Exhibit 5
Execution Copy
AGREEMENT AND AMENDMENT NO. 1 TO SHAREHOLDERS AGREEMENT
This AGREEMENT AND AMENDMENT No. 1 (this "Agreement and Amendment") is
entered into as of this 12 day of August 1998, and amends that certain
Shareholders Agreement dated as of December 20, 1994 (the "Shareholders
Agreement") by and among Xxxxx International, Inc. ("International"), Xxxxx X.
Xxxxx ("Xxxxx"), Xxxxx Intercable, Inc., a Colorado corporation (the "Company")
and BCI Telecom Holding Inc., a Canadian corporation, f/k/a Xxxx Canada
International Inc. ("BTH"), and is also entered into by BTH (US Cable) Limited,
a British Virgin Islands corporation, f/k/a Xxxx Canada International BVI III,
Limited ("US Cable") as assignee of BTH and by BTH (Intercable) Limited, a
British Virgin Islands corporation, f/k/a Xxxx Canada International BVI VI
Limited ("BTH Intercable" and together with BTH and US Cable, the "BTH
Entities") and the other Xxxxx Entities (as defined herein).
WHEREAS, on December 20, 1994, International, Xxxxx, the Company and
BTH entered into the Shareholders Agreement;
WHEREAS, BTH assigned its rights but not its obligations under the
Shareholders Agreement to US Cable by that certain assignment dated December 20,
1994;
WHEREAS, in connection with the execution and delivery of the
Shareholders Agreement, Xxxxx Xxxxx Grantor Business Trust ("Trust"), Xxxxx
International Grantor Business Trust ("JI Trust"), Xxxxx Space Segment, Inc.
("Space"), Xxxxx Global Group, Inc. ("Global"), Xxxxx Interdigital, Inc.
("Interdigital"), Xxxxx Entertainment Group, Ltd. ("Entertainment" and together
with Xxxxx, International, Trust, JI Trust, Space, Global and Interdigital, the
"Xxxxx Entities") and Xxxxxx Guaranty Trust Company of New York, as agent for
BTH and BTH Intercable entered into certain option agreements each dated as of
December 20, 1994 and amended and restated as of the date hereof, granting an
option (the "Control Option") to purchase the shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company owned beneficially or of
record by the Xxxxx Entities (the "Control Shares");
WHEREAS, the Xxxxx Entities, BTH, through its agent, have entered into
an amendment to the foregoing option agreements (as amended, the "Option
Agreements") to provide for, among other things, a new Exercise Period (as
defined therein) which has caused the Control Option to become currently
exercisable as provided in Section 3.1(a)(vi) of the Option Agreements (the
"Accelerated Exercise");
WHEREAS, the Shareholders Agreement currently provides that upon the
consummation of the purchase and sale of the Optioned Shares (as defined
therein) such Shareholders Agreement terminates with the proviso that certain
provisions of such Shareholders Agreement shall survive such termination;
WHEREAS, Comcast Corporation, a Pennsylvania corporation ("Comcast"),
and the BTH Entities have entered into a Purchase and Sale Agreement, dated as
of May 22, 1998, providing, among other things, for the acquisition by Comcast
of the Control Shares at such time that the BTH Entities are entitled to acquire
the Control Shares pursuant to the Control Option, which agreement has been
amended and restated on the date hereof, in connection with the Accelerated
Exercise (the "Comcast/BTH Agreement");
WHEREAS, the Xxxxx Entities and Comcast have entered into an Agreement,
dated as of the date hereof, relating to certain arrangements between the Xxxxx
Entities and Comcast concerning the exercise of the Control Option (the
"Comcast/Xxxxx Agreement");
-1-
WHEREAS, the parties hereto desire to amend the Shareholders Agreement
to amend the termination provision of the Shareholders Agreement so that in the
event the Optioned Shares are purchased pursuant to the Accelerated Exercise
certain provisions of the Shareholders Agreement shall not survive such
termination; and
WHEREAS, the parties hereto desire to set forth certain other
agreements relating to the consummation of the transactions contemplated by the
Comcast/Xxxxx Agreement and the Comcast/BTH Agreement;
THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the parties agree as follows.
ARTICLE I
AMENDMENT TO SHAREHOLDERS AGREEMENT
Definitions. All terms used but not otherwise defined herein shall have
the same meanings as ascribed to them in the Shareholders Agreement.
1.2. Amendment to Section 1.1. Section 1.1 of the Shareholders
Agreement is hereby amended by deleting therefrom the definitions of "Option
Agreements" and "Option Termination Date" in their entirety and substituting in
lieu thereof the following:
"Option Termination Date" means the earlier of (i) the date on
which the Control Option terminates pursuant to Section 3.6 of the Option
Agreements, or otherwise, (ii) the date on which BTH (or its agent) purchases
the Option Shares pursuant to the Option Agreements or (iii) the Closing, as
defined in the Comcast/Xxxxx Agreement, and the Simultaneous Closing, as defined
in the Comcast/BTH Agreement, shall have occurred.
"Option Agreements" means the Option Agreements dated as of
the Closing Date between Bank of New York, as successor agent to Xxxxxx Guaranty
Trust Company of New York, acting as agent for Investor and in the case of a
Section 3.1(a)(vi) Exercise, for Comcast, and each of Xxxxx International
Grantor Business Trust, Xxxxx Xxxxx Grantor Business Trust, Xxxxx Space Segment,
Inc., Xxxxx Global Group, Inc., Xxxxx Interdigital Inc. and Xxxxx Entertainment
Group, Ltd., as amended on August 12, 1998.
1.3. Amendment to Section 3.10. Section 3.10 of the Shareholders
Agreement is hereby amended by adding the following to the end of such section:
"Notwithstanding the foregoing, the parties hereto agree that this
Section 3.10 shall not prohibit any of the parties from disclosing all
such documents and information received after August 12, 1998 and until
the earlier to occur of (x) the Closing of the transactions
contemplated by that certain Agreement, dated August 12, 1998, by and
among Comcast Corporation, a Pennsylvania corporation ("Comcast") Xxxxx
International and certain JI Group Entities named therein (the
"Comcast/Xxxxx Agreement") or (y) the expiration or termination of the
Comcast/Xxxxx Agreement from the other parties to this Agreement (and
Affiliates of such other parties), including any information provided
by the Company to any Investor Nominee, to Comcast, and to the
officers, directors, employees, agents, representatives and advisors
(including, without limitation, legal and financial advisors) of
Comcast.
-2-
1.4. Amendment to Section 3.5. Effective as of and conditioned upon the
consummation of the transactions contemplated by the Xxxxx/Comcast Agreement.
Section 3.5 of the Shareholders Agreement shall be deleted in its entirety and
the following substituted in lieu thereof:
"3.5 Programming Services. Notwithstanding
any other provision in this Agreement to the contrary: (a) The
Bell International Group Entities shall have the right to
distribute, on a full-time (or, if requested from time to time
by Investor, part-time to be extended or restored, as
applicable to full time upon Investor's request), daily basis,
programming packaged (as opposed to brokered) by, created by
or created primarily for a Bell International Group Entity
("Investor Programming") on such number of channels (not to
exceed two at any one time) on the Systems as Investor may
designate from time to time.
(b) Prior to exercising its distribution
right with respect to any programming under this Section 3.5,
the relevant Bell International Group Entity (a "Programmer")
will present to the Board a reasonably detailed business plan
that, among other things, describes (i) the general content of
such programming, (ii) the marketing strategy for such
programming, including service level (such as basic, tier or a
la carte) and (iii) pricing for such service levels. The
Investor Programming shall be carried and priced by the
Intercable Group Entities on such level or levels of services
as such programming is intended to be carried under the
business plan for such programming.
(c) Notwithstanding the rights granted
pursuant to paragraph (a) above:
(i) the Intercable Group Entities shall not
be required to delete from any System any programming acquired
from any third-party programmer prior to the expiration of the
term of the program carriage agreement with such third-party
programmer in order to carry any Investor Programming,
(ii) in the event there is insufficient
channel capacity to carry Investor Programming, carriage of
such Investor Programming on a System shall be given priority
over any third party programming not then carried by such
System and over any third party programming then carried by
the System at such time as the initial or then current renewal
term, as applicable, is scheduled to expire, provided that (x)
such priority shall not apply to off-air programming carried
by the four major broadcast networks or as mandated by law, or
the 20 most widely viewed third party programs as then carried
by the System at the time as reported by Cablevision magazine,
and (y) in addition to the foregoing requirements, the Company
shall use its reasonable best efforts to add Investor
Programming to the Systems whenever opportunities to do so
arise, and
(iii) Investor shall give the Company at
least four months' prior notice of any proposed commencement
or termination of use of any channel.
-3-
(d) During the Validation Period (as defined
herein), the license fee payable by the Intercable Group
Entities for any unit of Investor Programming ("New
Programming") shall be such license fee as the Programmer
establishes in good faith based on its reasonable estimate of
the market value of such New Programming. A Programmer shall
notify the Company and the Disinterested Directors in writing
promptly following the end of the Validation Period whether
the Programmer has entered into an agreement providing for (a)
the distribution of such New Programming by a cable television
operator or other distributor of video programming (a
"Distributor") having at least 400,000 subscribers
("Validating Distributor") and (b) the payment of a license
fee by such Validating Distributor at a rate equal to or
greater than the license fee payable by the Intercable Group
Entities ("Validating Programming Agreement"). If no
Validating Programming Agreement has been entered into during
the Validation Period, the Company or any Disinterested
Director may, by written notice given within sixty (60) days
after receipt by the Company and the Disinterested Directors
of the above-referenced notification, require that such
Programmer reduce the license fee payable by the Intercable
Group Entities for such New Programming to the greater of (i)
a license agreement approved by the Disinterested Directors,
(ii) the average license fee charged by the applicable
Programmer to all Distributors for such New Programming and
(iii) the Agreed Rate in effect at such time. For purposes of
this Section 3.5, "Agreed Rate" means, at any time, the rate
set forth in the Affiliate Agreement between Mind Extension
University, Inc. and the Company dated December 28, 1993, as
amended as of June 1, 1994. Thereafter, the license fee
payable by the Intercable Group Entities for such New
Programming shall be subject to such adjustments as are
similar to adjustments in the license fee permitted by the
Validating Programming Agreement or, if there is no such
agreement in effect, by the programming agreement pursuant to
which such New Programming is carried by the largest
Distributor serving fewer than 400,000 subscribers. A
Programmer may elect at any time to terminate carriage of such
unit of New Programming upon not less than ninety days prior
written notice to the Company if it does enter into a
Validating Programming Agreement during the Validation Period.
"Validation Period" shall mean, as to any New Programming, the
fifteen (15) month period commencing with the first month with
respect to which a license fee is payable by an Intercable
Group Entity for the right to distribute such New Programming.
(e) The Intercable Group Entities shall
carry Investor Programming on the Systems until December 20,
2009 (or the expiration date of the applicable programming
agreement with the Company) in accordance with this Section
3.5.
(f) For purposes of this Section 3.5 the
term "Disinterested Directors" shall mean any director who
would be considered a "disinterested director" for the
purposes of Section 0-000-000 of the Colorado Business
Corporation Act.
-4-
(g) Notwithstanding anything to the contrary
contained in this Agreement, Investor may assign on behalf of
itself and the Bell International Group Entities its rights
under this Section 3.5 to Comcast."
1.5. Upon the amendment to Section 3.5 of the Shareholders Agreement
contained in Section 1.4 hereof becoming effective the Company shall pay to
Xxxxx and International $25,000,000 in immediately available funds to such bank
account or accounts as Xxxxx shall designate in consideration of the termination
of the JI Group Entities' rights under Section 3.5 of this Agreement.
1.6. General. Except as expressly modified by this Agreement and
Amendment, the provisions of the Shareholders Agreement shall remain in full
force and effect. Except as set forth in Section 2.2, below, execution and
delivery of this Agreement and Amendment, the Option Agreements and the
Comcast/Xxxxx Agreement shall not constitute or be deemed to be a waiver by any
party of (a) any rights or claims that such party had or may have under the
Shareholders Agreement as amended hereby or (b), in the event that the
Comcast/Xxxxx Agreement is terminated, any rights or claims that the Xxxxx
Entities or the Company had or may have against the BTH Entities by reason of
the execution, delivery or performance of the Comcast/BTH Agreement.
ARTICLE II
OTHER AGREEMENTS
2.1. Agreement to Stay Proceedings. In consideration of Comcast's
execution and delivery of the Comcast/Xxxxx Agreement and the Comcast/BTH
Agreement, each of the parties hereto hereby agrees to take any and all actions
and refrain from taking any and all actions necessary or advisable to seek a
stay of any proceedings relating to that certain lawsuit brought by BTH against
Xxxxx Intercable, Inc., Xxxxx International, Ltd., Xxxxx Internet Channel, Inc.
and Xxxxx X. Xxxxx, which was filed before the U.S. District Court for the
District of Colorado (the "Litigation"), including, without limitation, any
hearings or proceedings relating to any damage claims relating to the subject
matter of the Litigation and the appeal of the order entered on May 5, 1998
until the first to occur of (i) the date on which both the Closing (as defined
in the Comcast/Xxxxx Agreement) and the Simultaneous Closing (as defined in the
Comcast/BTH Agreement) shall have occurred, at which time the parties shall
dismiss the Litigation with prejudice or (ii) the termination of the
Comcast/Xxxxx Agreement.
2.2. General Release. In consideration of Comcast's execution and
delivery of the Comcast/Xxxxx Agreement and the Comcast/BTH Agreement each of
(i) the Xxxxx Entities and the Company and (ii) each of the BTH Entities, in the
case of each of (i) and (ii), on behalf of itself and each of its Affiliates
(including the Company and its subsidiaries) (the "Releasing Parties"),
effective as of and conditioned upon the consummation of both the Closing (as
defined in the Comcast/Xxxxx Agreement) and the Simultaneous Closing (as defined
in the Comcast/BTH Agreement), except as otherwise provided below, releases and
forever holds harmless, and waives and relinquishes from and against all
obligations, actions, causes of action, claims, demands, damages, costs,
expenses and liabilities whatsoever, at law or in equity, known or unknown,
fixed or contingent, which the Releasing Parties ever had, now have or which
their successors, predecessors, assigns, heirs, executors and administrators
hereafter can, shall or may have against any of the BTH Entities and the Xxxxx
Entities, their Affiliates (including the Company and its subsidiaries),
officers, directors, employees, shareholders and their successors or assigns
(the "Released Parties") on account or arising out of any matter, cause or thing
whatsoever from the beginning of the world to the date on which the Closing Date
(as defined in the Comcast/Xxxxx Agreement) and the Simultaneous Closing Date
(as defined in the Comcast/BTH Agreement) shall both have occurred.
Notwithstanding the foregoing nothing in this Section 2.2 shall release any
obligations, rights, actions, causes of action, claims, demands, damages, costs,
expenses or liabilities of the Released Parties to the Releasing Parties under
the Option Agreements or with respect to any judgment previously obtained in any
court of competent jurisdiction.
-5-
2.3. (a) Tax Matters. (a) The Company shall and International shall
cause Xxxxx Education Company ("Education") and Entertainment to provide BTH
with certification and file notice(s) with the Internal Revenue Service within
10 days after the request of BTH regarding any disposition undertaken in
connection with the Comcast/BTH Agreement, which certification or notification,
as the case may be, shall attest to the fact that the BTH Entities' interest in
such corporations does not constitute a "real property interest" within the
meaning of the Internal Revenue Code and shall otherwise conform with the
requirements of United States Treasury Regulation 1.897-2(h).
(b) Promptly upon request the Company shall, and International
shall cause Education and Entertainment to, accord the BTH Entities reasonable
access to the books and records and employees of the Company, Education and
Entertainment to enable the BTH Entities to confirm whether or not their
respective investments in such entities will constitute "excluded property"
within the meaning of the Income Tax Act (Canada) (i.e., that no more than 10%
of the assets of such entities consist of passive assets) as of the Simultaneous
Closing Date or the Initial Closing Date and the Final Closing Date, as the case
may be.
2.4. Termination of Certain Agreements. The BTH Entities, the Xxxxx
Entities and the Company agree and acknowledge, on their own behalf and on
behalf of their respective Affiliates, that the Secondment Agreement, the Fee
Sharing Agreement, the Financial Services Agreement and the Supply and Services
Agreement (each as defined in the Shareholders Agreement) shall terminate as of
and conditioned upon the consummation of the Closing and the Simultaneous
Closing; provided that anything contained in Section 2.2 to the contrary
notwithstanding, any moneys accrued for the account of BTH prior to termination
of such agreements shall be paid to BTH at the Closing or as soon as is
reasonably practicable thereafter.
2.5. Approval of this Agreement. Each of the parties to this Agreement
and Amendment represents and warrants to the other parties hereto that (i) if it
is a corporation, it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (ii) if
it is a trust, the trust agreement governing its operation is in full force and
effect, (iii) it has the power and authority to execute, deliver and perform
this Agreement and Amendment and (iv) this Agreement and Amendment has been duly
executed and delivered by it and is a valid and binding agreement by it. The
parties hereto hereby agree with each other that (i) this Agreement and
Amendment, (ii) the termination of Xxxxx' employment with Company pursuant to
the form of Termination Agreement presented to the Board of Directors of the
Company and (iii) the assumption by an Affiliate of a Xxxxx Entity of the
Company's rights and obligations under that certain lease dated December 23,
1997 by and between the Company and PNC Leasing Corp. shall be subject to the
approval of the Joint Nominees (as such term is defined in the Shareholders
Agreement) and that such approval shall satisfy the requirements of Section 3.6
of the Shareholders Agreement. The Company represents and warrants to the other
parties to this Agreement that this Agreement and Amendment has been approved by
a majority of the Joint Nominees at a meeting duly called and held for such
purpose.
ARTICLE III
MISCELLANEOUS
3.1. General. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws (as opposed to the conflicts of
laws provisions) of the State of Colorado. The agreement of the parties, which
is comprised of this Agreement and Amendment and the Shareholders Agreement,
sets forth the entire agreement and understanding between the parties relating
to the subject matter hereof and supersedes any prior agreement or
understanding, written or oral, relating to the subject matter of this Agreement
and Amendment and the Shareholders Agreement.
-6-
IN WITNESS WHEREOF, the parties have caused this Agreement and
Amendment to be executed by their duly authorized representatives as of the day
and year first above written.
XXXXX INTERCABLE, INC.
By:______________________________________
-----------------------------------------
Xxxxx X. Xxxxx
XXXXX INTERNATIONAL, LTD.
By:______________________________________
-----------------------------------------
XXXXX XXXXX GRANTOR BUSINESS TRUST
By:______________________________________
XXXXX INTERNATIONAL GRANTOR BUSINESS TRUST
By:______________________________________
XXXXX SPACE SEGMENT, INC.
By:______________________________________
XXXXX GLOBAL GROUP, INC.
By:______________________________________
XXXXX INTERDIGITAL, INC.
By:______________________________________
XXXXX ENTERTAINMENT GROUP, LTD.
By:______________________________________
BCI TELECOM HOLDING INC.
By:______________________________________
BTH (US CABLE) LTD.
By:______________________________________
BTH (INTERCABLE) LIMITED
By:______________________________________
