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DRAFT: June 2, 1994 10:39am
EXCHANGE AGREEMENT AND PLAN
OF REORGANIZATION AND LIQUIDATION
BY AND BETWEEN
JONES INTERCABLE, INC.
AND
JONES SPACELINK, LTD.
Dated as of May 31, 1994
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TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Assumption of Obligations and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SPACELINK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Corporate Authorization; Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.9 No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.14 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.15 Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.16 Compliance with Laws and Court Orders; No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.20 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.21 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.22 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.23 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.24 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.25 Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF INTERCABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Corporate Authorization; Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.9 No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.10 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.11 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.12 Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.14 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.15 Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.16 Compliance with Laws and Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.20 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.21 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.22 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.23 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.24 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.25 Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1 Shareholder Meetings; Proxy Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Conduct of Spacelink Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3 Conduct of Intercable Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.5 Notices of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.6 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.8 Other Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.10 Jones Earth Segment, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.11 Tax-Free Reorganization; Plan of Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.12 Spacelink Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE 6 CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.1 Conditions to Obligations of Spacelink and Intercable . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2 Conditions to Obligation of Spacelink . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.3 Conditions to Obligation of Intercable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 7 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 8 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.9 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.10 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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EXHIBITS
EXHIBIT A -- General Assignment, Bill of Sale and Assumption Agreement
EXHIBIT B -- Exchange Ratio Computation
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SCHEDULES
Schedule 1A -- Intercable Loan Agreements
Schedule 1B -- Loan Agreements
Schedule 1C -- Permitted Liens
Schedule 3.3 -- Governmental Authorization
Schedule 3.4 -- Consents and Approvals
Schedule 3.5 -- Options
Schedule 3.6 -- Subsidiaries
Schedule 3.10 -- Absence of Certain Changes
Schedule 3.12 -- Franchise Agreements
Schedule 3.13 -- Litigation
Schedule 3.14 -- Material Contracts
Schedule 3.17 -- Environmental Matters
Schedule 3.18 -- Intellectual Property
Schedule 3.19 -- Taxes
Schedule 3.20 -- Transactions with Affiliates
Schedule 3.20 -- Directors and Officers
Schedule 3.22 -- Employment Benefit Plans
Schedule 3.23 -- Finders' Fees
Schedule 4.3 -- Governmental Authorization
Schedule 4.4 -- Consents and Approvals
Schedule 4.5 -- Options
Schedule 4.6 -- Subsidiaries
Schedule 4.10 -- Absence of Certain Changes
Schedule 4.12 -- Franchise Agreements
Schedule 4.13 -- Intellectual Property
Schedule 4.14 -- Litigation
Schedule 4.17 -- Environmental Matters
Schedule 4.19 -- Transactions with Affiliates
Schedule 4.20 -- Employees
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Schedule 4.22 -- Employee Benefit Plans
Schedule 4.23 -- Finders' Fees
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EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
(this "Agreement") dated as of May __, 1994, by and between JONES INTERCABLE,
INC., a Colorado corporation ("Intercable") and JONES SPACELINK, LTD., a
Colorado corporation ("Spacelink").
RECITALS
A. Spacelink is primarily engaged in the business of
owning and/or operating cable television systems, providing audio programming
for cable television systems and radio stations and other related businesses in
the United States.
B. Subject to the terms and conditions contained in this
Agreement, Intercable desires to acquire from Spacelink, and Spacelink desires
to transfer to Intercable, substantially all of the assets of Spacelink used or
useful in connection with Spacelink's business in exchange for shares of
Intercable Class A Common Stock.
C. Spacelink intends to distribute, among other things,
the shares of Intercable Class A Common Stock acquired pursuant to this
Agreement, together with all other shares of capital stock of Intercable held
by Spacelink, to its shareholders as part of the contemplated liquidation and
dissolution of Spacelink.
D. It is intended that the transactions contemplated by
this Agreement shall constitute a tax-free reorganization within the meaning of
Section 368(a)(1)(C) of the Code.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending legally to be bound, agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by, or under common
control with such Person.
"Balance Sheet Date" means May 31, 1993.
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"Balance Sheet" means the consolidated balance sheets
of Spacelink and its consolidated Subsidiaries as of the Balance Sheet Date and
included in the SEC Documents.
"BCI" means Bell Canada International, Inc., a
corporation organized under the laws of Canada.
"Board of Directors" means the board of directors of
Spacelink.
"Cable Partnership" means, at any time, any
partnership that owns or operates a System in which any Spacelink Group Entity
is a general or managing partner and any joint venture of any such partnership.
"Capital Stock" means, at any time, Class A Common
Stock, Class B Common Stock and any other authorized capital stock of
Spacelink.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Convertible Debentures" means the 7.5% Convertible
Debentures due June 1, 2007 of Intercable.
"Control Option" means BCI's option to purchase the
Optioned Shares (as defined in the Option Agreements referred to in the Stock
Purchase Agreement) pursuant to the Option Agreements.
"Current Intercable SEC Filings" means (i) the annual
report on Form 10-K of Intercable for the fiscal year ended May 31, 1993, (ii)
the quarterly report on Form 10-Q of Intercable for the fiscal quarter ended
November 30, 1993, and (iii) the proxy statement dated November 19, 1993, of
the Company prepared in connection with the Notice of Annual Meeting of
Shareholders of Intercable held on December 21, 1993.
"Current SEC Filings" means (i) the annual report on
Form 10-K of Spacelink for the fiscal year ended May 31, 1993, (ii) the
quarterly report on Form 10-Q of Spacelink for the fiscal quarter ended
February 28, 1994, (iii) the proxy statement dated November 19, 1993 of
Spacelink prepared in connection with the Notice of Annual Meeting of
Shareholders of Spacelink held on December 21, 1993, and (iv) the annual
reports on Form 10-K of each Cable Partnership for the fiscal year ended
December 31, 1993.
"Dissenting Shareholders" means those shareholders of
Spacelink who have voted against the Transactions contemplated by this
Agreement and perfected their dissenter's rights in accordance with law.
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"Employee Options" means any options to purchase
capital stock granted to employees, officers or directors of Intercable or
Spacelink, as applicable, or any of their respective subsidiaries pursuant to
any employee benefit plan (including a stock option, stock purchase or stock
bonus plan) approved by its board of directors.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans, injunctions,
permits, agreements and governmental restrictions, whether now or hereafter in
effect, relating to human health, the environment or to emissions, discharges
or releases of pollutants, contaminants, Hazardous Substances or wastes into
the environment, including without limitation ambient air, surface water,
groundwater or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto, and the rules and
regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other
entity which, together with such entity, would be treated as a single employer
under Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"FCC" means the Federal Communications Commission or
its successor.
"FCC License" means any license, authorization,
certification or permit issued by the FCC and any applications to any of the
foregoing, including, without limitation, licenses issued in connection with
the operation of community antenna television systems, community antenna relay
systems, microwave systems, earth stations and business and other two-way
radios.
"Franchise Agreement" means any franchise, agreement,
permit, license or other authorization granted by any Governmental Authority
organized within the United States of America, including all laws, regulations
and ordinances relating thereto, which authorizes the construction or operation
of a System or the reception and transmission of signals by microwave, and
shall include, without limitation, all FCC Licenses and all certificates of
compliance, if any, and cable television registration statements or similar
documents which are required to be issued by or filed with the FCC or other
Governmental Authority organized within the United States of America.
"Governmental Authority" means any local, county,
state, commonwealth, federal or foreign judicial, executive or legislative
instrumentality, or any agency, authority, commission, board or official
thereof, including, without limitations, any franchising authority.
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"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, including without
limitation, any substance regulated under Environmental Laws.
"Intellectual Property Right" means any trademark,
service mark, trade name, invention, patent, trade secret, license, copyright,
know-how (including any registrations or applications for registration of any
of the foregoing) or any other similar type of proprietary intellectual
property right.
"Intercable Balance Sheet" means the consolidated
balance sheet of Intercable and its consolidated Subsidiaries as of the Balance
Sheet Date and included in the Intercable SEC Documents.
"Intercable Board of Directors" means the board of
directors of Intercable.
"Intercable Class A Common Stock" means the Class A
Common Stock, par value $.01 per share, of Intercable.
"Intercable Common Stock" means the Common Stock, par
value $.01 per share, of Intercable.
"Intercable Group" means Intercable and each Person
that is a Subsidiary of Intercable at such time.
"Intercable Group Entity" means each Person included
in the Intercable Group at such time.
"Intercable Loan Agreements" means the agreements
listed on Schedule 1A, attached hereto.
"Intercable SEC Reporting Entity" means Intercable
and each of its Subsidiaries that is, or since January 1, 1991, has been,
required to file periodic reports with the SEC under the Exchange Act.
"JI Group" means, at any time, Glenn R. Jones, Jones
International, Ltd. and each Person that is a Subsidiary of Glenn R. Jones or
Jones International, Ltd. at such time, other than any Person that is an
Intercable Group Entity or a Spacelink Group Entity at such time.
"JI Group Entity" means each Person included in the
JI Jones Group at such time.
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"Jones Intercable Transaction" means the transaction
contemplated by the Stock Purchase Agreement.
"Jones International, Ltd." means Jones
International, Ltd., a Colorado corporation.
"Lien" means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset, other than
liens for taxes not yet delinquent. For purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any property or asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Loan Agreements" means the agreements listed on
Schedule 1B attached hereto.
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business, assets, results of
operations or prospects of Intercable and its Subsidiaries or Spacelink and its
Subsidiaries, as applicable, in each case taken as a whole.
"Minority Shareholders" means any shareholder of
Spacelink other than a JI Group Entity.
"Multiemployer Plan" means each Employee Plan or
Intercable Employee Plan, as the case may be, that is a multiemployer plan, as
defined in Section 3(37) of ERISA.
"officer" has the meaning subscribed to it in Rule
16a-1 under the Exchange Act.
"Owned System" means any System that is owned or
operated by a Spacelink Group Entity that is not a Partnership System.
"Partnership System" means any System that is owned
and operated by a Cable Partnership.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means the Liens identified on
Schedule 1C attached hereto.
"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.
"SEC" means the Securities and Exchange Commission or
its successor.
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"SEC Transaction Document" means any document
required to be filed by Spacelink with the SEC in connection with the
consummation of the transaction contemplated hereby.
"Securities Act" means the Securities Act of 1993, as
amended, and the rules and regulations promulgated thereunder.
"SMATV" means a satellite master antenna television
system.
"Spacelink Group" means Spacelink and each Person
that is a Subsidiary of Spacelink at such time.
"Spacelink Group Entity" means each Person included
in the Spacelink Group at such time.
"Spacelink SEC Reporting Entity" means Spacelink and
each of its Subsidiaries that is, or since January 1, 1991, has been, required
to file periodic reports with the SEC under the Exchange Act.
"Stock Purchase Agreement" means the agreement, dated
May 31, 1994, between Intercable and BCI pursuant to which BCI has agreed to
purchase shares of Intercable Class A Common Stock.
"Subscriber" means at any time, the number of single
customer accounts receiving basic cable television services from a Spacelink
Group Entity and billed at the basic monthly price in the applicable System
(subject to applicable published discounts) during the full calendar month
ending immediately prior to such time.
"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. With respect to Subsidiaries of
Spacelink, Subsidiaries shall not include an Intercable Group Entity or Jones
Earth Segment, Inc. Neither Jones International, Ltd., nor Glenn R. Jones are
a subsidiary of any Spacelink Group Entity or Intercable Group Entity.
"Subsidiary Securities" means any shares of capital
stock of a Subsidiary of Spacelink, and securities of any type whatsoever that
are, or may become, exercisable to purchase, or convertible or exchangeable
into shares of such capital stock.
"System" or "Systems" means a cable television or
SMATV system owned or operated by any Spacelink Group Entity or any Intercable
Group Entity, as the case may be, and serving subscribers within a geographical
area covered by one or more Franchise Agreements from the same head end
facility or by two or more related head end facilities.
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"Tax" or "Taxes" means with respect to any Person (a)
any net income, gross income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, value-added or windfall profit
tax, custom duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest and any penalty,
addition to tax or additional amount imposed by any taxing authority (domestic
or foreign) on such person, (b) any liability of any Person for the payment of
any amount of the type described in clause (a) as a result of being a member of
an affiliated or combined group or being a party to any arrangement or
agreement whereby liability of any such Person was determined or taken into
account by reference to the liability of any other Person for any period and
(c) any liability of any such Person for the payment of any amounts of the type
described in Clauses (a) or (b) as a result of any express or implied
obligation to indemnify any other Person.
"Tax Ruling" means a private letter ruling issued by
the Internal Revenue Service to Intercable, Spacelink, Jones International,
Ltd., and Glenn R. Jones holding, inter alia, that the acquisition of
substantially all of the Assets (other than Excluded Assets) by Intercable
pursuant to this Agreement will be recognized as a tax-free reorganization
under Section 368(a)(1)(C) of the Code and that no gain or loss will be
recognized by Spacelink under Section 361 upon the transfer of the Assets to
Intercable or distribution of the Shares and the 2,859,240 shares of Common
Stock of Intercable in liquidation to its shareholders.
"Title IV Plan" means an Employee Plan, other than
any Multiemployer Plan, subject to Title IV of ERISA.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
---- -------
Acquisition Proposal 5.8.(b)
Assets 2.1
Benefit Arrangement 3.22.(i)
Class A Common Stock 3.5.(a)(i)
Class B Common Stock 3.5.(a)(i)
Closing 2.5.(a)
Employee Plan 3.22.(i)
Environmental Liabilities 3.17.(d)
Excluded Assets 2.2
Intercable Benefit Arrangement 4.22.(i)
Intercable Employee Plan 4.22.(i)
Intercable Outstanding Securities 4.5.(b)
Intercable Proposal 5.1.(a)
Intercable Returns 4.19
Intercable SEC Documents 4.7.(b)
Reserve 2.2.(c)
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Restricted Persons 5.8.(c)
SEC Documents 3.7.(b)
Shares 2.4
Spacelink Outstanding Securities 3.5.(b)
Spacelink Proposals 5.1.(b)
Spacelink Returns 3.19
Spacelink Subsidiary Securities 3.6.(c)
Statement 3.25.(a)
Transaction Agreement 5.1.(b)(ii)
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, Spacelink agrees
to transfer and deliver to Intercable, and Intercable agrees to acquire and
accept from Spacelink, subject only to Permitted Liens, all of the assets and
properties of Spacelink, whether real, personal, tangible or intangible, as of
the date hereof (specifically excepting the Excluded Assets described in
Section 2.2 hereof), including all additions thereto on and after the date
hereof and through and including the Closing Date, but less all dispositions
thereof or other changes thereto from and after the date hereof and through and
including the Closing Date not prohibited by Section 5.2 hereof, such assets
and properties being referred to herein as the "Assets," and including without
limitation the following:
(a) Spacelink's right, title and interest in and
to all parcels of real property owned in fee by Spacelink or in which Spacelink
has a leasehold interest, and all buildings, structures and other improvements
located thereon, and all rights of way and similar authorizations;
(b) Spacelink's right, title and interest in and
to all of the tangible personal property owned or leased by Spacelink;
(c) Spacelink's right, title and interest in and
to all contracts, options, leases (whether of realty or personalty), purchase
orders, commitments, Franchise Agreements, programming agreements, subscription
agreements for cable television and SMATV services, access agreements and other
agreements, whether oral or written (all of such contracts, agreements,
options, leases or commitments are sometimes referred to herein collectively as
the "Contracts")
(d) Spacelink's right, title and interest in any
and all joint venture and limited or general partnership agreements and any
shares of capital stock in any entity;
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(e) Spacelink's right, title and interest in and
to all subscriber, customer and advertiser lists;
(f) Spacelink's right, title and interest in and
to all Intellectual Property Rights which are used or held for use in
connection with the conduct of its business;
(g) All subscriber, customer and trade accounts
receivable due to Spacelink;
(h) All deposits under utility, pole rental and
similar agreements to which Spacelink is or may become entitled; and
(i) Spacelink's records, files and data,
including maps, plans, diagrams, blueprints and schematics, if any.
2.2 Excluded Assets. Notwithstanding anything contained
herein to the contrary, the following properties and assets (the "Excluded
Assets") shall be retained by Spacelink and shall not be contributed, assigned,
conveyed, transferred or delivered to Intercable:
(a) 2,859,240 shares of Intercable Common Stock
held by Spacelink on the Closing Date;
(b) All shares of capital stock in Jones Earth
Segment, Inc., a Colorado corporation; and
(c) A cash reserve sufficient to satisfy the
obligations of Spacelink to Dissenting Shareholders, and to pay any expenses
that may be incurred in connection with the determination and payment of such
obligations (the "Reserve").
2.3 Assumption of Obligations and Liabilities. Upon the
terms and subject to the conditions set forth in this Agreement, at Closing
Intercable shall assume and agree to pay, discharge and perform when due all
known, unknown and contingent liabilities of Spacelink (other than to
Dissenting Shareholders) including but not limited to:
(a) All the obligations and liabilities of
Spacelink under the Contracts, including the Franchise Agreements, whether such
obligations and liabilities arise with respect to the period prior to, at or
after the Closing Date;
(b) All of Spacelink's obligations for the
provision of cable television or other services to its subscribers;
(c) All obligations and liabilities arising out
of or related to the ownership and operation of the Assets; and
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(d) All state and local sales or use taxes (or
their equivalent) and transfer taxes or recording fees payable as a consequence
of the sale or purchase of the Assets hereunder.
2.4 Purchase Price. The consideration payable to
Spacelink for the Assets shall be 4,100,000 shares of Intercable Class A Common
Stock (the "Shares"). The Shares shall be registered under the Securities Act
in connection with the liquidation and distribution contemplated by Section
5.11(c). Notwithstanding the foregoing, the number of Shares payable to
Spacelink shall be increased or decreased by such number of Shares as is
necessary to permit the rounding of fractional shares pursuant to Section
5.11(d).
2.5 Closing.
(a) The closing (the "Closing") of the exchange,
transfer and delivery of the Shares for the Assets hereunder shall take place
at the offices of Intercable, 9697 East Mineral Avenue, Englewood, Colorado
80112, as soon as possible, but in no event later than 10 business days after
satisfaction of the conditions set forth in Article 6, or at such other time or
place as the Intercable and Spacelink may agree.
(b) At the Closing, Spacelink shall deliver to
Intercable:
(i) the General Assignment, Bill of Sale
and Assumption Agreement substantially in the form of Exhibit
A attached hereto, which agreement shall also assign, transfer
and deliver to Intercable all of Spacelink's right, title and
interest in and to the Assets;
(ii) the certificate referred to in
Section 6.3(c);
(iii) such deeds, assignments, consents,
instruments and agreements as are required herein or as
Intercable may reasonably require to effect the transactions
contemplated hereby; and
(iv) such other instruments and
agreements as are required herein or as Intercable may
reasonably request to effect the transactions contemplated
hereby.
(c) At the Closing, Intercable shall deliver to
Spacelink:
(i) the Shares;
(ii) the General Assignment, Bill of Sale
and Assumption Agreement referred to in Section 2.5(b)(i); and
(iii) the certificate referred to in
Section 6.2(c).
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SPACELINK
Spacelink represents and warrants to Intercable:
3.1 Corporate Existence and Power. Spacelink is a
corporation duly incorporated, validly existing and in good standing under the
laws of Colorado and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Spacelink
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
Spacelink has heretofore delivered to Intercable true and complete copies of
its articles of incorporation and bylaws as currently in effect.
3.2 Corporate Authorization; Minute Books. (a) The
execution, delivery and, subject to approval of the Spacelink Proposals by the
shareholders of Spacelink, performance by Spacelink of this Agreement are
within Spacelink's corporate powers and have been duly authorized by all
necessary corporate action on the part of Spacelink. This Agreement
constitutes a valid and binding agreement of Spacelink.
(b) Spacelink has made available to Intercable
true and correct copies of all minutes of meetings and actions by consent of
(i) the boards of directors of the Spacelink Group Entities and any committees
thereof and (ii) shareholders or partners of the Spacelink Group Entities. All
actions taken by Spacelink requiring action by its board of directors or
shareholders have been duly authorized or ratified by all necessary corporate
action and are evidenced in such minutes and consents.
(c) The Board of Directors, taking into account
the unanimous recommendation of a special committee of the Board of Directors
as to the Minority Shareholders, has unanimously (i) determined that the
transaction contemplated hereby is fair to, and in the best interest of,
Spacelink's shareholders and (ii) resolved to recommend the Spacelink Proposals
to the shareholders of Spacelink. Spacelink further represents that Goldman
Sachs & Co. has delivered to the Board of Directors its written opinion that
the number of shares to be received by the Minority Shareholders of Spacelink
pursuant to the transactions contemplated hereby is fair to Spacelink's
Minority Shareholders. Spacelink has been advised that all of its directors
who are shareholders of Spacelink intend to vote in favor of the Spacelink
Proposals.
3.3 Governmental Authorization. Assuming the accuracy of
Intercable's representations and warranties contained in Section 4.3 hereof,
the execution, delivery and performance by Spacelink of this Agreement and the
consummation of the transaction contemplated hereby, require no action of any
Spacelink Group Entity by or in respect of, or
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filing by any Spacelink Group Entity with, any Governmental Authority organized
within the United States of America, England or Spain other than (i) the
actions and filings listed on Schedule 3.3 and (ii) any such action or filing
as to which the failure to make or obtain would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Non-Contravention. The execution, delivery and
performance by Spacelink of this Agreement and the consummation of the
transaction contemplated hereby do not:
(i) violate (x) the articles of
incorporation or by-laws of Spacelink or (y) the articles of
incorporation, by-laws, partnership agreement or other
organizational document (as applicable) of any other Spacelink
Group Entity,
(ii) assuming compliance with the matters
referred to in Section 3.3, the approval by the shareholders
of Spacelink of the Spacelink Proposals and the accuracy of
Intercable's representations and warranties contained in
Section 4.3, violate any applicable law, rule, regulation,
judgment, injunction, order or decree binding on any Spacelink
Group Entity,
(iii) except as set forth in Schedule 3.4
and assuming compliance with the matters referred to in
Section 3.3, require any consent or other action by any Person
under, constitute a default under, or give rise to any right
of termination, cancellation or acceleration of any right or
obligation of any Spacelink Group Entity under, or cause a
loss of any benefit to which such Spacelink Group Entity is
entitled under, any agreement or other instrument binding upon
any Spacelink Group Entity or any Franchise Agreement,
license, permit or other similar authorization held by any
Spacelink Group Entity, or
(iv) result in the creation or imposition
of any Lien on any asset of any Spacelink Group Entity
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, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.5 Capitalization. (a) At the date hereof:
(i) Spacelink's authorized capital stock
consists of (A) 220,000,000 shares of Class A Common Stock,
par value $.01 per share ("Class A Common Stock"), of which
77,632,700 shares are issued and outstanding (of which
65,976,148 shares are held by the JI Group) and (B) 415,000
shares of Class B Common Stock, par value $.01 per share (the
"Class B Common Stock"), all of which are issued and
outstanding (all of which are held by Jones International,
Ltd.); and
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(ii) there are outstanding options to
purchase an aggregate of 2,116,947 shares of Class A Common
Stock of Spacelink and Spacelink holds no shares of Class A
Common Stock or Class B Common Stock in its treasury.
(b) Except as set forth in paragraph (a) of this
Section 3.5, as of the date hereof there are no outstanding (i) shares of
capital stock or other voting securities of Spacelink, (ii) securities of
Spacelink convertible into or exchangeable for shares of capital stock or
voting securities of Spacelink, or (iii) except as contemplated by this
Agreement, options or other rights to acquire from Spacelink, or other
obligation of Spacelink to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Spacelink (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Spacelink Outstanding Securities"). There are
no outstanding obligations of any Spacelink Group Entity to repurchase, redeem
or otherwise acquire any Outstanding Securities.
(c) All outstanding shares of capital stock of
Spacelink have been, and at or prior to the Closing will be, duly authorized
and validly issued, fully paid and non-assessable and have been (or will have
been) offered, issued, sold and delivered by Spacelink in compliance with
applicable federal and state securities laws.
(d) To the knowledge of Spacelink, as of the date
hereof there are no voting trusts, shareholder agreements or any other
agreements or understandings with respect to the voting of any shares of
capital stock of Spacelink other than those so created by the articles of
incorporation and by-laws of Spacelink and as contemplated hereby.
3.6 Subsidiaries. (a) All Subsidiaries of Spacelink and
their respective jurisdictions of incorporation or organization (as applicable)
are identified on Schedule 3.6. Schedule 3.6 also lists any investments in
excess of $5,000,000 as of the date hereof of any Spacelink Group Entity at the
date hereof in Persons that are not Subsidiaries of Spacelink. Each Subsidiary
of Spacelink is either a corporation, general partnership or a limited
partnership.
(b) Each Subsidiary of Spacelink identified as a
corporation on Schedule 3.6 is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each Subsidiary
of Spacelink identified as a partnership on Schedule 3.6 is a partnership duly
organized and validly existing as a partnership under the laws of its
jurisdiction of organization. Each such Subsidiary has all corporate or
partnership powers, as the case may be, and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Subsidiary of Spacelink is duly qualified to do business as a foreign
corporation or partnership and is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
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(c) Except as disclosed in Schedule 3.6 or
pursuant to Liens granted to secure obligations under the Loan Agreements, all
of the outstanding capital stock of, or other voting securities or ownership
interests in, each Subsidiary of Spacelink is owned by Spacelink, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such stock or other voting securities or ownership interests, but
excluding restrictions in the partnership agreements of the Cable Partnerships)
other than limitations and restrictions arising under applicable securities
laws and regulations. There are no outstanding (i) securities of any such
Subsidiary convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Spacelink Group Entity or
(ii) options or other rights to acquire from any such Subsidiary, or other
obligation of any such Subsidiary to issue, any capital stock or other voting
securities or ownership interests in, or any securities convertible into or
exchangeable for any capital stock or other voting securities or ownership
interests in, any Spacelink Group Entity (the items in clauses (i) and (ii)
being referred to collectively as the "Spacelink Subsidiary Securities").
There are no outstanding obligations of any Spacelink Group Entity to
repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
3.7 SEC Documents. (a) Spacelink has delivered to
Intercable all reports, statements, schedules and registration statements filed
with the SEC by each Spacelink SEC Reporting Entity since May 31, 1991,
including (i) the annual reports on Form 10-K of each Spacelink SEC Reporting
Entity for the fiscal years ended after May 31, 1991, (ii) the quarterly
reports on Form 10-Q of each Spacelink SEC Reporting Entity for the fiscal
quarters ended after the end of the most recent fiscal year of such SEC
Reporting Entity and (iii) the proxy or information statements relating to
meetings of, or actions taken without a meeting by, the stockholders or
partners of each Spacelink SEC Reporting Entity held since May 31, 1991.
(b) Since May 31, 1991, each Spacelink SEC
Reporting Entity has duly filed with the SEC all registration statements,
reports and proxy statements required to be filed by it under the Securities
Act and the Exchange Act (the "SEC Documents"), and each such registration
statement, when it became effective, and each such report or proxy statement,
when it was filed, as the case may be, complied in all material respects with
the Securities Act or the Exchange Act, as the case may be.
(c) Each such registration statement, as amended
or supplemented, if applicable, filed pursuant to the Securities Act as of the
date such statement or amendment became effective did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. As
of its filing date, each such report or proxy statement filed pursuant to the
Exchange Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
3.8 Financial Statements. (a) The audited and unaudited
interim consolidated financial statements of Spacelink included in the SEC
Documents fairly present, in all material respects and in conformity with
generally accepted accounting principles (except as permitted by Form 10-Q)
applied on a consistent basis (except as may be indicated in the notes
thereto),
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the consolidated financial position of Spacelink and its respective
consolidated subsidiaries as at the date thereof and the consolidated results
of operations, stockholders' equity and cash flows for the periods then ended
(subject to normal year end audit adjustments in the case of unaudited interim
financial statements).
(b) The audited and unaudited interim financial
statements of each Spacelink SEC Reporting Entity other than Spacelink included
in the SEC Documents fairly present, in all material respects and in conformity
with generally accepted accounting principles (except as permitted by Form
10-Q) applied on a consistent basis (except as may be indicated in the notes
thereto), the financial position of such SEC Reporting Entity as at the date
thereof and the statements of operations, partners' capital (or stockholders'
equity) and cash flows for the periods then ended (subject to normal year end
audit adjustments in the case of unaudited interim financial statements).
3.9 No Undisclosed Material Liabilities. There are no
liabilities of any Spacelink Group Entity of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, other
than:
(a) liabilities provided for in the Balance Sheet
or disclosed in the notes thereto;
(b) liabilities disclosed in the Current SEC Filings
or in Schedule 3.13; and
(c) other undisclosed liabilities which, individually
or in the aggregate, would not reasonably be expected to be material
to the Spacelink Group, taken as a whole.
3.10 Absence of Certain Changes. Except as disclosed in
Schedule 3.10 or the SEC Documents filed with the SEC prior to the date hereof,
since the Balance Sheet Date the business of the Spacelink Group Entities has
been conducted in the ordinary course consistent with past practices and there
has not been:
(i) any event, occurrence, development
or state of circumstances or facts which has had or would
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to
any shares of capital stock of Spacelink, or any repurchase,
redemption or other acquisition by any Spacelink Group Entity
of any outstanding shares of capital stock or other securities
of, or other ownership interest in, Spacelink;
(iii) any amendment of any term of any
outstanding equity security of Spacelink, or any debt security
material to the Spacelink Group
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Entities, taken as a whole, but excluding debt issued pursuant
to the Loan Agreements and capitalized leases;
(iv) prior to the date hereof any
incurrence, assumption or guarantee by Spacelink (or any
Subsidiary of Spacelink that is not a Cable Partnership) of
any indebtedness for borrowed money exceeding $5,000,000 in
the aggregate for all Spacelink Group Entities (other than
Cable Partnerships);
(v) prior to the date hereof, any
incurrence, assumption or guarantee by any Cable Partnership
of any indebtedness for borrowed money (excluding borrowings
to refinance outstanding debt) exceeding $25,000,000 in the
aggregate for all Cable Partnerships;
(vi) prior to the date hereof, any making
by any Spacelink Group Entity of any loan, advance or capital
contribution to or other investment in any Person other than
(A) loans, advances or capital contributions to or investments
in Intercable Group Entities and in other Spacelink Group
Entities or (B) loans, advances, capital contributions to or
investments in other Persons that are not JI Group Entities in
an aggregate amount not exceeding $2,500,000;
(vii) any damage, destruction or other
casualty loss not covered by insurance affecting the business
or assets of any Spacelink Group Entity which has had or could
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; or
(viii) any material change in any method of
accounting or accounting practice by any Spacelink Group
Entity, except as required by generally accepted accounting
principles.
3.11 Properties. Except as described in Schedule 3.11,
each Spacelink Group Entity possesses all assets (whether real or personal,
tangible or intangible) and rights necessary to enable it to carry on its
business in all material respects as currently conducted.
3.12 Franchises. (a) Schedule 3.12 lists all Systems of
the Spacelink Group Entities as of the date hereof and specifies for each such
System (i) the name of the Spacelink Group entity that owns or operates such
System, (ii) the material Franchise Agreements (other than FCC Licenses)
relating to such System, true and complete copies of which have been previously
delivered to Intercable, (iii) the approximate date on which each such
Franchise Agreement expires, (iv) the approximate number of Subscribers
serviced by such System on February 28, 1994 and (v) the approximate number of
homes passed by such System on February 28, 1994.
(b) The Spacelink Group Entities have all
material Franchise Agreements required to operate the Systems. All such
Franchise Agreements held by a Spacelink Group Entity were lawfully transferred
or granted to such Spacelink Group Entity pursuant to the rules and regulations
of the relevant Governmental Authorities. The Franchise
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Agreements (other than FCC Licenses) authorize the Spacelink Group Entity
indicated on Schedule 3.12 to operate a System (or portion thereof) until the
respective approximate expiration dates listed on Schedule 3.12. Except as
described in Schedule 3.12 or otherwise disclosed in writing to Intercable, the
Spacelink Group Entities are in compliance in all material respects with all
material terms and conditions of all material Franchise Agreements relating to
the Systems (taken as a whole), and no event has occurred or exists which
permits, or, after the giving of notice or the lapse of time or both would
permit, the revocation or termination of any Franchise Agreement, except for
such events that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(c) Schedule 3.12 lists each Franchise Agreement
for which a Spacelink Group Entity has received notice from, or has been
advised by, the relevant Governmental Authority that such Governmental
Authority is taking, or threatening to take, action to terminate or otherwise
revoke such Franchise Agreement.
(d) Schedule 3.12 contains a complete list and
brief description of all FCC Licenses granted to each Spacelink Group Entity
and in effect as of the date hereof, and all applications by a Spacelink Group
Entity for an FCC License now pending, other than the following types of
licenses: (i) business and other two-way radio licenses that are used in
connection with the operation of the businesses conducted by the Spacelink
Group and are not held for resale or to provide services to third parties and
(ii) microwave licenses and earth station registrations which authorize the
reception or transmission of signals in connection with the operation of the
Systems.
3.13 Litigation. (a) Except as listed and described in
Schedule 3.13 there are no claims, actions, suits, proceedings or, to the
knowledge of Spacelink, investigations pending by or against any Spacelink
Group Entity or any of their respective businesses, properties, assets or any
of the capital stock of any Spacelink Group Entity at law or in equity, before
or by any Governmental Authority, which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the knowledge
of Spacelink, no such claim, action, suit, proceeding or investigation is
threatened.
(b) Except as described in Schedule 3.13, as of
the date hereof there is no claim, action, suit, proceeding or, to the
knowledge of Spacelink, investigation pending (or to the knowledge of Spacelink
threatened) against, or affecting, any Spacelink Group Entity or any of their
respective properties before or by any Governmental Authority which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
consummation of this Agreement or the Jones Intercable Transaction.
3.14 Material Contracts. (a) Except as disclosed in
Schedule 3.14 or in any SEC Document filed with the SEC between December 31,
1992 and the date hereof (including documents incorporated by reference
therein), as of the date hereof none of the Spacelink Group Entities is a party
to or bound by:
(i) any partnership, joint venture or
other similar agreement or arrangement material to the
Spacelink Group Entities, taken as a whole;
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(ii) any agreement relating to the
acquisition or disposition of any business (whether by merger,
sale of stock, sale of assets or otherwise), except for
agreements relating to the acquisition or disposition of cable
television systems for a purchase price less than $5,000,000
in any one case or $25,000,000 in the aggregate;
(iii) any agreement relating to
indebtedness for borrowed money or the deferred purchase price
of property (in either case, whether incurred, assumed,
guaranteed or secured by any asset), except for the Loan
Agreements and any other agreements with an aggregate
outstanding principal amount not exceeding $10,000,000;
(iv) any agreement that limits the
freedom of any Spacelink Group Entity to compete in any line
of business or with any Person or in any area or which would
so limit the freedom of any Spacelink Group Entity after the
Closing Date other than (A) reasonable and customary
agreements not to compete in the cable television, SMATV or
similar business for a period of not greater than five years
entered into in connection with the sale or other disposition
of such businesses and (B) provisions in Franchise Agreements
that restrict Spacelink Group Entities from providing services
to customers in the franchise area; or
(v) any other agreement, commitment,
arrangement or plan not made in the ordinary course of
business that is material to the Spacelink Group, taken as a
whole and that has not been disclosed in a Schedule to this
Agreement.
(b) Each agreement, commitment, arrangement or
plan required to be disclosed in Schedule 3.12 or 3.14 to this Agreement (i) is
a valid and binding agreement in all material respects of the relevant
Spacelink Group Entity and, to the knowledge of Spacelink, the other parties
thereto and (ii) is in full force and effect. Except as described in Schedule
3.14, neither the relevant Spacelink Group Entity nor, to the knowledge of
Spacelink, any other party thereto is in default or breach in any respect under
the terms of any such agreement, commitment, arrangement or plan required to be
disclosed in Schedule 3.14, other than defaults or breaches which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.15 Insurance Coverage. Spacelink has furnished to
Intercable a list of all insurance policies and fidelity bonds relating to the
assets, business, operations, employees, officers or directors of the Spacelink
Group Entities. There is no material claim by any Spacelink Group Entity
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums payable under all such policies and bonds have been paid timely
and the Spacelink Group Entities have otherwise complied in all material
respects with the terms and conditions of all such policies and bonds. Such
policies and bonds are of the type and in amounts
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customarily carried by Persons conducting businesses similar to those of the
Spacelink Group Entities.
3.16 Compliance with Laws and Court Orders; No Defaults.
(a) None of the Spacelink Group Entities is in violation of, and has since May
31, 1991, violated, any applicable law, rule, regulation, judgment, injunction,
order or decree except for violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) Except as disclosed pursuant to Section 3.12,
none of the Spacelink Group Entities is in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, any agreement or other instrument binding upon any Spacelink Group
Entity or any license, franchise, permit or similar authorization held by any
Spacelink Group Entity, which defaults or potential defaults would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
3.17 Environmental Matters. (a) Except as disclosed on
Schedule 3.17, there are no Environmental Liabilities which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as disclosed in Schedule 3.17, there
has been no Phase I or Phase II environmental site audit or assessment
conducted of which Spacelink has knowledge in relation to the current or prior
business of any Spacelink Group Entity or any property or facility now or
previously owned or leased by any Spacelink Group Entity which has not been
delivered to Intercable at least five days prior to the date hereof.
(c) None of the Spacelink Group Entities owns or
leases or has owned or leased any property, or conducts or has conducted any
operations, in Connecticut or New Jersey.
(d) For purposes of this Section 3.17,
"Environmental Liabilities" means any and all liabilities of or relating to any
Spacelink Group Entity, whether vested or unvested, contingent or fixed, actual
or potential, known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws and (ii) relate to actions occurring or
conditions existing on or prior to the Closing Date.
3.18 Intellectual Property. Each Spacelink Group Entity
owns or possesses adequate licenses or other rights to use all Intellectual
Property Rights necessary to conduct the business now operated by it. Except
as disclosed in Schedule 3.18, Spacelink has no knowledge of any infringement
by any Spacelink Group Entity of, or conflict by any Spacelink Group Entity
with, any Intellectual Property Rights of others which is likely to be
sustained and, if such infringement or conflict were sustained, would
reasonably be expected to have a Material Adverse Effect.
3.19 Taxes. Except as set forth in the Balance Sheet,
Schedule 3.19 hereto, or as would not, individually or in the aggregate,
reasonably be expected to have a Material
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Adverse Effect (a) the Spacelink Group Entities have filed, been included in or
sent, and will, prior to the Closing Date, file, be included in or send all
material returns, declarations and reports and information returns and
statements required to be filed or sent by or relating to any of them prior to
the Closing Date relating to any Taxes with respect to any income, properties
or operations of any and all of the Spacelink Group Entities prior to the
Closing Date (collectively, the "Spacelink Returns"); (b) as of the time of
filing, the Returns correctly reflected (and, as to any Returns not filed as of
the date hereof, will correctly reflect) in all material respects the facts
regarding the income, business, assets, operations, activities and status of
the Spacelink Group Entities and any other information required to be shown
therein; (c) the Spacelink Group Entities have timely paid or made provision
for all Taxes that have been shown as due and payable on the Returns that have
been filed; (d) the Spacelink Group Entities have made or will make provisions
for all Taxes payable for any periods that end on or before the Closing Date
for which no Returns have yet been filed and for any periods that begin before
the Closing Date and end after the Closing Date to the extent such Taxes are
attributable to the portions of any such period ending at the Closing Date; (e)
the charges, accruals and reserves for taxes reflected on the books of the
Spacelink Group Entities are adequate to cover the Tax liabilities that have
accrued or are payable by the Spacelink Group Entities; (f) none of the
Spacelink Group Entities is delinquent in the payment of any material Taxes;
(g) no deficiency for any material Taxes has been proposed, asserted or
assessed in writing against any of the Spacelink Group Entities (or any member
of any affiliated or combined group of which any of the Spacelink Group
Entities is or has been a member for which any of the Spacelink Group Entities
could be liable); and (h) none of the Spacelink Group Entities is or has been a
party to any tax sharing agreement with any corporation which, as of the
Closing Date, is not a member of the affiliated group of which Spacelink is a
member.
3.20 Transactions with Affiliates. (a) Except as
disclosed on Schedule 3.20 or in the SEC Documents filed with the SEC prior to
the date hereof, no Spacelink Group Entity is, or since May 31, 1991, has been,
a party to a material agreement or transaction with any of its Affiliates
(other than Intercable Group Entities and other Spacelink Group Entities).
(b) Except as disclosed on Schedule 3.20 or
pursuant to transactions disclosed in the Current SEC Filings:
(i) no officer or director of any
Spacelink Group Entity (other than the Cable Partnerships) is
employed by, or renders or supplies services to, any JI Group
Entity (A) for which the JI Group Entities since May 31, 1992
paid, or are reasonably expected to pay, more than $20,000 per
year or (B) on terms which do not require such JI Group Entity
to pay fair market value for such services, and
(ii) no officer or director of any JI
Group Entity is employed by, or renders or supplies services
to, any Spacelink Group Entity (other than the Cable
Partnerships) (A) for which the Spacelink Group Entities since
May 31, 1992 paid, or are reasonably expected to pay, more
than $20,000 per year or (B) on terms which do not require
such Spacelink Group Entity to pay fair market value for such
services.
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(c) Schedule 3.20 lists all property or assets
(whether real or personal, tangible or intangible) that are owned, leased or
licensed by a JI Group Entity and are necessary for use in connection with the
businesses conducted by any of the Spacelink Group Entities.
(d) Except as set forth in Schedule 3.20 or in
the SEC Documents filed with the SEC prior to the date hereof, to the knowledge
of Spacelink, none of the officers or directors of any Spacelink Group Entity,
or their relatives, owns directly or indirectly, individually or collectively,
a material interest in any Person which is a material customer or supplier of
(or has any existing contractual relationship with) any Spacelink Group Entity
or owns any property used in the business of any Spacelink Group Entity.
3.21 Directors and Officers. Schedule 3.21 identifies all
directors and officers of Spacelink at the date hereof. None of such officers
has indicated to an officer of Spacelink that he or she intends to resign or
retire within one year after the Closing Date as a result of the consummation
of this Agreement or the Jones Intercable Transaction or the exercise of the
Control Option.
3.22 Employee Benefit Plans. (a) Schedule 3.22(a)
identifies each Employee Plan. Spacelink has furnished to Intercable copies of
the Employee Plans (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof.
(b) No Employee Plan is a Multiemployer Plan,
Title IV Plan or "defined benefit plan" as defined in Section 3(35) of ERISA.
(c) No "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to
any Employee Plan or any other employee benefit plan or arrangement maintained
by Spacelink Group Entity or any of their respective ERISA Affiliates which is
covered by Title I of ERISA, excluding transactions effected pursuant to a
statutory or administrative exemption and excluding transactions that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. No Spacelink Group Entity nor any of their respective ERISA
Affiliates has incurred, or reasonably expects to incur prior to the Closing
Date, any material liability under Title IV of ERISA arising in connection with
the termination of, or a complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA.
(d) Each Employee Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period from its adoption to date; each trust created under
any such Plan is exempt from tax under Section 501(a) of the Code and has been
so exempt during the period from creation to date. Spacelink has provided
Intercable with the most recent determination letter of the Internal Revenue
Service relating to each such Employee Plan. Except as described on Schedule
3.22(a), each Employee Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code.
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(e) Schedule 3.22(e) identifies each material
Benefit Arrangement. Spacelink has furnished to Intercable copies or
descriptions of each such Benefit Arrangement. Each such Benefit Arrangement
has been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations, except for such noncompliance that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(f) The Expected Postretirement Benefit
Obligation (as defined in Statement of Financial Accounting Standards No. 106)
in respect of active, retired and former employees of the Spacelink Group
Entities does not in the aggregate exceed $1,000,000 and, except as set forth
on Schedule 3.22(f), no condition exists that would prevent the Spacelink Group
Entities from amending or terminating any plan providing health, medical or
life insurance benefits in respect of any such active, retired or former
employee.
(g) Except as set forth in Schedule 3.22(g),
there is no contract, agreement, plan or arrangement covering any employee or
former employee of any Spacelink Group Entity that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code.
(h) Except as set forth on Schedule 3.22(h), no
current or former director, officer or employee of any Spacelink Group Entity
will become entitled to any bonus, retirement, severance, job security or
similar benefit from the Spacelink Group Entities, or any enhancement of any
such benefit, solely as a result of the consummation of this Agreement or the
Jones Intercable Transaction. Without limiting the generality of the
foregoing, the consummation of the transaction contemplated hereby will not
constitute a "Change of Control" for purposes of the Jones Spacelink, Ltd. 1992
Stock Option Plan.
(i) For purposes of this Section 3.22, the
following terms have the following meanings:
"Benefit Arrangement" means any employment, severance
or similar contract, arrangement or policy, or any other contract, plan, policy
or arrangement whether or not written) providing for severance benefits,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses,
stock options, stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits that (i) is
not an Employee Plan, (ii) is entered into or maintained, as the case may be,
by any of the Spacelink Group Entities or their respective Affiliates and (iii)
covers any employee or former employee of any Spacelink Group Entity.
"Employee Plan" means any "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by any of the
Spacelink Group Entities or their respective Affiliates and (iii) covers any
employee or former employee of any Spacelink Group Entity.
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3.23 Finders' Fees. Except as disclosed in Schedule 3.23,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of any Spacelink Group
Entity who might be entitled to any fee or commission from any Intercable Group
Entity in connection with the transactions contemplated by this Agreement.
3.24 Representations. The representations and warranties
of Spacelink contained in this Agreement, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect
are true and correct with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect.
3.25 Disclosure Documents. (a) The information supplied
or to be supplied by Spacelink specifically for use in the joint registration
statement/proxy statement to be filed by Intercable and Spacelink with the SEC
pursuant to Section 5.1 with respect to the meetings to be held to approve the
transactions contemplated hereby (the "Statement") will not contain, at the
time the Statement becomes effective, at the time the Statement, or any
amendment or supplement thereto, is first mailed to shareholders of Spacelink
and Intercable and at the time such shareholders vote on the matters covered
thereby, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they are made, not
misleading. Each document required to be filed by Spacelink with the SEC in
connection with this Agreement, including, without limitation, the Statement,
and any amendments or supplements thereto will, when filed, comply as to form
in all material respects with the applicable requirements of the Exchange Act.
(b) The representations and warranties contained
in subsection (a) above shall not apply to statements or omissions included in
the Statement based on information furnished to Spacelink by or on behalf of
Intercable specifically for use therein.
(c) Each of Spacelink's financial statements
(including, in each case, any notes thereto) contained in the Statement will
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto) and will fairly present, in all material
respects, the consolidated financial position, results of operations and
changes in financial position of the Spacelink Group Entities as at the dates
thereof and for the periods indicated therein.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF INTERCABLE
Intercable hereby represents and warrants to Spacelink that:
4.1 Corporate Existence and Power. Intercable is a
corporation duly incorporated, validly existing and in good standing under the
laws of Colorado and has all
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corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not, individually or in the aggregate, have a Material
Adverse Effect. Intercable is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. Intercable has heretofore delivered to Spacelink true and
complete copies of its articles of incorporation and bylaws as currently in
effect.
4.2 Corporate Authorization; Minute Books. (a) The
execution, delivery and, subject to approval of the Intercable Proposals by the
shareholders of Intercable, performance by Intercable of this Agreement is
within its corporate powers and has been duly authorized by all necessary
corporate action on the part of Intercable. This Agreement constitutes a valid
and binding agreement of Intercable.
(b) Intercable has made available to Spacelink
true and correct copies of all minutes of meetings and action by consent of (i)
the board of directors of Intercable Group Entities, and any committees thereof
and (ii) shareholders or partners of Intercable Group Entities. All actions
taken by Intercable requiring action by its board of directors or shareholders
have been duly authorized or ratified by all necessary corporate action, and
are evidenced in such minutes and consents.
(c) The Intercable Board of Directors, acting in
accordance with the unanimous recommendation of a special committee of the
board of directors, has unanimously (i) determined that the transaction
contemplated hereby is fair to, and in the best interest of, Intercable and
(ii) resolved to recommend the Intercable Proposals to the shareholders of
Intercable. Intercable further represents that Salomon Brothers Inc and
Dillon, Reed & Co. Inc. have delivered to the Board of Directors their written
opinion that the number of shares to be issued by Intercable to Spacelink
pursuant to the transaction contemplated hereby is fair to Intercable from a
financial point of view. Intercable has been advised that all of its directors
who are shareholders of Intercable intend to vote in favor of the Intercable
Proposals.
4.3 Governmental Authorization. Assuming the accuracy of
Spacelink's representations and warranties contained in Section 3.3 hereof, the
execution, delivery and performance by Intercable of this Agreement and the
consummation of the transaction contemplated hereby require no action of any
Intercable Group Entity by or in respect of, or filing by any Intercable Group
Entity with, any Governmental Authority, organized within the United States of
America, England or Spain other than (i) the actions and filings listed on
Schedule 4.3 and (ii) any such action or filing as to which the failure to make
or obtain would not, individually or in the aggregate, have a Material Adverse
Effect.
4.4 Non-Contravention. The execution, delivery and
performance by Intercable of this Agreement and the consummation of the
transaction contemplated hereby do not:
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(i) violate (x) the articles of
incorporation or by-laws of Intercable, or (y) the articles of
incorporation or by-laws, partnership agreement or other
organizational document (as applicable) of any other
Intercable Group Entity,
(ii) assuming compliance with the matters
referred to in Section 4.3 and the accuracy of Spacelink's
representations and warranties contained in Section 3.3,
violate any applicable law, rule, regulation, judgment,
injunction, order or decree, binding on any Intercable Group
Entity,
(iii) except as set forth in Schedule 4.4
and assuming compliance with the matters referred to in
Section 4.3 hereof, require any consent or other action by any
Person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of any
right or obligation of any Intercable Group Entity or cause a
loss of any benefit to which such Intercable Group Entity is
entitled under, any agreement or other instrument binding upon
such Intercable Group Entity or any Franchise Agreement,
license, permit or other similar authorization held by any
Intercable Group Entity, or
(iv) result in the creation or imposition
of any Lien on any asset of any Intercable Group Entity.
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, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.5 Capitalization. (a) At the date hereof:
(i) Intercable's authorized capital
stock consists of (A) 5,550,000 shares of Intercable Common
Stock, of which 5,498,539 shares are issued and 4,913,021
shares are outstanding and (B) 30,000,000 shares of Intercable
Class A Common Stock, of which 16,062,502 shares are issued
and 14,817,088 shares are outstanding,
(ii) there is outstanding $19,468,000
principal amount of 7.5% Convertible Debentures due June 1,
2007 of Intercable, which are convertible into 1,289,272
shares of Intercable Class A Common Stock,
(iii) Intercable holds (a) 585,518 shares
of Intercable Common Stock, and (b) 1,245,414 shares of
Intercable Class A Common Stock in its treasury, and
(iv) there are outstanding stock options
to purchase an aggregate of 200,000 shares of Intercable
Common Stock and 798,665 shares of Intercable Class A Common
Stock, and Schedule 4.5 hereto lists the grantees of such
options, together with the date of grant and the exercise
price.
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(b) Except as set forth in paragraph (a) of this
Section 4.5, there are not outstanding as of the date hereof (i) shares of
stock or other voting securities of Intercable, (ii) securities of Intercable
convertible into or exchangeable for shares of stock or voting securities of
Intercable or (iii) except as contemplated by the Jones Intercable Transaction,
options or other rights to acquire from Intercable, or other obligation of
Intercable to issue, any stock, voting securities or securities convertible
into or exchangeable for stock or voting securities of Intercable (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "Intercable
Outstanding Securities"). There are no outstanding obligations of Intercable
to repurchase, redeem or otherwise acquire any Intercable Outstanding
Securities, except in accordance with the terms thereof.
(c) All outstanding shares of stock of Intercable
have been and, at or prior to the Closing, will be, duly authorized and validly
issued, fully paid and non-assessable and have been (or will have been)
offered, issued, sold and delivered by Intercable in compliance with applicable
federal and state securities laws.
(d) To Intercable's knowledge, there are no
voting trusts, shareholder agreements or any other agreements or understandings
with respect to the voting of any Intercable Common Stock or Intercable Class A
Common Stock other than those created by the articles of incorporation and
by-laws of Intercable and as contemplated by the Jones Intercable Transaction.
4.6 Subsidiaries. (a) All Subsidiaries of Intercable and
their respective jurisdictions of incorporation or organization (as applicable)
are identified on Schedule 4.6. Schedule 4.6 also lists any investments in
excess of $5,000,000 at the date hereof of any Intercable Group Entity in
Persons that are not Subsidiaries of Intercable. Each Subsidiary of Intercable
is either a corporation, a general partnership or a limited partnership.
(b) Each Subsidiary of Intercable identified as a
corporation on Schedule 4.6 is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each Subsidiary
of Intercable identified as a partnership on Schedule 4.6 is a partnership duly
organized and validly existing as a partnership under the laws of its
jurisdiction of organization. Each such Subsidiary has all corporate or
partnership powers, as the case may be, and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect. Each Subsidiary of Intercable is
duly qualified to do business as a foreign corporation or partnership and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) Except as disclosed in Schedule 4.6 or
pursuant to Liens granted to secure obligations under the Loan Agreements, all
of the outstanding capital stock of, or other voting securities or ownership
interests in, each Subsidiary of Intercable is owned by
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Intercable, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests, but excluding restrictions in the
partnership agreements of the Cable Partnerships), other than limitations and
restrictions arising under applicable securities laws and regulations. There
are no outstanding (i) securities of any Subsidiary of Intercable convertible
into or exchangeable for shares of stock or other voting securities or
ownership interests in any Intercable Group Entity or (ii) options or other
rights to acquire from any Subsidiary of Intercable, or other obligation of any
such Subsidiary to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
Intercable Group Entity (the items in clauses (i) and (ii) being referred to
collectively as the "Intercable Subsidiary Securities"). There are no
outstanding obligations of any Subsidiary of Intercable to repurchase, redeem
or otherwise acquire any outstanding Intercable Subsidiary Securities.
4.7 SEC Documents. (a) Intercable has delivered to
Spacelink all reports, statements, schedules and registration statements filed
with the SEC by each Intercable SEC Reporting Entity since May 31, 1991,
including (i) the annual reports on Form 10-K of each Intercable SEC Reporting
Entity for the fiscal years ended after May 31, 1991, (ii) the quarterly
reports on Form 10-Q of each Intercable SEC Reporting Entity for the fiscal
quarters ended after the end of the most recent fiscal year of such Intercable
SEC Reporting Entity and (iii) the proxy or information statements relating to
meetings of, or actions taken without a meeting by, the shareholders or
partners of each Intercable SEC Reporting Entity held since May 31, 1991.
(b) Since May 31, 1991, each Intercable SEC
Reporting Entity has duly filed with the SEC all registration statements,
reports and proxy statements required to be filed by it under the Securities
Act and the Exchange Act (the "Intercable SEC Documents"), and each such
registration statement, when it became effective, and each such report or proxy
statement, when it was filed, as the case may be, complied in all material
respects with the Securities Act or the Exchange Act, as the case may be.
(c) Each such registration statement, as amended
or supplemented, if applicable, filed pursuant to the Securities Act as of the
date such statement or amendment became effective did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, not misleading. As
of its filing date, each such report or proxy statement filed pursuant to the
Exchange Act did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
4.8 Financial Statements. (a) The audited and unaudited
interim consolidated financial statements of Intercable included in the
Intercable SEC Documents fairly present, in all material respects and in
conformity with generally accepted accounting principles (except as permitted
by Form 10-Q) applied on a consistent basis (except as may be indicated in the
notes thereto) the consolidated financial position of Intercable and its
respective consolidated subsidiaries as at the date thereof and the
consolidated results of operations, stockholders' equity
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and cash flows for the periods then ended (subject to normal year end audit
adjustments in the case of unaudited interim financial statements).
(b) The audited and unaudited interim financial
statements of each Intercable SEC Reporting Entity other than Intercable
included in the Intercable SEC Documents fairly present, in all material
respects and in conformity with generally accepted accounting principles
(except as permitted by Form 10-Q) applied on a consistent basis (except as may
be indicated in the notes thereto) the financial position of such Intercable
SEC Reporting Entity as at the date thereof and the statements of operations,
partners' capital (or stockholders' equity) and cash flows for the periods then
ended (subject to normal year end audit adjustments in the case of unaudited
interim financial statements).
4.9 No Undisclosed Material Liabilities. There are no
liabilities of any Intercable Group Entity of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, which
would reasonably be expected to result in such a liability, other than:
(a) liabilities provided for in the Intercable
Balance Sheet or disclosed in the notes thereto;
(b) liabilities disclosed in the Current
Intercable SEC Filings or in Schedule 4.13; and
(c) other undisclosed liabilities which,
individually or in the aggregate, would not reasonably be expected to be
material to the Intercable Group, taken as a whole.
4.10 Absence of Certain Changes. Except as disclosed in
Schedule 4.10 or the Intercable SEC Documents filed with the SEC prior to the
date hereof, since the Intercable Balance Sheet Date the business of the
Intercable Group Entities has been conducted in the ordinary course consistent
with past practices and there has not been:
(i) any event, occurrence, development
or state of circumstances or facts which has had or would
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to
any shares of capital stock of Intercable, or any repurchase,
redemption or other acquisition by any Intercable Group Entity
of any outstanding shares of capital stock or other securities
of, or other ownership interest in, Intercable;
(iii) any amendment of any term of any
outstanding equity security of Intercable, or any debt
security material to the Intercable Group Entities, taken as a
whole, but excluding debt issued pursuant to the Intercable
Loan Agreements and capitalized leases;
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(iv) prior to the date hereof, any
incurrence, assumption or guarantee by Intercable (or any
Subsidiary of Intercable that is not a Cable Partnership of
Intercable) of any indebtedness for borrowed money exceeding
$10,000,000 in the aggregate for all Intercable Group Entities
(other than the Cable Partnerships of Intercable);
(v) prior to the date hereof, any
incurrence, assumption or guarantee by any Cable Partnership
of Intercable of any indebtedness for borrowed money
(excluding borrowings to refinance outstanding debt) exceeding
$50,000,000 in the aggregate for all Cable Partnerships of
Intercable;
(vi) prior to the date hereof, any making
by any Intercable Group Entity of any loan, advance or capital
contributions to or other investment in any Person other than
(A) loans, advances or capital contributions to or investments
in other Intercable Group Entities or (B) loans, advances,
capital contributions to or investments in other Persons that
are not JI Group Entities in an aggregate amount not exceeding
$5,000,000;
(vii) any damage, destruction or other
casualty loss not covered by insurance affecting the business
or assets of any Intercable Group Entity which has had or
would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; or
(viii) any material change in any method of
accounting or accounting practice by any Intercable Group
Entity except as required by generally accepted accounting
principles.
4.11 Properties. Except as described in Schedule 4.11,
each Intercable Group Entity possesses all assets (whether real or personal,
tangible or intangible) and rights necessary to enable it to carry on its
business as currently conducted.
4.12 Franchises. (a) Schedule 4.12 lists all Systems of
the Intercable Group Entities as of the date hereof and specifies for each such
System (i) the name of the Intercable Group Entity that owns or operates such
System, (ii) the material Franchise Agreements (other than FCC Licenses)
relating to such System, (iii) the approximate date on which each such
Franchise Agreement expires, (iv) the approximate number of Subscribers
serviced by such System on February 28, 1994, and (v) the approximate number of
homes passed by such System on February 28, 1994.
(b) The Intercable Group Entities have all
material Franchise Agreements required to operate the Systems. All such
Franchise Agreements held by an Intercable Group Entity were lawfully
transferred or granted to such Intercable Group Entity pursuant to the rules
and regulations of the relevant Governmental Authorities. The Franchise
Agreements (other than the FCC Licenses) authorize the Intercable Group Entity
indicated on Schedule 4.12 to operate a System (or portion thereof) until the
respective approximate expiration dates listed on Schedule 4.12. Except as
described in Schedule 4.12 or otherwise
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disclosed in writing to Spacelink, the Intercable Group Entities are in
compliance in all material respects with all material terms and conditions of
all material Franchise Agreements relating to the Systems (taken as a whole),
and no event has occurred or exists which permits, or, after the giving of
notice or the lapse of time or both would permit, the revocation or termination
of any Franchise Agreement, except for such events that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Schedule 4.12 lists each Franchise Agreement
for which an Intercable Group Entity has received notice from, or has been
advised by, the relevant Governmental Authority that such Governmental
Authority is taking, or threatening to take, action to terminate or otherwise
revoke such Franchise Agreement.
(d) Schedule 4.12 contains a complete list and
brief description of all FCC Licenses granted to each Intercable Group Entity
and in effect as of the date hereof, and all applications by an Intercable
Group Entity for an FCC License now pending, other than the following types of
licenses: (i) business and other two-way radio licenses that are used in
connection with the operation of the businesses conducted by the Intercable
Group and are not held for resale or to provide services to third parties and
(ii) microwave licenses and earth station registrations which authorize the
reception or transmission of signals in connection with the operation of the
Systems.
4.13 Litigation. (a) Except as listed and described in
Schedule 4.13 or the Current Intercable SEC Filings, there are no claims,
actions, suits, proceedings or, to the knowledge of Intercable, investigations
pending by or against any Intercable Group Entity or any of their respective
businesses, properties, assets or any of the capital stock of any Intercable
Group Entity at law or in equity, before or by any Governmental Authority,
which would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. To the knowledge of Intercable, no such claim,
action, suit, proceeding or investigation is threatened.
(b) Except as described in Schedule 4.13, as of
the date hereof there is no claim, action, suit, proceeding or, to the
knowledge of Intercable, investigation pending (or, to the knowledge of
Intercable, threatened) against, or affecting, any Intercable Group Entity or
any of their respective properties before or by any Governmental Authority
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the consummation of this Agreement, or the Jones Intercable Transaction.
4.14 Material Contracts. (a) Except as contemplated by
the Jones Intercable Transaction or as disclosed in Schedule 4.14 or in any
Intercable SEC Document filed with the SEC between December 31, 1992 and the
date hereof (including documents incorporated by reference therein), as of the
date hereof none of the Intercable Group Entities is a party to or bound by:
(i) any partnership, joint venture or
other similar agreement or arrangement material to the
Intercable Group Entities, taken as a whole;
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(ii) any agreement relating to the
acquisition or disposition of any business (whether by merger,
sale of stock, sale of assets or otherwise), except for
agreements relating to the acquisition or disposition of cable
television systems for a purchase price less than $5,000,000
in any one case or $25,000,000 in the aggregate;
(iii) any agreement relating to
indebtedness for borrowed money or the deferred purchase price
of property (in either case, whether incurred, assumed,
guaranteed or secured by any asset), except for the Intercable
Loan Agreements and any other agreements with an aggregate
outstanding principal amount not exceeding $10,000,000;
(iv) any agreement that limits the
freedom of any Intercable Group Entity to compete in any line
of business or with any Person or in any area or which would
so limit the freedom of any Intercable Group Entity after the
Closing Date other than (A) reasonable and customary
agreements not to compete in the cable television, SMATV or
similar business for a period of not greater than five years
entered into in connection with the sale or other disposition
of such businesses and (B) the provisions of Franchise
Agreements that restrict Intercable Group Entities from
providing certain services to customers in the franchise area;
or
(v) any other agreement, commitment,
arrangement or plan not made in the ordinary course of
business that is material to the Intercable Group, taken as a
whole and that has not been disclosed in a Schedules to this
Agreement.
(b) Each agreement, commitment, arrangement or
plan required to be disclosed in Schedule 4.12 or 4.14 to this Agreement (i) is
a valid and binding agreement in all material respects of the relevant
Intercable Group Entity and, to the knowledge of Intercable, the other parties
thereto and (ii) is in full force and effect. Except as disclosed in Schedule
4.14, neither the relevant Intercable Group Entity nor, to the knowledge of
Intercable, any other party thereto is in default or breach in any respect
under the terms of any such agreement, commitment, arrangement or plan required
to be disclosed on Schedule 4.14, other than defaults or breaches which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.15 Insurance Coverage. Intercable has furnished to
Spacelink a list of all of its insurance policies and fidelity bonds relating
to the assets, business, operations, employees, officers and directors of the
Intercable Group Entities. There is no material claim by any Intercable Group
Entity pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums payable under all such policies and bonds have been paid
timely and the Intercable Group Entities have otherwise complied in all
material respects with the terms and conditions of all such policies and bonds.
Such policies and bonds are of the type and in amounts
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39
customarily carried by Persons conducting businesses similar to those of the
Intercable Group Entities.
4.16 Compliance with Laws and Court Orders; No Defaults.
(a) None of the Intercable Group Entities is in violation of, and has since May
31, 1991, violated, any applicable law, rule, regulation, judgment, injunction,
order or decree except for violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) Except as disclosed pursuant to Section 4.12,
none of the Intercable Group Entities is in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, any agreement or other instrument binding upon any Intercable Group
Entity or any license, franchise, permit or similar authorization held by any
Intercable Group Entity, which defaults or potential defaults would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
4.17 Environmental Matters. (a) Except as disclosed on
Schedule 4.17, there are no Environmental Liabilities which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
and
(b) Except as disclosed on Schedule 4.17, there
has been no Phase I or Phase II environmental site audit or assessment
conducted of which Intercable has knowledge in relation to the current or prior
business of any Intercable Group Entity or any property or facility now or
previously owned or leased by any Intercable Group Entity which has not been
delivered to Spacelink at least five days prior to the date hereof;
(c) Except as disclosed in Schedule 4.17, none of
the Intercable Group Entities owns or leases or and has owned or leased any
property, or conducts or has conducted any operations, in Connecticut or New
Jersey.
(d) For purposes of this Section 4.17,
"Environmental Liabilities" means any and all liabilities of or relating to any
Intercable Group Entity, whether vested or unvested, contingent or fixed,
actual or potential, known or unknown, which (i) arise under or relate to
matters covered by Environmental Laws and (ii) relate to actions occurring or
conditions existing on or prior to the Closing Date.
4.18 Intellectual Property. Each Intercable Group Entity
owns or possesses adequate licenses or other rights to use all Intellectual
Property Rights necessary to conduct the business now operated by it. Except
as disclosed in Schedule 4.18, Intercable has no knowledge of any infringement
by any Intercable Group Entity of, or conflict by any Intercable Group Entity
with, any Intellectual Property Rights of others which is likely to be
sustained and, if such infringement or conflict were sustained, would
reasonably be expected to have a Material Adverse Effect.
4.19 Taxes. Except as set forth in the Intercable Balance
Sheet, Schedule 4.19, or as would not, individually or in the aggregate,
reasonably be expected to have
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a Material Adverse Effect, (a) the Intercable Group Entities have filed, been
included in or sent, and will, prior to the Closing Date, file, be included in
or send all returns, declarations and reports and information returns and
statements required to be filed or sent by or relating to any of them prior to
the Closing Date relating to any Taxes with respect to any income, properties
or operations of Intercable or any of its Subsidiaries prior to the Closing
Date (collectively, the "Intercable Returns"), (b) as of the time of filing,
the Intercable Returns correctly reflected (and, as to any Intercable Returns
not filed as of the date hereof, will correctly reflect) in all material
respects the facts regarding the income, business, assets, operations,
activities and status of the Intercable Group Entities and any other
information required to be shown therein, (c) the Intercable Group Entities
have timely paid or made provision for all Taxes that have been shown as due
and payable on the Intercable Returns that have been filed, (d) the Intercable
Group Entities have made or will make provision for all Taxes payable for any
periods that end on or before the Closing Date for which no Intercable Returns
have yet been filed and for any periods that begin before the Closing Date and
end after the Closing Date to the extent such Taxes are attributable to the
portion of any such period ending at the Closing Date, (e) the charges,
accruals and reserve for taxes reflected on the books of the Intercable Group
Entities are adequate to cover Tax liabilities that have accrued or are payable
by the Intercable Group Entities, (f) no Intercable Group Entity is delinquent
in the payment of any material Taxes, (g) no deficiency for any material Taxes
has been proposed, asserted or assessed in writing against any Intercable Group
Entity (or any member of any affiliated or combined group of which any of the
Intercable Group Entities is or has been a member for which any of the
Intercable Group Entities could be liable), and (h) no Intercable Group Entity
is or has been a party to any tax sharing agreement with any corporation which,
as of the Closing Date, is not a member of the affiliated group of which
Intercable is a member.
4.20 Transactions with Affiliates. (a) Except as
disclosed on Schedule 4.20 or in the Intercable SEC Documents filed with the
SEC prior to the date hereof, no Intercable Group Entity is, or since May 31,
1991 has been, a party to a material agreement or transaction with any of their
Affiliates (other than Spacelink Group Entities and other Intercable Group
Entities).
(b) Except as disclosed on Schedule 4.20 or
pursuant to transactions disclosed in the Current Intercable SEC Filings:
(i) no officer or director of any
Intercable Group Entity (other than Cable Partnerships) is
employed by, or renders or supplies services to, any JI Group
Entity (A) for which the JI Group Entities since May 31, 1992
paid, or are reasonably expected to pay, more than $20,000 per
year or (B) on terms which do not require such JI Group Entity
to pay fair market value for such services, and
(ii) no officer or director of any JI
Group Entity is employed by, or renders or supplies services
to, any Intercable Group Entity (A) for which the Intercable
Group Entities since May 31, 1992 paid, or are reasonably
expected to pay, more than $20,000 per year or (B) on terms
which do not require such Intercable Group Entity to pay fair
market value for such services.
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(c) Schedule 4.20 lists all property or assets
(whether real or personal, tangible or intangible) that are owned, leased or
licensed by a JI Group Entity and are necessary for use in connection with the
businesses conducted by any of the Intercable Group Entities.
(d) Except as set forth in Schedule 4.20 or in
the SEC Documents filed with the SEC prior to the date hereof to the knowledge
of Intercable, none of the officers or directors of any Intercable Group
Entity, or their relatives, owns directly or indirectly, individually or
collectively, a material interest in any Person which is a material customer or
supplier of (or has any existing contractual relationship with) any Intercable
Group Entity or owns any property used in the business of any Intercable Group
Entity.
4.21 Employees. Schedule 4.21 identifies all directors
and officers of Intercable at the date hereof. None of such directors or
officers has indicated to an officer of Intercable that he or she intends to
resign or retire within one year after the Closing Date as a result of the
consummation of this Agreement or the Jones Intercable Transaction.
4.22 Employee Benefit Plans. (a) Schedule 4.22 identifies
each Intercable Employee Plan. Intercable has furnished to Spacelink copies of
the Intercable Employee Plans (and, if applicable, related trust agreements)
and all amendments thereto and written interpretations thereof.
(b) No Intercable Employee Plan is a
Multiemployer Plan, Title IV Plan or "defined benefit plan" as defined in
Section 3(35) of ERISA.
(c) No "prohibited transaction," as defined in
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to
any Intercable Employee Plan or any other employee benefit plan or arrangement
maintained by Intercable or any of its ERISA Affiliates which is covered by
Title I of ERISA, excluding transactions effected pursuant to a statutory or
administrative exemption and excluding transactions that would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. Intercable and its ERISA Affiliates have not incurred, or reasonably
expect to incur prior to the Closing Date, any material liability under Title
IV of ERISA arising in connection with the termination of, or a complete or
partial withdrawal from, any plan covered or previously covered by Title IV of
ERISA.
(d) Each Intercable Employee Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to date and each
trust created under any such Intercable Employee Plan is exempt from tax under
Section 501(a) of the Code and has been so exempt during the period from
creation to date. Intercable has provided Spacelink with the most recent
determination letter of the Internal Revenue Service relating to each such
Intercable Employee Plan. Except as described in Schedule 4.22(a), each
Intercable Employee Plan has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations, including but not limited to ERISA and the Code.
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(e) Schedule 4.22(e) identifies each material
Intercable Benefit Arrangement. Intercable has furnished to Spacelink copies
or descriptions of each such Intercable Benefit Arrangement. Each such
Intercable Benefit Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, except for such noncompliance that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(f) The Expected Postretirement Benefit
Obligation in respect of active, retired and former employees of the Intercable
Group Entities does not in the aggregate exceed $1,000,000 and except as set
forth in Schedule 4.22(f), no condition exists that would prevent the
Intercable Group Entities from amending or terminating any plan providing
health, medical or life insurance benefits in respect of any such active,
retired or former employee.
(g) Except as set forth in Schedule 4.22(g),
there is no contract, agreement, plan or arrangement covering any employee or
former employee of any Intercable Group Entity that, individually or
collectively, could give rise to the payment of any material amount that would
not be deductible pursuant to the terms of Section 280G of the Code.
(h) Except as set forth on Schedule 4.20(h), and
except for bonuses not to exceed $1,000,000 in the aggregate, no current or
former director, officer or employee of any Intercable Group Entity will become
entitled to any bonus, retirement, severance, job security or similar benefit
from the Intercable Group Entities, or any enhancement of any such Benefit,
solely as a result of the consummation of this Agreement or the Jones
Intercable Transaction. Without limiting the generality of the foregoing,
neither the consummation of the transaction contemplated hereby or by the Jones
Intercable Transaction, will constitute a "Change of Control" for purposes of
the Jones Intercable, Inc. 1992 Stock Option Plan or otherwise result in the
acceleration of vesting of stock options under any stock option plan of
Intercable.
(i) For purposes of this Section 4.22, the
following terms have the following meanings:
"Intercable Benefit Arrangement" means any
employment, severance or similar contract, arrangement or policy, or any other
contract, plan, policy or arrangement (whether or not written) providing for
severance benefits, insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits that (i) is not an Intercable Employee Plan, (ii) is
entered into or maintained, as the case may be, by any of the Intercable Group
Entities or their respective Affiliates and (iii) covers any employee or former
employee of any Intercable Group Entity.
"Intercable Employee Plan" means any "employee
benefit plan", as defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is
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maintained, administered or contributed to by any of the Intercable Group
Entities or their respective Affiliates and (iii) covers any employee or former
employee of any Intercable Group Entity.
4.23 Finders' Fees. Except as disclosed in Schedule 4.23,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of any Intercable Group
Entity who might be entitled to any fee or commission from any Spacelink Group
Entity in connection with the transactions contemplated by this Agreement.
4.24 Representations. The representations and warranties
of Intercable contained in this Agreement, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse
Effect, are true and correct with only such exceptions as would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
4.25 Disclosure Documents. (a) The information supplied
or to be supplied by Intercable specifically for use in the Statement shall not
contain, at the time the Statement becomes effective, and at the time the
Statement is first mailed to the shareholders of Intercable and Spacelink and
at the time such shareholders vote on the approval of the matters covered
thereby, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. Each document required to be filed by Intercable and Spacelink
with the SEC in connection with this Agreement, including, without limitation,
the Statement, and any amendments or supplements thereto will, when filed,
comply as to form in all material respects with the applicable requirements of
the Exchange Act.
(b) The representations and warranties contained
in subsection (a) above shall not apply to statements or omissions included in
the Statement based upon information furnished to Intercable by or on behalf of
Spacelink specifically for use therein.
(c) Each of the Intercable's financial statements
(including, in each case, any notes thereto) contained in the Statement will
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto) and will fairly present, in all material
respects, the consolidated financial position, results of operations and
changes in financial position of Intercable and its Subsidiaries as at the
dates thereof and for the periods indicated therein.
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ARTICLE 5
COVENANTS
5.1 Shareholder Meetings; Proxy Materials. (a)
Intercable shall cause a meeting of its shareholders to be duly called and held
as soon as reasonably practicable for the purpose of voting on a proposal (the
"Intercable Proposal") to approve the acquisition by Intercable of
substantially all of the Assets (other than the Excluded Assets) in exchange
for the Shares and the assumption by Intercable of all of the liabilities of
Spacelink (other than liabilities to Dissenting Shareholders) as contemplated
by this Agreement. The Intercable Board of Directors shall, subject to their
fiduciary duties as advised by counsel, recommend approval of the Intercable
Proposal by Intercable's shareholders.
(b) Spacelink shall cause a meeting of its
shareholders to be duly called and held as soon as reasonably practicable for
the purpose of voting on the approval of the following matters (the "Spacelink
Proposals"):
(i) a proposal to approve (x) the sale
by Spacelink to Intercable of substantially all of the Assets
(other than the Excluded Assets) in exchange for the Shares
and the assumption by Intercable of all of the liabilities of
Spacelink (other than liabilities to Dissenting Shareholders),
(y) the dissolution of Spacelink and (z) the distribution by
Spacelink to its shareholders (other than Dissenting
Shareholders) of all of the shares of Common Stock and Class A
Common Stock of Intercable then held by Spacelink, in each
case as contemplated by this Agreement; and
(ii) a proposal to approve the
Alternative Transaction (as defined in the Transaction
Agreement, dated as of May 31, 1994, among Glenn R. Jones,
Jones International, Ltd., BCI, and Spacelink (the
"Transaction Agreement").
The Board of Directors shall, subject to their fiduciary duties as advised by
counsel, recommend approval of the Spacelink Proposals by Spacelink's
shareholders.
(c) In connection with such meetings, each of
Intercable and Spacelink (i) will promptly prepare and file with the SEC, will
use its reasonable efforts to have cleared by the SEC and will thereafter mail
to its shareholders as promptly as practicable, the Statement and all other
proxy materials for such meetings, (ii) will use its reasonable efforts to
obtain the necessary approvals by its shareholders of the matters submitted for
approval to such shareholders and (iii) will otherwise comply with all legal
requirements applicable to such meeting.
(d) Neither Intercable nor Spacelink will file,
amend or supplement any SEC Transaction Document without prior consultation
with the other and its counsel. Intercable and Spacelink shall each notify the
other promptly of the receipt of any comments from the SEC for amendments or
supplements to any SEC Transaction Document or for
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45
additional information and will supply the other with copies of all
correspondence between Intercable or Spacelink, as the case may be, and its
representatives, on the one hand, and the SEC or the members of its staff or
any other governmental officials, on the other hand, with respect to any SEC
Transaction Document.
5.2 Conduct of Spacelink Prior to Closing. (a) From the
date hereof until the Closing Date, Spacelink shall, and will cause each of its
Subsidiaries to, conduct their respective businesses in the ordinary course
consistent with past practice and to use all reasonable efforts to preserve
intact its business organizations and relationships with third parties and to
keep available the services of its present officers and employees.
(b) Without limiting the generality of paragraph
(a) above, from the date hereof until the Closing Date, Spacelink will not, and
will not permit any Spacelink Group Entity (i) to acquire or dispose of any
cable television system; (ii) issue or grant rights or options with respect to
any shares of capital stock; (iii) declare or make provision for the payment of
any dividend or other distribution with respect to any shares of capital stock
or (iv) take or agree to take any action that would knowingly make any
representation and warranty set forth in Article 3 inaccurate in any respect
at, or as of any time prior to, the Closing Date.
(c) From the date hereof until the Closing,
Spacelink will regularly advise and consult with Intercable as to the business
of Spacelink and its Subsidiaries, which consultation will include the review
of (i) strategic, operating and financial plans, including plans for
acquisitions and sales of cable television systems (both as they relate to
Partnership Systems and Owned Systems), (ii) equity, debt, joint venture and
other financing strategies, (iii) business plans for operations, marketing and
technology deployment and (iv) personnel, compensation and related policy
decisions. From the date hereof until the Closing, Spacelink will deliver to
Intercable copies of any agreements described in Section 3.14(a) that are
entered into by a Spacelink Group Entity after the date hereof.
(d) As soon as available, Spacelink shall furnish
Intercable with a consolidated balance sheet and related consolidated
statements of income, stockholders' equity and cash flows for (i) all fiscal
quarters ending after November 30, 1993 but prior to the Closing Date, and (ii)
when available, for the fiscal year ended May 31, 1994. All such financial
statements will be (and will be accompanied by a statement by the Chief
Financial Officer of Spacelink that, in the opinion of management of Spacelink,
such financial statements have been) prepared in accordance with generally
accepted accounting principles applied on a basis consistent with the audited
financial statement of Spacelink at, and for the period ended, May 31, 1993,
will fairly present, in all material respects and in conformity with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial condition, results
of operations, stockholders' equity and cash flows for the applicable periods
then ended (subject to normal year-end audit adjustments in the case of any
unaudited interim financial statements).
(e) As soon as available and in any event within
20 calendar days after the end of each monthly accounting period ending prior
to the Closing, Spacelink shall
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furnish Intercable with (i) a management report with respect to operating
revenues, operating expenses, capital expenditures and related information in
such detail as such management report is prepared for the use of the management
of Spacelink, consistent with past practice.
(f) Intercable acknowledges that prior to the
date hereof certain services have been provided by the Spacelink Group Entities
to the JI Group Entities, and by the JI Group Entities to the Intercable Group
Entities. Intercable agrees that the services described in the Current SEC
Filings may continue to be provided during the period from the date hereof to
the Closing Date, on terms and conditions consistent with past practice.
Except for transactions described in the immediately preceding sentence,
disclosed in Schedules attached hereto or contemplated by this Agreement,
Spacelink agrees that neither it nor any Spacelink Group Entity will engage in
any material transaction, or enter into any agreement, with any JI Group Entity
unless the terms of such transaction are fully and fairly disclosed to, and
approved by, Intercable.
(g) Spacelink acknowledges that it has reviewed
the Stock Purchase Agreement, including Section 5.4 thereof, and that
Intercable has agreed to furnish to BCI information provided by Spacelink to
Intercable.
5.3 Conduct of Intercable Prior to Closing. (a) From the
date hereof until the Closing Date, Intercable shall, and will cause each of
its Subsidiaries to, use all reasonable efforts to preserve intact its business
organizations and relationships with third parties and to keep available the
services of its present officers and employees.
(b) Intercable will not, and will not permit any
Intercable Group Entity to, take or agree to take any action that would
knowingly make any representation and warranty set forth in Article 4
inaccurate in any respect at, or as of any time prior to, the Closing Date.
5.4 Access to Information. (a) From the date hereof
until the earlier of the Closing Date or the termination of this Agreement,
Spacelink will (i) give, and will cause each other Spacelink Group Entity to
give, BCI and Intercable, their counsel, financial advisors, auditors and other
authorized representatives full access to the offices, properties, books and
records of the Spacelink Group Entities, (ii) furnish, and cause each other
Spacelink Group Entity to furnish, to BCI and Intercable, their counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such Persons may
reasonably request and (iii) instruct its employees, counsel and financial
advisors, and those of its Subsidiaries, to cooperate with BCI and Intercable
and their representatives in their investigation of the Spacelink Group
Entities. Any such investigations by BCI and Intercable and their
representatives will be conducted so as not to unreasonably disrupt the
business operations of the Spacelink Group Entities. No investigation by
Intercable, BCI or their representatives, or other information received by
Intercable or such representatives, shall operate as a waiver or otherwise
affect any representation, warranty or agreement given or made under this
Agreement.
(b) From the date hereof until the Closing Date,
Intercable will (i) give, and will cause each other Intercable Group Entity to
give, Spacelink, its counsel,
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financial advisors, auditors and other authorized representatives full access
to the offices, properties, books and records of the Intercable Group Entities,
(ii) furnish, and cause each other Intercable Group Entity to furnish, to
Spacelink, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and (iii) instruct the employees, counsel and
financial advisors of the Intercable Group Entities to cooperate with Spacelink
and its representatives in its investigation of the Intercable Group Entities.
Any such investigations by Spacelink and its representatives will be conducted
so as not to unreasonably disrupt the business operations of the Intercable
Group Entities. No investigation by Spacelink or such representatives or other
information received by Spacelink or such representatives shall operate as a
waiver or otherwise affect any representation, warranty or agreement given or
made under this Agreement.
5.5 Notices of Certain Events. From the date hereof
until the earlier of the Closing Date or the termination of this Agreement,
Intercable and Spacelink shall promptly notify each other of:
(i) any notice or other communication
from any Person alleging that the consent of such Person is or
may be required in connection with this Agreement;
(ii) any notice or other communication
from any Governmental Authority in connection with this
Agreement;
(iii) any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge
threatened against, relating to or involving or otherwise
affecting the Intercable Group Entities or the Spacelink Group
Entities that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section
3.13 or Section 4.13 or that relate to the consummation of
this Agreement; and
(iv) any other material adverse
developments affecting the business of the Intercable Group
Entities or the business of the Spacelink Group Entities, as
applicable, other than developments affecting their respective
industries generally.
5.6 Reasonable Best Efforts. (a) Subject to the terms
and conditions of this Agreement, Intercable and Spacelink will each use its
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary or desirable under applicable laws
and regulations to satisfy the conditions to the other party's obligation to
consummate this Agreement. Intercable and Spacelink each agree to execute and
deliver such other documents, certificates, agreements and other writings and
to take such other actions as may be reasonably necessary or desirable in order
to consummate or implement expeditiously the transaction contemplated hereby in
accordance with this Agreement.
(b) Intercable and Spacelink shall cooperate with
one another (i) in determining whether any action by or in respect of, or
filing with, any governmental body,
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agency, official or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of this Agreement and (ii) in taking such
actions or making any such filings, furnishing information required in
connection therewith and seeking to obtain any such actions, consents,
approvals or waivers in a timely manner.
5.7 Public Announcements. Intercable and Spacelink agree
to consult with each other before issuing (or allowing their Affiliates or
Subsidiaries to issue) any press release or making any public statement with
respect to this Agreement, except as may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any
such press release or make any such public statement prior to such
consultation.
5.8 Other Offers. (a) From the date hereof until the
earlier of the Closing Date or the termination of this Agreement, no Restricted
Person will, directly or indirectly (i) take any action to solicit, initiate or
encourage any Acquisition Proposal or (ii) subject to the fiduciary duties of
the Board of Directors under applicable law as advised by counsel to Spacelink,
with a view to pursuing an Acquisition Proposal with any Person, (x) engage in
negotiations with, or (y) disclose any nonpublic information relating to any
Spacelink Group Entity to, or (z) afford access to the properties, books or
records of any Spacelink Group Entity to, such Person. From the date hereof
until the earlier of the Closing Date or the termination of this Agreement,
Spacelink will promptly notify Intercable after receipt by a Restricted Person
of (A) any Acquisition Proposal or (B) actual notice that any person is giving
serious consideration to making an Acquisition Proposal or (C) any request for
nonpublic information relating to any Spacelink Group Entity or for access to
the properties, books or records of any Spacelink Group Entity by any person
that has made, or a Restricted Person reasonably believes is considering
making, an Acquisition Proposal and will keep Intercable fully informed of the
status and details of any such Acquisition Proposal, notice or request.
Nothing in this Section 5.8 shall prevent a Restricted Person from discussing,
negotiating and otherwise pursuing transactions contemplated by Section 5.2.
(b) "Acquisition Proposal" means a bona fide
offer or proposal for, or indication of interest in, a merger or other business
combination involving any Spacelink Group Entity or the acquisition of any
equity interest in, or a substantial portion of the assets of, any Spacelink
Group Entity, other than the transactions contemplated hereby and in the
Alternative Transaction as defined in the Transaction Agreement.
(c) "Restricted Persons" means Spacelink and any
other Spacelink Group Entity and their respective officers, directors,
employees or other agents.
5.9 Confidentiality. Intercable and the other Intercable
Group Entities will hold in confidence and not use, and will use their
reasonable efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold in confidence
and not use, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all documents and information concerning the
Spacelink Group furnished to or acquired by the Intercable Group in connection
with the consummation of the transaction contemplated hereby, except to the
extent that such information can be shown to
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have been (i) previously known by Intercable on a nonconfidential basis, (ii)
in the public domain through no fault of Intercable or (iii) later lawfully
acquired by Intercable on a non-confidential basis from sources other than the
Spacelink Group Entities. The obligation of the Intercable Group Entities to
hold any such information in confidence shall be satisfied if they exercise the
same care with respect to such information as they would take to preserve the
confidentiality of their own similar information. If this Agreement is
terminated, the Intercable Group Entities will, and will use their reasonable
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to Spacelink,
upon request, all documents and other materials, and all copies thereof,
obtained by the Intercable Group Entities or on their behalf from any Spacelink
Group Entity or in connection with this Agreement that are subject to such
confidence. In connection with the Jones Intercable Transaction, Intercable
shall require BCI to maintain the confidence, on terms substantially similar to
those set forth in this Section, of all information provided to it by
Intercable regarding the Spacelink Group Entities.
5.10 Jones Earth Segment, Inc. At or prior to the
Closing, Spacelink shall sell all of the capital stock of Jones Earth Segment,
Inc., for cash in an amount equal to the undepreciated acquisition cost of its
"uplink facility" plus the replacement cost of its "tape playback equipment,"
less debt, at the time of the sale.
5.11 Tax-Free Reorganization; Plan of Liquidation. (a)
The parties hereto shall use their reasonable best efforts to cause the
transactions contemplated hereby to be recognized as a tax-free reorganization
under Section 368(a)(1)(C) of the Code and any other applicable state or
federal law.
(b) Jones International, Ltd., hereby covenants
and agrees that, immediately following the Closing, it will transfer, or cause
to be transferred, up to 593,110 shares of the Class A Common Stock of
Intercable received, or to be received, by it upon liquidation of Spacelink to
Minority Shareholders, other than Dissenting Shareholders. Such transfer shall
be made to such Minority Shareholders in accordance with the provisions of
Section 5.11(c)(ii) hereof. Any portion of such shares that would otherwise
have been transferred to Minority Shareholders who became Dissenting
Shareholders shall be retained by Jones International, Ltd. For administrative
convenience, Jones International, Ltd., may request Spacelink to assist in the
transfer of such shares to the Minority Shareholders.
(c) Spacelink hereby covenants and agrees that,
immediately following the Closing, it will take steps to effect its complete
liquidation and distribute all of its assets (excluding the Reserve but
including the Shares and the 2,859,240 shares of Common Stock of Intercable),
subject to the provisions of Section 5.11(d), to its shareholders, other than
Dissenting Shareholders. Dissenting Shareholders shall not be entitled to
receive any consideration described in Sections 5.11(c)(i) or (ii) for their
shares of Capital Stock of Spacelink. For each share of Capital Stock held
immediately prior to the Closing, each shareholder of Spacelink (other than
Dissenting Shareholders) shall receive the following:
(i) 0.03567 shares of Common Stock of
Intercable; plus
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(ii) 0.05114 shares of Class A Common
Stock of Intercable. In addition, each Minority Shareholder
shall receive 0.04515 shares of the Class A Common Stock of
Intercable transferred by Jones International, Ltd., pursuant
to Section 5.11(b).
The exchange ratios described above were calculated as shown in Exhibit B on
the assumption that all of the options held by Minority Shareholders to acquire
Class A Common Stock were exercised. If all of such options are not exercised,
the exchange ratios shall be adjusted in the manner shown in Exhibit B.
(d) No fractional shares shall be distributed in
the liquidation distribution pursuant to Sections 5.11(c)(i) or (ii) hereof.
Any fractional share to which a shareholder of Spacelink would otherwise have
been entitled shall be rounded up or down to the nearest whole share.
(e) Upon satisfaction of all of its obligations
to Dissenting Shareholders and the distribution of all of its assets to
shareholders in complete liquidation pursuant to Section 5.11(c), Spacelink
shall transfer to Intercable any cash remaining in the Reserve established
pursuant to Section 2.2(c), together with any of the Shares which would
otherwise have been distributed to Dissenting Shareholders. Upon completion of
such steps, Spacelink shall forthwith execute and file Articles of Dissolution
with the Secretary of State of the State of Colorado.
5.12 Spacelink Stock Options. At or prior to Closing,
Spacelink will cause all outstanding stock options to acquire Class A Common
Stock to become immediately exercisable and will terminate all such stock
options that are not exercised at or prior to the Closing.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Spacelink and
Intercable. The obligations of Intercable to purchase, and Spacelink to sell,
the Assets under this Agreement are each subject to the satisfaction or, to the
extent legally permissible, waiver by each such party at or prior to the
Closing of the following conditions:
(a) The shareholders of Intercable shall have
approved the Intercable Proposals and the shareholders of Spacelink shall have
approved the Spacelink Proposals;
(b) The Statement shall have become effective
under the Securities Act and no stop order shall be in effect;
(c) The Shares shall have been approved for
listing on the Nasdaq National Market System;
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(d) Either one of the following events shall have
occurred: (i) Intercable, Spacelink, Jones International, Ltd. and Glenn R.
Jones shall have received the Tax Ruling or (ii) the conditions set forth in
Section 2.2(c) of the Transaction Agreement, as such Transaction Agreement
exists on the date hereof, shall have been satisfied.
(e) There shall not then be in effect any order
enjoining or restraining the consummation of this Agreement, and there shall
not then be instituted, pending or threatened any action or proceeding brought
by a Governmental Authority before any federal or state court or other
Governmental Authority challenging the acquisition of the Assets by Intercable
or otherwise seeking to restrain or prohibit consummation of this Agreement or
seeking to impose any material limitation on any material provision of this
Agreement;
(f) All actions by, in respect of or filings with
any Governmental Authority required to permit the consummation of this
Agreement shall have been taken or obtained, as the case may be, and shall be
in full force and effect, other than such actions or filings 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;
(g) The Spacelink Group Entities and the
Intercable Group Entities shall have received all third party consents required
to consummate this Agreement, in form and substance reasonably satisfactory to
Spacelink and Intercable, other than such consents the failure of which to
obtain would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; and
(h) Spacelink shall have sold all of the capital
stock of Jones Earth Segment, Inc., in accordance with Section 5.10 hereof.
6.2 Conditions to Obligation of Spacelink. The
obligation of Spacelink to consummate the Closing is subject to the
satisfaction or, to the extent legally permissible, waiver by Spacelink, of the
following further conditions:
(a) Intercable shall have performed in all
material respects all obligations required to be performed by it under this
Agreement on or prior to the Closing Date;
(b) The representations and warranties of
Intercable contained in this Agreement and in any certificate delivered by
Intercable pursuant hereto shall be true in all material respects at and as of
the Closing Date, as if made at and as of such date, except to the extent that
such representations and warranties expressly relate to an earlier date;
(c) Spacelink shall have received a certificate
signed by an executive officer of Intercable confirming the matters described
in paragraphs (a) and (b) of this Section 6.2;
(d) The Shares shall have been registered under
the Securities Act;
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(e) Spacelink shall have received all documents
it may reasonably request relating to the existence of Intercable and other
Intercable Group Entities and the authority of Intercable for this Agreement,
all in form and substance reasonably satisfactory to Spacelink;
(f) The holders of not more than 800,000 shares
of the Class A Common Stock of Spacelink shall have given notice of their
intent to exercise Dissenting Shareholders' rights by filing a notice of intent
to demand payment with Spacelink; and
(g) Goldman Sachs & Co. shall not have withdrawn
its opinion that the number of shares to be received by Minority Shareholders
pursuant to the transactions contemplated herein is fair to the Minority
Shareholders.
6.3 Conditions to Obligation of Intercable. The
obligation of Intercable to consummate the Closing is subject to the
satisfaction or, to the extent legally permissible, waived by Intercable, of
the following further conditions:
(a) Spacelink shall have performed in all
material respects all of its obligations required to be performed by it under
this Agreement at or prior to the Closing Date;
(b) The representations and warranties of
Spacelink contained in this Agreement and in any certificate delivered by
Spacelink pursuant hereto shall be true in all material respects at and as of
the Closing Date, as if made at and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date;
(c) Intercable shall have received a certificate
signed by an executive officer of Spacelink confirming the matters described in
paragraphs (a) and (b) of this Section 6.3;
(d) Intercable shall have received all documents
it may reasonably request relating to the existence of Spacelink and other
Spacelink Group Entities and the authority of Spacelink for this Agreement, all
in form and substance reasonably satisfactory to Intercable;
(e) The holders of not more than 800,000 shares
of the Class A Common Stock of Spacelink shall have duly given notice of their
intent to exercise Dissenting Shareholders' rights by filing a notice of intent
to demand payment with Spacelink; and
(f) Salomon Brothers Inc and Dillon Read & Co.
Inc. shall not have withdrawn their opinion that the number of shares to be
issued by Intercable to Spacelink pursuant to the transaction contemplated
hereby is fair to Intercable from a financial point of view.
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ARTICLE 7
SURVIVAL
7.1 Survival. The covenants, agreements, representations
and warranties of the parties hereto contained in this Agreement or in any
certificate delivered pursuant hereto or in connection herewith shall not
survive the Closing except the agreements set forth in Sections 2.3 and 5.11
which shall survive until the expiration of the period of time provided for in
the applicable statute of limitation.
ARTICLE 8
TERMINATION
8.1 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of
Intercable and Spacelink;
(ii) by Intercable or Spacelink if the
Tax Ruling shall not have been received by December 15, 1994,
unless an election to proceed with the transaction
contemplated hereby is made in accordance with Section 2.2(c)
of the Transaction Agreement;
(iii) by Intercable or Spacelink if the
Closing shall not have been consummated on or before December
30, 1994;
(iv) by Intercable or Spacelink at any
time after the request for the Tax Ruling is withdrawn or the
Internal Revenue Service indicates that it is likely that it
will not grant the rulings sought in such request, unless an
election to proceed with the transaction contemplated hereby
is made in accordance with Section 2.2(c) of the Transaction
Agreement; or
(v) by Intercable or Spacelink if there
shall be any law or regulation that makes consummation of the
transactions contemplated hereby illegal or otherwise
prohibited or if consummation of the transaction contemplated
hereby would violate any nonappealable final order, decree or
judgment of any court or Governmental Authority having
competent jurisdiction.
The party desiring to terminate this Agreement shall give
notice of such termination to the other party.
8.2 Effect of Termination. If this Agreement is
terminated as permitted by Section 8.1, termination shall be without liability
of either party (or any shareholder, director, officer, employee, agent,
consultant or representative of such party) to the other party to this
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Agreement; provided that if such termination shall result from (i) the willful
failure of a party to fulfill a condition to the performance of the obligations
of the other party or to perform a covenant of this Agreement or (ii) a knowing
breach by a party hereto of any representation or warranty contained herein,
such party shall be fully liable for any and all damage, loss, liability and
expense (including reasonable expenses of investigation and reasonable
attorneys' fees and expenses) incurred or suffered by the other party as a
result of such failure or breach. The provisions of Sections 5.9 and 9.3 shall
survive any termination hereof pursuant to Section 8.1.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
if to Spacelink to:
Jones Spacelink, Ltd.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attn: President
Fax: (303) 799-1644
with a copy to:
Jones Spacelink, Ltd.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attn: General Counsel
Fax: (303) 799-1644
if to Intercable to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: President
Fax: (303) 799-4675
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with a copy to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: General Counsel
Fax: (303) 799-1644
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt.
9.2 Amendments and Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Closing Date if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
9.3 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
9.4 Successors and Assigns. No party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
9.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of Colorado, without
regard to the conflicts of law rules of such state.
9.6 Counterparts. 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.
9.7 Headings. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.8 Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the
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subject matter of this Agreement. No provision of this Agreement is intended
to confer upon any Person other than the parties hereto any rights or remedies
hereunder.
9.9 Separability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
9.10 Schedules. Inclusion of or reference to matters in a
schedule does not constitute an admission of what is material or the
materiality of such matter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
JONES SPACELINK, LTD.
By:___________________________________
Name:______________________________
Title:_____________________________
JONES INTERCABLE, INC.
By:___________________________________
Name:______________________________
Title:_____________________________
JONES INTERNATIONAL, LTD. (for the
purposes of Section 5.11(b) only)
By:___________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT A
GENERAL ASSIGNMENT, BILL OF SALE AND ASSUMPTION AGREEMENT
This GENERAL ASSIGNMENT, BILL OF SALE AND ASSUMPTION AGREEMENT is made
as of the __ day of ________, 1994, by and between Jones Spacelink, Ltd., a
Colorado corporation ("Seller") and Jones Intercable, Inc., a Colorado
corporation ("Buyer").
RECITALS
Pursuant to the Exchange Agreement and Plan of Reorganization and
Liquidation dated as of May 31, 1994 between Seller and Buyer (the "Exchange
Agreement"), Seller has agreed to sell, convey, grant, assign, transfer and
deliver to Buyer all of Seller's right, title and interest in and to the Assets
(as defined below) and Buyer has agreed to assume the liabilities of Seller in
connection with the Assets, all as set forth herein and in the Exchange
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties provide and agree as
follows:
1. CAPITALIZED TERMS. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Exchange Agreement.
2. TRANSFER OF ASSETS. Seller hereby sells, conveys, grants,
assigns, transfers and delivers to Buyer and its successors and assigns forever
all of Seller's right, title and interest in and to all of the assets and
properties of Seller, whether real, personal, tangible or intangible other than
the excluded assets listed on Schedule 1 hereto (the "Assets"), subject only to
Permitted Liens. The Assets include, without limitation, the following:
(a) Seller's right, title and interest in and to all
parcels of real property owned in fee by Seller or in which Seller has a
leasehold interest, and all buildings, structures and other improvements
located thereon, and all rights of way and similar authorizations;
(b) Seller's right, title and interest in and to all of
the tangible personal property owned or leased by Seller;
(c) Seller's right, title and interest in and to all
contracts, options, leases (whether of realty or personalty), purchase orders,
commitments, Franchise Agreements, programming agreements, subscription
agreements for cable television and SMATV services, access agreements and other
agreements, whether oral or written;
58
(d) Seller's right, title and interest in any and all
joint venture and limited or general partnership agreements and any shares of
capital stock in any entity;
(e) Seller's right, title and interest in and to all
subscriber, customer and advertiser lists;
(f) Seller's right, title and interest in and to all
Intellectual Property Rights which are used or held for use in connection with
the conduct of its business;
(g) All subscriber, customer and trade accounts
receivable due to Seller;
(h) All deposits under utility, pole rental and similar
agreements to which Seller is or may become entitled; and
(i) Seller's records, files and data, including maps,
plans, diagrams, blueprints and schematics, if any.
3. ASSUMPTION OF LIABILITIES. Buyer hereby assumes and agrees to
pay, discharge and perform when due all known, unknown and contingent
liabilities of Seller (other than to Dissenting Shareholders) including
(a) All the obligations and liabilities of Seller under
the Contracts, including the Franchise Agreements, whether such obligations and
liabilities arise with respect to the period prior to, at or after the date
hereof;
(b) All of Seller's obligations for the provision of
cable television or other services to its subscribers;
(c) All obligations and liabilities arising out of or
related to the ownership and operation of the Assets; and
(d) All state and local sales or use taxes (or their
equivalent) and transfer taxes or recording fees payable as a consequence of
the sale or purchase of the Assets evidenced hereby.
IN WITNESS WHEREOF, the parties have executed and delivered this
General Assignment, Bill of Sale and Assumption Agreement as of the date first
referenced above.
JONES SPACELINK, LTD., JONES INTERCABLE, INC.,
a Colorado corporation a Colorado corporation
By:____________________________ By:_________________________
Name:__________________________ Name:_______________________
Title:_________________________ Title:______________________
59
Schedule 1
EXCLUDED ASSETS
1. 2,859,240 shares of Common Stock of Jones Intercable, Inc.,
held by Seller on the date hereof.
2. A cash reserve in the amount of $_________ to satisfy the
obligations of Seller to Dissenting Shareholders, and to pay any expenses that
may be incurred in connection with the determination and payment of such
obligations.
60
EXHIBIT B
SUMMARY OF EXCHANGE RATIOS
Shares Outstanding as follows:
CLASS A SHARES CLASS B SHARES
-------------- --------------
Minority Shares 11,656,552 Jones International 415,000
JI, Glenn Jones 65,976,148
----------
Total 77,632,700
==========
Options Outstanding
Minority Options 1,480,483
Glenn Jones 636,514
---------
Total 2,116,997
=========
Total Shares Outstanding (including options) = 80,164,697; Total Minority
Shares (1,480,483 + 11,656,552) is 13,137,035.
Distribution to Minority Shareholders as follows:
. Pro Rata Share of Common Stock of Intercable
13,137,035
----------
80,164,697 = 16,388% x 2,859,240 = 468,559
Minority receives 468,559 divided by 13,137,035 =
.03567 shares
======
. Minority to receive 1,265,000 Shares of 4,100,000.
593,110 divided by 13,137,035 = .04515
671,890 divided by 13,137,035 = .05114
--------- ---------- ------
1,265,000 divided by 13,137,035 = .09629 shares
========= ========== ======
. Assuming 40,000 options are not exercised:
Total Shares Outstanding 80,124,697
Total Minority Shares 13,097,035
. Common Stock of Intercable
16.3458% x 2,859,240 = 467,366
Minority receives 467,366 divided by 13,097,035 =
.03568
. Class A Shares
Minority to receive 1,265,000 out of 4,100,000
1,265,000 divided by 13,097,035 = .09658