
bonus, equity, option, profit sharing, compensation, welfare, retirement, or
other similar arrangement, or any employment contract; (vii) not prepay any
loans (if any) from their stockholders, officers or directors; (viii) not make
any change in their borrowing or banking arrangements; and (ix) except with
Comcast's consent in connection with the actions contemplated by Section 7.10
not issue any capital stock nor any rights, options or warrants to purchase
capital stock.
Section 7.8. Resignation of Directors. BTH, US Cable and Intercable each agree
to cause each of the Investor Nominees (as such term is defined in the
Shareholders Agreement) to resign, seriatim from the Company's board of
directors at the Final Closing or the Simultaneous Closing, as applicable (but
in any event prior to the closing of the purchase and sale of the Optioned
Shares (as defined in the Option Agreements)) and to designate as Investor
Nominees such persons as may be selected by Comcast and to vote in favor of and
to cause the other Investor Nominees, subject to their fiduciary duties as
provided in Section 2.4(b) of the Shareholders Agreement, to vote in favor of
electing such individuals designated by Comcast to fill the vacancies created by
such resignations and by the resignations of the Jones Nominees (as such term is
defined in the Shareholders Agreement) pursuant to the Jones/Comcast Agreement .
BTH, Intercable and US Cable each agree to follow Comcast's direction with
respect to the sequence of such resignations and the filling of such vacancies.
Section 7.9. Covenant to Act in Good Faith.
(a) BTH and the BTH Subsidiaries shall in good faith use reasonable
best efforts to ensure that (i) the conditions in Article V(A) are fulfilled as
soon as is reasonably possible following the date hereof and (ii) the conditions
in Article V(B) are fulfilled as soon as is reasonably possible (x) in the case
of a Simultaneous Closing, following the date hereof and (y) in all other cases
after the earlier to occur of (i) the date Comcast notifies BTH to exercise or
cause the exercise of the Control Option after the Control Option becomes
exercisable or (ii) the date the Control Option terminates according to its
terms without Comcast having notified BTH to exercise the Control Option. BTH
and any of its respective Affiliates, shall promptly file any required notice or
application for approval with respect to the consummation of the transactions
contemplated hereby, including making any required filing under the HSR Act on
or prior to August 27, 1998 and shall expeditiously process the same (and each
of BTH and its respective Affiliates shall cooperate in a commercially
reasonable manner with Comcast in the filing of any such notice or application
and the obtaining of any such approval). In connection with the foregoing,
Comcast may also seek that any such actions, consents, approvals or waivers
include the immediate transfer on the Closing Date of the Control Shares by
Comcast to Comcast Cable Communications, Inc., a wholly-owned subsidiary of
Comcast and the parent company of Comcast's cable division.
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(b) Comcast shall in good faith use reasonable best efforts to ensure
that (i) the conditions in Article VI(A) are fulfilled as soon as is reasonably
possible following the date hereof including making any required filing under
the HSR Act on or prior to August 27, 1998 and (ii) the conditions in Article
VI(B) are fulfilled as soon as is reasonably possible (x) in the case of a
Simultaneous Closing following the date hereof and (y) in all other cases after
the earlier to occur of (i) the date Comcast notifies BTH to exercise or cause
the exercise of the Control Option after the Control Option becomes exercisable
or (ii) the date the Control Option terminates according to its terms without
Comcast having notified BTH to exercise the Control Option. Comcast and any of
its Affiliates shall promptly file any required notice or application for
approval with respect to the consummation of the transactions contemplated
hereby, including making any required filing under the HSR Act prior to [July
___, 1998 (10 business days after signing)], and shall expeditiously process the
same (and Comcast and its Affiliates shall cooperate in a commercially
reasonable manner with BTH and the BTH Subsidiaries in the filing of any such
notice or application or the obtaining of any such approval).
Section 7.10. Tax Matters. BTH and Comcast covenant and agree to consult with
one another and cooperate in good faith to determine mutually advantageous
allocations and tax structures to effect the transactions contemplated by this
Agreement.
Section 7.11. Other Agreements. (a) Following the Initial Closing, BTH shall pay
Comcast any Payments pursuant to the Fee Letter and the Supply Services
Agreement received on or after the Initial Closing Date.
(b) The parties agree that $50,000,000 of the Purchase Price (or such
other amount as may be mutually agreed upon by the parties in their individual
and sole discretion) will be allocated to the Affiliate Stock. BTH covenants and
agrees to offer Jones the Affiliate Stock if and to the extent required by the
terms of the Jones Companies Shareholders Agreements pursuant to the terms of
Section 4.5 thereof promptly following the Initial Closing Date. At the
Simultaneous Closing, BTH shall, subject to Jones' consent, assign, or cause to
be assigned, to Comcast all of the rights of BTH and the BTH Subsidiaries under
the Jones Companies Shareholders Agreement and the related Registration Rights
Agreements.
(c) BTH covenants and agrees to promptly notify Comcast upon becoming
aware of a Change in Law (as defined in the Control Option Agreements) and
except as otherwise provided in Section 7.5(b) BTH and Intercable will refrain
from exercising their rights pursuant to Section 7.2 of the Option Agreement and
shall follow Comcast's instructions with respect to the Control Option.
(d) BTH, the BTH Subsidiaries and Comcast agree that, in the event the
Company or Jones (or Jones' Affiliates or Associates) file any action, suit or
claim challenging the transactions contemplated by this Agreement or seeking to
prohibit consummation of the transactions contemplated by this Agreement, (i)
none of them shall settle any such action, suit or claim without the written
consent of the other parties to this Agreement and (ii) they shall cooperate and
use their respective reasonable best efforts to preserve the rights of BTH
pursuant to the Shareholders Agreement and the Control Option Agreement;
provided that Comcast shall not have any obligation to waive, amend, modify or
fail to enforce any of its rights under this Agreement. In addition, each of
Comcast on the one hand, and BTH and its Affiliates on the other hand, shall pay
one-half of the reasonable costs and expenses incurred in the aggregate by
counsel to Comcast and counsel to BTH and its Affiliates in connection with any
such action, suit or claim.
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(e) (i) BTH and the BTH Subsidiaries covenant and agree that promptly
upon becoming aware that Jones or any of his Affiliates have engaged in a
transaction of the type described in Section 2.6(a) or Section 3.6 of the
Shareholders Agreement without having obtained any consent of BTH required
thereunder, BTH or any such BTH Subsidiary will notify Comcast of such
transaction.
(ii) Subject to Section 7.3(g), BTH will, if requested by Comcast, at
Comcast's expense, diligently enforce its rights under the Shareholders
Agreement, including seeking judicial relief in respect thereof and will not
settle any such judicial proceeding without the consent of Comcast.
Section 7.12. Updates. BTH agrees that it shall promptly notify Comcast in
writing of (i) all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement that could result in any breach of a
representation or warranty of BTH in this Agreement or which could have the
effect of making any representation or warranty contained herein untrue or
incorrect in any material respect and (ii) all other material developments
affecting the ability of BTH to perform its obligations under this Agreement.
Comcast may elect not to accept such disclosures for purposes of any
determination pursuant to Article V(A) or V(B) of this Agreement, provided, that
if Comcast elects to proceed with the transactions contemplated hereby, such
disclosures shall (to the extent such disclosures do not relate to (i) breaches
of covenants of BTH or the BTH Subsidiaries or (ii) breaches of representations
and warranties of which BTH had Knowledge prior to the date of this Agreement)
be deemed to be updates to the applicable representations and warranties for
purposes of the indemnification provisions set forth in Article XI of this
Agreement and for purposes of any determination pursuant to Article V or Section
8.5 of this Agreement.
Section 7.13. Programming Rights. Effective as of and conditioned upon the
consummation of the Simultaneous Closing, BTH on behalf of itself and its
Affiliates assigns to Comcast all of its rights pursuant to Section 3.5 of the
Shareholders Agreement.
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ARTICLE VIII
CLOSINGS
Initial Closing. The initial closing of the transactions contemplated by Section
1.1(a)(i) of this Agreement (the "Initial Closing") shall take place at 10:00
a.m. Eastern Standard Time on the Initial Closing Date. The Initial Closing
shall take place in the offices of Dechert Price & Rhoads, 4000 Bell Atlantic
Tower, 1717 Arch Street, Philadelphia, PA 19103-2793, or such other location as
mutually agreed upon by the parties.
Section 8.2. Deliveries at the Initial Closing.
(a) At the Initial Closing, Comcast shall deliver to BTH the Initial
Closing Payment as set forth in Section 1.2.
(b) At the Initial Closing, simultaneously with the delivery of the
Initial Closing Payment as provided in Section 8.2(a), (i) BTH shall transfer to
Comcast good, valid and marketable title to, and shall deliver to Comcast a
certificate or certificates representing, 49% of the issued and outstanding
shares of capital stock of the BTH Subsidiaries and (ii) US Cable shall deliver
to Comcast good, valid and marketable title to, and shall deliver to Comcast
certificates representing (x) the Class A Shares and (y) subject to any rights
which may exist pursuant to Section 4.5 of the Jones Companies Shareholders
Agreements shall deliver certificates representing the Affiliate Stock,
accompanied by appropriate stock power(s) in form reasonably satisfactory to
Comcast, which shares shall be free and clear of any Claims. Notwithstanding the
foregoing, in the event that US Cable is required to sell the Affiliate Stock to
Jones as a result of the exercise by Jones or any Affiliate of Jones of any
rights of first refusal under the Jones Companies Shareholders Agreements, US
Cable shall have no obligation to deliver the Affiliate Stock and the amount of
the Purchase Price shall be reduced by the amount received by BTH from Jones or
his Affiliates with respect to such Affiliate Stock. If BTH receives such
payment from Jones prior to the Initial Closing Date, then the Initial Purchase
Price shall be reduced by the amount of such payment; otherwise, BTH shall
promptly refund such amount to Comcast plus interest accrued since the Initial
Closing Date at the Applicable Rate. In the event that on the Initial Closing
Date, U.S. Cable is unable to deliver the Affiliate Stock until it has complied
with any rights of first refusal under the Jones Companies Shareholders
Agreements, U.S. Cable shall deliver the certificates representing the Affiliate
Stock as provided above as soon as U.S. Cable shall have complied with its
obligations under the Jones Companies Shareholders Agreement.
Section 8.3. Final Closing. The final closing of the transactions contemplated
by Section 1.1(a)(ii) of this Agreement (the "Final Closing") shall take place
at 10:00 a.m. Eastern Time on the Final Closing Date. The Final Closing shall
take place in the offices of Dechert Price & Rhoads, 4000 Bell Atlantic Tower,
1717 Arch Street, Philadelphia, PA 19103-2793, or such other location as
mutually agreed upon by the parties.
Section 8.4. Deliveries at the Final Closing.
(a) At the Final Closing, Comcast shall deliver to BTH the Final
Closing Payment as specified in Section 1.2, together with interest on such
amount accrued from the Initial Closing Date to and including the Final Closing
Date at the Applicable Rate.
(b) At the Final Closing, simultaneously with the delivery of the Final
Closing Payment as provided in Section 8.4(a), BTH shall transfer to Comcast
good, valid and marketable title to, and shall deliver to Comcast a certificate
or certificates representing, all of the Remaining Subsidiary Stock accompanied
by appropriate stock power(s) in form reasonably satisfactory to Comcast, which
shares of Remaining Subsidiary Stock shall be free and clear of any Claims.
(c) Notwithstanding the terms of Section 8.4(b), Comcast shall have the
right to elect in its sole discretion at least two days prior to the Final
Closing by written notice to BTH, not to receive the Remaining Subsidiary Stock
at the Final Closing but instead to require US Cable, Intercable and any of
their Affiliates to deliver to Comcast at the Final Closing good, valid and
marketable title to, and to deliver to Comcast a certificate or certificates
representing, all of the shares of capital stock of the Company owned
beneficially or of record by US Cable, Intercable or any of their Affiliates as
of the date of the Final Closing (including, without limitation, the Control
Shares and any shares acquired pursuant to Sections 2.8, 3.1, 3.8, 4.2 or 5.1(b)
of the Shareholders Agreement with funds provided by Comcast) accompanied by
appropriate stock power(s) in form reasonably satisfactory to Comcast, together
with any cash or non-cash dividends or other distributions upon or in respect of
any shares of capital stock of the Company paid since the date of this
Agreement, which shares of capital stock and other property shall be free and
clear of any Claims; provided that if Comcast makes such election pursuant to
this Section 8.4(c), Comcast shall be required to deliver to BTH at the Final
Closing good, valid and marketable title to, and Comcast shall deliver to BTH a
certificate or certificates representing, all of the shares of Subsidiary Stock
acquired by Comcast in the Initial Closing accompanied by appropriate stock
power(s) in form reasonably satisfactory to BTH, which shares of Subsidiary
Stock shall be free and clear of any Claims.
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Section 8.5. Conditions to Final Closing of Comcast. The obligations of Comcast
to consummate the Final Closing and to deliver the Final Closing Payment at the
Final Closing in accordance with this Section 8.5 are subject to the fulfillment
or waiver of each of the following conditions at or prior to the Final Closing:
(a) Litigation; No Governmental Opposition. No judgment, injunction,
order or decree (i) enjoining or prohibiting BCE, BTH, the BTH Subsidiaries or
Comcast from consummating the transactions contemplated hereby or the exercise
of the Control Option (including its exercise pursuant to Section 7.5(a)); or
(ii) invalidating or terminating the Control Option or the Jones/BTH Agreements
shall have been entered prior to or on the Final Closing Date.
(b) Approvals.
(i) Except as could not reasonably be expected to have a
Material Adverse Effect on Comcast or the Company, all actions by, or filings
with, any Governmental Authority required to permit the consummation of the
transactions contemplated hereby or to permit the Company to continue to conduct
its business as conducted immediately prior to the Final Closing, shall have
been taken, made or obtained, and any and all other permits, approvals,
consents, licenses or other actions necessary to consummate the transactions
hereunder or to permit the Company to continue to conduct its business as
conducted immediately prior to the Final Closing shall have been received or
taken, and none of such permits, approvals, consents or licenses shall contain
any provisions which could reasonably be expected to have a Material Adverse
Effect on the Company or Comcast; provided that if all authorizations, consents
and approvals from applicable Franchise Authorities necessary to effect the
change of control of the Franchises (i) relating to the Franchises (whether in
Owned Systems or Managed Systems) set forth on Schedule F, (ii) relating to
Franchises in Managed Systems which, as of the Closing Date, are subject to a
letter of intent or agreement of sale providing for the sale or other
disposition of such Managed System to a Person other than the Company (or its
wholly owned Subsidiaries), and (iii) relating to Franchises with not less than
10,000 basic subscribers in Systems (whether Owned Systems or Managed Systems)
acquired by any Intercable Group Entity (except for Managed Systems which, as of
the Closing Date, are subject to a letter of intent or agreement of sale
providing for the sale or other disposition of such Managed System to the
Company or one of its wholly owned Subsidiaries) after the date hereof (the
"Required Franchise Approvals") shall have been so obtained, be in effect and
not be subject to withdrawal or appeal then the condition contained in this
Section 8.5(b) shall be deemed to be fulfilled as it relates to authorizations,
consents or approvals from applicable Franchise Authorities on the date on which
all of the Required Franchise Approvals are so obtained and are in effect and
not subject to withdrawal or appeal and provided further that this condition
shall not be satisfied if any Required Franchise Approval shall not have been
obtained.
(ii) There shall not be in effect any statute, rule or
regulation which would have the effect of prohibiting Comcast from consummating
the transactions contemplated hereby.
(c) Representations and Warranties.
(i) Each of the representations and warranties of BTH
contained in this Agreement other than the representations and warranties
contained in Section 3.7 or 3.10 shall, in the case of those representations and
warranties that are not qualified by materiality, be true, complete and correct
in all material respects, and in the case of those representations and
warranties that are qualified by materiality shall be true, complete and correct
in all respects, as of each of (i) the date of this Agreement and (ii) unless
otherwise being specified as being made as of a specific date, the Final Closing
Date, in each case as though newly made at such time, except to the extent the
facts underlying such representations and warranties have changed (i) with
Comcast's consent in accordance with Section 7.3 or otherwise, (ii) as a result
of the consummation of the Initial Closing or (iii) as a result of the sale of
the Affiliate Stock in accordance with the provisions of Section 7.11(b).
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(ii) Each of the covenants and agreements to be performed by
BTH and the BTH Subsidiaries hereunder to be performed at or prior to the Final
Closing shall have been duly performed in all material respects.
(d) Other Deliveries. In addition to those documents and instruments
which are required to be delivered to Comcast at the Final Closing pursuant to
Section 8.4, BTH and each of the BTH Subsidiaries shall have executed (where
applicable) and delivered to Comcast (or shall have caused to be executed and
delivered to Comcast by the appropriate Person) the following:
(i) if Comcast has not made the election described in Section
8.4(c), a copy of the memorandum of association of each of the BTH Subsidiaries
which is certified as of a recent date by the applicable British Virgin Islands
authority;
(ii) if Comcast has not made the election described in
Section 8.4(c), a customary certificate of the applicable British Virgin
Islands authority, certifying as to matters such as the due incorporation and
good standing of each
of the BTH Subsidiaries;
(iii) if Comcast has not made the election described in
Section 8.4(c), a certificate of the Secretary of each of the BTH Subsidiaries,
certifying that their respective articles of incorporation and the copies of the
resolutions of their respective boards of directors and stockholders authorizing
the execution of this Agreement and the transactions contemplated hereby and
which are each attached thereto are true, correct and complete copies and are
each in full force and effect and have not been amended or modified, and that
the officers of each of the BTH Subsidiaries are those persons named in the
certificate;
(iv) a certificate dated as of the Final Closing Date signed
by the president or chief executive officer of BTH certifying that all of the
conditions in Section 8.5(c) have been fulfilled prior to or on the Final
Closing Date; and
(v) in the event Comcast has not made the election pursuant to
Section 8.4(c) hereof, all corporate record books of the BTH Subsidiaries,
including minutes of all meetings of stockholders, directors and committees of
the board of directors, if any, and the stock records of the BTH Subsidiaries
and the resignations of all of the directors and officers of the BTH
Subsidiaries effective as of the date prior to the Final Closing Date.
(e) HSR Act. Any applicable waiting period under the HSR Act (including
any extensions thereof) shall have expired or been terminated.
(f) Exercise of the Control Option. Either (i) BTH and the BTH
Subsidiaries shall have caused Intercable to exercise the Control Option
pursuant to Comcast's instructions (including a Section 3.1(a)(vi) Exercise) and
Intercable shall have either consummated the purchase of the Control Shares
pursuant to the Control Option Agreements or arranged for the transfer at the
closing of such purchase of the Control Shares to Comcast or a person designated
by Comcast pursuant to the terms of the Control Option Agreements (whether
following Jones failure to elect to purchase the Control Option in accordance
with section 7.5(b) or otherwise) and Comcast or such person shall have
consummated the purchase of the Control Shares; or (ii) BTH and its Affiliates
and their respective agents shall have complied with the covenants set forth in
Section 7.5 hereof and the Control Option shall have terminated in accordance
with its terms without Comcast instructing BTH to exercise the Control Option.
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(g) Additional Condition. The Company shall not have taken or agreed to
take, and shall not have permitted any of the Company's subsidiaries to take or
agree to take, directly or indirectly, any of the actions (other than adoption
of the resolutions set forth on Schedule 7.3 and the consummation of the
transactions authorized by such resolutions in accordance with the terms of such
resolutions) described in paragraphs (i), (ii), (iii), (v), (viii), (ix) or (x)
of Section 2.6(a) of the Shareholders Agreement; provided that this condition
shall be deemed satisfied even if the Company shall have taken or agreed to take
any such action so long as (i) BTH and its Affiliates shall not have acted
contrary to or failed to take action in accordance with, the wishes of Comcast
expressed in any applicable Notice of Preference delivered or deemed to have
been delivered by Comcast pursuant to Section 7.3 within the applicable
Preference Period and have complied with the covenants set forth in Sections
7.11(e) and, if requested by Comcast and at Comcast's expense, sought judicial
enforcement of their rights under Section 2.6 of the Shareholders Agreement as
provided therein and (ii) a court of competent jurisdiction shall have finally
adjudicated all claims or suits brought pursuant to clause (i), and (iii) no
court of competent jurisdiction shall have determined, in connection with any
such final adjudication that BTH's rights pursuant to Section 2.6 of the
Shareholders Agreement are void or unenforceable with respect to such Company
action by virtue of the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated by this Agreement.
Section 8.6. Conditions of BTH to the Final Closing. The obligations of BTH or
and the BTH Subsidiaries to consummate the Final Closing are subject to the
fulfillment of the following conditions:
(a) Litigation; No Governmental Opposition. No judgment, injunction,
order or decree (i) enjoining or prohibiting BTH or the BTH Subsidiaries from
consummating the transactions contemplated hereby or the exercise of the Control
Option (including its exercise pursuant to Section 7.5(a)) or (ii) invalidating
or terminating the Control Option shall have been entered prior to or on the
Final Closing Date.
(b) HSR Act. Any period under the HSR Act (including any extensions
thereof) shall have expired or been terminated.
(c) No Violation of Law. There shall not be in effect any statute, rule
or regulation which would have the effect or prohibiting Intercable or BTH from
consummating transactions contemplated hereby.
(d) Approvals. Except as could not reasonably be expected to have a
Material Adverse Effect, and except for any authorizations, consents, orders or
approvals from applicable Franchise Authorities, all actions by or in respect
of, or filings with, any Governmental Authority required to permit the
consummation of the transactions contemplated hereby shall have been taken, made
or obtained, and any and all other permits, approvals, consents, licenses or
other actions necessary to consummate the transactions hereunder shall have been
received or taken.
(e) Representations and Warranties. (i) The representations and
warranties of Comcast contained in the first and last sentences of Section 4.1
and Sections 4.2 and 4.3(a) in this Agreement shall, in the case of those
representations and warranties that are not qualified by materiality, be true,
complete and correct in all material respects, and in the case of those
representations and warranties that are qualified by materiality, be true,
complete and correct in all respects, as of each of (i) the date of this
Agreement and (ii) unless otherwise specified as being made as of a specific
date, as of the Final Closing Date as though newly made at such time.
(ii) Each of the covenants and agreements to be performed by Comcast
under Section 7.3(d), 7.5(b), 7.7(b), 7.9(b), 7.10 and 7.11(d) to be performed
at or prior to the Final Closing shall have been duly performed in all material
respects.
(f) Other Deliveries. In addition to those documents and instruments
which are required to be delivered to BTH at the Initial Closing pursuant to
Section 8.2, Comcast shall have executed (where applicable) and delivered to BTH
(or shall have caused to be executed and delivered to BTH by the appropriate
Person) a certificate dated as of the Final Closing Date signed by the president
or chief executive officer of Comcast certifying that all of the conditions in
Section 8.6(e) have been fulfilled prior to or on the Final Closing Date.
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Section 8.7. Simultaneous Closing
(a) Notwithstanding any other provision to the contrary herein, the
Simultaneous Closing shall take place at 10:00 a.m. Eastern Standard Time on the
Simultaneous Closing Date. The Simultaneous Closing shall take place in the
offices of Dechert Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street,
Philadelphia, PA 19103-2793 or such other location as mutually agreed upon by
the parties.
(b) The parties shall make the deliveries required of them pursuant to
Sections 8.2 and 8.4 as if the Simultaneous Closing were the Initial Closing and
the Final Closing.
(c) The conditions to the respective obligations of the parties at the
Initial Closing and the Final Closing as set forth in Articles V and VI and
Sections 8.5 and 8.6 shall be conditions to the respective obligations of the
parties at the Simultaneous Closing as if the Simultaneous Closing were the
Initial Closing and the Final Closing.
(d) The obligations of the parties to consummate the Simultaneous
Closing are subject to the fulfillment or waiver of the condition that, on the
Simultaneous Closing Date, the other transactions contemplated by Section 1(b)
of the Jones/Comcast Agreement shall have been consummated.
(e) The directors of the Company other than the Joint Nominees (as
defined in the Shareholders Agreement) shall resign seriatim and the remaining
directors shall appoint individuals designated by Comcast to fill the vacancies
created thereby, all as more fully set forth in Section 7.8 hereof and in the
Jones/Comcast Agreement.
Section 8.8. Alternative Final Closing Procedures.
If an event or circumstance has occurred such that satisfaction of a
condition in Section 8.5 or 8.6 is not reasonably possible despite the parties
reasonable best efforts to ensure the same, the parties will take the following
actions as an alternative to the Final Closing:
(a) If the Final Closing has not occurred due to (i) a failure to
satisfy the conditions specified in Section 8.6(d) or (ii) a failure to satisfy
the conditions specified in Section 8.5(f) because Intercable shall have
exercised the Control Option pursuant to Comcast's instructions but shall have
failed to consummate the purchase of the Control Shares due to the failure of
Intercable to satisfy one or more of the conditions contained in Sections
3.2(b)(i)-(vi) of the Control Option Agreements and Intercable is unable to
assign its rights under the Control Option Agreements pursuant to Section
10.2(a)(iii), then BTH shall pay to Comcast an amount equal to $150,000,000 plus
interest at the Applicable Rate from the Initial Closing Date and deliver to
Comcast any shares of capital stock of the Company acquired by BTH or the BTH
Subsidiaries pursuant to Section 2.8, 3.1, 3.8, 4.2 or 5.1(b) of the
Shareholders Agreement with funds provided by Comcast together with any
dividends or distributions upon or with respect to such shares, and BTH shall
deliver to Comcast all of the Remaining Subsidiary Stock (and Comcast shall have
the right to make the same election with respect to the Remaining Subsidiary
Stock as described in Section 8.4(c)) and Comcast shall have no obligation to
pay to BTH the Final Closing Payment.
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(b) If the Final Closing has not occurred due to (i) a failure to
satisfy the conditions contained in Sections 8.5(a)(ii); or (ii) a failure of
the conditions contained in Section 8.5(c), 8.5(d) or 8.5(f) to be satisfied or
waived or (iii) due to a failure of the conditions contained in Section 8.6(e)
or 8.6(f) to be satisfied or waived, then BTH shall pay to Comcast an amount
equal to $250,000,000 plus interest at the Applicable Rate from the Initial
Closing Date and deliver to Comcast any shares of capital stock of the Company
acquired by BTH or the BTH Subsidiaries pursuant to Sections 2.8, 3.1, 3.8, 4.2
or 5.1(b) of the Shareholders Agreement with funds provided by Comcast together
with any dividends or distributions upon or with respect to such shares, and
Comcast shall deliver to BTH all of the 49% Subsidiary Stock acquired by Comcast
at the Initial Closing together with any dividends or distributions upon or with
respect to such shares and Comcast shall have no obligation to pay to BTH the
Final Closing Payment; provided, however, that (A) in the case of a judgment,
injunction, order or decree referred to in clause (i) above that is based upon
the effect of any (x) agreement, arrangement or understanding other than the
Jones/BTH Agreements, or (y) any parole evidence or other matters extrinsic to
the Jones/BTH Agreements, in the case of either clause (x) or (y) above,
existing prior to the date of this Agreement or (B) the failure of the
conditions specified in Section 8.5(c) or 8.5(d) to be satisfied or waived; then
in lieu of the $250,000,000 payment referred to above BTH shall pay to Comcast
an amount equal to $272,000,000.
(c) In the event that (i) a judgment, injunction, order or decree of
any court of competent jurisdiction invalidating, terminating, nullifying or
voiding this Agreement has become final and non-appealable or (ii) the Final
Closing fails to occur due to a failure to satisfy the condition specified in
Section 8.5(g), then in the case of either (i) or (ii), BTH shall pay to Comcast
an amount equal to $250,000,000 plus interest at the Applicable Rate from the
Initial Closing Date and deliver to Comcast any shares of capital stock of the
Company acquired by BTH or the BTH Subsidiaries pursuant to Sections 2.8, 3.1,
3.8, 4.2 or 5.1(b) of the Shareholders Agreement with funds provided by Comcast
together with any dividends or distributions upon or with respect to such
shares, and Comcast shall deliver to BTH all of the 49% Subsidiary Stock
acquired by Comcast at the Initial Closing together with any dividends or
distributions upon or with respect to such stock and Comcast shall have no
obligation to pay to BTH the Final Closing Payment.
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(d) If the Final Closing has not occurred due to the inability of
Comcast to take delivery of or take title to the Control Shares, the Class A
Shares or any other shares of capital stock of the Company or the Remaining
Subsidiary Stock but Intercable shall have exercised the Control Option and
purchased the Control Shares, then Comcast shall pay to BTH an amount equal to
the Final Closing Payment together with interest accrued at the Applicable Rate
from the Initial Closing Date through the Final Closing Date and BTH agrees that
Intercable shall take delivery of the Control Shares and US Cable and Intercable
shall hold the Control Shares and other shares of capital stock of the Company
owned by US Cable and Intercable including, without limitation, the Class A
Shares and any shares of capital stock of the Company acquired by BTH or the BTH
Subsidiaries pursuant to Section 2.8, 3.1, 3.8, 4.2 or 5.1(b) of the
Shareholders Agreement with funds provided by Comcast, in each case together
with any dividends or distributions upon or with respect to such shares (the
"Trust Stock") in trust for Comcast's benefit and, to the maximum extent
permitted by law, subject to Comcast's direction.
At such time as either the Trust Stock is sold or disposed of or
Comcast is permitted under applicable law to take possession of the Trust Stock,
Comcast may at its option elect to either take possession of the Remaining
Subsidiary Stock or exchange the shares of Subsidiary Stock which Comcast
received in the Initial Closing for all of the shares of capital stock of the
Company beneficially owned by BTH and the BTH Subsidiaries (including, if any
portion of the Trust Stock shall have been sold or disposed of prior to such
exchange, the Net Proceeds of such sale or disposition). Comcast agrees that, if
the Trust Stock (including any Net Proceeds) has not been transferred to Comcast
or sold or otherwise disposed of by the BTH Subsidiaries at Comcast's direction
within one year of the date Intercable consummates the purchase of the Control
Shares, Comcast shall direct BTH and the BTH Subsidiaries to transfer either the
Remaining Subsidiary Stock or the Trust Stock (including any Net Proceeds) to an
independent trustee or other third party designated by Comcast.
(e) In the event BTH shall have paid $150,000,000 to Comcast pursuant
to Section 7.3 hereof, the payments referred to in paragraphs (a), (b), (c) and
(d) above shall be reduced by such amount and all interest on such payments
shall be calculated on such reduced amount.
(f) In the event BTH or Comcast shall be prevented from transferring or
receiving title to or possession of any of the Remaining Subsidiary Stock or
shares of capital stock of the Company to Comcast, as contemplated in paragraph
(a), (b), (c) or (d) above, the parties shall use their reasonable best efforts
to give the parties the benefits they would have received if such shares of the
Remaining Subsidiary Stock or shares of capital stock of the Company had been so
transferred, including to the extent legally permissible the transfer of shares
of the Company and rights held by the BTH Subsidiaries and placing such shares
of the capital stock of the BTH Subsidiaries or shares of capital stock of the
Company in trust.
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ARTICLE IX
TERMINATION
Termination.
(a) This Agreement may be terminated as follows: (i) by mutual written
consent of Comcast and BTH; (ii) by either Comcast or BTH on July 10, 1999, if
the Initial Closing or the Simultaneous Closing has not occurred; provided that
the right to terminate this Agreement under this Section 9.1(a)(ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of or shall have resulted in the failure of
the Initial Closing or the Simultaneous Closing to occur on or prior to such
date; and (iii) if a statute, rule or regulation is enacted or adopted
subsequent to the date of this Agreement but prior to the Initial Closing Date
which would have the effect of prohibiting Comcast from purchasing or owning the
Control Shares then Comcast may terminate this Agreement and the parties hereto
shall have no further obligation to any other party hereto.
(b) Notwithstanding the foregoing, in the event any injunction, order
or similar restraint has been issued by a court of competent jurisdiction (other
than by virtue of any suit brought by a party to this Agreement), the
termination date referred to in the foregoing clause (a) shall, upon the mutual
agreement of the parties, be extended until the earlier of (i) the 10th day
after such injunction, order or restraint shall have been dissolved or (ii) the
date such injunction, order or restraint shall have become permanent and no
longer subject to appeal, as the case may be.
Section 9.2. Effect Of Termination.
All obligations of the parties hereunder shall cease upon any
termination pursuant to this Article IX; provided, however, that (a) the
provisions of this Section 9.2 and Sections 13.3, 13.4 and 13.13 shall survive
any termination of this Agreement and (b) nothing herein shall relieve any party
from any liability for any prior breach of this Agreement.
Section 9.3. Right to Proceed. Subject to Section 7.12, anything in this
Agreement to the contrary notwithstanding, if any of the conditions specified in
Article V or Section 8.5 hereof have not been satisfied, Comcast shall have the
right to proceed with the transactions contemplated hereby without waiving any
of its rights hereunder.
ARTICLE X
RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
Survival of Representations, Warranties and Covenants. Each of the
representations, warranties, agreements, covenants and obligations of Comcast
and BTH set forth herein are material and shall be deemed to have been relied
upon by the other party in entering into this Agreement. Each of the
representations and warranties set forth herein shall survive until the first
anniversary of the Final Closing Date (other than those contained in Sections
3.1, 3.2, 3.3, 3.4, 3.5, 4.1 and 4.2, which shall survive indefinitely). The
expiration of any representation or warranty shall not affect any claim made
prior to the date of such expiration. All covenants, agreements and other
obligations contained herein not fully performed shall survive the Final Closing
and continue thereafter until fully performed. Any investigation, audit or other
examination that may have been made or may be made at any time by or on behalf
of the party to whom any such representation or warranty is made shall not limit
or diminish such representations and warranties, and the parties may rely on the
representations and warranties set forth in this Agreement irrespective of any
information obtained by them by any investigation, audit or examination or
otherwise.
Section 10.2. Regulatory Filings. Each of BTH and the BTH Subsidiaries and
Comcast will cooperate to enable the other party to make any and all regulatory
filings required with respect to the transactions contemplated hereby
(including, by way of example and not of limitation, the filing of tax returns).
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ARTICLE XI
INDEMNIFICATION
Indemnification by BTH. BTH agrees to indemnify and hold Comcast and its
respective subsidiaries and Affiliates (including, from and after the Initial
Closing and the Final Closing, the BTH Subsidiaries) and individuals serving as
officers, directors, partners, stockholders or employees thereof (individually a
"Comcast Indemnified Party" and collectively the "Comcast Indemnified Parties")
harmless from and against any damages, liabilities, losses, taxes, fines,
penalties, costs, and expenses (including, without limitation, reasonable fees
and expenses of counsel) of any kind or nature whatsoever (whether or not
arising out of third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) ("Losses") which may be
sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) any breach of any representation, warranty or covenant of BTH or
the BTH Subsidiaries under this Agreement or in any certificate, schedule or
exhibit delivered pursuant hereto or thereto, or by reason of any claim, action
or proceeding asserted or instituted growing out of any matter or thing
constituting such a breach;
(b) the reasonable cost of enforcing any of the rights of any Comcast
Indemnified Party hereunder; and
(c) any liabilities or obligations of any nature whatsoever of the BTH
Subsidiaries other than, in the event Comcast has not made an election pursuant
to Section 8.4(c) to return to BTH the shares of Subsidiary Stock, those
liabilities or obligations incurred by the BTH Subsidiaries after the Final
Closing.
Section 11.2. Limitations on Indemnification by BTH. Notwithstanding any other
provision of this Agreement to the contrary, the right of the Comcast
Indemnified Parties to indemnification under Section 11.1 shall be subject to
the following provisions:
(a) BTH shall have no obligation to indemnify a Comcast Indemnified
Party under Section 11.1 with respect to any claim for breach of a
representation or warranty made after the first anniversary of the Final Closing
Date other than a representation or warranty contained in Sections 3.1, 3.2,
3.3, 3.4 and 3.5 (the "Comcast Indemnification Cut-Off Date"); provided,
however, that such expiration shall not affect any claim with respect to which
notice was given in the manner contemplated by Section 11.5 hereof prior to the
Comcast Indemnification Cut-Off Date.
(b) No indemnification shall be payable pursuant to Section 11.l(a)
above to any Comcast Indemnified Party if such claim is based solely upon a
breach of a representation and warranty contained in Article III (other than a
representation or warranty contained in Sections or 3.2 and 3.3 or breaches of
representations of which BTH had Knowledge as of the date of this Agreement),
unless and until the total of all such claims for indemnification pursuant to
Section 11.1(a) which are based upon a breach of the representation and
warranty, other than a representation and warranty contained in Section 3.2 and
3.3 or breaches of representations of which BTH had Knowledge as of the date of
this Agreement, shall exceed $5,000,000 in the aggregate, whereupon the amount
of such claims exceeding such $5,000,000 threshold shall be recoverable in
accordance with the terms hereof.
(c) In no event will the aggregate obligations of BTH to the Comcast
Indemnified Parties pursuant to Section 11.1(a) for breaches of representations
or warranties other than representations and warranties contained in Sections
3.2 and 3.3 and other than those breaches of representations and warranties of
which BTH had Knowledge prior to the date of this Agreement exceed $250,000,000.
In no event will the aggregate obligations of BTH to the Comcast Indemnified
Parties pursuant to Section 11.1(a) for breaches of representations and
warranties contained herein exceed $500,000,000.
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(d) Notwithstanding anything to the contrary contained in this
Agreement, BTH shall not be liable for any special or consequential damages for
breaches of representations or warranties other than those contained in Sections
3.2 and 3.3. Comcast shall be required to take all reasonable steps to mitigate
its Losses.
(e) Notwithstanding anything to the contrary contained in this
agreement, to the extent that any Comcast Indemnified Party has been compensated
for its Losses from an insurance company or any other third party, BTH's
indemnification obligation in respect of any such Losses shall be reduced by an
equal amount.
(f) The obligation of BTH to indemnify the Comcast Indemnified Parties
for matters contemplated by Section 7.3 and 8.8 shall be limited to the
exclusive remedies set forth herein.
Section 11.3. Indemnification by Comcast. Comcast agrees to indemnify and hold
BTH and its respective subsidiaries and Affiliates and individuals serving as
officers, directors, partners, stockholders or employees thereof (individually a
"BTH Indemnified Party" and collectively the "BTH Indemnified Parties") harmless
from and against any Losses which may be sustained or suffered by any of them
arising out of or based upon any of the following matters:
(a) any breach of any representation, warranty or covenant of Comcast
under this Agreement, or by reason of any claim, action or proceeding asserted
or instituted growing out of any matter or thing constituting such a breach;
(b) the reasonable cost of enforcing any of the rights of the BTH
Indemnified Parties hereunder; and
(c) any Losses incurred by BTH in respect of liabilities of any BTH
Subsidiary arising following the consummation of the Final Purchase, if Comcast
has not made an election pursuant to Section 8.4(c) to return to BTH the shares
of Subsidiary Stock.
Section 11.4. Limitation on Indemnification by Comcast. Notwithstanding the
foregoing, the right of the BTH Indemnified Parties to indemnification under
Section 11.3 shall be subject to the following provisions: (a) Comcast shall
have no obligation to indemnify a BTH Indemnified Party under Section 11.3 with
respect to claim for a breach of a representation or warranty (other than
representations and warranties contained in Sections 4.1 and 4.2) which claim is
made after the first anniversary of the Final Closing Date (the "BTH
Indemnification Cut-Off Date"); provided, however, that such expiration shall
not affect any claim with respect to which notice was given in the manner
contemplated by Section 11.5 hereof prior to the BTH Indemnification Cut-Off
Date.
(a) In no event will the aggregate obligations of Comcast to the BTH
Indemnified Parties pursuant to Section 11.3 exceed $250,000,000.
(b) No indemnification shall be payable pursuant to Section 11.3 such
claim is based upon a breach of representation and warranty, unless and until
the total of all such claims for indemnification pursuant to Section 11.3 which
are based upon a breach of representation or warranty shall exceed $5,000,000 in
the aggregate, whereupon the amount of such claims exceeding such $5,000,000
threshold shall be recoverable in accordance with the terms hereof.
(c) Notwithstanding anything to the contrary contained in this
agreement, Comcast shall not be liable for any special or consequential damages
for breaches of representation or warranty. BTH shall be required to take all
reasonable steps to mitigate its Losses.
(d) Notwithstanding anything to the contrary contained in this
agreement, to the extent that any BTH Indemnified Party has been compensated for
its Losses from an insurance company or any other third party, Comcast's
indemnification obligation in respect of any such Losses shall be reduced by an
equal amount.
(e) The obligation of Comcast to indemnify the BTH Indemnified Parties
for matters contemplated by Section 8.8 shall be limited to the exclusive
remedies set forth therein.
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Section 11.5. Notice: Defense of Claims. An indemnified party may make claims
for indemnification hereunder by giving written notice thereof to the
indemnifying party within the period in which indemnification claims can be made
hereunder. If indemnification is sought for a claim or liability asserted by a
third party, the indemnified party shall also give written notice thereof to the
indemnifying party promptly after it receives notice of the claim or liability
being asserted, but the failure to do so shall not relieve the indemnifying
party from any liability except to the extent that it is prejudiced by the
failure or delay in giving such notice. Such notice shall summarize the bases
for the claim for indemnification and any claim or liability being asserted by a
third party. Within twenty (20) days after receiving such notice the
indemnifying party shall give written notice to the indemnified party stating
whether it disputes the claim for indemnification and whether it will defend
against any third party claim or liability at its own cost and expense. If the
indemnifying party fails to give notice that it disputes an indemnification
claim within twenty (20) days after receipt of notice thereof, it shall be
deemed to have accepted and agreed to the claim, which shall become immediately
due and payable. The indemnifying party shall be entitled to direct the defense
against a third party claim or liability with counsel selected by it (subject to
the consent of each indemnified party, which consent shall not be unreasonably
withheld) as long as the indemnifying party has acknowledged in writing that it
is obligated to indemnify the indemnified party for such claim pursuant to this
Article XI and is conducting a good faith and diligent defense and only money
damages are at issue. Each indemnified party shall at all times have the right
to fully participate in the defense of a third party claim or liability at its
own expense directly or through counsel; provided, however, that if the named
parties to the action or proceeding include either both the indemnifying party
and/or one or more indemnified parties and an indemnified party is advised in
writing by counsel to the indemnified party that representation of both parties
by the same counsel would be inappropriate under applicable standards of
professional conduct, an indemnified party may engage separate counsel at the
expense of the indemnifying party. If no such notice of intent to dispute and
defend a third party claim or liability is given by the indemnifying party, or
if a good faith and diligent defense is not being or ceases to be conducted by
the indemnifying party or if the claim or liability includes other than money
damages, the indemnified party shall have the right, at the expense of the
indemnifying party, to undertake the defense of such claim or liability (with
counsel selected by the indemnified party), and to compromise or settle it,
exercising reasonable business judgment. If the third party claim or liability
is one that by its nature cannot be defended solely by the indemnifying party,
then the indemnified party shall make available such information and assistance
as the indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.
Section 11.6. No Right of Contribution. After the Initial Closing, neither of
BTH nor Comcast shall have any claim for contribution against the BTH
Subsidiaries in respect of any liability any such party may have to any BTH
Indemnified Party or Comcast Indemnified Party under this Agreement.
ARTICLE XII
DEFINITIONS
For the purposes of this Agreement, including the Schedules attached
hereto, the following terms shall have the following meanings:
"Affiliate" shall mean with respect to any Person (herein the "first
party") (i) any other Person that directly or indirectly controls, or is
controlled by, or is under common control with, such first party or (ii) any
officer or director of the first party or of any Person described in clause (i)
of this sentence. The term "control" as used herein (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to (a) vote fifty percent (50%) or more of the
outstanding voting securities of such Person, (b) elect fifty percent (50%) or
more of the board of directors or other equivalent committee or group of such
Person or (c) otherwise direct the management or policies of such Person by
contract or otherwise; provided however, that for purposes of this Agreement;
the parties hereto agree that the Company shall be deemed not to be an Affiliate
of BTH.
"Associate" as used herein shall mean with reference to any Person: (i)
any corporation or organization of which such Person, or relative or spouse of
such Person or relative of a spouse of such Person, is an officer or partner or
is, directly or indirectly, the beneficial owner of twenty-five percent (25%) or
more of any class of equity securities; (ii) any trust or other estate in which
such Person, or relative or spouse of such Person or relative of a spouse of
such Person, has a substantial beneficial interest or as to which such Person,
or relative or spouse of such Person or relative of a spouse of such Person,
serves as trustee or in a similar fiduciary capacity; and (iii) any relative or
spouse of such Person or any relative of such spouse of such Person.
"Applicable Rate" means an interest rate per annum at which deposits in
United States dollars appears on page 3750 (or any successor page thereto) of
the Dow Jones Telerate Screen for a ninety day period, plus 1%. The Applicable
Rate for any period shall be determined as of the Initial Closing Date (or, in
the case of a Simultaneous Closing occurring after December 31, 1998 as provided
in Section 1.2(a), as of December 31, 1998), and adjusted quarterly on the first
business day of each January, April, July and October through the date of any
final payment of the Purchase Price, whether on the Final Closing Date, the
Simultaneous Closing Date or pursuant to Section 8.8.
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"Claim" shall mean any lien, charge, claim, security interest,
assignment, conditional sale agreement, deposit agreement, mortgage, security
agreement, option, restriction, charge, deposit, pledge or encumbrance of any
kind or nature whatsoever other than under the Securities Act of 1933, as
amended.
"Franchise" means written "franchise" within the meaning of Section
602(8) of the Cable Communications Policy Act of 1984 (47 U.S.C. (ss.)522(9)).
"Franchising Authority" has the meaning that term is given by Section
602(9) of the Cable Communications Policy Act of 1984 (47 U.S.C. (ss.)522(10)).
"Intercable Group" means, at any time, the Company and each person that
is a Subsidiary of Jones Intercable, Inc., a Colorado corporation at such time.
"Intercable Group Entity" means, at any time, each Person included in
the Intercable Group at such time.
"Jones/BTH Agreements" means the Shareholders Agreement, the Control
Option Agreements, the Shareholders Agreement Assignment and the Option
Agreement Assignment.
"Jones Companies Shareholders Agreements" shall mean that certain
Shareholders Agreement among Glenn R. Jones, Jones International, Ltd., Bell
Canada International Inc. and Jones Education Networks, Inc. and that certain
Shareholders Agreement among Glenn R. Jones, Jones International, Ltd., Bell
Canada International Inc. and Jones Entertainment Group, Ltd., each dated as of
December 20, 1994.
"Knowledge" means, with respect to BTH, the actual knowledge of (i) any
present director of the Company who was designated by BTH or any of its
Affiliates and (ii) of any officer or, employee of BTH or its Affiliates who
actively participated in the preparation and negotiation of this Agreement.
"Material Adverse Effect" with respect to any Person shall be deemed to
occur if any event, change or effect, individually or in the aggregate with such
other events, changes or effects, has occurred which would reasonably be
expected to have a material adverse effect on the business, assets (including
intangible assets), liabilities (contingent or otherwise), results of
operations, financial condition of such Person and its subsidiaries taken as a
whole.
"Payments" means, (i) with respect to the Fee Letter, any and all
payments received by BTH or its Affiliates pursuant to the Fee Letter, and (ii)
with respect to the Supply Services Agreement, any and all payments received by
BTH or its Affiliates pursuant to the Supply Services Agreement after reducing
such amounts for 115% of the actual out-of-pocket expenses incurred by BTH and
its Affiliates in connection with the provision of the services required to be
rendered by BTH or its Affiliates to the Company under the Supply Services
Agreement.
"Person" shall mean any individual, partnership (general or limited),
corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
"Subsidiary Stock" means the shares of capital stock of the BTH
Subsidiaries.
"Transfer" shall mean to exchange, sell, assign, transfer, pledge,
hypothecate, make gifts of or in any manner whatsoever dispose of or encumber or
grant any rights or interests, create any voting trust or other agreement or
arrangement with respect to the transfer of voting rights or any other
beneficial interest, create any other claim or make any other transfer or
disposition whatsoever, whether voluntary or involuntary, affecting right,
title, interest or possession.
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<PAGE>
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Further Assurances. BTH shall, and shall cause its Affiliates to,
from time to time after the Closing Date, at the request of Comcast and without
further consideration, execute and deliver further instruments of transfer and
assignment and take such other action as Comcast may reasonably require to fully
implement the provisions of this Agreement.
Section 13.2. Counting of Days. Whenever a specified period of days is required
to be counted hereunder, in the event that the final day in such specified
number of days falls on a date when the banking institutions in the state of New
York or Canada are required to be closed, then the final day in such specified
number of days shall be deemed to occur on the first day following such day when
the banking institutions in the state of New York or Canada are required to be
closed.
Section 13.3. Fees and Expenses. The rights and obligations of the parties
hereto with respect to fees and expenses are as follows: Comcast shall pay its
own expenses incident to the negotiation and consummation of the transactions
contemplated by this Agreement and the agreements, instruments and documents
contemplated hereby. BTH shall pay its and the BTH Subsidiaries expenses
incident to the negotiation and consummation of the transactions contemplated by
this Agreement and the agreements, instruments and documents contemplated
hereby. BTH and Comcast shall share equally any filing fees required under the
HSR Act and any transfer taxes, fees and duties arising by reason of transfer of
the Subsidiary Stock.
Section 13.4. Dispute Resolution. All disputes arising in connection with this
Agreement, other than disputes involving a request for the granting of an
injunction or specific performance, shall be resolved by binding arbitration in
accordance with the applicable rules of the American Arbitration Association.
The arbitration shall be held in the State of New York before a panel of at
least three arbitrators and shall be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules. Comcast and BTH will each
be entitled to appoint one of the three panel members and such members shall
cooperate to jointly select a third mutually acceptable to both parties.
Section 13.5. Waivers. Any waiver of any terms or conditions or of the breach of
any covenant, representation or warranty of this Agreement in any one instance,
shall not operate as or be deemed to be or construed as a further or continuing
waiver of any other breach of such term, condition, covenant, representation or
warranty or any other term, condition, covenant, representation or warranty, nor
shall any failure or delay at any time or times to enforce or require
performance of any provision hereof operate as a waiver of or affect in any
manner such party's right at a later time to enforce or require performance of
such provision or of any provision hereof; provided, however, that no such
waiver, unless it, by its own terms, explicitly provides to the contrary, shall
be construed to effect a continuing waiver of the provision being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance.
Section 13.6. Governing Law and Consent to Jurisdiction. (a) This Agreement
shall be construed under and governed by the internal laws of the State of New
York without regard to its conflict of laws provisions. Each of the parties
hereby consents to personal jurisdiction, service of process and venue in the
federal or state courts of the State of New York for any claim, suit or
proceeding arising under this Agreement, and hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such court. Each of the parties hereby irrevocably consents to the service of
process in any such action or proceeding by the mailing by certified mail of
copies of any service or copies of the summons and complaint and any other
process to such party at the address specified in Section 13.8 hereof. The
parties agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit or in any other
manner permitted by law and shall affect the right of a party to service legal
process or to bring any action or proceeding in the courts of other
jurisdictions.
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<PAGE>
(b) Each of the parties hereto irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Agreement, any Jones/BTH
Agreement, the Jones Companies Shareholders Agreement or the actions of any
party in the negotiation, performance or enforcement hereof or thereof.
Section 13.7. Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon transmission
with electronic confirmation of delivery, or if sent by registered or certified
mail postage prepaid, upon the sooner of the date on which receipt is
acknowledged or the expiration of five days after deposit in United States post
office facilities properly addressed with postage prepaid or if sent by
overnight courier, the day after delivery of such notice to such courier. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
To BTH:
BCI Telecom Holding Inc.
1000, rue de la Gauchetiere Ouest
Bureau 1100
Montreal (Quebec) Canada H3B 4Y8
Attention: Chief Financial Officer
Facsimile No. (514) 392-2262
Telephone No. (514) 392-2260
With a copy to:
BCI Telecom Holding Inc.
1000, rue de la Gauchetiere Ouest
Bureau 1100
Montreal (Quebec) Canada H3B 4Y8
Attention: Corporate Secretary
Facsimile No. (514) 392-2342
Telephone No. (514) 392-2340
To Comcast:
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102
Attention: President
Facsimile No: (215) 981-7790
Telephone No. (215) 981-7501
with a copy to:
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102-2148
Attention: General Counsel
Facsimile No: (215) 981-7794
Telephone No. (215) 981-7510
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
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<PAGE>
Section 13.8. Entire Agreement. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby including without limitation the Jones/Comcast
Agreement, the Option Agreements and the Shareholders Agreement (as amended by
Agreement and Amendment No. 1 to Shareholders Agreement), is complete, reflects
the entire agreement of the parties with respect to its subject matter, and
supersedes all previous written or oral negotiations, commitments and writings.
No promises, representations, understandings, warranties and agreements have
been made by any of the parties hereto except as referred to herein or in such
Schedules and Exhibits or in such other writings; and all inducements to the
making of this Agreement and the transactions contemplated hereby which were
relied upon by either party hereto have been expressed herein or in such
Schedules or Exhibits or in such other writings.
Section 13.9. Assignability; Binding Effect. This Agreement or any of the
obligations or rights hereunder (a) may not be assigned or delegated by Comcast
without the prior written consent of BTH, other than an assignment and/or
delegation to an Affiliate of Comcast provided that Comcast shall remain
obligated to pay the Purchase Price and to indemnify BTH pursuant to Section
11.3, and (b) may not be assigned by BTH or the BTH Subsidiaries without the
prior written consent of Comcast. This Agreement shall be binding upon and
enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
Section 13.10. Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
Section 13.11. Execution in Counterparts. For the convenience of the parties and
to facilitate execution, this Agreement may (a) be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document, and (b) executed by facsimile.
Section 13.12. Amendments. This Agreement may not be amended or modified, nor
may compliance with any condition or covenant set forth herein be waived, except
by a writing duly and validly executed by Comcast, BTH and the BTH Subsidiaries
or in the case of a waiver, the party waiving compliance.
Section 13.13. Publicity and Disclosures. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
Knowledge and written consent of Comcast, BTH and the BTH Subsidiaries which
consent shall not be unreasonably withheld, except as is otherwise required by
applicable laws, rules and regulations (including, without limitation, the HSR
Act, the Securities Act, the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder).
Section 13.14. Equitable Relief. Each party hereto expressly acknowledges that
damages alone will be an inadequate remedy for any breach or violation by them
of any of the provisions of this Agreement, and the opposing party, in addition
to all other remedies hereunder or thereunder, shall be entitled, as a matter of
right, to injunctive relief, including specific performance with respect to any
such breach or violation, in any court of competent jurisdiction.
Section 13.15. Severability. The invalidity of any term or terms of this
Agreement shall not invalidate or otherwise affect any other term of this
Agreement which shall remain in full force and effect.
Section 13.16. Surety of Payment. Within thirty days of the date of this
Agreement BTH shall either have posted a letter of credit securing its
obligations under Sections 7.3 and 8.8 or have obtained a guaranty by BCE, Inc.,
the parent company of BTH, of Comcast's right to collect sums from BTH under
Sections 7.3(e), 8.2(b) and 8.8.
Section 13.17. Miscellaneous. In the event BTH acts in accordance with Comcast's
Notice of Preference delivered or deemed to have been delivered pursuant to
Section 7.3(e), then any such acts or their direct effects shall not result in
BTH having breached a representation, warranty or covenant contained in this
Agreement.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the date set forth above by their duly authorized
representatives.
BCI TELECOM HOLDING INC.
By:____________________________________
Name:
Title:
COMCAST CORPORATI
By:____________________________________
Name:
Title:
BTH (U.S. CABLE) LIMITED
By:____________________________________
Name:
Title:
BTH (INTERCABLE) LIMITED
By:____________________________________
Name:
Title:
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<PAGE>
SCHEDULE 3.10
1. Organization and Standing of the Company. The Company and
each of its subsidiaries, is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization with full corporate power and authority to own, lease, use and
operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted. The Company and each of its subsidiaries
is duly qualified to do business and in good standing in each jurisdiction in
which the nature of the business conducted by it or the property it owns, leases
or operates requires it to so qualify, except where the failure to be so
qualified or in good standing in such jurisdiction individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Company. The Company and each of its subsidiaries is not in default in the
performance, observance or fulfillment of any provision of their respective
certificate of incorporation or by-laws.
2. Organizational Documents. The certificate of incorporation
and bylaws of the Company are as set forth in Exhibits 3.1-3.4 to the Company's
Form 10-K for the fiscal year ended December 31, 1997, as filed with the SEC and
have not been amended, modified, or rescinded and they remain in full force and
effect.
3. Capitalization. As of February 20, 1998, the Company's
authorized capital stock consisted solely of (a) 60,000,000 shares of Class A
Stock, of which (i) 35,578,398 shares were issued and outstanding, and (ii)
1,353,083 shares were reserved for issuance upon the exercise of outstanding
options, and no other shares were reserved for issuance for any other purposes;
and (b) 5,550,000 shares of Common Stock of which 5,113,021 shares were issued
and outstanding, and no shares were reserved for issuance for any purpose. Since
February 20, 1998 through the date of the Agreement and through the Initial
Closing Date, there have been no increases to any of the foregoing amounts other
than increases in the number of shares of Class A Stock outstanding by reason of
the exercise of the foregoing options, which exercise has reduced the number of
shares of Class A Stock reserved for issuance pursuant to options by a
corresponding amount. Since the date of the Agreement, there have been no
additional issuances of shares of Class A Stock or Common Stock other than
issuances of Class A Stock upon exercises of stock options outstanding on the
date of this Agreement. Except for the stock options described in the preceding
sentence, since the date of the Agreement there have been no subscriptions,
options, warrants, or other rights, convertible securities, agreements,
arrangements, or commitments of any character relating to the issued or unissued
capital stock of the Company to which the Company or any of its subsidiaries is
a party, or by which any of their properties are bound or affected, or
obligating the Company or any of its subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, the Company.
4. Public Filings. Since December 31, 1995, the Company has
timely filed all material forms, reports, and documents (the "Company Public
Reports") required to be filed with the SEC and the National Association of
Securities Dealers and other US federal or state securities law authorities,
exchanges or self-regulatory bodies (the "Securities Authorities") prior to the
Initial Closing Date. The Company Public Reports (including, without limitation,
any financial statements or schedules included therein) filed on or prior to the
Initial Closing Date (i) have been prepared in compliance with the requirements
of applicable law, and (ii) did not at the time of filing (or, if amended,
supplemented, or superseded by a filing prior to the Initial Closing Date, on
the date of that filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
5. Financial Statements. Each of the consolidated financial
statements contained in the Company Public Reports filed on or prior to the
Initial Closing Date and the Company's audited consolidated financial statements
for the years ended December 31, 1997, 1996 and 1995 and the quarter ended March
31, 1998 (together, the "Financial Statements") (including, in each case, any
related notes thereto) have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto), and each of
them present fairly in all material respects the consolidated financial position
of the Company and its Subsidiaries at their respective dates and the
consolidated results of their operations and cash flows for the periods
indicated, except that unaudited interim financial statements included in any
quarterly reports may have been subject to normal and recurring year-end
adjustments that were not expected to be material in amount.
<PAGE>
Schedule 7.3
1. The purchase of the following assets by Jones or a Jones Entity at a price
equal to the fair market value (determined by appraisal) of such assets:
(i) that certain real estate located on Lot 1, Jones
Intercable's Headquarters, according to the recorded plot thereof, County of
Anapahoe, State of Colorado and the Panorama Falls Office Building.
(ii) the Company's equity interest in each of Jones Futurex,
Inc., Jones Global Group and Jones Customer Service Management LLC
(iii) all of the Company's interest in the "Jones Spacelink"
tradename.
2. The assumption by the Jones Entities of the Company's rights and obligations
under that certain lease dated, December 23, 1997, by and between the Company
and PNC Leasing Corp. ("Lessor") relating to the aircraft presently leased by
the Company and the release by the Lessor of the Company from such lease.
3. The amendment of (i) that certain lease, dated November 30, 1989, by and
between the Company and Jones Properties, Inc. (the "Lease") (a) providing the
Company with a right to terminate the Lease upon (x) vacating the entire
premises which are subject to the Lease and occupied by the Company with the
intention not to re-occupy such leased premises and (y) the payment by the
Company to Jones Properties, Inc. of an amount determined pursuant to section
27(a)(v) of such Lease (without the offset for fair market rental value of such
premises provided in such section calculated until the end of the stated term of
such lease, June 30, 2000, and (b) prohibiting the Company from subleasing the
premises to any person other than Jones, through the stated term of such lease,
and (ii) any subleases relating to the premises providing that such subleases
automatically terminate upon the termination of the Lease and relieving the
Company of any further obligations under such sublease following such
termination.
4. The adoption of a Severance Plan for certain associates of the Intercable
Group Entities located in Denver, Colorado, and Lanham, Maryland. Amounts
payable under the plan shall be in cash and shall not exceed $32,000,000 in the
aggregate, of which not more than $14,000,000 shall be non-deductible by the
Company from its income under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code").
All such severance payments shall, as a condition to payment, require that the
recipient be an employee of the Company at all times from the date hereof to the
date which is 90 days after the Closing Date unless such employee is terminated
without cause prior to the expiration of such 90-day period. Jones shall not be
a recipient of any such severance payments.
<PAGE>
SCHEDULE F
Owned Systems
FRANCHISES HELD BY
JONES INTERCABLE, INC.
Panama City Beach, Florida System
City of Panama City Beach
Oxnard, California System
City of Oxnard
FRANCHISES HELD BY
JONES COMMUNICATIONS OF MARYLAND, INC.
Prince George's County System:
North Prince George's County
South Prince George's County
City of Bowie
Chesapeake Bay Group (including Annapolis,
Anne Arundel County and
Charles County Systems):
Anne Arundel County
City of Annapolis
<PAGE>
FRANCHISES HELD BY
JONES COMMUNICATIONS OF
GEORGIA/SOUTH CAROLINA, INC.
Savannah System:
Chatham County
City of Savannah
FRANCHISES HELD BY
JONES COMMUNICATIONS OF VIRGINIA, INC.
Alexandria System:
City of Alexandria
Prince William Group (including
Dale City, Reston and
Manassas Systems):
Fairfax County (Reston)
City of Manassas
FRANCHISES HELD BY
JONES COMMUNICATIONS OF ARIZONA, INC.
Pima County System:
Town of Oro Valley
FRANCHISES HELD BY
JONES COMMUNICATIONS OF MISSOURI, INC.
Independence System:
City of Olathe, KS
City of Raytown
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<PAGE>
FRANCHISES HELD BY
JONES COMMUNICATIONS OF NEW MEXICO, INC.
Albuquerque System:
City of Albuquerque
FRANCHISES HELD BY
JONES OF WISCONSIN, INC.
Manitowoc System:
City of Manitowoc
Managed Systems
FRANCHISES HELD BY
CABLE TV FUND 14-A, Ltd.
Calvert County System:
Calvert County
Naperville System
City of Naperville
FRANCHISES HELD BY
JONES GROWTH PARTNERS, L.P.
Wheaton System
City of Wheaton
Village of Addison
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<PAGE>
FRANCHISES HELD BY
IDS/JONES JOINT VENTURE PARTNERS
Aurora System
City of Aurora
FRANCHISES HELD BY
CABLE TV FUND 12-BCD VENTURE
Palmdale and Littlerock Systems:
Los Angeles County
City of Lancaster
City of Palmdale
FRANCHISES HELD BY
JONES CABLE INCOME FUND 1-A, LTD.
Owatonna/Glencoe System
City of Owatonna
FRANCHISES HELD BY
CABLE TV FUND 12-A, LTD.
Cook County/Orland Park System
Village of Mundelein
FRANCHISES HELD BY
CABLE TV FUND 15-A, LTD.
South Suburban System
Village of Lansing
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<PAGE>
Exhibit 4
Execution Copy
AGREEMENT
This AGREEMENT is entered into as of August 12, 1998, by and among
Comcast Corporation, a Pennsylvania corporation ("Comcast") and Mr. Glenn R.
Jones ("Jones"), Jones International, Ltd. ("International"), Glenn Jones
Grantor Business Trust (the "Jones Trust"), Jones International Grantor Business
Trust (the "JI Trust", and together with the Jones Trust, the "Trusts"), Jones
Space Segment, Inc. ("Space"), Jones Global Group, Inc. ("Global"), Jones
Interdigital, Inc. ("Interdigital"), Jones Entertainment Group, Ltd.
("Entertainment" and together with Jones, International, the Trusts, Space,
Global and Interdigital, the "Jones Entities").
WHEREAS, certain of the Jones Entities and The Bank of New York, as
successor agent to Morgan Guaranty Trust Company of New York, as agent for BCI
Telecom Holding Inc., a Canadian corporation f/k/a/ Bell Canada International
Inc. ("BTH") and BTH (Intercable) Limited, a British Virgin Islands corporation
f/k/a Bell Canada International BVI VI Limited ("BTH Intercable"), as assignee
of BTH, have entered into certain option agreements each dated as of December
20, 1994 and amended as of the date hereof (the "Option Agreements"), granting
an option (the "Control Option") to purchase the shares of Common Stock, par
value $.01 per share (the "Common Stock"), of Jones Intercable, Inc. (the
"Company") owned beneficially or of record by the Jones Entities (the "Control
Shares");
WHEREAS, the Company, Jones, International and BTH are parties to a
certain Shareholders Agreement originally dated as of December 20, 1994
providing for certain rights and obligations regarding their relationships (the
"Original Shareholders Agreement");
WHEREAS, Comcast, BTH, BTH Intercable and BTH (US Cable) Limited, a
British Virgin Islands corporation f/k/a Bell Canada International BVI III
Limited ("US Cable" and together with BTH and BTH Intercable the "BTH Entities")
have entered into a Purchase and Sale Agreement, dated as of May 22, 1998,
providing, among other things, for the acquisition by Comcast of the Control
Shares at such time that certain of the BTH Entities (or their agents) are
entitled to acquire the Control Shares pursuant to the Control Option (the
"Original Comcast/BTH Agreement");
WHEREAS, conditioned on the terms hereof, the Jones Entities and
Comcast desire to expedite the consummation of the transactions contemplated by
the Option Agreements;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Jones Entities and certain of the BTH Entities are amending the
Option Agreements which amendments provide for the immediate acceleration of the
exercise of the Control Option and the ultimate acquisition of the Control
Shares by Comcast;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company, Jones, International and BTH have entered into an
agreement of even date herewith providing for the amendment of certain rights
and obligations of the parties under the Original Shareholders Agreement (the
Original Shareholders Agreement as so amended, the "Shareholders Agreement"),
and the other Jones Entities and BTH Entities have also entered into such
agreement of even date herewith to provide for the mutual release, effective as
of the Closing Date, of certain claims each of the Jones Entities, the Company
and the BTH Entities may have against each other.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Comcast and the BTH Entities have entered into an amendment to the
Original Comcast/BTH Agreement amending, among other things, the timing of the
"Initial Closing" and "Final Closing" and providing for the "Simultaneous
Closing" (as such terms are defined in the Comcast/BTH Agreement) of the
transactions contemplated by the Comcast/BTH Agreement, which Simultaneous
Closing shall occur on the same date as the Closing (as defined below) (the
Original Comcast/BTH Agreement as so amended, the "Comcast/BTH Agreement"); and
WHEREAS, Comcast and the Jones Entities desire to set forth their
agreement regarding certain matters relating to the transactions contemplated by
the amendments to the Option Agreements, the Comcast/BTH Agreement and the
Shareholders Agreement;
THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties agree as follows.
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<PAGE>
1. Closing.
(a) The closing of the transactions contemplated hereby (the
"Closing") shall take place on the same date as the Simultaneous Closing at the
offices of Dechert Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street,
Philadelphia, PA 19103 as soon as is reasonably practicable after the date on
which the conditions specified in Sections 3 and 4 shall be fulfilled or waived.
The date on which the Closing occurs is sometimes referred to herein as the
"Closing Date". Comcast shall notify to the extent possible the Jones Entities
of the expected Closing Date no less than three days prior to the Closing Date.
(b) At the Closing, the parties agree that the following
events shall occur in the following sequence:
(i) The directors of the Company other than the Joint
Nominees (as defined in the Shareholders Agreement) shall resign seriatim and
the remaining directors shall appoint individuals designated by Comcast to fill
the vacancies created thereby.
(ii) The purchase and sale of the Control Shares
shall occur (the "Option Closing").
(iii) The Simultaneous Closing shall occur.
(c) If the Option Closing and the Simultaneous Closing under
the Comcast/BTH Agreement shall not have occurred on the Closing Date, then all
of the transactions and agreements to be effected at the Closing shall be
rescinded and deemed not to have occurred.
2. Initial Consideration.
(a) In consideration for the Jones Entities entering into this
Agreement, Comcast agrees that, on the date that the Jones Entities pledge the
Pledged Shares (as defined herein) pursuant to Section 9(e) hereof, it will
deposit with International $50,000,000 in cash (the "Initial Consideration") by
wire transfer of immediately available funds to a bank account designated by
International. The parties acknowledge and agree that the Initial Consideration,
together with interest thereon, shall be a credit against the aggregate Purchase
Price (as such term is defined in the Option Agreements) required to be paid
upon the closing of the purchase and sale of all of the Optioned Shares, as more
fully described in the Option Agreements.
(b) In the event that this Agreement is terminated for any
reason other than pursuant to Section 16(c) hereof or the Closing fails to occur
on the Closing Date for any reason other than as set forth in Section 16(c), the
Jones Entities agree to pay to Comcast, upon delivery by any Jones Entity of any
notice of termination or upon demand by Comcast, an amount equal to the Initial
Consideration plus interest calculated at the Applicable Rate from the date the
Initial Consideration is deposited with the Jones Entities to and including the
date the Jones Entities repay such Initial Consideration. "Applicable Rate"
means an interest rate per annum at which deposits in United States dollars
appears on page 3750 (or any successor page thereto) of the Dow Jones Telerate
Screen for a ninety day period, plus 1/2%. The Applicable Rate for any period
shall be determined as of the date the Initial Consideration is deposited with
the Jones Entities, and shall be adjusted quarterly on the first business day of
each January, April, July and October through the date the Jones Entities repay
the Initial Consideration (or the Initial Consideration is credited against the
Purchase Price payable in respect of the Optioned Shares pursuant to the Option
Agreements).
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(c) In the event that this Agreement is validly terminated by
the Jones Entities pursuant to Section 16(c) hereof or the Closing fails to
occur on the Closing Date for the reason set forth in Section 16(c), the parties
agree that the damages suffered by the Jones Entities would be speculative and
difficult to measure and, therefore, the Jones Entities shall be entitled to
retain the Initial Consideration (together with any interest earned thereon by
the Jones Entities) as liquidated damages and a sole remedy for Comcast's breach
of its obligations under this Agreement; provided however, that nothing
contained in this clause (c) shall preclude the Jones Entities from seeking
specific performance of Comcast's obligations hereunder prior to the termination
of this Agreement.
(d) The Jones Entities shall be entitled to retain the Initial
Consideration (together with any interest earned thereon by the Jones Entities)
upon consummation of the purchase and sale of the Optioned Shares.
3. Conditions to the Obligations of Comcast. The obligation of Comcast
to take any action required to be taken by Comcast at or following the Closing
shall be subject to the fulfillment or waiver of each of the following
conditions:
(a) The waiting period (including any extension thereof
resulting from additional inquiries, if any) under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") applicable to the
consummation of the transactions contemplated hereby (including the consummation
of the exercise of the Control Option and the Simultaneous Closing under the
Comcast/BTH Agreement) shall have expired or been earlier terminated.
(b) All authorizations, consents, approvals or other actions
by, in respect of or filings with any Governmental Authority in the United
States, England or Spain, or any other country where any Intercable Group Entity
conducts material business required (including the obtaining of any approvals
from Franchise Authorities) to permit the consummation of the transactions
contemplated hereby shall have been taken or obtained, as the case may be, and
shall be in full force and effect; provided that if all authorizations, consents
and approvals from applicable Franchise Authorities necessary to effect the
change of control of the Franchises (i) relating to the Franchises (whether in
Owned Systems or Managed Systems) set forth on Schedule F, (ii) relating to
Franchises in Managed Systems which, as of the Closing Date, are subject to a
letter of intent or agreement of sale providing for the sale or other
disposition of such Managed System to a Person other than the Company (or its
wholly owned Subsidiaries), and (iii) relating to Franchises with not less than
10,000 basic subscribers in Systems (whether Owned Systems or Managed Systems)
acquired by any Intercable Group Entity (except for Managed Systems which, as of
the Closing Date, are subject to a letter of intent or agreement of sale
providing for the sale or other disposition of such Managed System to the
Company or one of its wholly owned Subsidiaries) after the date hereof (the
"Required Franchise Approvals") shall have been so obtained, be in effect and
not be subject to withdrawal or appeal then the condition contained in this
paragraph (b) shall be deemed to be fulfilled as it relates to authorizations,
consents or approvals from applicable Franchise Authorities on the date on which
all of the Required Franchise Approvals are so obtained and are in effect and
not subject to withdrawal or appeal and provided further that this condition
shall not be satisfied if any Required Franchise Approval shall not have been
obtained.
(c) 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 (i), (ii) or (iii) of the following
paragraph (d); provided that if after the date hereof Comcast 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 paragraph (c) will not apply to any such law, rule or
regulation.
(d) 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
transactions contemplated hereby or seeking to (i) prevent Comcast from
consummating the transactions contemplated hereby, including exercising (or
directing BTH Intercable (or its Affiliates and agents) to exercise) the Control
Option or prevent BTH Intercable (or its Affiliates and agents) from exercising
the Control Option, (ii) require Comcast to divest, or otherwise limit Comcast's
ability to exercise full rights of ownership over the Control Option or the
Optioned Shares or any shares of capital stock of the Company owned by Comcast,
BTH, BTH Intercable or their respective Affiliates, or (iii) require, after the
exercise of the Control Option, Comcast or the Intercable Group to divest any
material business or assets or which would impose a material limitation on the
conduct of Comcast's or the Intercable Group's business; provided that if after
the date hereof Comcast 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 (d) will not apply to actions or proceedings that seek to enforce such
law, rule or regulation.
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(e) The Intercable Group Entities shall have received all
material third party consents required to be obtained in connection with the
Closing (including all consents required under any loan or security agreement,
indenture or other agreement in respect of borrowed funds to which any
Intercable Group Entity is a party and waivers of all purchase rights or rights
of first offer or rights of first refusal triggered by the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby held by any Franchise Authority, or other third party in respect of any
Franchise of the Intercable Group Entities but excluding consents from Franchise
Authorities necessary to effect the change of control of the Franchises held by
Intercable Group Entities), in each case in form and substance reasonably
satisfactory to Comcast.
(f) Each of the covenants and agreements to be performed by
the Jones Entities under this Agreement at or prior to the Closing shall have
been duly performed in all material respects.
(g) Each of the representations and warranties of the Jones
Entities contained in this Agreement shall, in the case of those representations
and warranties that are not qualified by materiality, be true, complete and
correct in all material respects, and in the case of those representations and
warranties that are qualified by materiality shall be true, complete and correct
in all respects, as of each of (i) the date of this Agreement and (ii) unless
otherwise specified as having been made as of a specific date, the Closing Date,
in each case as though newly made at such time.
(h) Within forty-five (45) days of the date hereof, the
Company shall have amended the Severance Plan adopted by the Board of Directors
on August 11, 1998, so that such Severance Plan conforms to the requirements of
Schedule B.
(i) The Simultaneous Closing shall have occurred on the
Closing Date.
4. Conditions to the Obligations of the Jones Entities. The obligations of the
Jones Entities to take any action required by them at or following the Closing
shall be subject to the fulfillment or waiver of each of the following
conditions:
(a) The waiting period (including any extension thereof
resulting from additional inquiries, if any) under the HSR Act applicable to the
consummation of the transactions contemplated hereby (including the consummation
of the exercise of the Control Option and the Simultaneous Closing under the
Comcast/BTH Agreement) shall have expired or been earlier terminated.
(b) There shall not then be in effect any applicable law, rule
or regulation or any judgment, injunction, order or decree that would prevent
the Jones Entities from consummating the transactions contemplated hereby.
(c) Each of the covenants and agreements to be performed by
Comcast hereunder at or prior to the Closing shall have been duly performed in
all material respects.
(d) Each of the representations and warranties of Comcast
contained in this Agreement shall, in the case of those representations and
warranties that are not qualified by materiality, be true, complete and correct
in all material respects, and in the case of those representations and
warranties that are qualified by materiality shall be true, complete and correct
in all respects, as of each of (i) the date of this Agreement and (ii) unless
otherwise specified as having been made as of a specific date, the Closing Date,
in each case as though newly made at such time.
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(e) The Simultaneous Closing shall have occurred on the
Closing Date.
5. Representations and Warranties of the Jones Entities. Each Jones Entity
jointly and severally represents and warrants to Comcast that, as of the date
hereof and the Closing Date (except for the representations contained in Section
5(d) and clause (ii) of Section 5(e) which representation is made only as of the
date hereof):
(a) Such Jones Entity is the sole record and beneficial owner
of the Optioned Shares and the shares of Class A Stock, par value $.01 per share
of the Company (the "Class A Shares") set forth opposite its name on Schedule A
free and clear of any mortgage, lien, pledge, charge, security interest,
encumbrance or other adverse claim of any kind ("Liens") (other than the Option
Agreements and the Shareholders Agreement) 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 or Class A Share), other
than offer and sale restrictions imposed by securities laws and the Shareholders
Agreement. At the Closing, each Jones Entity will convey good and valid title to
the Optioned Shares set forth opposite its name on Schedule A free and clear of
any Lien and any such limitation or restriction (other than offer and sale
restrictions imposed by securities laws).
(b) Such Jones Entity has been duly organized, and is validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted.
(c) The execution, delivery and performance by each Jones
Entity of this Agreement are within such Jones Entity's power and have been duly
authorized by all necessary action on the part of such Jones Entity. This
Agreement has been duly executed and delivered by each Jones Entity, and
assuming the accuracy of Comcast's representations and warranties contained
herein, is a valid and binding agreement of such Jones Entity.
(d) Assuming the accuracy of Comcast's representations and
warranties contained herein, the execution, delivery and performance by each
Jones Entity of this Agreement requires no action by any Jones Entity or any
Intercable Group Entity in respect of, or filing by any Jones Entity or any
Intercable Group Entity with, any Governmental Authority other than (i)
compliance with any applicable requirements of the HSR Act and (ii) actions or
filings with Franchise Authorities and the Federal Communications Commission and
(iii) any such action or filing as to which the failure to make or obtain 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
condition (financial or otherwise) of any Intercable Group Entities taken as a
whole or the ability of such Jones Entity to consummate the transactions
contemplated hereby or perform its obligations hereunder.
(e) The execution, delivery and performance by each Jones
Entity of this Agreement do not: (i) violate its articles of incorporation or
trust, bylaws or similar organizational documents, (ii) assuming the accuracy of
Comcast's representations and warranties herein violate any applicable law,
rule, regulation, judgment, injunction, order or decree binding on such Jones
Entity or any Intercable Group Entity, (iii) assuming the accuracy of Comcast'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 such Jones Entity or any Intercable Group Entity, (iv)
result in the creation or imposition of any Lien on any material asset of such
Jones Entity or any Intercable Group Entity, or (v) require any consent or other
action by any Person under, or constitute a default under, (x) any agreement or
other instrument binding upon any Intercable Group Entity providing for the sale
of a Managed System to a Person other than the Company or its wholly owned
Subsidiaries or (y) any Partnership Agreement or similar organizational document
of any Cable Partnership, 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 such
Intercable Group Entities taken as a whole or the ability of such Jones Entity
to consummate the transactions contemplated hereby or perform its obligations
hereunder and except in the case of clauses (ii) and (iii), actions and consents
required under the HSR Act and the Communications Act of 1934, as amended, and
in respect of Franchises, loan and lease agreements and other agreements and
instruments customarily entered into by cable operators in the ordinary course
of business, including agreements with utilities, programming agreements and
retransmission consent agreements.
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<PAGE>
(f) There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of any
Jones Entity or its Affiliates who might be entitled to any fee or commission
from Comcast or any Intercable Group Entity in connection with the transactions
contemplated by this Agreement.
(g) Options to purchase no more than 1,353,083 shares of Class
A Common Stock of the Company are outstanding and there are no options
outstanding to purchase any shares of Common Stock of the Company. The Company
has not granted any options to purchase either Class A Common Stock or Common
Stock since July 28, 1997.
6. Representations and Warranties of Comcast. Comcast represents and warrants to
the Jones Entities that, as of the date hereof and the Closing Date (except for
the representation contained in Section 6(c) and clause (ii) of Section 6(d)
which representation is made only as of the date hereof):
(a) Comcast has been duly organized, and is validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all powers and all material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted.
(b) The execution, delivery and performance by Comcast of this
Agreement are within Comcast's power and have been duly authorized by all
necessary action on the part of Comcast. This Agreement has been duly executed
and delivered by Comcast, and assuming the accuracy of the representations and
warranties of the Jones Entities contained herein, is a valid and binding
agreement of Comcast.
(c) Assuming the accuracy of the Jones Entities'
representations and warranties contained herein, the execution, delivery and
performance by Comcast of this Agreement requires no action by Comcast in
respect of, or filing by Comcast with, any Governmental Authority other than (i)
compliance with any applicable requirements of the HSR Act, (ii) filings with
respect to Franchises of the Intercable Group Entities and (iii) any such action
or filing as to which the failure to make or obtain would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the ability of Comcast to consummate the transactions contemplated hereby or
perform its obligations hereunder.
(d) The execution, delivery and performance by Comcast of this
Agreement does not: (i) violate its articles of incorporation or bylaws, (ii)
assuming the accuracy of the representations and warranties of the Jones
Entities contained herein, violate any applicable law, rule, regulation,
judgment, injunction, order or decree binding on Comcast, (iii) assuming the
accuracy of the representations and warranties of the Jones Entities contained
herein, and assuming that the Intercable Group Entities have all powers,
licenses, authorizations, permits, consents and approvals required to carry on
their businesses as now conducted, require any consent or other action by any
Person under, or constitute a default under, any material agreement or other
instrument binding upon Comcast, or (iv) result in the creation or imposition of
any Lien on any material asset of Comcast, 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 ability of Comcast to consummate the transactions contemplated hereby or
perform its obligations hereunder.
(e) There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Comcast or its Affiliates who might be entitled to any fee or commission from
any Jones Entity or any Intercable Group Entity in connection with the
transactions contemplated by this Agreement.
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7. Reasonable Best Efforts; Further Assurances. Comcast and the Jones
Entities will each execute and deliver or cause to be executed and delivered all
further documents and instruments and use their reasonable best efforts to
secure such consents and take, or cause to be taken, all such further action and
to do, or cause to be done, all things as may be reasonably necessary in order
to consummate the transactions contemplated hereby or to enable Comcast to enjoy
all of the benefits and rights incident to the ownership of the Control Shares.
Comcast and the Jones Entities shall each use their reasonable best efforts to,
and the Jones Entities shall use their reasonable best efforts to cause the
Intercable Group Entities to, cooperate with one another (a) in determining
whether any action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from any third party, in connection with the
consummation of the transactions contemplated by this Agreement and (b) in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers, including making such filings on FCC Form 394 ("394
Filings") as may be necessary to obtain the required authorizations, consents
and approvals from the applicable Franchise Authorities relating to the
Franchises held by the Intercable Group Entities; provided that no such 394
Filings shall be required to be filed prior to November 1, 1998 with respect to
Franchises relating to Managed Systems, which, on the date hereof, are and
thereafter remain subject to a letter of intent or agreement of sale providing
for the sale or other disposition of such Managed System to a Person other than
the Company (or its wholly-owned Subsidiaries). In connection with the
foregoing, Comcast may also seek that any such actions, consents, approvals or
waivers include the immediate transfer on the Closing Date of the Control Shares
by Comcast to Comcast Cable Communications, Inc., a wholly-owned subsidiary of
Comcast and the parent company of Comcast's cable division. Comcast and the
Jones Entities shall use their reasonable best efforts to, and the Jones
Entities shall use their reasonable best efforts to cause the Intercable Group
Entities to, each make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act no later than ten business days from the date hereof;
and each such filing shall request early termination of the waiting period
imposed by the HSR Act. Comcast and the Jones Entities shall not be required to
agree to any consent decree or order in connection with any objections of the
Department of Justice or the Federal Trade Commission to the transactions
contemplated by this Agreement.
8. Covenants and Agreements of Comcast.
(a) (i) On the Closing Date, Comcast agrees to enter into, or
cause one or more of its appropriate Affiliates to enter into an agreement with
Knowledge TV, Inc. ("KTV") in the form of Exhibit D attached hereto.
(ii) On the Closing Date, Comcast agrees to
enter into, or cause one or more of its appropriate Affiliates to enter into (x)
an amendment to that certain Affiliate Agreement dated December 10, 1997,
between Comcast and Great American Country, Inc. ("GAC"), which amendment shall
be in the form of Exhibit A attached hereto, and shall provide for the
elimination of the current incremental service subscriber launch commitment and
(y) an agreement with GAC in the form of Exhibit E attached hereto.
(b) Comcast acknowledges effective as of and conditioned upon
the consummation of the Closing, the Option Closing and the Simultaneous Closing
the existence of (i) that certain lease (the "Lease"), dated November 30, 1989,
by and between the Company and Jones Properties, Inc. (the "Landlord"), together
with that certain Sublease, dated December 1, 1994 between the Company and Jones
International, Ltd., (ii) that certain Services Agreement, dated June 9, 1994,
by and between the Company and Jones Interactive, Inc., (iii) that certain
Amended and Restated Jones Infomercial Networks, Inc. Affiliate Agreement, dated
as of August 1, 1994, by and between Jones Infomercial Networks, Inc. and the
Company, (iv) that certain Galactic Radio Affiliate Agreement, dated as of May
1, 1990, by and between Galactic Radio, Inc. and Jones Programming Services,
Inc., (v) the KTV and GAC Agreements (as defined herein), and (vi) the
transactions, agreements and/or arrangements as described in the Company's Form
10-K for the year ended December 31, 1997 (the "1997 Form 10-K") (the matters
listed in clauses (i) through (vi), the "Existing Related Party Agreements") and
that such Existing Related Party Agreements are binding obligations of the
Company except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent transfer or similar laws
affecting the enforcement of creditor's rights generally and by the effect of
general principles of equity (regardless of whether asserted in a proceeding at
law or in equity). Comcast agrees effective as of and conditioned upon the
consummation of the Closing, the Option Closing and the Simultaneous Closing
that it shall not assert directly or indirectly in any claim, suit or action or
otherwise, the invalidity or unenforceability, in whole or in part, of any
Existing Related Party Agreement.
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(c) Comcast, on behalf of itself and its Affiliates, effective
as of and conditioned upon the consummation of the Closing, the Option Closing
and the Simultaneous Closing, (i) waives and releases the Jones Entities, their
Affiliates and their Affiliates' employees, officers, directors, shareholders
and their predecessors, successors and assigns from any obligations, actions,
causes of action, demands, damages, costs, expenses and liabilities whatsoever
at law or in equity known or unknown, fixed or contingent ("Claims") which
Comcast and its Affiliates ever had, now has or which their successors or
assigns can, shall or may have against them and (ii) agrees not to cause any
Intercable Group Entity to assert any Claims against them, in the case of both
(i) and (ii) arising from (x) the adoption of the proposed resolutions set forth
on Schedules B or C, (y) any transaction or agreement between any Jones Entity
or an Affiliate thereof and any Intercable Group Entity consummated or
terminated prior to and no longer in effect as of the date hereof and (z)
arising from the Existing Related Party Agreements. In the event this Agreement
is terminated the execution and delivery of this Agreement including this
Section 8(c) shall not be deemed a waiver by Comcast of each Claim which it may
have against any of the Jones Entities.
(d) Comcast agrees that, for six years after the Closing, it
shall use its reasonable best efforts to cause the Company not to amend, repeal
or otherwise modify any rights to indemnification by the Company which exist as
of the Closing Date in favor of each present and former director, officer,
employee or agent of the Company under the Company's articles of incorporation
or bylaws, in each case as in effect on the date of this Agreement, in any
manner that would adversely affect the rights of individuals who, at any time
prior to the Closing, were directors, officers or employees of the Company to
receive indemnification under the Company's articles of incorporation and bylaws
for actions occurring prior to the Closing. Comcast shall use its reasonable
best efforts to cause the Company to maintain in effect for six years from the
Closing Date, if available, the current directors' and officers' liability
insurance policies maintained by the Company covering those persons and
positions who are currently covered by such policies (provided that the Company
may substitute therefor policies of at least the same coverage containing terms
and conditions which are not less favorable) with respect to matters occurring
prior to the Closing Date; provided, however, that in no event shall Comcast be
required to use its reasonable best efforts to cause the Company to expend
pursuant to this paragraph (e) more than an amount per year equal to one hundred
fifty percent (150%) of current annual premiums paid by the Company for such
insurance. In the event that, but for the proviso to the immediately preceding
sentence, the Company would be required to expend more than one hundred fifty
percent (150%) of current annual premiums, Comcast shall use its reasonable best
efforts to cause the Company to obtain the maximum amount of such insurance
obtainable by payment of annual premiums equal to one hundred fifty percent
(150%) of current annual premiums.
(e) Comcast agrees that (i) it shall perform its obligations
under the Comcast/BTH Agreement; (ii) it shall not, without the written consent
of the Jones Entities, amend the Comcast/BTH Agreement to add any additional
conditions to the obligations of the parties to the Comcast/BTH Agreement to
consummate the Simultaneous Closing or otherwise adversely affect in a material
way the right or ability of any party thereto to consummate the Closing or the
Simultaneous Closing; and (iii) it shall enforce vigorously any rights it may
have against the BTH Entities in respect of any breach by them of their
obligations under the Comcast/BTH Agreement, including seeking specific
performance by the BTH Entities of their obligations thereunder.
(f) Comcast agrees that it shall pay to International, at the
Closing, a fee of $1,500,000 on account of financial advisory, brokerage and
consulting services performed by International for the Company.
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9. Covenants and Agreements of the Jones Entities.
(a) At the Closing (but in any event prior to the closing of
the purchase and sale of the Optioned Shares, Jones agrees to resign as a
director, and Jones and International agree to cause each of the other Jones
Nominees (as such term is defined in the Shareholders Agreement) to resign,
seriatim from the Company's board of directors and to designate as Jones
Nominees such persons as may be selected by Comcast and the Jones Entities agree
to vote in favor of and Jones and International agree to cause the other Jones
Nominees, subject to their fiduciary duties as provided in Section 2.4(b) of the
Shareholders Agreement, to vote in favor of electing such individuals designated
by Comcast to fill the vacancies created by such resignations and by the
resignations of the Investor Nominees (as such term is defined in the
Shareholders Agreement) pursuant to the Comcast/BTH Agreement. The Jones
Entities agree to follow Comcast's direction with respect to the sequence of
such resignations and the filling of such vacancies.
(b) The Jones Entities agree that to the extent the Company
does not adopt any of the proposed resolutions set forth on Schedule C hereto
prior to the Closing, then following the Closing, the Jones Entities may offer
the Company the opportunity to enter into (and Comcast agrees to use its
reasonable best efforts after the Closing to cause the Company to consider
promptly and in any event within 30 days after receipt of such offer) the same
transactions with the Jones Entities as are authorized by such proposed
resolution; provided that the Jones Entities shall, following the Closing, offer
such opportunity to the Company with respect to those resolutions so indicated
on Schedule C. The Jones Entities agree that any such offer shall remain open
for at least 30 days following the Closing.
(c) Each of the Jones Entities on behalf of itself and each of
its Affiliates (the "Releasing Parties"), effective as of and conditioned upon
the consummation of the Closing, the Option Closing and the Simultaneous
Closing, releases and forever holds harmless, and waives and relinquishes from
and against all obligations, actions, causes of action, claims, demands,
damages, costs, expenses and liabilities whatsoever, at law or in equity, known
and unknown, fixed or contingent which the Releasing Parties ever had, now have
or which their predecessors, successors, assigns, heirs, executors and
administrators hereafter can, shall or may have against (i) each of the BTH
Entities and (ii) Comcast and, in the case of both (i) and (ii), their
Affiliates, and their (and their Affiliates') officers, directors, employees,
shareholders and their predecessors, successors or assigns on account of or
arising out of (A) any matter, cause or thing whatsoever relating to the
execution and delivery of the Comcast/BTH Agreement and the consummation of the
transactions contemplated thereby; and (B) the BTH Entities having provided to
Comcast any information received by them or the Investor Nominees. In the event
that this Agreement is terminated the execution and delivery of this Agreement
including this Section 9(c) shall not be deemed to be a waiver by the Jones
Entities of any claim they may have against Comcast arising out of or related to
the execution, delivery or performance of the Comcast/BTH Agreement.
(d) In consideration of Comcast's execution and delivery of
this Agreement and the Comcast/BTH Agreement, the Jones Entities agree to take
any and all actions and refrain from taking any and all actions and to use their
reasonable best efforts to cause the Company to take any and all actions and
refrain from taking any and all actions necessary or advisable to seek a stay
any proceedings relating to that certain lawsuit brought by BTH against Jones
Intercable, Inc., Jones International, Ltd., Jones Internet Channel, Inc. and
Glenn R. Jones, which was brought before the U.S. District Court for the
District of Colorado (the "Litigation"), including, without limitation, any
hearings or proceedings relating to any damage claims relating to the subject
matter of the Litigation and the appeal of the order entered on May 5, 1998
until the first to occur of (i) the date on which both the Closing and the
Simultaneous Closing shall have occurred or (ii) the termination of this
Agreement as provided in Section 16 hereof and, effective as of the Closing
Date, to release any and all claims which they may have against the BTH Entities
and their Affiliates in respect of the Litigation on the terms and conditions
set forth in the Agreement and Amendment No. 1 to Shareholders Agreement of even
date herewith.
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(e) The Jones Entities agree, as a condition to Comcast's
obligation to deliver the Initial Consideration, to pledge 2,000,000 Class A
Shares owned by the Jones Entities as of the date hereof (the "Pledged Shares")
to Comcast to secure the repayment of the Initial Consideration pursuant to
Section 2(b). The Jones Entities shall pledge the Pledged Shares by delivering
them to Comcast and executing and delivering to Comcast a pledge agreement
containing the same terms as are contained in the pledge agreement in the form
attached as Exhibit C (the "Pledge Agreement"). Comcast agrees to terminate its
security interest in and release the Pledged Shares to the Jones Entities upon
the earliest to occur of (i) the Closing, (ii) the valid termination of this
Agreement pursuant to Section 16(c) hereof or (iii) repayment to Comcast of the
Initial Consideration plus interest as provided in Section 2(b). In the event
that the Jones Entities breach their obligations to repay the Initial
Consideration plus interest as provided in Section 2(b), Comcast shall be
entitled to exercise its rights under the Pledge Agreement; provided that
Comcast shall remain entitled to all other remedies available to it at law or in
equity in respect of such breach and the exercise by Comcast of its rights under
the Pledge Agreement shall not relieve the Jones Entities of any liability they
may have in respect of any breach of this Agreement.
(f) The Jones Entities agree that they shall cause GAC to
enter into an amendment, effective as of and conditioned upon the consummation
of the Closing, the Option Closing and the Simultaneous Closing, to the GAC
Programming Agreement substantially in the form of Exhibit A hereto.
(g) The Jones Entities agree that they shall cause KTV,
formerly known as Mind Extension University, Inc. and GAC to amend, effective as
of and conditioned upon the consummation of the Closing, the Option Closing and
the Simultaneous Closing, those certain Affiliate Agreements with the Company,
dated December 28, 1993, and January 1, 1996, with KTV and GAC, respectively
(the "KTV/GAC Agreements") to provide that the term of such KTV/GAC Agreements
shall expire no later than June 9, 2009.
(h) Effective as of and conditioned upon the consummation of
the Closing, the Option Closing and the Simultaneous Closing, the Jones Entities
and Landlord each agree that any extension of the Lease beyond its stated term
is required to be approved by the Company.
(i) The Jones Entities agree that they waive, effective as of
and conditioned upon the Closing, the Option Closing and the Simultaneous
Closing and conditioned further upon an amount equal to $50,000,000 of the
Purchase Price (as defined in the Comcast/BTH Agreement) being allocated to the
Affiliate Stock in the amounts previously disclosed to the Jones Entities, any
rights they may have under the Education and Entertainment Shareholders
Agreements (including Section 4.5 thereof) with respect to the sale of the
Affiliate Stock (as such term is defined in the Comcast/BTH Agreement) to
Comcast at the Simultaneous Closing pursuant to the Comcast/BTH Agreement. In
addition, the Jones Entities consent to the assignment, effective as of and
conditioned upon the consummation of the Closing, the Option Closing and the
Simultaneous Closing, of all of the rights and obligations of BTH under the
Education and Entertainment Shareholders Agreements and the related Registration
Rights Agreements. "Education and Entertainment Shareholders Agreements" means
that certain Shareholders Agreement dated as of December 20, 1994 among Jones,
International, Bell Canada International Inc. and Jones Entertainment Group,
Ltd. and that certain Shareholders Agreement dated as of December 20, 1994 among
Jones, International, Bell Canada International Inc. and Jones Education
Networks, Inc.
(j) The Jones Entities agree that prior to the Closing without
the prior written consent of Comcast they and their Affiliates shall not enter
into any contract, agreement, understanding or transaction (including the
amendment, modification or renewal of any existing contract, agreement,
arrangement or understanding) with any Intercable Group Entity other than those
transactions specifically authorized by the resolutions listed on Schedule B.
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<PAGE>
(k) The Jones Entities agree that (i) they shall perform their
obligations under the Option Agreements and the Shareholders Agreement
(including the Agreement and Amendment No.1 to Shareholders Agreement of even
date herewith); (ii) they shall not, without the written consent of Comcast,
amend any of their rights under the Shareholders Agreement (including the
Agreement and Amendment No. 1 to Shareholders Agreement of even date herewith);
and (iii) they shall enforce vigorously any rights they may have against the BTH
Entities in respect of any breach by them of their obligations under the
Shareholder's Agreement (including the Agreement and Amendment No. 1 to
Shareholders Agreement), including seeking specific performance by the BTH
Entities of their obligations thereunder.
10. Additional Covenants of the Jones Entities with Respect to the Company.
(a) The Jones Entities agree that they shall use their
reasonable best efforts to cause the Company not to take or agree to take, and
not to permit any Subsidiary of the Company to take or agree to take, directly
or indirectly, any of the following actions prior to the Closing without the
prior written consent of Comcast or except pursuant to the procedures described
in paragraph (b) below:
(i) authorize, sell, distribute or otherwise issue,
or grant rights with respect to, any shares of capital stock or securities
convertible into or exchangeable for shares of capital stock of the Company or
its Subsidiaries (or any stock appreciation or similar interests or rights with
respect to such securities) except for (A) any issuances of capital stock
pursuant to the terms of stock options issued and outstanding as of the date
hereof, (B) authorizations, sales, distributions or other issuances of capital
stock of a Subsidiary of the Company to Persons that are wholly-owned Intercable
Group Entities (except in connection with sales of capital stock of a Subsidiary
of the Company permitted by subparagraphs (v) and (vi) of Section 2.6(a) of the
Shareholders Agreement and Section 10(a)(ii) of this Agreement), and (C)
Permitted Equity Issuances as such term is defined in the Shareholders
Agreement.
(ii) any action described in Section 2.6(a)(ii)
through (vii), inclusive, and Section 2.6(a)(ix) and (xi) of the Shareholders
Agreement.
(iii) enter into any contract, agreement,
arrangement, understanding or transaction (including the amendment, modification
or renewal of any existing contract, agreement, arrangement or understanding)
with any Jones Entity or BTH Entity or any Affiliate of any Jones Entity or BTH
Entity other than those transactions specifically identified by the resolutions
listed on Schedule B. For purposes of this clause (iii) only no Intercable Group
Entity shall be deemed an Affiliate of any Jones Entity or any BTH Entity.
(iv) any action that would reasonably be expected to,
as a result of a law, rule or regulation of a Governmental Authority organized
within the United States of America, England or any other jurisdiction where the
Intercable Group conducts a material portion of its business, (A) prevent
Comcast, BTH or their Affiliates from consummating the transactions contemplated
hereby or from otherwise obtaining control of the Company, (B) require Comcast,
BTH or their Affiliates to divest or otherwise limit Comcast's ability to
exercise full rights of ownership over the Control Option or any shares of
capital stock of the Company (whether acquired upon exercise of the Control
Option or otherwise) or (C) require, after the exercise of the Control Option,
Comcast, BTH or their Affiliates or the Intercable Group to divest any material
business or assets or impose a material limitation on the conduct of Comcast's
or the Intercable Group's business; provided that (1) if on the date hereof the
activities conducted by Comcast or BTH are subject to any such law, rule or
regulation (based on interpretations in effect on the date hereof) that has, or
would reasonably be expected to have, one or more of the effects described in
clauses (A), (B) or (C), or if after the date hereof Comcast or BTH enters into
a new line of business and at such time there is a law, rule or regulation that
has, or would reasonably be expected to have, one or more of the effects
described in clauses (A), (B) or (C), then in each case this subparagraph (iv)
will not apply to actions of the Intercable Group that would reasonably be
expected to have such effects under such law, rule or regulation, (2) the Jones
Entities shall not be in breach of this clause (iv) in matters relating to
Franchise agreements and material contracts if the Company is in compliance with
its obligations under Section 5.2 of the Shareholders Agreement concerning such
matters and if the Company is in compliance with the obligations it would have
under Section 5.2 of the Shareholders Agreement if Comcast were "Investor" as
such term is used in the Shareholders Agreement, and (3) in the case of clauses
(A) and (B) the effect of any such action must be due to the business or assets
of Comcast or BTH (and not an agent thereof).
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<PAGE>
(v) declare or make any provision for payment of, or
the setting aside of assets with respect to, any dividend or other distribution
of any property by the Company with respect to any shares of capital stock of
the Company.
(b) If the Company wishes to take an action described in
paragraph (a) of this Section 10, the Jones Entities shall cause the Company to
deliver to Comcast a written notice describing in reasonable detail the action
proposed to be taken and expressly requesting Comcast's consent to such action
pursuant to this Section 10. Such notice shall be accompanied by such additional
information as is reasonably required to enable Comcast to evaluate such
proposed action. Upon receipt of such notice and of any additional information
as may be reasonably requested by Comcast, Comcast will have ten Business Days
to exercise its right not to consent to such proposed action. If no response is
received by the Jones Entities from Comcast prior to the expiration of such time
period, the proposed action will be deemed to have been approved by Comcast. The
Jones Entities shall not be in breach of this Section 10 if such action is taken
in compliance with the procedure set forth in this paragraph.
11. Preservation of Business. Between the date hereof and the earlier
of the Closing Date and the date this Agreement is terminated, the Jones
Entities will use their reasonable best efforts to preserve, and to cause the
Company to preserve, the business organization of the Company intact and to
preserve the goodwill of the Company's (and its Subsidiaries') suppliers,
clients and others having business relationships with the Company (or its
Subsidiaries) and to operate their respective businesses in the ordinary course,
consistent with past practices.
12. Access.
(a) Immediately upon execution of this Agreement, the Jones Entities
shall use their best efforts to cause the Company to provide Comcast and its
representatives complete access to the books, records, agreements, employees,
accountants and the offices of the Company and its Subsidiaries for the purposes
of making such investigation of the business of the Company and its Subsidiaries
as Comcast shall deem necessary; provided, however, that such investigation
shall not unreasonably interfere with the operations of the Company. Between the
date hereof and the termination of this Agreement, Jones agrees to provide to
Comcast copies of all information delivered to BTH or any Investor Nominee in
accordance with the Shareholders Agreement. In addition, the parties agree that
the BTH Entities shall be permitted to provide to Comcast all information
regarding the Company received by them or any Investor Nominee after the date
hereof; provided that any such information provided to Comcast shall be subject
to paragraph (b) below.
(b) From the date hereof to the earlier of the Closing Date or the date
which is one year after the termination of this Agreement, Comcast and its
officers, directors, employees, representatives and Affiliates will use
reasonable care to avoid disclosure to third parties of proprietary information
(whether received by Comcast from the Company, the Jones Entities or the BTH
Entities) relating to the Company, except as specifically (and only to the
extent) required to be disclosed by applicable law or administrative or legal
process. For purposes of Comcast's obligations under this Section 12, reasonable
care means the same degree of care that Comcast exercises with respect to
similar types of its own proprietary information. It is understood and agreed
that: (i) Comcast will (to the extent reasonably possible) notify the Jones
Entities in writing prior to any proposed disclosure of such nonpublic
information in response to the requirements of applicable law or administrative
or legal process in order to enable the Jones Entities to seek an appropriate
protective order; (ii) Comcast may disclose any information which (x) is or
becomes publicly available other than as a result of a disclosure of Comcast in
breach of this Agreement, (y) was known to the party receiving such information
prior to the receipt thereof other than as a result of a disclosure by Comcast
in breach of this Agreement, or (z) was previously independently developed by
the party receiving such information without the assistance of Comcast. In the
event that the transactions contemplated hereby do not take place, all original
documents shall be returned by Comcast if requested by the providing party
within thirty (30) days of the termination of this Agreement; otherwise, Comcast
shall dispose of any such original documents in the normal course of Comcast's
business.
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<PAGE>
13. Costs and Expenses. Whether or not the transactions contemplated
hereby are consummated, each party shall bear its own costs and expenses. The
Jones Entities agree to indemnify, defend and hold harmless Comcast and its
Affiliates and each of their respective directors, officers, employees, agents,
contractors, successors and assigns from any claims by or liabilities to any
third party with whom the Jones Entities or their agents had discussions
regarding the disposition of their interests in the Company arising from the
consummation of the transactions contemplated hereby.
14. Publicity. The parties agree to keep the transactions contemplated
hereby confidential until mutual agreement is reached in writing regarding
publicity or until otherwise required by law (and as to the latter the parties
will make reasonable efforts to consult with each other).
15. Standstill. From the date of the execution of this Agreement until
the Closing or termination of this Agreement, the Jones Entities, on behalf of
themselves and each of their Affiliates, agents, officers, consultants, and
representatives, agree not to solicit, encourage or negotiate with any other
party relating to or enter into any contract, agreement, understanding or
arrangement with respect to the sale of the Common Stock of the Company owned
beneficially or of record by the Jones Entities or a transaction involving the
merger, consolidation or sale of the Company or substantially all of the
Company's assets.
16. Termination. This Agreement may be terminated as follows: (a) by
mutual written consent of Comcast and the Jones Entities; (b) by Comcast upon
written notice to the other parties hereto of such termination if (x) the Jones
Entities have materially breached any of their obligations contained herein and
the Jones Entities have failed to cure such breach within fifteen (15) calendar
days of receipt of written notice of such breach from Comcast, (y) all of the
conditions to closing set forth in Sections 3 and 4 hereof shall have been
fulfilled or waived at the time of such termination except for the condition
which has not been fulfilled or waived because of the Jones Entities' breach of
this Agreement and (z) Comcast shall not be in material breach of its
obligations contained herein or in the BTH/Comcast Agreement; (c) by the Jones
Entities upon written notice to Comcast of such termination if (x) Comcast has
materially breached any of its obligations contained herein and Comcast has
failed to cure such breach within fifteen (15) calendar days of receipt of
written notice of such breach from the Jones Entities, (y) all of the conditions
to closing set forth in Sections 3 and 4 hereof shall have been fulfilled or
waived at the time of such termination except for the condition which has not
been fulfilled or waived because of Comcast's breach of this Agreement and (z)
the Jones Entities shall not be in material breach of their obligations
contained herein or in the Agreement and Amendment No. 1 to Shareholders
Agreement of even date herewith; (d) if the Closing shall not have occurred on
or prior to June 30, 1999, by Comcast upon written notice of such termination to
the other parties hereto, provided that no such notice of termination shall be
effective if at the time of such purported termination, Comcast is in material
breach of any of its obligations contained herein or in the Comcast/BTH
Agreement; or (e) if the Closing shall not have occurred on or prior to June 30,
1999, by the Jones Entities upon written notice of such termination to Comcast
and repayment to Comcast of the Initial Consideration as provided in Section
2(b) hereof, provided that no such notice of termination shall be effective if
at the time of such purported termination, any Jones Entity shall be in material
breach of any of its obligations contained herein or in the Agreement and
Amendment No. 1 to Shareholders Agreement of even date herewith. This Agreement
and the rights and obligations of the parties hereunder shall cease upon any
termination pursuant to this Section; provided that (x) the provisions of this
Section and Section 2(b), 12(b) and 13 shall survive any termination of this
Agreement and (y) nothing herein shall relieve any party from any liability for
any prior breach of this Agreement.
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<PAGE>
17. Miscellaneous.
(a) Successors and Assigns. 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 Comcast may assign its rights, but not
its obligations, hereunder to any Subsidiary of Comcast.
(b) Specific Performance. The parties agree that (i) Comcast
would be irreparably damaged if for any reason any Jones Entity failed to sell
the Optioned Shares upon exercise of the Control Option or to perform any of
such Jones Entity's other obligations under this Agreement, and that Comcast
would not have on adequate remedy at law for money damages in such event and
(ii) the Jones Entities would be irreparably damaged if for any reason Comcast
failed to perform any of Comcast's obligations under this Agreement, and that
the Jones Entities 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.
(c) Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by facsimile transmission, nationally-recognized overnight courier
service or by registered or certified mail (postage prepaid, return receipt
requested):
if to the Jones Entities,
c/o Glenn R. Jones
Jones International, Ltd.
9697 East Mineral Avenue
Englewood, Colorado 80112
if to Comcast:
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102-2148
Attn: 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.
(d) Amendments and Waivers. (i) 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.
(ii) 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 cumulative and not exclusive of
any rights or remedies provided by law.
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<PAGE>
(e) 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.
(f) 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.
(g) Entire Agreement. This Agreement, the Shareholders
Agreement (including Agreement and Amendment No.1 to Shareholders Agreement),
the Option Agreements, the Comcast/BTH Agreement and the agreements attached as
exhibits hereto, together with their respective schedules and exhibits,
constitute 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.
(h) Separability. In case any provision of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
(i) No Third Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
(j) Tax Matters. The parties hereto covenant and agree to
consult with one another and cooperate in good faith to determine mutually
advantageous allocations and tax structures to effect the transactions
contemplated by this Agreement.
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<PAGE>
18. Definitions.
"Affiliate" shall have the same meaning as in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks are authorized to close in New York, New
York.
"Cable Partnership" means, at any time, any partnership that
is an Intercable Group Entity at such time.
"Franchise" means written "franchise" within the meaning of
Section 602(8) of the Cable Communications Policy Act of 1984 (47 U.S.C.
(S)522(9)).
"Franchise Authority" has the meaning that term is given by
Section 602(9) of the Cable Communications Act of 1984 (47 U.S.C. (S)522(10)).
"Governmental Authority" means any local, county, state,
commonwealth, federal or foreign court, judicial, executive or legislative
instrumentality, or any agency, authority, commission, board or official
thereof, including, without limitation, any Franchise Authority.
"Intercable Group" means, at any time, the Company and each
person that is a Subsidiary of Jones Intercable, Inc., a Colorado corporation 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).
"Managed System" means any System that is owned and operated
by a Cable Partnership.
"Option Closing" shall mean the consummation of the purchase
and sale of the Control Shares.
"Owned System" means any System that is owned and operated by
an Intercable Group Entity other than a Cable Partnership.
"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.
"Securities Act" means the Securities Act of 1933, as amended,
and rules and regulations promulgated thereunder.
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<PAGE>
"Subsidiary" means, as to any Person, (i) any entity of which
securities or other ownership interests having ordinary voting power 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.
"System" means a cable television or SMATV system owned or
operated by an Intercable Group Entity serving subscribers within a geographical
area covered by one or more Franchise agreements from the same head end facility
(or two or more related head end facilities).
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
COMCAST CORPORATION
By:_____________________________________
________________________________________
Glenn R. Jones
GLENN JONES GRANTOR BUSINESS TRUST
By:_____________________________________
JONES INTERNATIONAL GRANTOR BUSINESS TRUST
By:_____________________________________
JONES INTERNATIONAL, LTD.
By:_____________________________________
JONES SPACE SEGMENT, INC.
By:_____________________________________
JONES GLOBAL GROUP, INC.
By:_____________________________________
JONES INTERDIGITAL, INC.
By:_____________________________________
JONES ENTERTAINMENT GROUP, LTD.
By:_____________________________________
The undersigned hereby joins in this Agreement as a party
hereto solely for purposes of Sections 9(h) and 17 hereof.
JONES PROPERTIES, INC.
By:_____________________________________
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<PAGE>
The undersigned hereby consent to the execution of this
Agreement pursuant to Section 5.4 of the Shareholders Agreement and Section 4.1
of each of the Option Agreements.
BCI TELECOM HOLDING INC.
By:_______________________________
BTH (INTERCABLE) LTD.
By:_______________________________
BTH (US CABLE) LTD.
By:_______________________________
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<PAGE>
Schedule A
Beneficial Ownership of Optioned Shares held by the Jones Entities
Optioned Shares
(Common Stock)
Jones International Grantor Business Trust 2,239,416
Glenn Jones Grantor Business Trust 474,400
Jones Space Segment, Inc. 35,707
Jones Global Group, Inc. 27,585
Jones Interdigital, Inc. 643
Jones Entertainment Group, Ltd. 100,400
---------
2,878,151
=========
Class A Shares
Jones International Ltd. 1,497,373
Glenn R. Jones 526,893
---------
2,024,266
=========
<PAGE>
Schedule B
Permitted Affiliate Transactions
1. The purchase of the following assets by Jones or a Jones Entity at a price
equal to the fair market value (determined by appraisal) of such assets:
(a) that certain real estate located on Lot 1, Jones Intercable's
headquarters according to the recorded plot thereof, County of Arapahoe, State
of Colorado and the Panorama Falls Office Building.
(b) the Company's equity interest in each of Jones Futurex, Inc.,
Jones Global Group and Jones Customer Service Management LLC
(c) all of the Company's interest in the "Jones Spacelink" tradename.
2. The assumption by the Jones Entities of the Company's rights and obligations
under that certain lease dated, December 23, 1997, by and between the Company
and PNC Leasing Corp. ("Lessor") relating to the aircraft presently leased by
the Company and the release by the Lessor of the Company from such lease.
3. The amendment of (i) that certain lease, dated November 30, 1989, by and
between the Company and Jones Properties, Inc. (the "Lease") (a) providing the
Company with a right to terminate the Lease upon (x) vacating the entire
premises which are subject to the Lease and occupied by the Company with the
intention not to re-occupy such leased premises and (y) the payment by the
Company to Jones Properties, Inc. of an amount determined pursuant to section
27(a)(v) of such Lease (without the offset for fair market rental value of such
premises provided in such section calculated until the end of the stated term of
such lease, June 30, 2000, and (b) prohibiting the Company from subleasing the
premises to any person other than Jones, through the stated term of such lease,
and (ii) any subleases relating to the premises providing that such subleases
automatically terminate upon the termination of the Lease and relieving the
Company of any further obligations under such sublease following such
termination.
4. The adoption of a Severance Plan for certain associates of the Intercable
Group Entities located in Denver, Colorado, and Lanham, Maryland. Amounts
payable under the plan shall be in cash and shall not exceed $33,000,000 in the
aggregate, of which not more than $15,000,000 shall be non-deductible by the
Company from its income under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code").
Such Severance Plan may also include the provision of COBRA benefits for the
number of weeks used to calculate a covered employee's severance payment but in
any case not to exceed one year.
All such severance payments shall, as a condition to payment, require that the
recipient be an employee of the Company at all times from the date hereof to the
date which is 90 days after the Closing Date unless such employee is terminated
without cause prior to the expiration of such 90-day period. Jones shall not be
a recipient of any such severance payments.
5. The termination of the Services Agreement on the terms set forth on Schedule
C-1.
<PAGE>
Schedule C
Transactions Offered to the Company Post-Closing
1. The purchase of the following assets by Jones or a Jones Entity at a price
equal to the fair market value (determined by appraisal) of such assets:
(a) that certain real estate located on Lot 1, Jones
Intercable headquarters according to the recorded plot thereof, County of
Arapahoe, State of Colorado and the Panorama Falls Office Building.
(b) the Company's equity interest in each of Jones Futurex,
Inc., Jones Global Group and Jones Customer Service Management LLC
(c) all of the Company's interest in the "Jones Spacelink"
tradename.
*2. The assumption by the Jones Entities of the Company's rights and obligations
under that certain lease dated, December 23, 1997, by and between the Company
and PNC Leasing Corp. ("Lessor") relating to the aircraft presently leased by
the Company and the release by the Lessor of the Company from such lease.
*3. The termination of the Services Agreement on the terms set forth on
Schedule C-1.
*4. The amendment of (i) that certain lease, dated November 30, 1989, by and
between the Company and Jones Properties, Inc. (the "Lease") (a) providing the
Company with a right to terminate the Lease upon (x) vacating the entire
premises which are subject to the Lease and occupied by the Company with the
intention not to re-occupy such leased premises and (y) the payment by the
Company to Jones Properties, Inc. of an amount determined pursuant to section
27(a)(v) of such Lease (without the offset for fair market rental value of such
premises provided in such section calculated until the end of the stated term of
such lease, June 30, 2000 and (b) prohibiting the Company from subleasing the
premises to any person other than Jones, through the stated term of such lease,
and (ii) any subleases relating to the premises providing that such subleases
automatically terminate upon the termination of the Lease and relieving the
Company of any further obligations under such sublease following such
termination.
* Indicates transactions which Jones Entities shall offer the Company following
the Closing as provided in Section 9(b).
<PAGE>
Schedule C-1
The Services Agreement dated as of December 9, 1994 (the
"Services Agreement") between Jones Intercable, Inc. ("Intercable") and Jones
Interactive, Inc. ("Interactive") may be terminated by Intercable, prior to the
end of the term stated in the Services Agreement (an "Early Termination"), on
sixty (60) days prior written notice to Interactive (an "Early Termination
Notice"), subject to the following termination payment:
In connection with an Early Termination, Intercable shall pay
to Interactive on the termination date (x) the net present value discounted at a
rate of 6.25% of the greater of (i) $50,000 or (ii) the average Management Fee
(as such term is defined in the Services Agreement) which was payable during the
three (3) months immediately preceding the date of the Early Termination Notice,
in either case times the number of months remaining in the term of the Services
Agreement; plus (y) an amount equal to the severance costs associated with the
termination of employment of employees of Interactive in connection with the
termination of the Services Agreement, which severance payments shall be
calculated based on the formulas contained in the severance plan adopted by
Intercable in connection with the change in control of Intercable from Glenn R.
Jones and Jones International, Ltd. to Comcast Corporation; plus (z) any lease
termination costs associated with early termination of leases of equipment that
will no longer be required or used as a result of the Early Termination and
which the Company has decided not to assume.
<PAGE>
SCHEDULE F
Owned Systems
FRANCHISES HELD BY
JONES INTERCABLE, INC.
Panama City Beach, Florida System
City of Panama City Beach
Oxnard, California System
City of Oxnard
FRANCHISES HELD BY
JONES COMMUNICATIONS OF MARYLAND, INC.
Prince George's County System:
North Prince George's County
South Prince George's County
City of Bowie
Chesapeake Bay Group (including Annapolis,
Anne Arundel County and
Charles County Systems):
Anne Arundel County
City of Annapolis
<PAGE>
FRANCHISES HELD BY
JONES COMMUNICATIONS OF
GEORGIA/SOUTH CAROLINA, INC.
Savannah System:
Chatham County
City of Savannah
FRANCHISES HELD BY
JONES COMMUNICATIONS OF VIRGINIA, INC.
Alexandria System:
City of Alexandria
Prince William Group (including
Dale City, Reston and
Manassas Systems):
Fairfax County (Reston)
City of Manassas
FRANCHISES HELD BY
JONES COMMUNICATIONS OF ARIZONA, INC.
Pima County System:
Town of Oro Valley
FRANCHISES HELD BY
JONES COMMUNICATIONS OF MISSOURI, INC.
Independence System:
City of Olathe, KS
City of Raytown
-2-
<PAGE>
FRANCHISES HELD BY
JONES COMMUNICATIONS OF NEW MEXICO, INC.
Albuquerque System:
City of Albuquerque
FRANCHISES HELD BY
JONES OF WISCONSIN, INC.
Manitowoc System:
City of Manitowoc
Managed Systems
FRANCHISES HELD BY
CABLE TV FUND 14-A, Ltd.
Calvert County System:
Calvert County
Naperville System
City of Naperville
FRANCHISES HELD BY
JONES GROWTH PARTNERS, L.P.
Wheaton System
City of Wheaton
Village of Addison
-3-
<PAGE>
FRANCHISES HELD BY
IDS/JONES JOINT VENTURE PARTNERS
Aurora System
City of Aurora
FRANCHISES HELD BY
CABLE TV FUND 12-BCD VENTURE
Palmdale and Littlerock Systems:
Los Angeles County
City of Lancaster
City of Palmdale
FRANCHISES HELD BY
JONES CABLE INCOME FUND 1-A, LTD.
Owatonna/Glencoe System
City of Owatonna
FRANCHISES HELD BY
CABLE TV FUND 12-A, LTD.
Cook County/Orland Park System
Village of Mundelein
FRANCHISES HELD BY
CABLE TV FUND 15-A, LTD.
South Suburban System
Village of Lansing
-4-
<PAGE>
Exhibit A
FIRST AMENDMENT TO GREAT AMERICAN COUNTRY
AFFILIATE AGREEMENT
THIS FIRST AMENDMENT TO GREAT AMERICAN COUNTRY AFFILIATE
AGREEMENT is made and entered into as of the ___ day of _________, 19__, by and
between GREAT AMERICAN COUNTRY, INC., a Colorado corporation ("G.A.C") and
COMCAST PROGRAMMING, a division of Comcast Corporation, a Pennsylvania
corporation ("Affiliate").
WHEREAS, G.A.C and Affiliate entered into that certain Great
American Country Affiliate Agreement dated as of December 10, 1997 (the
"Affiliate Agreement"); and
WHEREAS, G.A.C and Affiliate now desire to amend the
Affiliate Agreement as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
1. Section 5 Amendments.
(a) Section 5(b) of the Affiliate Agreement is hereby deleted in
its entirety and in place thereof the following is inserted:
"(b) On or before February 28, 1998 (the "New System Launch
Date"), Affiliate shall launch the Service in systems that are not currently
distributing the Service (such systems on which the Service is launched between
the date of this Agreement and the New System Launch Date shall be referred to
herein as the "New Systems", and following any such launch shall be included in
the term "Systems" as used herein), which New Systems shall represent at least
250,000 Service Subscribers. The New Systems shall distribute the Service on a
full time basis at all times during the term of this Agreement. If Affiliate
does not launch the Service on the New Systems as of the New System Launch Date,
Affiliate shall have until May 31, 1998 to cure such default without any
liability or obligation of any kind to G.A.C."
(b) Section 5(d) of the Affiliate Agreement is hereby deleted in
its entirety and in place thereof the following is inserted:
"(d) Affiliate shall not delete the Service from any System or
delete any System from Exhibit A during the term of this Agreement; provided,
however, that in the event Affiliate sells a System to an unaffiliated third
party, Affiliate shall be relieved of all of its obligations with respect to
such System for all periods after the date of sale of such System.
Notwithstanding the foregoing, at no time during the term of this Agreement,
commencing from and after the New System Launch Date, shall the number of
Service Subscribers be less than 250,000."
<PAGE>
2. No Other Amendments. Except as expressly set forth herein, the
Affiliate Agreement shall remain in full force and effect without modification
or change.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Great American Country Affiliate Agreement as of the day and
year first written above.
GREAT AMERICAN COUNTRY, INC.
By __________________________
Jeffrey C. Wayne
Vice President and General Manager
COMCAST PROGRAMMING,
a division of Comcast Corporation
By __________________________
Thomas A. Hurley
Senior Vice President, Programming
-2-
<PAGE>
Exhibit C
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is entered into as of the 12 day of August 1998,
by and among Glenn R. Jones ("Jones"), Jones International, Ltd.
("International") and Comcast Corporation ("Comcast").
WHEREAS, Comcast, Jones, International, Glenn Jones Grantor
Business Trust, Jones International Grantor Business Trust, Jones Space Segment,
Inc., Jones Global Group, Inc., Jones Interdigital, Inc., and Jones
Entertainment Group, Ltd. have entered into that certain Agreement, dated as of
August __, 1998 (the "Jones/Comcast Agreement");
WHEREAS, Section 2 of the Jones/Comcast agreement provides for
Comcast to deposit $50,000,000 with International (the "Initial Consideration");
WHEREAS, Section 2 of the Jones/Comcast Agreement further
provides that under certain circumstances described therein, the Jones Entities,
as defined therein, are obligated to repay the Initial Consideration to Comcast
plus interest as described in such Section 2 (the "Secured Obligations");
WHEREAS, Comcast's obligation to deposit the Initial
Consideration with International is conditioned upon Jones and International
pledging 2,000,000 shares (the "Class A Stock") of Class A Common Stock, par
value $.01 per share, of Jones Intercable, Inc. (the "Company") with Comcast to
secure the Secured Obligations; and
WHEREAS, contemporaneously with the execution and delivery
hereof Comcast is depositing the Initial Consideration with International;
THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the parties agree as follows.
1. The Security Interest. In order to secure the performance
of the Secured Obligations in accordance with the terms thereof,
(a) Jones and International each hereby assign and pledge to
Comcast and grant to Comcast a security interest in the Class A Shares, and all
of their rights and privileges with respect to the Class A Shares, and all
income and profits thereon (other than dividends paid by the Company in respect
of the Class A Shares prior to any exercise by Comcast of its remedies
hereunder, which will be paid over to Jones and International as provided in
Section 4) and all proceeds of the foregoing, and any and all property referred
to in Section 1(b) (the "Collateral").
(b) In the event any change in the Company's capital stock
shall occur, Jones and International will immediately pledge with Comcast any
securities (and any share certificates or other instruments evidencing such
securities) issued by the Company in respect of the Class A Shares, and all
income and profits thereon (other than dividends paid by the Company in respect
of the Class A Shares prior to any exercise by Comcast 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 Comcast to, or transfer or in any way affect or modify, any
obligation or liability of Jones and International with respect to any of the
Collateral or any transaction in connection therewith.
(d) In the event Jones and International fail to perform any
Secured Obligation, Comcast 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.
2. Delivery of Collateral. All certificates representing the
Class A Shares (or securities described in Section 1(b)) delivered to Comcast by
Jones and International 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
Comcast.
<PAGE>
3. Further Assurances. (a) Jones and International agrees that
they will, at Comcast's expense and in such manner and form as Comcast 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 Comcast may request, in order to create, preserve,
perfect or validate the Security Interest or to enable Comcast to exercise and
enforce its rights hereunder with respect to any of the Collateral. To the
extent permitted by applicable law, Jones and International hereby authorize
Comcast to execute and file, in the name of Jones and International or
otherwise, Uniform Commercial Code financing statements (which may be carbon,
photographic, photostatic or other reproductions of this Pledge Agreement or of
a financing statement relating to this Pledge Agreement) which Comcast in its
reasonable discretion may deem necessary or appropriate to further perfect the
Security Interest.
(b) Jones and International agree that they will not change
(i) their name, identity or structure in any manner or (ii) the location of
their chief executive office or domicile unless they shall have given Comcast
not less than 30 days' prior notice thereof.
(c) In connection with an exercise of rights pursuant to
Section 1(d), Comcast may cause any or all of the Class A Shares to be
transferred of record into the name of Comcast or its designee. After notice
thereof, Jones and International will promptly give to Comcast (or its designee)
copies of any notices or other communications received by them with respect to
the Class A Shares registered in the name of Jones and International, and
Comcast will promptly give Jones and International copies of any notices and
communications received by Comcast with respect to any Class A Shares registered
in the name of Comcast.
4. Right to Vote and Receive Dividends on Collateral. (a)
Until such time (if ever) that Comcast shall have exercised, pursuant to Section
1(d), any of its remedies in respect of the Collateral, Jones and International
shall retain all voting rights with respect to the Class A Shares and shall have
the right to receive all dividends paid by the Company in respect of the
Collateral and Comcast shall take all such action as Jones and International may
deem necessary or appropriate to give effect to such right. All such dividends
which are received by Comcast shall be received in trust for the benefit of
Jones and International and shall promptly be paid over to Jones and
International.
(b) In the event Comcast exercises, pursuant to Section 1(d),
any of its remedies in respect of the Collateral, Comcast shall thereafter be
entitled to receive all dividends paid by the Company in respect of the
Collateral.
5. Limitation on Duty of Comcast in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, Comcast 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. Comcast 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 Comcast in good faith.
6. Termination of Security Interest; Release of Collateral.
The Security Interest granted hereunder shall terminate, and all rights to the
Collateral shall revert to Jones and International at such time as the Jones
Entities shall have no further obligation to repay the Initial Consideration.
Upon any such termination of the Security Interests or release of Collateral,
Comcast will deliver the Collateral to Jones and International and will execute
and deliver to Jones and International such documents as Jones and International
shall reasonably request to evidence the termination of the Security Interest or
the release of such Collateral, as the case may be.
<PAGE>
7. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by facsimile transmission, nationally-recognized overnight courier
service or by registered or certified mail (postage prepaid, return receipt
requested):
if to Jones or International,
c/o Glenn R. Jones
Jones International, Ltd.
9697 East Mineral Avenue
Englewood, Colorado 80112
if to Comcast:
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102-2148
Attn: 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.
8. Amendments and Waivers. (i) Any provision of this Pledge
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
Pledge Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective. 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 cumulative and not exclusive of any rights or
remedies provided by law.
9. 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.
10. 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.
11. Entire Agreement. This Pledge Agreement and the
Jones/Comcast Agreement together with its respective schedules and exhibits,
constitute the entire agreement between the parties with respect to the subject
matter of this Pledge Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Pledge Agreement.
12. Separability. In case any provision of this Pledge
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
13. Successors and Assigns. The provisions of this Pledge
Agreement are for the benefit of Comcast and Jones and International and their
respective successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be executed as of the date set forth above by their duly authorized
representatives.
COMCAST CORPORATION
By:____________________________________
_______________________________________
Glenn R. Jones
JONES INTERNATIONAL, LTD.
By:____________________________________
<PAGE>
Exhibit D
KNOWLEDGE TV
AFFILIATE AGREEMENT
THIS AGREEMENT is made as of the ___ day of ___________, 199_,
by and between KNOWLEDGE TV, INC., a Colorado corporation ("KTV"), and COMCAST
PROGRAMMING, a division of COMCAST CORPORATION, a Pennsylvania corporation
("Affiliate"), whose address is 1500 Market Street, Philadelphia, PA. 19102.
IN CONSIDERATION OF THE MUTUAL COVENANTS, STIPULATIONS AND REPRESENTATIONS
CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS:
1. GRANT OF LICENSE
Subject to the terms and conditions of this Agreement, KTV hereby
grants to Affiliate the non-exclusive license to distribute the
"Knowledge TV" service (the "Service") within any operating area within
the United States of any (i) cable, satellite master antenna television
system(s) ("SMATV") or multichannel multipoint distribution system(s)
of which Affiliate owns now or hereafter no less than 50% or of which
Affiliate owns now or hereafter no less than 20% and over which
Affiliate has management control including the authority to make
programming decisions with respect to the applicable system, and (ii)
any SMATV system that is operated by a party other than Affiliate in
the operating area of any cable system of Affiliate or an area
contiguous thereto, all as listed on the attached Exhibit A, as such
list may be amended from time to time (the "System(s)"). Affiliate
shall give prior written notice to KTV of the addition of a System to
Exhibit A.
2. TERM AND TERMINATION
(a) The term of this Agreement shall commence on the date hereof
and shall extend for a period of five (5) years plus ninety (90) days
from the date hereof.
(b) Except as otherwise provided herein, neither Affiliate nor KTV may
terminate this Agreement except upon sixty (60) days prior written
notice and then only if the other has made a material misrepresentation
herein or breaches any of its material obligations hereunder and such
misrepresentation or breach (which shall be specified in such notice)
is not cured within sixty (60) days of such notice, or the defaulting
party has not undertaken within such sixty (60) day period and is not
diligently pursuing actions to cure such misrepresentation or breach.
(c) Affiliate acknowledges and agrees that its obligations hereunder
with respect to the distribution of the Service are of a special,
unique and extraordinary character and that such distribution has a
unique and peculiar value, the loss of which cannot be adequately or
reasonably compensated by damages in an action at law, and that
Affiliate's failure to perform its obligations hereunder with respect
to the distribution of the Service shall cause KTV irreparable injury
and damage. In acknowledgment thereof, Affiliate hereby agrees that, in
addition to any and all other rights it may have at law or in equity,
including its termination right set forth above, KTV shall be entitled
to bring an action for specific performance of the terms of this
Agreement in the event of any breach thereof by Affiliate.
-1-
<PAGE>
3. CONTENT OF SERVICE
(a) KTV shall have the exclusive authority to determine the content and
format of the Service, and the selection, scheduling, substitution and
withdrawal of any program or advertisement shall remain within the sole
discretion of KTV. Notwithstanding the foregoing, the Service shall
consist of educational informational materials and programming which
endeavors to expose the viewer to the activities one might find in a
school, on a campus, or in other learning environments including but
not limited to, educational, instructional and informational
programming and, in addition, such programming as might relate to or
evolve from schools, campuses or other learning environments including
bookstores, field trips, laboratories, observatories, libraries and
trips or outings related to the foregoing, as well as marketing and
sales activities relating to the foregoing; provided, however, that
such marketing activities shall not include the direct on-air marketing
and/or sale of goods or products (excluding materials, books, tapes and
other items directly relating to any of the educational programming on
the Service), except as set forth below in this Section 3(a). The
Service currently contains no more than thirty-five (35) hours in the
aggregate of infomercial and/or home shopping programming each week.
KTV shall have the right to increase such infomercial and/or home
shopping programming at any time during the term of this Agreement;
provided, however, that if the number of hours of infomercial and/or
home shopping programming in the Service exceeds thirty-five (35) hours
each week, Affiliate shall be entitled, at its option, to preempt any
of the hours of infomercial and/or home shopping programming in excess
of thirty-five (35) each week; and provided further, however, that any
infomercial and/or home shopping programming will only be aired by KTV
during the hours of Midnight to 6:00 a.m., Eastern time, Monday through
Sunday and during the hours of 3:00 p.m. to 6:00 p.m., Eastern time,
Saturday and Sunday, such times to be adjusted to reflect comparable
periods in other time zones in the event that the Service, in the
future, supplies other than a single satellite feed. Except as set
forth herein, Affiliate shall distribute the Service without addition,
deletion, alteration, editing or amendment, including any copyright
notices, credits and similar notices, trademarks or trade names
contained therein.
(b) KTV does not currently make available to any affiliates any local
advertising time in the Service. However, if during the term of this
Agreement, KTV makes any such local advertising avails available to any
distributor of the Service, it will offer at least the same number and
type of local advertising avails to Affiliate. KTV will not have more
than twelve (12) minutes during any hour of national advertising time
in the Service at any time during the term of this Agreement.
-2-
<PAGE>
4. RATES AND PAYMENTS
(a) For those Systems listed on Exhibit A attached hereto, as the same
may be amended, on or before the forty-fifth (45th) day following each
month throughout the term of this Agreement, Affiliate shall pay to KTV
for each Subscriber of such System during the preceding month, at the
address specified by KTV, license fees in an amount calculated in
accordance with the attached Exhibit B.
(b) KTV's failure, for any reason, to send an invoice for a particular
monthly payment shall not relieve Affiliate of its obligation to make
any payment in a timely manner consistent with the terms of this
Agreement. Past due payments may, at KTV's option, bear interest at a
rate equal to the lesser of (i) one percent (1%) per month or (ii) the
maximum legal rate permitted under law, and Affiliate shall be liable
for all reasonable costs and expenses (including, without limitation,
reasonable court costs and attorneys' fees) incurred by KTV in
collecting any past due payments.
(c) For purposes of this Agreement, the term "Subscriber" shall mean
(i) each residential customer and commercial or business establishment
(including any restaurant, barbershop, lounge, tavern, social, athletic
or country club, bar, business office, sales office, store or shop)
receiving and separately paying for any level of cable television
service which includes the Service from each System, and (ii) the
number of basic equivalent subscribers computed by dividing the monthly
revenue for cable television service paid by bulk accounts (such as
apartment buildings, cooperatives, condominiums, mobile home parks,
hotels, and motels) of each System for cable television service up to
and including the level of service that includes the Service by the
standard residential rate of that System for cable television service
up to and including the level of service that includes the Service;
provided, however, that the term "Subscriber" shall not include persons
who do not pay any monies to Affiliate to receive the level of service
on which the Service is carried (which shall be limited to full-time
employees of Affiliate or of cable system operators located within a
System's DMA, schools, libraries, government buildings and offices and
any other complimentary service which is required by a System's
franchise ordinance, grant, license or other authorizing operating
agreement).
(d) Accompanying each payment during the term of this Agreement,
Affiliate shall provide to KTV a true and complete monthly report,
prepared by the chief financial officer of Affiliate or his/her
authorized designee specifying for each System the average number of
Subscribers of each System during the subject payment period (computed
by dividing the sum of the number of Subscribers on the first and last
day of the payment period by two (2)) and certifying the accuracy of
such information and containing such other information as may be
reasonably required by KTV for accurate billing purposes, subject to
applicable law.
-3-
<PAGE>
(e) Affiliate agrees to keep and maintain complete and accurate books
and records of matters relating to this Agreement. Affiliate grants
KTV, itself or through an independent audit service selected by KTV,
the right, during regular business hours, at KTV's expense, to inspect,
make copies and otherwise audit such books and records at Affiliate's
offices upon fifteen (15) days' prior written notice from KTV. KTV's
right to perform such audit shall be limited to once in any twelve (12)
month period during the term of this Agreement and shall be limited to
an audit with respect to amounts paid in the current calendar year and
prior calendar year. Throughout such audit, KTV's auditors or its
representatives shall discuss with Affiliate's controller, or his
designee, audit methodology as well as a reasonable estimate of any
additional payments which KTV believes may be due. If, as a result of
such audit, it is determined that Affiliate's payments to KTV under
this Agreement were less than what they should have been, Affiliate
shall pay to KTV, upon demand by KTV, the difference between
Affiliate's actual payments to KTV and the undisputed amounts Affiliate
should have paid to KTV hereunder; provided, however, that KTV shall,
upon request by Affiliate, make available copies of work papers,
analyses and other supporting documentation used to calculate any such
difference. If, as a result of such audit, it is determined that
Affiliate's payments to KTV under this Agreement were greater than what
they should have been, Affiliate may elect to receive a cash refund
from KTV of such overpayment or may elect to have the amount of such
overpayment credited against future license fees that may be owed to
KTV under this Agreement. If KTV audits Affiliate's books hereunder,
KTV must make any claim against Affiliate within three (3) months after
KTV completes such audit. If the claim is not made within such three
(3) month period, KTV will be deemed to have waived its right to
collect any shortfalls from Affiliate for the period(s) audited. Both
parties shall endeavor to resolve any claim hereunder in a timely
manner.
5. DELIVERY AND DISTRIBUTION
(a) During the term of this Agreement, each of the Systems shall offer
the Service on such level, and as part of such package, of cable
television service as Affiliate may elect; provided, however, that
Affiliate may not distribute the Service (i) on a level or as part of a
package of cable television service that has a Penetration (as
hereinafter defined) of less than ten percent (10%); or (ii) as a stand
alone a la carte service, unless the Service is also carried on a tier
with at least three (3) other national cable television services; or
(iii) as part of a package of cable television services that includes
pay or premium services, such as HBO, Showtime or other similar
services. For purposes of this Agreement, the term "Penetration" means
the ratio of the number of Subscribers in any System receiving and
paying for the level or package of cable television service that
includes the Service to the total number of basic subscribers of the
System. Affiliate shall designate one (1) channel on each System for
the carriage of the Service prior to the commencement of the delivery
of the Service on such System. Affiliate may change, from time to time,
the channel designation on which the Service is carried; provided,
however, that Affiliate shall use commercially reasonable efforts to
give KTV written notice of the change and the new channel designation
at least thirty (30) days prior to the effective date of such change.
(b) On or before forty-five (45) days after the date of this Agreement
(the "New System Launch Date"), Affiliate shall launch the Service in
systems that are not currently distributing the Service and which are
located in one or more of the markets identified on Exhibit C attached
hereto, which systems shall represent at least 500,000 Subscribers. If
Affiliate does not launch the Service on Systems representing at least
500,000 Subscribers as of the New System Launch Date, Affiliate shall
have until ninety (90) days after the date of this Agreement to cure
such default without any liability or obligation of any kind to KTV.
(c) Each System shall distribute the Service on a full time basis at
all times during the term of this Agreement at the hours it is
initially transmitted by KTV.
(d) Affiliate shall not delete the Service from any System or delete
any System from Exhibit A during the term of this Agreement; provided,
however, that in the event Affiliate sells a System to an unaffiliated
third party, Affiliate shall be relieved of all of its obligations with
respect to such System for all periods after the date of sale of such
System. Notwithstanding the foregoing, at no time during the term of
this Agreement, commencing from and after the New System Launch Date,
shall the number of Subscribers receiving the Service be less than
500,000 (the "Minimum Distribution Commitment").
-4-
<PAGE>
(e) KTV will transmit the Service by means of domestic communications
satellite Galaxy V, Transponder 21. Affiliate shall, at its own
expense, obtain and install such earth station receivers and other
equipment as shall be necessary to receive, descramble (if necessary)
and transmit and deliver to Subscribers receiving the Service the
signals comprising the Service. In the event KTV decides to change the
transmission of the Service to another domestic communications
satellite or change its scrambling or transmission technology, KTV
shall notify Affiliate at least sixty (60) days prior to the effective
date of such change. If it reasonably appears that as a result of such
proposed change Affiliate will incur the expense of additional
equipment in order to continue to receive or decode the Service,
Affiliate will be entitled to terminate this Agreement with respect to
all affected Systems as of the effective date of such change; provided,
however, that this termination right shall not apply if (i) KTV agrees
to reimburse such Systems for its pro rata share (based on the number
of signals to be received by any System from such new satellite) of the
cost of purchasing and installing equipment reasonably necessary for
such Systems to receive the Service as the result of any such change;
(ii) physical space exists at the then-existing earth station sites to
accommodate the necessary equipment; and (iii) current zoning and other
restrictions permit such additional equipment. KTV shall provide a high
quality signal for provision of the Service and shall use commercially
reasonable efforts to maintain such high quality signal. Affiliate
shall use commercially reasonable efforts to maintain the high quality
signal provided by KTV.
(f) Subject to then existing law, Affiliate shall not itself, and shall
not expressly authorize others to, copy, tape or otherwise reproduce
any part of the Service without KTV's prior written authorization, and
shall take reasonable and practical security measures to prevent the
unauthorized copying or taping by others; provided, however, that
nothing herein shall prohibit Affiliate from assisting its residential
subscribers in connecting video cassette recorders to record the
Service. Affiliate shall not distribute or exhibit, and shall not
expressly authorize or license or knowingly permit the distribution or
exhibition of, the Service by any means or device, whether now known or
hereafter devised, other than through the Systems now or hereafter
listed in Exhibit A hereto and in accordance with the terms of this
Agreement.
6. PROMOTION AND RESEARCH
(a) Affiliate shall use commercially reasonable efforts, as determined
in its best business judgment, to promote, market and sell the Service
to Subscribers and to the general public within the Operating Area of
each System. Advertising, promotional, marketing and/or sales materials
concerning the Service which are provided to Affiliate by KTV, if used
by Affiliate, shall be used without any alteration, deletion, addition
or any other change, unless such changes are approved by KTV prior to
use by Affiliate.
(b) At KTV's request, each System shall use commercially reasonable
efforts in its business judgment to provide KTV with data regarding the
marketing and promotion of the Service by Affiliate. Subject to
applicable federal, state and local law (including the franchises, if
any, pursuant to which the Systems are operated), Affiliate also agrees
to render such other assistance to KTV as KTV may request and which
Affiliate may reasonably provide in its business judgment in connection
with any marketing test, survey, poll or other research which KTV may
undertake in connection with the Service. KTV shall treat as
confidential any data or information which KTV receives from Affiliate,
and shall not utilize any such data or information except in connection
with such research.
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<PAGE>
7. NOTICES
All notices, statements and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission,
telegraph, personal delivery, certified mail, return receipt requested,
or by next day express delivery, addressed, if to KTV at 9697 East
Mineral Avenue, Englewood, Colorado 80112, Attn: President, KTV, (Fax:
303-799-1644), with a copy to the Legal Department and, if to
Affiliate, at its address set forth herein or by facsimile at
215-981-7793, with a copy to the Legal Department. The date of such
facsimile transmission, telegraphing or personal delivery or the next
day if by express delivery, or the date three (3) days after mailing,
shall be deemed the date on which such notice is given and effective.
8. TRADEMARKS
(a) All right, title and interest in and to the Service, and all
materials, formats, computer software or other rights of whatever
nature related thereto shall remain the property of KTV. Further,
Affiliate acknowledges and agrees that all names, logos, marks,
copyright notices or designations utilized by KTV in connection with
the Service (the "Marks") are the sole and exclusive property of KTV
and/or its affiliates, and no rights or ownership are intended to be or
shall be transferred to Affiliate. Affiliate's use of the Marks shall
be limited to the advertising and promotion of its carriage of the
Service over the Systems pursuant to this Agreement; provided, however,
that Affiliate may request that KTV allow it to use the Marks in other
manners, and KTV agrees not to unreasonably withhold its consent to
reasonable business uses of the Marks requested by Affiliate. KTV shall
provide Affiliate with samples of the Marks which Affiliate shall use
in their entirety (including all service mark and trademark notices)
whenever the Marks are used by Affiliate.
(b) KTV acknowledges that the names "Comcast", "Comcast Cable
Communications, Inc.", "Comcast Cablevision" and the concentric "C"
mark are the exclusive property of Affiliate and/or its affiliated
entities, and that KTV has not and will not acquire any proprietary
rights therein by reason of this Agreement. Any use of such names or
marks by KTV shall be subject to Affiliate's prior written consent.
9. REPRESENTATIONS AND INDEMNIFICATION
(a) KTV represents and warrants to Affiliate that (i) it is a
corporation duly organized and validly existing and in good standing
under the laws of the State of Colorado; (ii) KTV has the corporate
power and authority to enter into this Agreement and to fully perform
its obligations hereunder; (iii) KTV is under no contractual or other
legal obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder; (iv) the individual
executing this Agreement on behalf of KTV has the authority to do so;
(v) KTV is operating in substantial compliance with all applicable
laws, rules and regulations; (vi) nothing contained in the Service
shall violate the civil or property rights, copyrights, trademark
rights, right of privacy or any other right of any person, firm or
corporation except that no representation and warranty is given with
respect to music performance rights, subject to the indemnification
obligation of KTV pursuant to Section 9(d) hereof; and (vii) the
license fee rates set forth on Exhibit B attached hereto for the years
2002, 2003 and 2004 are the standard license fee rates for KTV, and
have been agreed to in at least one written affiliate agreement with a
cable television operator in the United States with an equivalent or
greater number of basic cable television subscribers as Affiliate.
-6-
<PAGE>
(b) Affiliate represents and warrants to KTV that (i) Affiliate is a
corporation duly organized and validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania; (ii) Affiliate has
the corporate power and authority to enter into this Agreement and to
fully perform its obligations hereunder; (iii) the individual executing
this Agreement on behalf of Affiliate has the authority to do so; and
(iv) Affiliate is under no contractual or other legal obligation which
in any way interferes with its ability to fully, promptly and
completely perform hereunder.
(c) Affiliate and KTV shall each indemnify, defend and forever hold
harmless the other, the other's affiliated companies and their
respective officers, directors, employees, partners and agents from all
liabilities, claims, costs, damages and expenses (including, without
limitation, reasonable counsel fees) arising out of any breach or
claimed breach by it of any representation or warranty or any of its
obligations pursuant to this Agreement. KTV will credit Affiliate for
any continuous interruption of Service caused by KTV of twenty-four
(24) hours or longer. The amount so credited shall be an amount equal
to that portion of the monthly license fees applicable to the period
during which the Service was interrupted. KTV's liability for damages
arising out of its inability or failure to deliver the Service shall be
limited to the license fee credits set forth in the preceding sentence.
(d) With respect to music performance rights, KTV agrees that it will
use its commercially reasonable efforts, at its expense, to secure
additional appropriate licenses, authorities or other grants of right
regarding music performance rights related to the exhibition and
distribution of the Service by KTV, Affiliate and/or the Systems
distributing the Service which KTV does not currently possess, and will
indemnify and hold harmless Affiliate from and against any claims,
damages, liabilities, costs and expenses arising from music performance
rights related to the exhibition and distribution of the Service by
KTV, Affiliate and/or the Systems distributing the Service.
(e) In connection with any indemnification provided for in this Section
9, each party shall so indemnify the other only if such other party
claiming indemnification shall give the indemnifying party prompt
notice of any claim or litigation to which its indemnification applies;
it being agreed that the indemnifying party shall have the right to
assume the full defense of any or all claims or litigation to which its
indemnity applies and that the indemnified party will cooperate fully
(at the cost of the indemnifying party) with the indemnifying party in
such defense and in the settlement of such claims or litigation, and
the indemnified party shall make no compromise or settlement of any
such claim without the prior written consent of the indemnifying party.
The settlement of any claim without the prior written consent of the
indemnifying party shall release the indemnifying party from its
obligations hereunder with respect to such claim or action so settled.
(f) Except as herein provided, neither Affiliate nor KTV shall have any
rights against the other party hereto for the non-operation of
facilities or the non-furnishing of the Service if such non-operation
or non-furnishing is due to an act of God; inevitable accident; fire;
lockout; flood; tornado; hurricane; strike; or other labor dispute;
riot or civil commotion; earthquake; war; act of government or
governmental instrumentality (whether federal, state or local); failure
of performance by a common carrier; failure in whole or in part of
technical facilities; or other cause (financial inability excepted)
beyond such party's reasonable control. In the event of non-operation
or non-furnishing of the Service for a period of ten (10) consecutive
days, Affiliate shall have the right to insert programming of its
choice on the channel otherwise identified with the Service until such
time as the Service is fully operational again. Credit will be given to
Affiliate, however, on the portion of the Service which is affected by
an interruption during any month equal to the product of (i) the
license fees which would be due for such month, calculated in
accordance with Section 4 hereof, assuming no interruption of Service
during such month, multiplied by (ii) a fraction, the numerator of
which is the total number of hours of interruption of the Service
during such month and the denominator of which is the total number of
hours of the Service which would have been provided during such month
absent such interruption(s). In the event of non-operation or
non-furnishing of the Service for a period of fifteen (15) or more
consecutive days, or thirty (30) days out of any ninety (90) day
period, Affiliate may terminate this Agreement by delivery of written
notice thereof to KTV without any further obligation or liability on
the part of KTV or Affiliate.
(g) The representations, warranties and indemnities contained in this
Section 9 shall continue throughout the term of this Agreement and the
indemnities shall survive the expiration or termination of this
Agreement.
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<PAGE>
10. CONFIDENTIALITY
(a) Neither Affiliate nor KTV shall disclose to any third party (other
than its respective officers, directors, employees, auditors and
attorneys each of whom shall agree to be bound by the provisions of
this Section 10 and whose compliance herewith shall be the legal
obligation of the disclosing party) any information with respect to the
terms and provisions of this Agreement, including by way of press
release(s), and KTV shall not disclose any information obtained in any
inspection and/or audit of Affiliate's books and records, except: (i)
to the extent necessary to comply with law or legal reporting or
disclosure requirements, including those relating to the public or
private offering of securities, or the valid order of an administrative
agency or a court of competent jurisdiction, in which event the party
making such disclosure shall so notify the other as promptly as
practicable (and, if possible, prior to making such disclosure) and
shall seek confidential treatment of such information; (ii) as part of
its normal reporting or review procedure to its parent company, its
auditors and its attorneys; provided, however, that such parent
company, auditors and attorneys agree to be bound by the provisions of
this Section 10; (iii) in order to enforce its rights pursuant to this
Agreement; and (iv) if mutually agreed by Affiliate and KTV in advance
and in writing.
(b) This Section 10 shall survive the termination or expiration of this
Agreement.
11. GENERAL
(a) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, this Agreement may not be assigned by
either party without the prior written consent of the other party,
which consent shall not be unreasonably withheld, except that upon 30
days' prior notice to the other party, either party may assign this
Agreement to any entity controlled by, controlling, or under common
control with such party, or to an entity acquiring all or substantially
all of the assets of such party, whether by acquisition, stock
issuance, trade, merger or other means.
(b) Neither Affiliate nor KTV shall be, or hold itself out as, the
agent of the other under this Agreement. No subscriber of Affiliate
shall be deemed to have any privity of contract or direct contractual
or other relationship with KTV by virtue of this Agreement or KTV's
delivery of the Service to Affiliate hereunder. Likewise, no supplier
of advertising or programming or anything else included in the Service
by KTV shall be deemed to have any privity of contract or direct
contractual or other relationship with Affiliate by virtue of this
Agreement or Affiliate's carriage of the Service hereunder. Nothing
contained herein shall be deemed to create, and the parties do not
intend to create, any relationship of partners, joint venturers or
agents, as between Affiliate and KTV, and neither party is authorized
to or shall act toward third parties or the public in any manner which
would indicate any such relationship with the other. KTV disclaims any
present or future right, interest or estate in or to the transmission
facilities of Affiliate or the parent, subsidiaries, partnerships or
joint venturers controlling the Systems on which the programming
signals delivered by Affiliate are transmitted, such disclaimer being
to acknowledge that neither Affiliate nor the transmission facilities
of the Systems (and the owners thereof) are common carriers.
(c) Except for the Original KTV Agreement (as hereinafter defined),
this Agreement contains the entire understanding of the parties and
supersedes all prior understandings of the parties relating to the
subject matter herein. This Agreement may not be modified except in
writing executed by all parties hereto. Any waiver must be in writing
and signed by the party whose rights are being waived and no waiver by
either Affiliate or KTV of any breach of any provision hereof shall be
or be deemed to be a waiver of any preceding or subsequent breach of
the same or any other provision of this Agreement.
(d) This Agreement and all collateral matters shall be construed in
accordance with the internal laws of the State of Colorado applicable
to agreements fully made and to be performed therein, irrespective of
the place of actual execution or performance.
(e) The invalidity or unenforceability of any provision of this
Agreement shall in no way affect the validity or enforceability of any
other provision of this Agreement.
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<PAGE>
(f) KTV and Affiliate each acknowledge that this Agreement was fully
negotiated by the parties and, therefore, no provision of this
Agreement shall be interpreted against any party because such party or
its legal representative drafted such provision.
(g) The provisions of this Agreement are for the exclusive benefit of
the parties hereto and their permitted assigns, and no third party
shall be a beneficiary of, or have any rights by virtue of, this
Agreement.
(h) The titles and headings of the sections in this Agreement are for
convenience only and shall not in any way affect the interpretation of
this Agreement.
(i) If at any time during the term of this Agreement, KTV offers any
other distributor of the Service terms and conditions with respect to
the following matters: exclusivity, distribution to alternate
technologies, tiering, packaging, and/or a la carte carriage (the
"Non-Economic Terms"), which are more favorable than the terms set
forth herein, KTV shall offer to Affiliate such more favorable terms
and conditions with respect to the Non-Economic Terms for such period
of time as the same are available to the other third party distributor;
provided, however, that Affiliate must also accept those terms and
conditions of such other distributor's agreement as were material
inducements to KTV's willingness to offer such more favorable terms to
the other third party distributor to the extent such terms and
conditions are not unique to such other distributor and Affiliate can
reasonably comply with such terms and conditions.
(ii) Within ten (10) business days after receiving Affiliate's
request, KTV shall provide Affiliate with a certificate signed by an
authorized officer of KTV stating that KTV has complies with the
conditions of this Section.
(j) As between KTV and Affiliate, Affiliate shall be responsible for
all taxes levied upon Affiliate or related to the existence or
operation of the Systems or to its handling and delivery of the Service
from its Systems' headends to Subscribers. KTV shall be responsible for
all taxes levied with respect to producing, distributing, licensing and
transmitting the Service to such headends.
(k) Except with respect to closed captioning and second audio programs
(which uses Affiliate agrees shall be reserved to KTV throughout the
Term of this Agreement), KTV agrees that signal distribution beyond
traditional television video and audio, including but not limited to
the use of Vertical Blanking Interval ("VBI"), is not essential to, nor
a part of, the transmission of the Service and, thus, except for the
rights reserved to KTV herein, all rights in and to signal distribution
beyond traditional television video and audio, including but not
limited to the use of the VBI, are retained by and reserved to
Affiliate, and nothing herein shall preclude Affiliate from exercising
and exploiting such rights exclusively by means and in any locations
concurrently herewith freely and without restrictions.
(l) The obligations of Affiliate under this Agreement with respect to
the launch and distribution of the Service are in addition to the
obligations of Affiliate under that certain Affiliate Agreement dated
as of January 1, 1997 between KTV (f/k/a Mind Extension University,
Inc.) and Affiliate (the "Original KTV Agreement"). The terms and
conditions of the Original KTV Agreement shall govern the distribution
of the Service on Systems where the Service is launched pursuant to the
terms of such agreement, and the terms and conditions of this Agreement
shall govern the distribution of the Service on Systems where the
Service is launched pursuant to the terms of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first set forth above.
KNOWLEDGE TV, INC.
a Colorado corporation
By ___________________________________
Glenn R. Jones
President
COMCAST PROGRAMMING,
a division of COMCAST
CORPORATION
By ____________________________________
Thomas A. Hurley,
Senior Vice President, Programming
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<PAGE>
EXHIBIT A
SYSTEMS DISTRIBUTING SERVICE
List Each
Franchise Area No. of
Served by Each System Launch Date Subscribers
<PAGE>
EXHIBIT B
LICENSE FEES
Affiliate shall pay License Fees as follows:
<TABLE>
<CAPTION>
Affiliate's
Service 1998 1999 2000 2001 2002 2003 2004
Subscribers* ---- ---- ---- ---- ---- ---- ----
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
0 - 799,999 $.05 $.07 $.07 $.07 $.10 $.11 $.135
800,000 - $.05 $.065 $.065 $.07 $.09 $.10 $.125
1,599,999
1,600,000 - $.05 $.06 $.06 $.065 $.08 $.09 $.115
2,399,999
2,400,000 $.05 $.05 $.06 $.06 $.07 $.08 $.105
or more
</TABLE>
* For purposes of calculating applicable volume discounts with respect to
license fees payable under this Agreement, all Service Subscribers receiving the
Service pursuant to this Agreement and the Original KTV Agreement (as such term
is defined herein) shall be aggregated. Similarly, for purposes of calculating
applicable volume discounts with respect to license fees payable under the
Orginial KTV Agreement, all Service Subscribers receiving the Service pursuant
to the Original KTV Agreement and this Agreement shall be aggregated.
<PAGE>
EXHIBIT C
MARKETS WHERE SYSTEMS ARE TO BE LOCATED
o Philadelphia DMA (Philadelphia, Willow Grove, Lower Merion,
Gloucester, Burlington, East Windsor)
o Systems in New Jersey or Connecticut within the NY DMA
o Sacramento, CA
o Knoxville, TN
o South Florida (Broward County/Palm Beach County)
o Indianapolis, IN
o West Florida (Sarasota/Arcadia/Venice/Lehigh Acres/Port Charlotte)
o Chesterfield, VA
o Tallahassee, FL
o Mobile, AL
o Howard County, MD
o New Haven, Conn.
o Detroit DMA
To qualify toward the subscriber benchmark in Section 5(b) hereof, the market
must have at least 50,000 Comcast/KTV subscribers.
<PAGE>
Exhibit E
GREAT AMERICAN COUNTRY
AFFILIATE AGREEMENT
THIS AGREEMENT is made as of the ___ day of ______________,
199_, by and between GREAT AMERICAN COUNTRY, INC., a Colorado corporation
("G.A.C"), and COMCAST PROGRAMMING, a division of COMCAST CORPORATION, a
Pennsylvania corporation ("Affiliate"), whose address is 1500 Market Street,
Philadelphia, PA. 19102.
IN CONSIDERATION OF THE MUTUAL COVENANTS, STIPULATIONS AND REPRESENTATIONS
CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS:
1. GRANT OF LICENSE
Subject to the terms and conditions of this Agreement, G.A.C hereby
grants to Affiliate the non-exclusive license to distribute the "Great
American Country" service (the "Service") within any operating area
within the United States of any (i) cable, satellite master antenna
television system(s) ("SMATV") or multichannel multipoint distribution
system(s) of which Affiliate owns now or hereafter no less than 50%, or
of which Affiliate owns now or hereafter no less than 20% and over
which Affiliate has management control including the authority to make
programming decisions with respect to the applicable system, and (ii)
any SMATV system that is operated by a party other than Affiliate in
the operating area of any cable system of Affiliate or an area
contiguous thereto, all as listed on the attached Exhibit A, as such
list may be amended from time to time (the "System(s)"). Affiliate
shall give prior written notice to G.A.C of the addition of a
System to Exhibit A.
2. TERM AND TERMINATION
(a) The term of this Agreement shall commence on the date hereof
and shall extend for a period of five (5) years plus ninety (90) days
from the date hereof.
(b) Except as otherwise provided herein, neither Affiliate nor
G.A.C may terminate this Agreement except upon ninety (90) days
prior written notice and then only if the other has made a material
misrepresentation herein or breaches any of its material obligations
hereunder and such misrepresentation or breach (which shall be
specified in such notice) is not cured within ninety (90) days of such
notice, or the defaulting party has not undertaken within such ninety
(90) day period and is not diligently pursuing actions to cure such
misrepresentation or breach. The parties' right to terminate this
Agreement pursuant to this Section 2(b) shall be in addition to any
right or remedy which either party may have in law or equity.
3. CONTENT OF SERVICE
(a) G.A.C shall have the exclusive authority to determine the
content and format of the Service, and the selection, scheduling,
substitution and withdrawal of any program or advertisement shall
remain within the sole discretion of G.A.C. Notwithstanding the
foregoing, the Service shall consist of a twenty-four (24) hour a day,
satellite-delivered country music television network that features
current and past country music videos, concerts, information on country
music artists and occasional short-form programming that focuses on
both country music and country music's performing artists. Affiliate
shall distribute the Service without addition, deletion, alteration,
editing or amendment, including any copyright notices, credits and
similar notices, trademarks or trade names contained therein.
(b) G.A.C shall make available to Affiliate not less than four (4)
minutes of commercial advertising time in each programming hour for use
by Affiliate in inserting local advertising or promotions. All such
availabilities shall be at such points in the transmission of the
Service as G.A.C determines in its sole discretion. G.A.C shall
signal Affiliate's commercial advertising time by a hidden cue tone.
Affiliate shall use its reasonable efforts to assure that all
commercial matter or advertisements it inserts with the Service (i) are
not offensive in nature; (ii) do not suggest an affiliation between
G.A.C or any programming contained in the Service, and third party
advertisers, and (iii) are compatible with applicable law. Affiliate's
commercial advertising time shall be fixed, nonrecapturable and
nonpreemptible, except that under limited circumstances and uniformly
applied to all affiliates of G.A.C, G.A.C may give thirty (30)
days' notice to Affiliate preempting Affiliate's specific commercial
time, provided that G.A.C makes available to Affiliate, within
sixty (60) days of such preemption, an equal amount of commercial time
in a like time period.
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<PAGE>
(c) The Service shall not contain more than four (4) hours of
infomercial and/or long form (i.e. longer than two minutes) home
shopping programming (collectively, "Infomercial Programming"), in any
day, and any Infomercial Programming so included in the Service shall
be aired only between the hours of Midnight and 6:00 a.m. Eastern Time.
Beginning at the earlier of (i) January 1, 2002, (ii) such time as the
Service is being distributed to at least 20,000,000 Service
Subscribers, in the aggregate, in the United States, or (iii) the date
on which any other affiliate of G.A.C has the right to preempt
Infomercial Programming included in the Service, Affiliate shall be
entitled, at its option, to preempt up to one hundred percent (100%) of
the Infomercial Programming included in the Service. In the event of
any such permitted preemption, Affiliate shall be entitled to insert
programming of its own choosing into the Service during the periods of
such preemption; provided, however, that such inserted programming is
not adult-oriented programming and otherwise meets the standards for
inserted material set forth in Section 3(b) of this Agreement.
4. RATES AND PAYMENTS
(a) For those Systems listed on Exhibit A attached hereto, as the same
may be amended, on or before the forty-fifth (45th) day following each
month throughout the term of this Agreement, Affiliate shall pay to
G.A.C for each Service Subscriber of such System during the
preceding month, at the address specified by G.A.C, license fees
in an amount calculated in accordance with the attached Exhibit B.
(b) G.A.C's failure, for any reason, to send an invoice for a
particular monthly payment shall not relieve Affiliate of its
obligation to make any payment in a timely manner consistent with the
terms of this Agreement. Past due payments may, at G.A.C's option,
bear interest at a rate equal to the lesser of (i) one percent (1%) per
month or (ii) the maximum legal rate permitted under law, and Affiliate
shall be liable for all reasonable costs and expenses (including,
without limitation, reasonable court costs and attorneys' fees)
incurred by G.A.C in collecting any past due payments.
(c) For purposes of this Agreement, the term "Service Subscriber" shall
mean (i) each residential customer and commercial or business
establishment (including any restaurant, barbershop, lounge, tavern,
social, athletic or country club, bar, business office, sales office,
store or shop) receiving and separately paying for any level of cable
television service which includes the Service from each System, and
(ii) the number of basic equivalent subscribers computed by dividing
the monthly revenue for cable television service paid by bulk accounts
(such as apartment buildings, cooperatives, condominiums, mobile home
parks, hotels, and motels) of each System for cable television service
up to and including the level of service that includes the Service by
the standard residential rate of that System for cable television
service up to and including the level of service that includes the
Service; provided, however, that the term "Service Subscriber" shall
not include persons who do not pay any monies to Affiliate to receive
the level of service on which the Service is carried (which shall be
limited to full-time employees of Affiliate or of cable system
operators located within a System's DMA, schools, libraries, government
buildings and offices and any other complimentary service which is
required by a System's franchise ordinance, grant, license or other
authorizing operating agreement).
(d) Accompanying each payment during the term of this Agreement,
Affiliate shall provide to G.A.C a true and complete monthly
report, prepared by the chief financial officer of Affiliate or his/her
authorized designee specifying for each System the average number of
Service Subscribers of each System during the subject payment period
(computed by dividing the sum of the number of Service Subscribers on
the first and last day of the payment period by two (2)) and certifying
the accuracy of such information and containing such other information
as may be reasonably required by G.A.C for accurate billing
purposes, subject to applicable law.
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<PAGE>
(e) Affiliate agrees to keep and maintain complete and accurate books
and records of matters relating to this Agreement. Affiliate grants
G.A.C., itself or through an independent audit service selected by
G.A.C., the right, during regular business hours, at G.A.C's expense,
to inspect, make copies and otherwise audit such books and records at
Affiliate's offices upon fifteen (15) days' prior written notice from
G.A.C. G.A.C's right to perform such audit shall be limited to
once in any twelve (12) month period during the term of this Agreement
and shall be limited to an audit with respect to amounts paid in the
current calendar year and prior calendar year. Throughout such audit,
G.A.C's auditors or its representatives shall discuss with
Affiliate's controller, or his designee, audit methodology as well as a
reasonable estimate of any additional payments which G.A.C believes
may be due. If, as a result of such audit, it is determined that
Affiliate's payments to G.A.C under this Agreement were less than
what they should have been, Affiliate shall pay to G.A.C, upon
demand by G.A.C, the difference between Affiliate's actual
payments to G.A.C and the undisputed amounts Affiliate should have
paid to G.A.C hereunder; provided, however, that G.A.C shall,
upon request by Affiliate, make available copies of work papers,
analyses and other supporting documentation used to calculate any such
difference. If, as a result of such audit, it is determined that
Affiliate's payments to G.A.C under this Agreement were greater
than what they should have been, Affiliate may elect to receive a cash
refund from G.A.C of such overpayment or may elect to have the
amount of such overpayment credited against future license fees that
may be owed to G.A.C under this Agreement. If G.A.C audits
Affiliate's books hereunder, G.A.C must make any claim against
Affiliate within three (3) months after G.A.C completes such audit.
If the claim is not made within such three (3) month period, G.A.C
will be deemed to have waived its right to collect any shortfalls from
Affiliate for the period(s) audited. Both parties shall endeavor to
resolve any claim hereunder in a timely manner.
5. DELIVERY AND DISTRIBUTION
(a) During the term of this Agreement, each of the Systems shall offer
the Service on such level, and as part of such package, of cable
television service as Affiliate may elect; provided, however, that
Affiliate may not distribute the Service (i) as a stand alone a la
carte service, unless the Service is also carried on a tier with at
least three (3) other national cable television services; or (ii) as
part of a package of cable television services that includes pay or
premium services, such as HBO, Showtime or other similar services; and
provided further, however, that Affiliate must maintain an aggregate
Penetration (as hereinafter defined) for the Service on all Systems
distributing the Service of not less than fifty percent (50%). For
purposes of this Section 5(a), the term "Penetration" means the ratio
of the aggregate number of Service Subscribers in all Systems
distributing the Service, to the total number of basic subscribers of
those Systems, excluding those subscribers receiving only a "lifeline"
level of service. Affiliate shall designate one (1) channel on each
System for the carriage of the Service prior to the commencement of the
delivery of the Service on such System. Affiliate may change, from time
to time, the channel designation on which the Service is carried;
provided, however, that Affiliate shall use commercially reasonable
efforts to give G.A.C written notice of the change and the new
channel designation at least thirty (30) days prior to the effective
date of such change.
(b) On or before forty-five (45) days after the date of this Agreement,
(the "New System Launch Date"), Affiliate shall launch the Service in
systems that are not currently distributing the Service, which systems
shall represent at least 500,000 Service Subscribers. If Affiliate does
not launch the Service on Systems representing at least 500,000 Service
Subscribers as of the New System Launch Date, Affiliate shall have
until ninety (90) days after the date of this Agreement to cure such
default without any liability or obligation of any kind to G.A.C.
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(c) Each System shall distribute the Service on a full time basis at
all times during the term of this Agreement at the hours it is
initially transmitted by G.A.C.
(d) Affiliate shall not delete the Service from any System or delete
any System from Exhibit A during the term of this Agreement; provided,
however, that in the event Affiliate sells a System to an unaffiliated
third party, Affiliate shall be relieved of all of its obligations with
respect to such System for all periods after the date of sale of such
System. Notwithstanding the foregoing, at no time during the term of
this Agreement, commencing from and after the New System Launch Date,
shall the number of Service Subscribers be less than 500,000 (the
"Minimum Distribution Requirement").
(e) G.A.C will transmit the Service to each System by means of
domestic communications satellite GE American C-3, Transponder 20, and
at all times at no additional cost to Affiliate. Affiliate shall, at
its own expense, obtain and install such earth station receivers and
other equipment as shall be necessary to receive, descramble (if
necessary) and transmit and deliver to Subscribers receiving the
Service the signals comprising the Service. In the event G.A.C
decides to change the transmission of the Service to another domestic
communications satellite or change its scrambling or transmission
technology, G.A.C shall notify Affiliate at least sixty (60) days
prior to the effective date of such change. If it reasonably appears
that as a result of such proposed change Affiliate will incur the
expense of additional equipment in order to continue to receive or
decode the Service, Affiliate will be entitled to terminate this
Agreement with respect to all affected Systems as of the effective date
of such change; provided, however, that this termination right shall
not apply if (i) G.A.C agrees to reimburse such Systems for its pro
rata share (based on the number of signals to be received by any System
from such new satellite) of the cost of purchasing and installing
equipment reasonably necessary for such Systems to receive the Service
as the result of any such change; (ii) physical space exists at the
then-existing earth station sites to accommodate the necessary
equipment; and (iii) current zoning and other restrictions permit such
additional equipment. G.A.C shall provide a high quality signal for
provision of the Service and shall use commercially reasonable efforts
to maintain such high quality signal. Affiliate shall use commercially
reasonable efforts to maintain the high quality signal provided by
G.A.C
(f) Subject to then existing law, Affiliate shall not itself, and shall
not expressly authorize others to, copy, tape or otherwise reproduce
any part of the Service without G.A.C's prior written
authorization, and shall take reasonable and practical security
measures to prevent the unauthorized copying or taping by others;
provided, however, that nothing herein shall prohibit Affiliate from
assisting its residential subscribers in connecting video cassette
recorders to record the Service. Affiliate shall not distribute or
exhibit, and shall not expressly authorize or license or knowingly
permit the distribution or exhibition of, the Service by any means or
device, whether now known or hereafter devised, other than through the
Systems now or hereafter listed in Exhibit A hereto and in accordance
with the terms of this Agreement.
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6. PROMOTION AND RESEARCH
(a) Affiliate shall use commercially reasonable efforts, as determined
in its best business judgment, to promote, market and sell the Service
to subscribers and to the general public within the Operating Area of
each System. Advertising, promotional, marketing and/or sales materials
concerning the Service which are provided to Affiliate by G.A.C, if
used by Affiliate, shall be used without any alteration, deletion,
addition or any other change, unless such changes are approved by
G.A.C prior to use by Affiliate.
(b) At G.A.C's request, each System shall use commercially
reasonable efforts in its business judgment to provide G.A.C with
data regarding the marketing and promotion of the Service by Affiliate.
Subject to applicable federal, state and local law (including the
franchises, if any, pursuant to which the Systems are operated),
Affiliate also agrees to render such other assistance to G.A.C as
G.A.C may request and which Affiliate may reasonably provide in its
business judgment in connection with any marketing test, survey, poll
or other research which G.A.C may undertake in connection with the
Service. G.A.C shall treat as confidential any data or information
which G.A.C receives from Affiliate, and shall not utilize any such
data or information except in connection with such research.
7. NOTICES
All notices, statements and other communications given hereunder shall
be in writing and shall be delivered by facsimile transmission,
telegraph, personal delivery, certified mail, return receipt requested,
or by next day express delivery, addressed, if to G.A.C at 9697
East Mineral Avenue, Englewood, Colorado 80112, Attn: President,
G.A.C, (Fax: 303-799-1644), with a copy to the Legal Department
and, if to Affiliate, at its address set forth herein or by facsimile
at 215-981-7793, with a copy to the Legal Department. The date of such
facsimile transmission, telegraphing or personal delivery or the next
day if by express delivery, or the date three (3) days after mailing,
shall be deemed the date on which such notice is given and effective.
8. TRADEMARKS
(a) All right, title and interest in and to the Service, and all
materials, formats, computer software or other rights of whatever
nature related thereto shall remain the property of G.A.C. Further,
Affiliate acknowledges and agrees that all names, logos, marks,
copyright notices or designations utilized by G.A.C in connection
with the Service (the "Marks") are the sole and exclusive property of
G.A.C and/or its affiliates, and no rights or ownership are
intended to be or shall be transferred to Affiliate. Affiliate's use of
the Marks shall be limited to the advertising and promotion of its
carriage of the Service over the Systems pursuant to this Agreement;
provided, however, that Affiliate may request that G.A.C allow it
to use the Marks in other manners, and G.A.C agrees not to
unreasonably withhold its consent to reasonable business uses of the
Marks requested by Affiliate. G.A.C shall provide Affiliate with
samples of the Marks which Affiliate shall use in their entirety
(including all service mark and trademark notices) whenever the Marks
are used by Affiliate.
(b) G.A.C acknowledges that the names "Comcast", "Comcast Cable
Communications, Inc.", "Comcast Cablevision" and the concentric "C"
mark are the exclusive property of Affiliate and/or its affiliated
entities, and that G.A.C has not and will not acquire any
proprietary rights therein by reason of this Agreement. Any use of
such names or marks by G.A.C shall be subject to Affiliate's prior
written consent.
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9. REPRESENTATIONS AND INDEMNIFICATION
(a) G.A.C represents and warrants to Affiliate that (i) it is a
corporation duly organized and validly existing and in good standing
under the laws of the State of Colorado; (ii) G.A.C has the
corporate power and authority to enter into this Agreement and to fully
perform its obligations hereunder; (iii) G.A.C is under no
contractual or other legal obligation which in any way interferes with
its ability to fully, promptly and completely perform hereunder; (iv)
the individual executing this Agreement on behalf of G.A.C has the
authority to do so; (v) G.A.C is operating in substantial
compliance with all applicable laws, rules and regulations; (vi)
nothing contained in the Service shall violate the civil or property
rights, copyrights, trademark rights, right of privacy or any other
right of any person, firm or corporation except that no representation
and warranty is given with respect to music performance rights, subject
to the indemnification obligation of G.A.C pursuant to Section 9(d)
hereof; and (vii) the license fee rates set forth on Exhibit B attached
hereto for the years 2003 and 2004 are the standard license fee rates
for G.A.C, and have been agreed to in at least one written
affiliate agreement with a cable television operator in the United
States with an equivalent or greater number of basic cable television
subscribers as Affiliate.
(b) Affiliate represents and warrants to G.A.C that (i) Affiliate
is a corporation duly organized and validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania; (ii)
Affiliate has the corporate power and authority to enter into this
Agreement and to fully perform its obligations hereunder; (iii) the
individual executing this Agreement on behalf of Affiliate has the
authority to do so; and (iv) Affiliate is under no contractual or other
legal obligation which in any way interferes with its ability to fully,
promptly and completely perform hereunder.
(c) Affiliate and G.A.C shall each indemnify, defend and forever
hold harmless the other, the other's affiliated companies and their
respective officers, directors, employees, partners and agents from all
liabilities, claims, costs, damages and expenses (including, without
limitation, reasonable counsel fees) arising out of any breach or
claimed breach by it of any representation or warranty or any of its
obligations pursuant to this Agreement. G.A.C will credit Affiliate
for any continuous interruption of Service caused by G.A.C of
twenty-four (24) hours or longer. The amount so credited shall be an
amount equal to that portion of the monthly license fees applicable to
the period during which the Service was interrupted. G.A.C's
liability for damages arising out of its inability or failure to
deliver the Service shall be limited to the license fee credits set
forth in the preceding sentence.
(d) With respect to music performance rights, G.A.C agrees that it
will use its commercially reasonable efforts, at its expense, to secure
additional appropriate licenses, authorities or other grants of right
regarding music performance rights related to the exhibition and
distribution of the Service by G.A.C, Affiliate and/or the Systems
distributing the Service which G.A.C does not currently possess,
and will indemnify and hold harmless Affiliate from and against any
claims, damages, liabilities, costs and expenses arising from music
performance rights related to the exhibition and distribution of the
Service by G.A.C, Affiliate and/or the Systems distributing the
Service.
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(e) In connection with any indemnification provided for in this Section
9, each party shall so indemnify the other only if such other party
claiming indemnification shall give the indemnifying party prompt
notice of any claim or litigation to which its indemnification applies;
it being agreed that the indemnifying party shall have the right to
assume the full defense of any or all claims or litigation to which its
indemnity applies and that the indemnified party will cooperate fully
(at the cost of the indemnifying party) with the indemnifying party in
such defense and in the settlement of such claims or litigation, and
the indemnified party shall make no compromise or settlement of any
such claim without the prior written consent of the indemnifying party.
The settlement of any claim without the prior written consent of the
indemnifying party shall release the indemnifying party from its
obligations hereunder with respect to such claim or action so settled.
(f) Except as herein provided, neither Affiliate nor G.A.C shall
have any rights against the other party hereto for the non-operation of
facilities or the non-furnishing of the Service if such non-operation
or non-furnishing is due to an act of God; inevitable accident; fire;
lockout; flood; tornado; hurricane; strike; or other labor dispute;
riot or civil commotion; earthquake; war; act of government or
governmental instrumentality (whether federal, state or local); failure
of performance by a common carrier; failure in whole or in part of
technical facilities; or other cause (financial inability excepted)
beyond such party's reasonable control. In the event of non-operation
or non-furnishing of the Service for a period of ten (10) consecutive
days, Affiliate shall have the right to insert programming of its
choice on the channel otherwise identified with the Service until such
time as the Service is fully operational again. Credit will be given to
Affiliate, however, on the portion of the Service which is affected by
an interruption during any month equal to the product of (i) the
license fees which would be due for such month, calculated in
accordance with Section 4 hereof, assuming no interruption of Service
during such month, multiplied by (ii) a fraction, the numerator of
which is the total number of hours of interruption of the Service
during such month and the denominator of which is the total number of
hours of the Service which would have been provided during such month
absent such interruption(s). In the event of non-operation or
non-furnishing of the Service for a period of fifteen (15) or more
consecutive days, or thirty (30) days out of any ninety (90) day
period, Affiliate may terminate this Agreement by delivery of written
notice thereof to G.A.C without any further obligation or liability
on the part of G.A.C or Affiliate.
(g) The representations, warranties and indemnities contained in this
Section 9 shall continue throughout the term of this Agreement and the
indemnities shall survive the expiration or termination of this
Agreement.
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<PAGE>
10. CONFIDENTIALITY
(a) Neither Affiliate nor G.A.C shall disclose to any third party
(other than its respective officers, directors, employees, auditors and
attorneys each of whom shall agree to be bound by the provisions of
this Section 10 and whose compliance herewith shall be the legal
obligation of the disclosing party) any information with respect to the
terms and provisions of this Agreement, including by way of press
release(s), and G.A.C shall not disclose any information obtained
in any inspection and/or audit of Affiliate's books and records,
except: (i) to the extent necessary to comply with law or legal
reporting or disclosure requirements, including those relating to the
public or private offering of securities, or the valid order of an
administrative agency or a court of competent jurisdiction, in which
event the party making such disclosure shall so notify the other as
promptly as practicable (and, if possible, prior to making such
disclosure) and shall seek confidential treatment of such information;
(ii) as part of its normal reporting or review procedure to its parent
company, its auditors and its attorneys; provided, however, that such
parent company, auditors and attorneys agree to be bound by the
provisions of this Section 10; (iii) in order to enforce its rights
pursuant to this Agreement; and (iv) if mutually agreed by Affiliate
and G.A.C in advance and in writing.
(b) This Section 10 shall survive the termination or expiration of this
Agreement.
11. GENERAL
(a) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, this Agreement may not be assigned by
either party without the prior written consent of the other party,
which consent shall not be unreasonably withheld, except that upon 30
days' prior notice to the other party, either party may assign this
Agreement to any entity controlled by, controlling, or under common
control with such party, or to an entity acquiring all or substantially
all of the assets of such party, whether by acquisition, stock
issuance, trade, merger or other means.
(b) Neither Affiliate nor G.A.C shall be, or hold itself out as,
the agent of the other under this Agreement. No subscriber of Affiliate
shall be deemed to have any privity of contract or direct contractual
or other relationship with G.A.C by virtue of this Agreement or
G.A.C's delivery of the Service to Affiliate hereunder. Likewise,
no supplier of advertising or programming or anything else included in
the Service by G.A.C shall be deemed to have any privity of
contract or direct contractual or other relationship with Affiliate by
virtue of this Agreement or Affiliate's carriage of the Service
hereunder. Nothing contained herein shall be deemed to create, and the
parties do not intend to create, any relationship of partners, joint
venturers or agents, as between Affiliate and G.A.C, and neither
party is authorized to or shall act toward third parties or the public
in any manner which would indicate any such relationship with the
other. G.A.C disclaims any present or future right, interest or
estate in or to the transmission facilities of Affiliate or the parent,
subsidiaries, partnerships or joint venturers controlling the Systems
on which the programming signals delivered by Affiliate are
transmitted, such disclaimer being to acknowledge that neither
Affiliate nor the transmission facilities of the Systems (and the
owners thereof) are common carriers.
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<PAGE>
(c) Except for the Original G.A.C Agreement (as hereinafter
defined), this Agreement contains the entire understanding of the
parties and supersedes all prior understandings of the parties relating
to the subject matter herein. This Agreement may not be modified except
in writing executed by all parties hereto. Any waiver must be in
writing and signed by the party whose rights are being waived and no
waiver by either Affiliate or G.A.C of any breach of any provision
hereof shall be or be deemed to be a waiver of any preceding or
subsequent breach of the same or any other provision of this Agreement.
(d) This Agreement and all collateral matters shall be construed in
accordance with the internal laws of the State of Colorado applicable
to agreements fully made and to be performed therein, irrespective of
the place of actual execution or performance.
(e) The invalidity or unenforceability of any provision of this
Agreement shall in no way affect the validity or enforceability of any
other provision of this Agreement.
(f) G.A.C and Affiliate each acknowledge that this Agreement was
fully negotiated by the parties and, therefore, no provision of this
Agreement shall be interpreted against any party because such party or
its legal representative drafted such provision.
(g) The provisions of this Agreement are for the exclusive benefit of
the parties hereto and their permitted assigns, and no third party
shall be a beneficiary of, or have any rights by virtue of, this
Agreement.
(h) The titles and headings of the sections in this Agreement are for
convenience only and shall not in any way affect the interpretation of
this Agreement.
(i) (i) G.A.C agrees that if, at any time during the term of this
Agreement, it gives or offers to any third party with an equivalent or
lesser number of Service Subscribers than Affiliate any non-economic
term, provision, covenant or consideration (excluding deletion rights)
which are or is more favorable to such third party than Affiliate is
receiving hereunder, G.A.C will afford such more favorable
non-economic term, provision, covenant or consideration to Affiliate,
on and subject to the same material terms and conditions offered or
given to such other affiliate.
(ii) Within ten (10) business days after receiving Affiliate's
request, G.A.C shall provide Affiliate with a certificate signed by
an authorized officer of G.A.C stating that G.A.C has complied
with the conditions of this Section.
(j) As between G.A.C and Affiliate, Affiliate shall be responsible
for all taxes levied upon Affiliate or related to the existence or
operation of the Systems or to its handling and delivery of the Service
from its Systems' headends to subscribers. G.A.C shall be
responsible for all taxes levied with respect to producing,
distributing, licensing and transmitting the Service to such headends.
(k) Except with respect to closed captioning and second audio programs
(which uses Affiliate agrees shall be reserved to G.A.C throughout
the Term of this Agreement), G.A.C agrees that signal distribution
beyond traditional television video and audio, including but not
limited to the use of Vertical Blanking Interval ("VBI"), is not
essential to, nor a part of, the transmission of the Service and, thus,
except for the rights reserved to G.A.C herein, all rights in and
to signal distribution beyond traditional television video and audio,
including but not limited to the use of the VBI, are retained by and
reserved to Affiliate, and nothing herein shall preclude Affiliate from
exercising and exploiting such rights exclusively by means and in any
locations concurrently herewith freely and without restrictions.
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(l) The obligations of Affiliate under this Agreement with respect to
the launch and distribution of the Service are in addition to the
obligations of Affiliate under that certain Affiliate Agreement dated
as of December 10, 1997 between G.A.C and Affiliate (the "Original
G.A.C Agreement"). The terms and conditions of the Original
G.A.C Agreement shall govern the distribution of the Service on
Systems where the Service is launched pursuant to the terms of such
agreement, and the terms and conditions of this Agreement shall govern
the distribution of the Service on Systems where the Service is
launched pursuant to the terms of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first set forth above.
GREAT AMERICAN COUNTRY, INC.
a Colorado corporation
By ___________________________
Jeffrey C. Wayne
Vice President and General Manager
COMCAST PROGRAMMING,
a division of COMCAST
CORPORATION
By ____________________________
Thomas A. Hurley,
Senior Vice President, Programming
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EXHIBIT A
SYSTEMS DISTRIBUTING SERVICE
List Each
Franchise Area No. of
Served by Each System Launch Date Subscribers
---------------------- ----------- -------------
<PAGE>
EXHIBIT B
LICENSE FEES
I. Affiliate shall pay the following license fees per Service Subscriber per
month (the "Base Rate"):
Penetration of
Service in any
System 1998 1999 2000 2001 2002 2003 2004
- ------ ---- ---- ---- ---- ---- ---- ----
70% or greater
$.05 $.055 $.06 $.065 $.07 $.075 $.08
II. In Systems where the Service is distributed on a level of cable television
service with a penetration rate of less than 70% (excluding lifeline), Affiliate
shall pay, in addition to the Base Rate, the following tier surcharge per
Service Subscriber per month:
Penetration of
Service in any System 1998 through 2004
- --------------------- -----------------
50% to 69.9% $.02
30% to 49.9% $.04
20% to 29.9% $.06
0%-19% $.08
III. The following volume discounts to the Base Rate are available to Affiliate
based on the aggregate number of Service Subscribers of Affiliate receiving the
Service pursuant to the terms of this Agreement:
Aggregate Number of % Discount Applicable
Service Subscribers* to the Base Rate
- -------------------- ---------------------
100,000 - 249,999 5%
250,000 - 499,999 10%
500,000 - 749,999 15%
750,000 - 999,999 20%
1,000,000 - 1, 999,999 25%
2,000,000 - 3,999,999 40%
Over 4,000,000 50%
*For purposes of calculating applicable volume discounts with respect to license
fees payable under this Agreement, all Service Subscribers receiving the Service
pursuant to this Agreement and the Orginal G.A.C Agreement (as such term is
defined herein) shall be aggregated.
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Exhibit 5
Execution Copy
AGREEMENT AND AMENDMENT NO. 1 TO SHAREHOLDERS AGREEMENT
This AGREEMENT AND AMENDMENT No. 1 (this "Agreement and Amendment") is
entered into as of this 12 day of August 1998, and amends that certain
Shareholders Agreement dated as of December 20, 1994 (the "Shareholders
Agreement") by and among Jones International, Inc. ("International"), Glenn R.
Jones ("Jones"), Jones Intercable, Inc., a Colorado corporation (the "Company")
and BCI Telecom Holding Inc., a Canadian corporation, f/k/a Bell Canada
International Inc. ("BTH"), and is also entered into by BTH (US Cable) Limited,
a British Virgin Islands corporation, f/k/a Bell Canada International BVI III,
Limited ("US Cable") as assignee of BTH and by BTH (Intercable) Limited, a
British Virgin Islands corporation, f/k/a Bell Canada International BVI VI
Limited ("BTH Intercable" and together with BTH and US Cable, the "BTH
Entities") and the other Jones Entities (as defined herein).
WHEREAS, on December 20, 1994, International, Jones, the Company and
BTH entered into the Shareholders Agreement;
WHEREAS, BTH assigned its rights but not its obligations under the
Shareholders Agreement to US Cable by that certain assignment dated December 20,
1994;
WHEREAS, in connection with the execution and delivery of the
Shareholders Agreement, Glenn Jones Grantor Business Trust ("Trust"), Jones
International Grantor Business Trust ("JI Trust"), Jones Space Segment, Inc.
("Space"), Jones Global Group, Inc. ("Global"), Jones Interdigital, Inc.
("Interdigital"), Jones Entertainment Group, Ltd. ("Entertainment" and together
with Jones, International, Trust, JI Trust, Space, Global and Interdigital, the
"Jones Entities") and Morgan Guaranty Trust Company of New York, as agent for
BTH and BTH Intercable entered into certain option agreements each dated as of
December 20, 1994 and amended and restated as of the date hereof, granting an
option (the "Control Option") to purchase the shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company owned beneficially or of
record by the Jones Entities (the "Control Shares");
WHEREAS, the Jones Entities, BTH, through its agent, have entered into
an amendment to the foregoing option agreements (as amended, the "Option
Agreements") to provide for, among other things, a new Exercise Period (as
defined therein) which has caused the Control Option to become currently
exercisable as provided in Section 3.1(a)(vi) of the Option Agreements (the
"Accelerated Exercise");
WHEREAS, the Shareholders Agreement currently provides that upon the
consummation of the purchase and sale of the Optioned Shares (as defined
therein) such Shareholders Agreement terminates with the proviso that certain
provisions of such Shareholders Agreement shall survive such termination;
WHEREAS, Comcast Corporation, a Pennsylvania corporation ("Comcast"),
and the BTH Entities have entered into a Purchase and Sale Agreement, dated as
of May 22, 1998, providing, among other things, for the acquisition by Comcast
of the Control Shares at such time that the BTH Entities are entitled to acquire
the Control Shares pursuant to the Control Option, which agreement has been
amended and restated on the date hereof, in connection with the Accelerated
Exercise (the "Comcast/BTH Agreement");
WHEREAS, the Jones Entities and Comcast have entered into an Agreement,
dated as of the date hereof, relating to certain arrangements between the Jones
Entities and Comcast concerning the exercise of the Control Option (the
"Comcast/Jones Agreement");
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<PAGE>
WHEREAS, the parties hereto desire to amend the Shareholders Agreement
to amend the termination provision of the Shareholders Agreement so that in the
event the Optioned Shares are purchased pursuant to the Accelerated Exercise
certain provisions of the Shareholders Agreement shall not survive such
termination; and
WHEREAS, the parties hereto desire to set forth certain other
agreements relating to the consummation of the transactions contemplated by the
Comcast/Jones Agreement and the Comcast/BTH Agreement;
THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the parties agree as follows.
ARTICLE I
AMENDMENT TO SHAREHOLDERS AGREEMENT
Definitions. All terms used but not otherwise defined herein shall have
the same meanings as ascribed to them in the Shareholders Agreement.
1.2. Amendment to Section 1.1. Section 1.1 of the Shareholders
Agreement is hereby amended by deleting therefrom the definitions of "Option
Agreements" and "Option Termination Date" in their entirety and substituting in
lieu thereof the following:
"Option Termination Date" means the earlier of (i) the date on
which the Control Option terminates pursuant to Section 3.6 of the Option
Agreements, or otherwise, (ii) the date on which BTH (or its agent) purchases
the Option Shares pursuant to the Option Agreements or (iii) the Closing, as
defined in the Comcast/Jones Agreement, and the Simultaneous Closing, as defined
in the Comcast/BTH Agreement, shall have occurred.
"Option Agreements" means the Option Agreements dated as of
the Closing Date between Bank of New York, as successor agent to Morgan Guaranty
Trust Company of New York, acting as agent for Investor and in the case of a
Section 3.1(a)(vi) Exercise, for Comcast, and each of Jones International
Grantor Business Trust, Glenn Jones Grantor Business Trust, Jones Space Segment,
Inc., Jones Global Group, Inc., Jones Interdigital Inc. and Jones Entertainment
Group, Ltd., as amended on August 12, 1998.
1.3. Amendment to Section 3.10. Section 3.10 of the Shareholders
Agreement is hereby amended by adding the following to the end of such section:
"Notwithstanding the foregoing, the parties hereto agree that this
Section 3.10 shall not prohibit any of the parties from disclosing all
such documents and information received after August 12, 1998 and until
the earlier to occur of (x) the Closing of the transactions
contemplated by that certain Agreement, dated August 12, 1998, by and
among Comcast Corporation, a Pennsylvania corporation ("Comcast") Jones
International and certain JI Group Entities named therein (the
"Comcast/Jones Agreement") or (y) the expiration or termination of the
Comcast/Jones Agreement from the other parties to this Agreement (and
Affiliates of such other parties), including any information provided
by the Company to any Investor Nominee, to Comcast, and to the
officers, directors, employees, agents, representatives and advisors
(including, without limitation, legal and financial advisors) of
Comcast.
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1.4. Amendment to Section 3.5. Effective as of and conditioned upon the
consummation of the transactions contemplated by the Jones/Comcast Agreement.
Section 3.5 of the Shareholders Agreement shall be deleted in its entirety and
the following substituted in lieu thereof:
"3.5 Programming Services. Notwithstanding
any other provision in this Agreement to the contrary: (a) The
Bell International Group Entities shall have the right to
distribute, on a full-time (or, if requested from time to time
by Investor, part-time to be extended or restored, as
applicable to full time upon Investor's request), daily basis,
programming packaged (as opposed to brokered) by, created by
or created primarily for a Bell International Group Entity
("Investor Programming") on such number of channels (not to
exceed two at any one time) on the Systems as Investor may
designate from time to time.
(b) Prior to exercising its distribution
right with respect to any programming under this Section 3.5,
the relevant Bell International Group Entity (a "Programmer")
will present to the Board a reasonably detailed business plan
that, among other things, describes (i) the general content of
such programming, (ii) the marketing strategy for such
programming, including service level (such as basic, tier or a
la carte) and (iii) pricing for such service levels. The
Investor Programming shall be carried and priced by the
Intercable Group Entities on such level or levels of services
as such programming is intended to be carried under the
business plan for such programming.
(c) Notwithstanding the rights granted
pursuant to paragraph (a) above:
(i) the Intercable Group Entities shall not
be required to delete from any System any programming acquired
from any third-party programmer prior to the expiration of the
term of the program carriage agreement with such third-party
programmer in order to carry any Investor Programming,
(ii) in the event there is insufficient
channel capacity to carry Investor Programming, carriage of
such Investor Programming on a System shall be given priority
over any third party programming not then carried by such
System and over any third party programming then carried by
the System at such time as the initial or then current renewal
term, as applicable, is scheduled to expire, provided that (x)
such priority shall not apply to off-air programming carried
by the four major broadcast networks or as mandated by law, or
the 20 most widely viewed third party programs as then carried
by the System at the time as reported by Cablevision magazine,
and (y) in addition to the foregoing requirements, the Company
shall use its reasonable best efforts to add Investor
Programming to the Systems whenever opportunities to do so
arise, and
(iii) Investor shall give the Company at
least four months' prior notice of any proposed commencement
or termination of use of any channel.
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<PAGE>
(d) During the Validation Period (as defined
herein), the license fee payable by the Intercable Group
Entities for any unit of Investor Programming ("New
Programming") shall be such license fee as the Programmer
establishes in good faith based on its reasonable estimate of
the market value of such New Programming. A Programmer shall
notify the Company and the Disinterested Directors in writing
promptly following the end of the Validation Period whether
the Programmer has entered into an agreement providing for (a)
the distribution of such New Programming by a cable television
operator or other distributor of video programming (a
"Distributor") having at least 400,000 subscribers
("Validating Distributor") and (b) the payment of a license
fee by such Validating Distributor at a rate equal to or
greater than the license fee payable by the Intercable Group
Entities ("Validating Programming Agreement"). If no
Validating Programming Agreement has been entered into during
the Validation Period, the Company or any Disinterested
Director may, by written notice given within sixty (60) days
after receipt by the Company and the Disinterested Directors
of the above-referenced notification, require that such
Programmer reduce the license fee payable by the Intercable
Group Entities for such New Programming to the greater of (i)
a license agreement approved by the Disinterested Directors,
(ii) the average license fee charged by the applicable
Programmer to all Distributors for such New Programming and
(iii) the Agreed Rate in effect at such time. For purposes of
this Section 3.5, "Agreed Rate" means, at any time, the rate
set forth in the Affiliate Agreement between Mind Extension
University, Inc. and the Company dated December 28, 1993, as
amended as of June 1, 1994. Thereafter, the license fee
payable by the Intercable Group Entities for such New
Programming shall be subject to such adjustments as are
similar to adjustments in the license fee permitted by the
Validating Programming Agreement or, if there is no such
agreement in effect, by the programming agreement pursuant to
which such New Programming is carried by the largest
Distributor serving fewer than 400,000 subscribers. A
Programmer may elect at any time to terminate carriage of such
unit of New Programming upon not less than ninety days prior
written notice to the Company if it does enter into a
Validating Programming Agreement during the Validation Period.
"Validation Period" shall mean, as to any New Programming, the
fifteen (15) month period commencing with the first month with
respect to which a license fee is payable by an Intercable
Group Entity for the right to distribute such New Programming.
(e) The Intercable Group Entities shall
carry Investor Programming on the Systems until December 20,
2009 (or the expiration date of the applicable programming
agreement with the Company) in accordance with this Section
3.5.
(f) For purposes of this Section 3.5 the
term "Disinterested Directors" shall mean any director who
would be considered a "disinterested director" for the
purposes of Section 7-108-501 of the Colorado Business
Corporation Act.
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<PAGE>
(g) Notwithstanding anything to the contrary
contained in this Agreement, Investor may assign on behalf of
itself and the Bell International Group Entities its rights
under this Section 3.5 to Comcast."
1.5. Upon the amendment to Section 3.5 of the Shareholders Agreement
contained in Section 1.4 hereof becoming effective the Company shall pay to
Jones and International $25,000,000 in immediately available funds to such bank
account or accounts as Jones shall designate in consideration of the termination
of the JI Group Entities' rights under Section 3.5 of this Agreement.
1.6. General. Except as expressly modified by this Agreement and
Amendment, the provisions of the Shareholders Agreement shall remain in full
force and effect. Except as set forth in Section 2.2, below, execution and
delivery of this Agreement and Amendment, the Option Agreements and the
Comcast/Jones Agreement shall not constitute or be deemed to be a waiver by any
party of (a) any rights or claims that such party had or may have under the
Shareholders Agreement as amended hereby or (b), in the event that the
Comcast/Jones Agreement is terminated, any rights or claims that the Jones
Entities or the Company had or may have against the BTH Entities by reason of
the execution, delivery or performance of the Comcast/BTH Agreement.
ARTICLE II
OTHER AGREEMENTS
2.1. Agreement to Stay Proceedings. In consideration of Comcast's
execution and delivery of the Comcast/Jones Agreement and the Comcast/BTH
Agreement, each of the parties hereto hereby agrees to take any and all actions
and refrain from taking any and all actions necessary or advisable to seek a
stay of any proceedings relating to that certain lawsuit brought by BTH against
Jones Intercable, Inc., Jones International, Ltd., Jones Internet Channel, Inc.
and Glenn R. Jones, which was filed before the U.S. District Court for the
District of Colorado (the "Litigation"), including, without limitation, any
hearings or proceedings relating to any damage claims relating to the subject
matter of the Litigation and the appeal of the order entered on May 5, 1998
until the first to occur of (i) the date on which both the Closing (as defined
in the Comcast/Jones Agreement) and the Simultaneous Closing (as defined in the
Comcast/BTH Agreement) shall have occurred, at which time the parties shall
dismiss the Litigation with prejudice or (ii) the termination of the
Comcast/Jones Agreement.
2.2. General Release. In consideration of Comcast's execution and
delivery of the Comcast/Jones Agreement and the Comcast/BTH Agreement each of
(i) the Jones Entities and the Company and (ii) each of the BTH Entities, in the
case of each of (i) and (ii), on behalf of itself and each of its Affiliates
(including the Company and its subsidiaries) (the "Releasing Parties"),
effective as of and conditioned upon the consummation of both the Closing (as
defined in the Comcast/Jones Agreement) and the Simultaneous Closing (as defined
in the Comcast/BTH Agreement), except as otherwise provided below, releases and
forever holds harmless, and waives and relinquishes from and against all
obligations, actions, causes of action, claims, demands, damages, costs,
expenses and liabilities whatsoever, at law or in equity, known or unknown,
fixed or contingent, which the Releasing Parties ever had, now have or which
their successors, predecessors, assigns, heirs, executors and administrators
hereafter can, shall or may have against any of the BTH Entities and the Jones
Entities, their Affiliates (including the Company and its subsidiaries),
officers, directors, employees, shareholders and their successors or assigns
(the "Released Parties") on account or arising out of any matter, cause or thing
whatsoever from the beginning of the world to the date on which the Closing Date
(as defined in the Comcast/Jones Agreement) and the Simultaneous Closing Date
(as defined in the Comcast/BTH Agreement) shall both have occurred.
Notwithstanding the foregoing nothing in this Section 2.2 shall release any
obligations, rights, actions, causes of action, claims, demands, damages, costs,
expenses or liabilities of the Released Parties to the Releasing Parties under
the Option Agreements or with respect to any judgment previously obtained in any
court of competent jurisdiction.
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<PAGE>
2.3. (a) Tax Matters. (a) The Company shall and International shall
cause Jones Education Company ("Education") and Entertainment to provide BTH
with certification and file notice(s) with the Internal Revenue Service within
10 days after the request of BTH regarding any disposition undertaken in
connection with the Comcast/BTH Agreement, which certification or notification,
as the case may be, shall attest to the fact that the BTH Entities' interest in
such corporations does not constitute a "real property interest" within the
meaning of the Internal Revenue Code and shall otherwise conform with the
requirements of United States Treasury Regulation 1.897-2(h).
(b) Promptly upon request the Company shall, and International
shall cause Education and Entertainment to, accord the BTH Entities reasonable
access to the books and records and employees of the Company, Education and
Entertainment to enable the BTH Entities to confirm whether or not their
respective investments in such entities will constitute "excluded property"
within the meaning of the Income Tax Act (Canada) (i.e., that no more than 10%
of the assets of such entities consist of passive assets) as of the Simultaneous
Closing Date or the Initial Closing Date and the Final Closing Date, as the case
may be.
2.4. Termination of Certain Agreements. The BTH Entities, the Jones
Entities and the Company agree and acknowledge, on their own behalf and on
behalf of their respective Affiliates, that the Secondment Agreement, the Fee
Sharing Agreement, the Financial Services Agreement and the Supply and Services
Agreement (each as defined in the Shareholders Agreement) shall terminate as of
and conditioned upon the consummation of the Closing and the Simultaneous
Closing; provided that anything contained in Section 2.2 to the contrary
notwithstanding, any moneys accrued for the account of BTH prior to termination
of such agreements shall be paid to BTH at the Closing or as soon as is
reasonably practicable thereafter.
2.5. Approval of this Agreement. Each of the parties to this Agreement
and Amendment represents and warrants to the other parties hereto that (i) if it
is a corporation, it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (ii) if
it is a trust, the trust agreement governing its operation is in full force and
effect, (iii) it has the power and authority to execute, deliver and perform
this Agreement and Amendment and (iv) this Agreement and Amendment has been duly
executed and delivered by it and is a valid and binding agreement by it. The
parties hereto hereby agree with each other that (i) this Agreement and
Amendment, (ii) the termination of Jones' employment with Company pursuant to
the form of Termination Agreement presented to the Board of Directors of the
Company and (iii) the assumption by an Affiliate of a Jones Entity of the
Company's rights and obligations under that certain lease dated December 23,
1997 by and between the Company and PNC Leasing Corp. shall be subject to the
approval of the Joint Nominees (as such term is defined in the Shareholders
Agreement) and that such approval shall satisfy the requirements of Section 3.6
of the Shareholders Agreement. The Company represents and warrants to the other
parties to this Agreement that this Agreement and Amendment has been approved by
a majority of the Joint Nominees at a meeting duly called and held for such
purpose.
ARTICLE III
MISCELLANEOUS
3.1. General. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws (as opposed to the conflicts of
laws provisions) of the State of Colorado. The agreement of the parties, which
is comprised of this Agreement and Amendment and the Shareholders Agreement,
sets forth the entire agreement and understanding between the parties relating
to the subject matter hereof and supersedes any prior agreement or
understanding, written or oral, relating to the subject matter of this Agreement
and Amendment and the Shareholders Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement and
Amendment to be executed by their duly authorized representatives as of the day
and year first above written.
JONES INTERCABLE, INC.
By:______________________________________
-----------------------------------------
Glenn R. Jones
JONES INTERNATIONAL, LTD.
By:______________________________________
-----------------------------------------
GLENN JONES GRANTOR BUSINESS TRUST
By:______________________________________
JONES INTERNATIONAL GRANTOR BUSINESS TRUST
By:______________________________________
JONES SPACE SEGMENT, INC.
By:______________________________________
JONES GLOBAL GROUP, INC.
By:______________________________________
JONES INTERDIGITAL, INC.
By:______________________________________
JONES ENTERTAINMENT GROUP, LTD.
By:______________________________________
BCI TELECOM HOLDING INC.
By:______________________________________
BTH (US CABLE) LTD.
By:______________________________________
BTH (INTERCABLE) LIMITED
By:______________________________________
