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 ▇▇▇▇▇ International, Inc. ("International"), ▇▇▇▇▇ ▇.
▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ Intercable, Inc., a Colorado corporation (the "Company")
and BCI Telecom Holding Inc., a Canadian corporation, f/k/a ▇▇▇▇ Canada
International Inc. ("BTH"), and is also entered into by BTH (US Cable) Limited,
a British Virgin Islands corporation, f/k/a ▇▇▇▇ Canada International BVI III,
Limited ("US Cable") as assignee of BTH and by BTH (Intercable) Limited, a
British Virgin Islands corporation, f/k/a ▇▇▇▇ Canada International BVI VI
Limited ("BTH Intercable" and together with BTH and US Cable, the "BTH
Entities") and the other ▇▇▇▇▇ Entities (as defined herein).
WHEREAS, on December 20, 1994, International, ▇▇▇▇▇, 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, ▇▇▇▇▇ ▇▇▇▇▇ Grantor Business Trust ("Trust"), ▇▇▇▇▇ International
Grantor Business Trust ("JI Trust"), ▇▇▇▇▇ Space Segment, Inc. ("Space"), ▇▇▇▇▇
Global Group, Inc. ("Global"), ▇▇▇▇▇ Interdigital, Inc. ("Interdigital"), ▇▇▇▇▇
Entertainment Group, Ltd. ("Entertainment" and together with ▇▇▇▇▇,
International, Trust, JI Trust, Space, Global and Interdigital, the "▇▇▇▇▇
Entities") and ▇▇▇▇▇▇ 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 ▇▇▇▇▇ Entities (the "Control Shares");
WHEREAS, the ▇▇▇▇▇ 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 ▇▇▇▇▇ Entities and Comcast have entered into an Agreement,
dated as of the date hereof, relating to certain arrangements between the ▇▇▇▇▇
Entities and Comcast concerning the exercise of the Control Option (the
"Comcast/▇▇▇▇▇ Agreement");
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/▇▇▇▇▇ 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
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AMENDMENT TO SHAREHOLDERS AGREEMENT
1.1. Definitions. All terms used but not otherwise defined herein shall have
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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
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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/▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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,
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and each of ▇▇▇▇▇ International Grantor Business Trust, ▇▇▇▇▇ ▇▇▇▇▇ Grantor
Business Trust, ▇▇▇▇▇ Space Segment, Inc., ▇▇▇▇▇ Global Group, Inc., ▇▇▇▇▇
Interdigital Inc. and ▇▇▇▇▇ Entertainment Group, Ltd., as amended on August 12,
1998.
1.3. Amendment to Section 3.10. Section 3.10 of the Shareholders Agreement is
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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") ▇▇▇▇▇ International and
certain JI Group Entities named therein (the "Comcast/▇▇▇▇▇ Agreement") or
(y) the expiration or termination of the Comcast/▇▇▇▇▇ 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.
1.4. Amendment to Section 3.5. Effective as of and conditioned upon the
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consummation of the transactions contemplated by the ▇▇▇▇▇/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
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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
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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.
(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
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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 ▇-▇▇▇-▇▇▇ of the
Colorado Business Corporation Act.
(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."
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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
▇▇▇▇▇ and International $25,000,000 in immediately available funds to such bank
account or accounts as ▇▇▇▇▇ 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
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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/▇▇▇▇▇ 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/▇▇▇▇▇ Agreement is terminated, any rights or claims that the ▇▇▇▇▇
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
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OTHER AGREEMENTS
2.1. Agreement to Stay Proceedings. In consideration of Comcast's execution
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and delivery of the Comcast/▇▇▇▇▇ 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 ▇▇▇▇▇
Intercable, Inc., ▇▇▇▇▇ International, Ltd., ▇▇▇▇▇ Internet Channel, Inc. and
▇▇▇▇▇ ▇. ▇▇▇▇▇, 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/▇▇▇▇▇
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/▇▇▇▇▇
Agreement.
2.2. General Release. In consideration of Comcast's execution and
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delivery of the Comcast/▇▇▇▇▇ Agreement and the Comcast/BTH Agreement each of
(i) the ▇▇▇▇▇ 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/▇▇▇▇▇ 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
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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 ▇▇▇▇▇ 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/▇▇▇▇▇ 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.
2.3. (a) Tax Matters. (a) The Company shall and International shall cause
▇▇▇▇▇ 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 ▇▇▇▇▇ 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
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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
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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
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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 ▇▇▇▇▇'
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 ▇▇▇▇▇ 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
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MISCELLANEOUS
3.1. General. This Agreement shall be governed by and construed and
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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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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.
▇▇▇▇▇ INTERCABLE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ INTERNATIONAL, LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇ GRANTOR BUSINESS TRUST
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Marocco
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▇▇▇▇▇ INTERNATIONAL GRANTOR BUSINESS TRUST
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Marocco
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▇▇▇▇▇ SPACE SEGMENT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ GLOBAL GROUP, INC.
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By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ INTERDIGITAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ENTERTAINMENT GROUP, LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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BCI TELECOM HOLDING INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Director
BTH (US CABLE) LTD.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Director/President
BTH (INTERCABLE) LIMITED
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Director/President
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