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 Xx. Xxxxx X.
Xxxxx ("Xxxxx"), Xxxxx International, Ltd. ("International"), Xxxxx Xxxxx
Grantor Business Trust (the "Xxxxx Trust"), Xxxxx International Grantor Business
Trust (the "JI Trust", and together with the Xxxxx Trust, the "Trusts"), Xxxxx
Space Segment, Inc. ("Space"), Xxxxx Global Group, Inc. ("Global"), Xxxxx
Interdigital, Inc. ("Interdigital"), Xxxxx Entertainment Group, Ltd.
("Entertainment" and together with Xxxxx, International, the Trusts, Space,
Global and Interdigital, the "Xxxxx Entities").
WHEREAS, certain of the Xxxxx Entities and The Bank of New York, as
successor agent to Xxxxxx Guaranty Trust Company of New York, as agent for BCI
Telecom Holding Inc., a Canadian corporation f/k/a/ Xxxx Canada International
Inc. ("BTH") and BTH (Intercable) Limited, a British Virgin Islands corporation
f/k/a Xxxx 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 Xxxxx Intercable, Inc. (the
"Company") owned beneficially or of record by the Xxxxx Entities (the "Control
Shares");
WHEREAS, the Company, Xxxxx, 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 Xxxx 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 Xxxxx 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 Xxxxx 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, Xxxxx, 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 Xxxxx 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 Xxxxx 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 Xxxxx 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.
-1-
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 & Xxxxxx, 4000 Xxxx Atlantic Tower, 0000 Xxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000 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 Xxxxx 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 Xxxxx Entities entering into this
Agreement, Comcast agrees that, on the date that the Xxxxx 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
Xxxxx Entities agree to pay to Comcast, upon delivery by any Xxxxx 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 Xxxxx Entities to and including the
date the Xxxxx 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 Xxxxx 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 Xxxxx Entities, and shall be adjusted quarterly on the first business day of
each January, April, July and October through the date the Xxxxx 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).
-2-
(c) In the event that this Agreement is validly terminated by
the Xxxxx 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 Xxxxx Entities would be speculative and
difficult to measure and, therefore, the Xxxxx Entities shall be entitled to
retain the Initial Consideration (together with any interest earned thereon by
the Xxxxx 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 Xxxxx Entities from seeking
specific performance of Comcast's obligations hereunder prior to the termination
of this Agreement.
(d) The Xxxxx Entities shall be entitled to retain the Initial
Consideration (together with any interest earned thereon by the Xxxxx 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 Xxxx-Xxxxx-Xxxxxx
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.
-3-
(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 Xxxxx 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 Xxxxx
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 Xxxxx Entities. The obligations of the
Xxxxx 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 Xxxxx 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.
-4-
(e) The Simultaneous Closing shall have occurred on the
Closing Date.
5. Representations and Warranties of the Xxxxx Entities. Each Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx
Entity of this Agreement are within such Xxxxx Entity's power and have been duly
authorized by all necessary action on the part of such Xxxxx Entity. This
Agreement has been duly executed and delivered by each Xxxxx Entity, and
assuming the accuracy of Comcast's representations and warranties contained
herein, is a valid and binding agreement of such Xxxxx Entity.
(d) Assuming the accuracy of Comcast's representations and
warranties contained herein, the execution, delivery and performance by each
Xxxxx Entity of this Agreement requires no action by any Xxxxx Entity or any
Intercable Group Entity in respect of, or filing by any Xxxxx 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 Xxxxx Entity to consummate the transactions
contemplated hereby or perform its obligations hereunder.
(e) The execution, delivery and performance by each Xxxxx
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 Xxxxx
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 Xxxxx Entity or any Intercable Group Entity, (iv)
result in the creation or imposition of any Lien on any material asset of such
Xxxxx 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 Xxxxx 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.
-5-
(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
Xxxxx 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 Xxxxx 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 Xxxxx Entities contained herein, is a valid and binding
agreement of Comcast.
(c) Assuming the accuracy of the Xxxxx 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 Xxxxx
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 Xxxxx 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 Xxxxx Entity or any Intercable Group Entity in connection with the
transactions contemplated by this Agreement.
-6-
7. Reasonable Best Efforts; Further Assurances. Comcast and the Xxxxx
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 Xxxxx Entities shall each use their reasonable best efforts to,
and the Xxxxx 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
Xxxxx Entities shall use their reasonable best efforts to, and the Xxxxx
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 Xxxxx 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 Xxxxx Properties, Inc. (the "Landlord"), together
with that certain Sublease, dated December 1, 1994 between the Company and Xxxxx
International, Ltd., (ii) that certain Services Agreement, dated June 9, 1994,
by and between the Company and Xxxxx Interactive, Inc., (iii) that certain
Amended and Restated Xxxxx Infomercial Networks, Inc. Affiliate Agreement, dated
as of August 1, 1994, by and between Xxxxx 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 Xxxxx 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.
-7-
(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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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.
-8-
9. Covenants and Agreements of the Xxxxx Entities.
(a) At the Closing (but in any event prior to the closing of
the purchase and sale of the Optioned Shares, Xxxxx agrees to resign as a
director, and Xxxxx and International agree to cause each of the other Xxxxx
Nominees (as such term is defined in the Shareholders Agreement) to resign,
seriatim from the Company's board of directors and to designate as Xxxxx
Nominees such persons as may be selected by Comcast and the Xxxxx Entities agree
to vote in favor of and Xxxxx and International agree to cause the other Xxxxx
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 Xxxxx
Entities agree to follow Comcast's direction with respect to the sequence of
such resignations and the filling of such vacancies.
(b) The Xxxxx 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 Xxxxx 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 Xxxxx Entities as are authorized by such proposed
resolution; provided that the Xxxxx Entities shall, following the Closing, offer
such opportunity to the Company with respect to those resolutions so indicated
on Schedule C. The Xxxxx Entities agree that any such offer shall remain open
for at least 30 days following the Closing.
(c) Each of the Xxxxx 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 Xxxxx
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 Xxxxx 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 Xxxxx
Intercable, Inc., Xxxxx International, Ltd., Xxxxx Internet Channel, Inc. and
Xxxxx X. Xxxxx, 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.
-9-
(e) The Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx Entities of any liability they
may have in respect of any breach of this Agreement.
(f) The Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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, 0000 xxxxx Xxxxx,
Xxxxxxxxxxxxx, Xxxx Xxxxxx International Inc. and Xxxxx Entertainment Group,
Ltd. and that certain Shareholders Agreement dated as of December 20, 0000 xxxxx
Xxxxx, Xxxxxxxxxxxxx, Xxxx Xxxxxx International Inc. and Xxxxx Education
Networks, Inc.
(j) The Xxxxx 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.
-10-
(k) The Xxxxx 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 Xxxxx Entities with Respect to the Company.
(a) The Xxxxx 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 Xxxxx Entity or BTH Entity or any Affiliate of any Xxxxx 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 Xxxxx 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 Xxxxx
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).
-11-
(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 Xxxxx 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 Xxxxx Entities from Comcast prior to the expiration of such time
period, the proposed action will be deemed to have been approved by Comcast. The
Xxxxx 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 Xxxxx
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 Xxxxx 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, Xxxxx 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 Xxxxx 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 Xxxxx
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 Xxxxx 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.
-12-
13. Costs and Expenses. Whether or not the transactions contemplated
hereby are consummated, each party shall bear its own costs and expenses. The
Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx Entities; (b) by Comcast upon
written notice to the other parties hereto of such termination if (x) the Xxxxx
Entities have materially breached any of their obligations contained herein and
the Xxxxx 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 Xxxxx 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 Xxxxx
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 Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx 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.
-13-
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 Xxxxx Entity failed to sell
the Optioned Shares upon exercise of the Control Option or to perform any of
such Xxxxx 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 Xxxxx Entities would be irreparably damaged if for any reason Comcast
failed to perform any of Comcast's obligations under this Agreement, and that
the Xxxxx 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 Xxxxx Entities,
c/o Xxxxx X. Xxxxx
Xxxxx International, Ltd.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
if to Comcast:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
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.
-14-
(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.
-15-
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 Xxxxx 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.
"Xxxxx" means Xxxxx X. Xxxxx, 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.
-16-
"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).
-17-
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:_____________________________________
________________________________________
Xxxxx X. Xxxxx
XXXXX XXXXX GRANTOR BUSINESS TRUST
By:_____________________________________
XXXXX INTERNATIONAL GRANTOR BUSINESS TRUST
By:_____________________________________
XXXXX INTERNATIONAL, LTD.
By:_____________________________________
XXXXX SPACE SEGMENT, INC.
By:_____________________________________
XXXXX GLOBAL GROUP, INC.
By:_____________________________________
XXXXX INTERDIGITAL, INC.
By:_____________________________________
XXXXX 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.
XXXXX PROPERTIES, INC.
By:_____________________________________
-18-
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:_______________________________
-19-
Schedule A
Beneficial Ownership of Optioned Shares held by the Xxxxx Entities
Optioned Shares
(Common Stock)
Xxxxx International Grantor Business Trust 2,239,416
Xxxxx Xxxxx Grantor Business Trust 474,400
Xxxxx Space Segment, Inc. 35,707
Xxxxx Global Group, Inc. 27,585
Xxxxx Interdigital, Inc. 643
Xxxxx Entertainment Group, Ltd. 100,400
---------
2,878,151
=========
Class A Shares
Xxxxx International Ltd. 1,497,373
Xxxxx X. Xxxxx 526,893
---------
2,024,266
=========
Schedule B
Permitted Affiliate Transactions
1. The purchase of the following assets by Xxxxx or a Xxxxx 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, Xxxxx 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 Xxxxx Futurex, Inc.,
Xxxxx Global Group and Xxxxx Customer Service Management LLC
(c) all of the Company's interest in the "Xxxxx Spacelink" tradename.
2. The assumption by the Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx, 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. Xxxxx 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.
Schedule C
Transactions Offered to the Company Post-Closing
1. The purchase of the following assets by Xxxxx or a Xxxxx 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, Xxxxx
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 Xxxxx Futurex,
Inc., Xxxxx Global Group and Xxxxx Customer Service Management LLC
(c) all of the Company's interest in the "Xxxxx Spacelink"
tradename.
*2. The assumption by the Xxxxx 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 Xxxxx 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 Xxxxx 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 Xxxxx, 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 Xxxxx Entities shall offer the Company following
the Closing as provided in Section 9(b).
Schedule C-1
The Services Agreement dated as of December 9, 1994 (the
"Services Agreement") between Xxxxx Intercable, Inc. ("Intercable") and Xxxxx
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 Xxxxx X.
Xxxxx and Xxxxx 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.
SCHEDULE F
Owned Systems
FRANCHISES HELD BY
XXXXX INTERCABLE, INC.
Panama City Beach, Florida System
City of Panama City Beach
Oxnard, California System
City of Oxnard
FRANCHISES HELD BY
XXXXX COMMUNICATIONS OF MARYLAND, INC.
Prince George's County System:
Xxxxx Xxxxxx Xxxxxx'x Xxxxxx
Xxxxx Xxxxxx Xxxxxx'x Xxxxxx
City of Bowie
Chesapeake Bay Group (including Annapolis,
Xxxx Arundel County and
Xxxxxxx County Systems):
Xxxx Arundel County
City of Annapolis
FRANCHISES HELD BY
XXXXX COMMUNICATIONS OF
GEORGIA/SOUTH CAROLINA, INC.
Savannah System:
Chatham County
City of Savannah
FRANCHISES HELD BY
XXXXX COMMUNICATIONS OF VIRGINIA, INC.
Alexandria System:
City of Alexandria
Prince Xxxxxxx Group (including
Xxxx City, Reston and
Manassas Systems):
Fairfax County (Reston)
City of Manassas
FRANCHISES HELD BY
XXXXX COMMUNICATIONS OF ARIZONA, INC.
Pima County System:
Town of Oro Valley
FRANCHISES HELD BY
XXXXX COMMUNICATIONS OF MISSOURI, INC.
Independence System:
City of Olathe, KS
City of Raytown
-2-
FRANCHISES HELD BY
XXXXX COMMUNICATIONS OF NEW MEXICO, INC.
Albuquerque System:
City of Albuquerque
FRANCHISES HELD BY
XXXXX OF WISCONSIN, INC.
Manitowoc System:
City of Manitowoc
Managed Systems
FRANCHISES HELD BY
CABLE TV FUND 14-A, Ltd.
Xxxxxxx County System:
Xxxxxxx County
Naperville System
City of Naperville
FRANCHISES HELD BY
XXXXX GROWTH PARTNERS, X.X.
Xxxxxxx System
City of Wheaton
Village of Addison
-3-
FRANCHISES HELD BY
IDS/XXXXX 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
XXXXX CABLE INCOME FUND 1-A, LTD.
Owatonna/Glencoe System
City of Owatonna
FRANCHISES HELD BY
CABLE TV FUND 12-A, LTD.
Xxxx County/Orland Park System
Village of Mundelein
FRANCHISES HELD BY
CABLE TV FUND 15-A, LTD.
South Suburban System
Village of Lansing
-4-
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."
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 __________________________
Xxxxxxx X. Xxxxx
Vice President and General Manager
COMCAST PROGRAMMING,
a division of Comcast Corporation
By __________________________
Xxxxxx X. Xxxxxx
Senior Vice President, Programming
-2-
Exhibit C
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is entered into as of the 12 day of August 1998,
by and among Xxxxx X. Xxxxx ("Xxxxx"), Xxxxx International, Ltd.
("International") and Comcast Corporation ("Comcast").
WHEREAS, Comcast, Xxxxx, International, Xxxxx Xxxxx Grantor
Business Trust, Xxxxx International Grantor Business Trust, Xxxxx Space Segment,
Inc., Xxxxx Global Group, Inc., Xxxxx Interdigital, Inc., and Xxxxx
Entertainment Group, Ltd. have entered into that certain Agreement, dated as of
August __, 1998 (the "Xxxxx/Comcast Agreement");
WHEREAS, Section 2 of the Xxxxx/Comcast agreement provides for
Comcast to deposit $50,000,000 with International (the "Initial Consideration");
WHEREAS, Section 2 of the Xxxxx/Comcast Agreement further
provides that under certain circumstances described therein, the Xxxxx 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 Xxxxx and International
pledging 2,000,000 shares (the "Class A Stock") of Class A Common Stock, par
value $.01 per share, of Xxxxx 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) Xxxxx 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 Xxxxx 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, Xxxxx 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 Xxxxx and International with respect to any of the
Collateral or any transaction in connection therewith.
(d) In the event Xxxxx 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
Xxxxx 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.
3. Further Assurances. (a) Xxxxx 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, Xxxxx and International hereby authorize
Comcast to execute and file, in the name of Xxxxx 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) Xxxxx 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, Xxxxx 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 Xxxxx and International, and
Comcast will promptly give Xxxxx 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, Xxxxx 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 Xxxxx 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
Xxxxx and International and shall promptly be paid over to Xxxxx 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 Xxxxx and International at such time as the Xxxxx
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 Xxxxx and International and will execute
and deliver to Xxxxx and International such documents as Xxxxx and International
shall reasonably request to evidence the termination of the Security Interest or
the release of such Collateral, as the case may be.
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 Xxxxx or International,
c/o Xxxxx X. Xxxxx
Xxxxx International, Ltd.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
if to Comcast:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
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
Xxxxx/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 Xxxxx and International and their
respective successors and assigns.
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:____________________________________
_______________________________________
Xxxxx X. Xxxxx
XXXXX INTERNATIONAL, LTD.
By:____________________________________
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 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX. 00000.
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-
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-
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-
(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-
(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.
-5-
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 0000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attn: President, KTV, (Fax:
000-000-0000), with a copy to the Legal Department and, if to
Affiliate, at its address set forth herein or by facsimile at
000-000-0000, 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 xxxx 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"
xxxx 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-
(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.
-7-
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.
-8-
(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.
-9-
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 ___________________________________
Xxxxx X. Xxxxx
President
COMCAST PROGRAMMING,
a division of COMCAST
CORPORATION
By ____________________________________
Xxxxxx X. Xxxxxx,
Senior Vice President, Programming
-10-
EXHIBIT A
SYSTEMS DISTRIBUTING SERVICE
List Each
Franchise Area No. of
Served by Each System Launch Date Subscribers
EXHIBIT B
LICENSE FEES
Affiliate shall pay License Fees as follows:
Affiliate's
Service 1998 1999 2000 2001 2002 2003 2004
Subscribers* ---- ---- ---- ---- ---- ---- ----
-----------
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
* 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.
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
x Xxxxxx 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.
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 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX. 00000.
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.
-1-
(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.
-2-
(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.
-3-
(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.
-4-
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 0000
Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attn: President,
G.A.C, (Fax: 000-000-0000), with a copy to the Legal Department
and, if to Affiliate, at its address set forth herein or by facsimile
at 000-000-0000, 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 xxxx 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"
xxxx 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.
-5-
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.
-6-
(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.
-7-
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.
-8-
(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.
-9-
(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.
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 ___________________________
Xxxxxxx X. Xxxxx
Vice President and General Manager
COMCAST PROGRAMMING,
a division of COMCAST
CORPORATION
By ____________________________
Xxxxxx X. Xxxxxx,
Senior Vice President, Programming
-10-
EXHIBIT A
SYSTEMS DISTRIBUTING SERVICE
List Each
Franchise Area No. of
Served by Each System Launch Date Subscribers
---------------------- ----------- -------------
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.
-11-
