EXHIBIT 1.1
EXCHANGE AGREEMENT
This Exchange Agreement is made and entered into as of the 15th day of
April, 1999, by and between Interactive Network, Inc. ("IN"), a California
corporation, First Party, and TCI Programming Holding Company, III ("TCI
Programming"), TCI Development, LLC ("TCID") (the successor-in-interest to TCI
Development Corporation) (TCI Programming and TCID being hereafter collectively
referred to as "TCI") National Broadcasting Company, Inc. ("NBC"), Sprint
Corporation ("Sprint"), and Motorola, Inc. ("Motorola") (TCI, NBC, Sprint and
Motorola being collectively referred to herein as the "Noteholders"), Second
Parties.
RECITALS
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1. IN and the Noteholders have entered into a Mutual Release and
Settlement Agreement (the "Settlement Agreement") dated as of July 10, 1998,
Section 5 of which contemplates the execution of this Agreement in order to
effectuate the exchange of certain promissory notes of IN held by the
Noteholders for shares of IN's common stock.
2. Pursuant to Section 7 of the Settlement Agreement, IN filed a petition
with the United States Bankruptcy Court of the Northern District of California
under Chapter 11 of the Bankruptcy Code (Case No. 98-34055-DM-11) on September
14, 1998, and on December 22, 1998, filed its plan of reorganization. On April
12, 1999, the Bankruptcy Court entered its order (the "Bankruptcy Court
Confirming Order") confirming IN's plan of reorganization (a copy of which has
been delivered to each Noteholder).
Now, therefore, in consideration of the foregoing premises and the
following terms, covenants and conditions, the Parties hereby agree as follows:
1. EXCHANGE OF SECURITIES
1.1 Subject to the terms and conditions set forth herein, the Noteholders
agree to convey to IN at the Closing (as that term is defined below) for
cancellation promissory notes of IN (the "Notes") in the aggregate principal
amounts indicated below, duly endorsed to IN, and in exchange IN agrees to
deliver to each Noteholder a stock certificate of IN issued in the name of each
Noteholder evidencing the number of shares of IN's common stock, no par value,
indicated below after the name of each Noteholder (the aggregate number of
shares issuable hereunder being referred to herein as the "Shares"):
NUMBER OF SHARES OF IN
PRINCIPAL AMOUNT OF COMMON STOCK TO BE RECEIVED
NOTEHOLDER NOTES BY NOTEHOLDER
TCI Programming 2,600,351 (TCI Programming)
and TCID $10,008,216.80 342,556 (TCID)
NBC 6,503,287.65 1,902,279
Sprint 5,000,000.00 1,484,520
Motorola 5,001,220.88 1,484,883
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TOTAL: $26,512,723.00 7,814,589
1.2 The Noteholders hereby acknowledge that upon transfer of the Notes to
IN, and upon receipt of
the Shares in exchange therefor, all obligations of IN with respect to the
Notes, including principal and interest accrued thereon, will be deemed
cancelled and extinguished.
1.3 The IN Stock Certificates being delivered to the Noteholders in
accordance with Section 1.1 will have endorsed on the face thereof a legend
conspicuously stating: "The shares evidenced hereby are subject to a voting
agreement, dated as of April 23, 1999, and expiring on April 22, 2003, a copy of
which is on file at the office of Interactive Network, Inc."
2. DISBURSEMENT OF ESCROW FUNDS
TCI will cause Xxxxx Fargo Bank, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, contemporaneously with the exchange of securities at the
Closing contemplated in section 1 of this Agreement, to wire transfer (a) to
IN's Account No. 0029106168 at Xxxxx Fargo Bank's XXX Operations Office, 000
Xxxxxx Xxxxxx, 0xx Xxxxx (Transit No. 000000000), the sum of $10,000,000,
currently held in its Escrow Account No. 6029 108453, plus any accrued interest
or appreciation thereon, and (b) to the Account No. 00-00000-0 maintained in the
name of Cotchett, Xxxxx & Simon - Money Market Account, at Peninsula Bank of
Commerce, 0000 Xxxxxxxx, Xxxxxxxx, Xxxxxxxxxx, the sum of $2,500,000, currently
held in Xxxxx Fargo Bank, Escrow Account No. 6029-108461, plus any accrued
interest or appreciation thereon. TCI will secure the cooperation of Legal
Strategies Group in effecting the aforesaid transfer to Cotchett, Xxxxx & Simon.
3. RELEASE OF SECURITY INTERESTS
At the Closing, TCI will, contemporaneously with the exchange of securities
contemplated in Section 1 of this Agreement, deliver to IN any intellectual
property of IN and a release of all security liens and/or interests held by any
of the TCI Parties (as defined in the Settlement Agreement), NBC, Sprint or
Motorola in any IN assets, as contemplated in Section 4 of the Settlement
Agreement. Such release will be in the form attached hereto as Exhibit 1. The
Noteholders will execute such further documents and take such further actions as
IN may reasonably require to effectuate the release of liens on the assets of IN
held by or for the benefit of the Noteholders at the time of Closing.
4. VOTING AGREEMENT
At the Closing, the Noteholders and IN will contemporaneously with the
exchange of securities contemplated in Section 1 of the Agreement enter into a
voting agreement (the "Voting Agreement") with respect to the shares of IN
common stock issued to the Noteholders pursuant to this Agreement. Such Voting
Agreement will be in the form attached hereto as Exhibit 2.
5. OPINION OF COUNSEL
At the Closing, IN will deliver to the Noteholders an opinion of Xxxxxxxx &
Xxxxxxxx LLP, counsel to IN, in the form attached hereto as Exhibit 3.
6. CLOSING
The closing will be held at 10:00 a.m. Pacific Time, on April 23, 1999, at
the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, or at such other time and place as the parties shall mutually
agree .
7. REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS
Each of the Noteholders represents and warrants to IN, severally and not
jointly as to itself only and not to any other Noteholder, that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of its respective state of incorporation and has full
corporate power to carry on its business as it is now being conducted.
(b) It has full right, power and authority to execute, deliver and perform
this Agreement and the Voting Agreement.
(c) This Agreement and the Voting Agreement each constitutes a valid and
binding agreement of it enforceable in accordance with its terms.
(d) It has good and marketable title to all of the Notes to be exchanged
by it pursuant to Section 1 of this Agreement free and clear of any lien, claim,
charge, restriction, security interest, equity or encumbrance of any kind
whatsoever and, except as otherwise provided in the Notes (which restrictions
are hereby waived), has the complete and unrestricted right, power and authority
to sell, transfer and deliver said Notes.
(e) To the best of its knowledge, the only place where filings are
required to effect the release of liens held by it at the time of Closing on the
assets of IN as contemplated in Section 3 of this Agreement are set forth in
Exhibit 4 attached hereto.
8. REPRESENTATIONS AND WARRANTIES OF IN
IN represents and warrants to the Noteholders that:
(a) IN is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has full corporate power
to carry on its business as it is now being conducted.
(b) IN has full right, power and authority to execute, deliver and perform
this Agreement and the Voting Agreement.
(c) This Agreement and the Voting Agreement each constitutes a valid and
binding agreement of IN enforceable in accordance with its terms.
(d) The shares of common stock to be issued to each of the Noteholders
pursuant to Section 1 hereof have been duly authorized by the board of directors
of IN, will be validly issued, fully paid and non-assessable, and will be free
and clear of any lien, claim, charge, restriction, security interest, equity or
encumbrance of any kind whatsoever.
(e) Neither the execution of this Agreement nor the consummation of the
transactions contemplated herein require the consent of, approval of,
declaration of, filing with or registration with any governmental or non-
governmental person, entity or authority, including, without limitation, any
filing under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
(f) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will (i) not conflict with, or result in
(or with notice or lapse of time result in) a breach of the terms of or default
under or violate (A) any provision of applicable law, or (B) any agreement,
commitment, contract, instrument, order, decree, ruling or injunction to which
IN is subject or a party or by which IN is bound or to which any shares or
properties or assets of IN are subject; (ii) not cause the cancellation,
discontinuance or alteration of any contract or agreement held by IN, or to
which IN is a party; (iii) not result in a default or breach under the
provisions of any note of which IN is the maker or guarantor or under any
indenture, agreement or other instrument to which IN is a party or by which IN
is bound or to which the properties or assets of IN are subject; (iv) not cause
any acceleration of maturity of any loan or material obligations to which IN is
a party or by which IN is bound or with respect to which IN is an obligor or
guarantor; or (v) not result in the creation or imposition of any material lien,
claim, charge, restriction or encumbrance of any kind whatsoever upon, or give
to any other person any interest or right (including any right of termination or
cancellation) in or with respect to, any of the material properties, assets,
business, agreements or contracts of IN or the stock of IN.
(g) The issuance of the shares contemplated by this Agreement is exempt
under Section 3(a)(9) of the Securities Act of 1933.
(h) No commission or other remuneration was or will be paid or given,
directly or indirectly, by IN to any person or entity for soliciting the
exchange of the Notes contemplated by this Agreement.
(i) There are 30,840,441 shares of common stock of IN issued and
outstanding as of the date hereof, immediately prior to consummation of this
Agreement. No shares or rights or options to purchase shares of common stock of
IN have been issued or granted since July 10, 1998, except for options granted
on February 26, 1999, to Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxxxxx, as
Directors of the Company, to purchase 25,000 shares and 12,500 shares,
respectively, of the Company's Common Stock at 42 cents per share under the
Company's 1999 Stock Option Plan.
(j) The number of shares of common stock of IN and/or stock options held
or claimed to be held by Xxxxx Xxxxxxx, or for the benefit of Xxxxx Xxxxxxx, as
disclosed on the stock records of the Company are set forth in Exhibit 5
attached hereto. IN's current management is not aware of any common stock and/or
stock options of IN held by or for the benefit of any members of Xx. Xxxxxxx'x
family or any corporations or other entities directly or indirectly controlled
by Xx. Xxxxxxx, except as disclosed in Amendment No. 1 to his Schedule 13D filed
with the Securities and Exchange Commission on December 7, 1998, and reflected
in Exhibit 5 attached hereto.
9. TCI AS AGENT
The Noteholders hereby appoint TCI as their agent-in-fact to take any
actions and execute any documents for their benefit to carry out the provisions
of this Agreement, including, without limitation, approval of documents as to
form, and executing instruments to effectuate the release of liens on IN's
assets as contemplated in Section 3 of this Agreement, and (except for NBC,
which reserves its right to consider any such waiver) waiver of the requirement
that the Bankruptcy Court's Confirming Order be final and non-appealable,
provided that TCI shall not take any action that would alter the provisions for
exchange of securities set forth in Section 1 of this Agreement or adversely
affect the rights of the Noteholders hereunder or under the Voting Agreement.
The Noteholders will each arrange to receipt for and take possession of the
stock certificates evidencing their shares.
10. MISCELLANEOUS PROVISIONS
(a) No Waiver. No failure to exercise, and no delay in exercising, any
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right, power or privilege hereunder shall operate as a waiver thereof. No waiver
of any breach of any provision shall be deemed to be a waiver of any proceeding
or succeeding breach of the same or any other provision. No extension of time of
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts.
(b) No Assignment. The rights and obligations of this Agreement may not be
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assigned in whole or in part without the prior written consent of the other
party hereto.
(c) Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be an original but all of which together shall constitute one and
the same instrument.
(d) Entire Agreement/Amendments/Titles. This Agreement constitutes the
----------------------------------
entire agreement between the parties and no waiver, modification or termination
of the terms hereof shall be valid unless in writing signed by the parties and
only to the extent therein set forth. The capitalized titles to the various
paragraphs and subparagraphs hereof are for convenience only and shall not
effect the construction or interpretation of the actual provisions.
(e) Reaffirmation and Survival of Warranties. The representations and
----------------------------------------
warranties set forth herein shall be deemed to have been made again at and as of
the Closing, and said representations and warranties shall survive the Closing.
(f) Expenses. Each party hereto shall pay its own expenses incident to
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this Agreement and the transactions contemplated hereby except (i) any
applicable excise, sales, transfer, documentary or other similar taxes, if any,
that may be imposed upon or payable or collectible as a consequence of the
transactions provided for herein shall be payable by the Noteholders and (ii) as
may be provided otherwise in this Agreement.
(g) Notices. All notices, requests, demands and other communications shall
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be in writing and shall be deemed to have been duly given only if for delivery
prepaid via a traceable over-business-night delivery service.
To the Noteholders:
TCI:
Tele-Communications, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xx 00000
Attn: Xxxx Xxxxxx
with copies to:
Xxxxxxx Xxxxxx, Esq.
Xxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
and
Xxxxxx X. Xxxxx
Legal Strategies Group
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
National Broadcasting Company, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, President
NBC Cable and Business Development
with a copy to:
Xxxxxxxxx Xxxxxx, Esq.
Law Department, Suite 1075E
National Broadcasting Company
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Motorola, Inc., Law Department
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Vice President
and Assistant General Counsel
with a copy to:
Xxxx Xxxxxx, Esq.
Xxxxxxxxx-Xxxxxx
000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Sprint Corporation
Department of Law
0000 Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attn: Corporate Secretary
or such other addresses as may be subsequently designated by each of the
Noteholders.
To IN:
Xxxxx Xxxxx, Chairman of the Board, President
and Chief Executive Officer
Interactive Network, Inc.
0000 Xxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
with a copy to:
Xxxxxxxx X. Small, Esq.
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
or such other address as may be subsequently designated by IN.
(h) Governing Law. This Agreement will be governed by, and construed in
-------------
accordance with, the laws of the state of California as applied to contracts
made and performed in such State.
In witness whereof, IN and the Noteholders have duly executed this
Agreement on the date first set forth above.
Interactive Network, Inc. TCI Programming Holding Company, III
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxx Xxxxxx
------------------------------ -------------------------------
Xxxxx X. Xxxxx, Xxxx Xxxxxx,
Chairman of the Board, President and
President and Chief Executive Officer
Chief Executive Officer
TCI Development, LLC
First Party
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx,
Vice President
National Broadcasting Company, Inc.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx, President
NBC Cable and
Business Development
Sprint Corporation
By: /s/ Xxx X. Xxxxxx
__________________________
Xxx X. Xxxxxx
Motorola, Inc.
By: /s/ Xxxxx Xxxxxxxxx
__________________________
Xxxxx Xxxxxxxxx
Senior Vice President
Second Parties
SCHEDULE OF EXHIBITS
Exhibit No. Description
----------- -----------
1 Instrument(s) releasing liens on IN assets
2 Voting Agreement
3 Opinion of Xxxxxxxx & Xxxxxxxx LLP
4 Places where filings are required to effect release of liens on
IN assets
5 Stockholdings and options of Xxxxx Xxxxxxx
EXHIBIT 1 [TO EXCHANGE AGREEMENT]
---------------------------------
INSTRUMENTS RELEASING LIENS ON IN ASSETS
----------------------------------------
1. Patent Assignment from TCI Programming Holding Company, III, to
Interactive Network, Inc., for filing in U.S. Patent & Trademark
Office
2. Trademark Assignment from TCI Programming Holding Company, III, to
Interactive Network, Inc., for filing in U.S. Patent & Trademark
Office
3. Patent Assignment from TCI Programming Holding Company, III, to
Interactive Network, Inc., for filing in Canadian Intellectual
Property Office
4. California Uniform Commercial Code, Termination Statement executed by
TCI Programming Holding Company, III, for filing with the California
Secretary of State on its own behalf and as agent for NBC, Sprint and
Motorola
5. California Uniform Commercial Code Termination Statement executed by
TCI Development, LLC, as successor to TCI Development Corporation, for
filing with the California Secretary of State
6. Assignment and termination of Security Interests and Liens
[COPIES OF INSTRUMENTS OMITTED]
EXHIBIT 2 [TO EXCHANGE AGREEMENT]
---------------------------------
VOTING AGREEMENT
This Voting Agreement is made and entered into as of the 23rd day of April,
1999, by and between Interactive Network, Inc. ("IN"), a California corporation,
First Party, and TCI Programming Holding Company, III ("TCI Programming"), TCI
Development, LLC ("TCID") (the successor-in-interest to TCI Development
Corporation) (TCI Programming and TCID being hereafter sometimes collectively
referred to as "TCI"), National Broadcasting Company, Inc. ("NBC"), Sprint
Corporation ("Sprint"), and Motorola, Inc. ("Motorola") (TCI, NBC, Sprint and
Motorola being collectively referred to herein as the "Shareholders"), Second
Parties.
RECITALS
--------
1. IN and the Shareholders entered into a Mutual Release and Settlement
Agreement (the "Settlement Agreement"), dated as of July 10, 1998, Section 6 of
which contemplates the execution of this Agreement in connection with
consummation of the Exchange Agreement (the "Exchange Agreement) to which a copy
of this Agreement is attached as Exhibit 2.
2. The Exchange Agreement has been consummated on this date, and each of
the Shareholders has received a certificate evidencing the numbers of shares of
common stock of IN set opposite its name in Section 1 of this Agreement.
Now, therefore, in consideration of the foregoing premises and the
following terms, covenants and conditions, the Parties hereto agree as follows:
1. SHARES SUBJECT TO THIS AGREEMENT
The shares of common stock of IN (hereinafter referred to as the "Shares")
subject to this Agreement are the shares set forth opposite the name of each
Shareholder below issued pursuant to the Exchange Agreement and initially
represented by the stock certificate indicated below:
CERTIFICATE NUMBER
SHAREHOLDER NUMBER OF SHARES
TCI Programming 2,600,351
TCID 347,556
NBC 1,902,279
Sprint 1,484,520
Motorola 1,484,883
---------
TOTAL: 7,814,589
2. AGREEMENT TO VOTE SHARES
Each holder will vote the shares received by it under the Exchange
Agreement as directed by a committee of Independent Persons (as such term is
defined in the Settlement Agreement) who shall consist of three persons and
shall make its decisions by majority vote. The committee shall initially consist
of Xxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxx. If any of them shall resign, die
or become incapacitated, he shall first be replaced by Xxxxxxx Xxxxx, if Xxxxxxx
Xxxxx is then available and willing to serve in such capacity. If
Green is unavailable and/or unwilling, the members of the committee shall, by
majority vote, select a new member or members in their discretion, provided that
no new member shall be Xxxxx Xxxxxxx or a member of Xxxxx Xxxxxxx'x family. If
the remaining members are unable to agree upon a new member by majority vote,
then they shall apply to the chief Judge of the Superior Court of Alameda County
to appoint such a member. However, (i) each Holder shall be entitled to vote its
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Shares as it determines in its sole discretion with respect to the election of
Xxxxx Xxxxxxx or any of his family members as a director of IN, or any other
matter regarding Xx. Xxxxxxx, and (ii) each Holder shall be entitled to vote its
Shares (to the extent stockholder approval or a consent to such action is
required, whether sought by IN or any other person) as it determines in its sole
discretion with respect to the following matters:
(a) any liquidation or dissolution of IN or the filing of any
voluntary bankruptcy petition (other than as contemplated in the Settlement
Agreement);
(b) any sale of IN; or
(c) the declaration and payment of any cash dividends or other
distributions on the common stock or any other cash payments to stockholders as
such.
This Agreement shall constitute a voting agreement within the meaning of
Section 706 of the California Corporations Code.
3. DURATION OF AGREEMENT
This Agreement will terminate on April 22, 2003, unless sooner terminated
upon a breach of its terms.
4. APPLICATION TO TRANSFEREES; LEGENDING OF STOCK CERTIFICATES
The terms of this Agreement shall be binding upon any transferee(s) of the
shares, who, as a condition to transfer of the shares, shall sign a counterpart
of this Agreement evidencing the agreement of the transferee to be bound by this
Agreement. Stock certificates evidencing the shares shall be evidenced with a
conspicuous legend on the face thereof stating: "The shares evidenced hereby are
subject to a voting agreement dated as of April 23, 1999, and expiring on April
22, 2003, a copy of which is on file at the office of Interactive Network, Inc."
Each of the Second Parties reserves the right upon 5 business days prior written
notice to the other Second Parties and the Company to assert under Section 12.2
of the Settlement Agreement that transferees of its shares may not be bound by
this Agreement.
5. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be an
original but all of which together shall constitute one and the same instrument.
In witness whereof, IN and the Shareholders have duly executed this
Agreement on the date first set forth above.
Interactive Network, Inc. TCI Programming Holding Company, III
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxx Xxxxxx
__________________________ __________________________
Xxxxx X. Xxxxx, Xxxx Xxxxxx,
Chairman of the Board, President and
President and Chief Executive Officer
Chief Executive Officer
TCI Development LLC
First Party
By: /s/ Xxxxxxx X. Xxxxx
________________________________
Xxxxxxx X. Xxxxx,
Vice President
National Broadcasting Company, Inc.
By: /s/ Xxxxxx X. Xxxxxx
________________________________
Xxxxxx X. Xxxxxx, President
NBC Cable and
Business Development
Sprint Corporation
By: /s/ Xxx X. Xxxxxx
________________________________
Xxx X. Xxxxxx
Motorola, Inc.
By: /s/ Xxxxx Xxxxxxxxx
________________________________
Xxxxx Xxxxxxxxx,
Senior Vice President
Second Parties
[This agreement was also itself signed as of the Closing]
EXHIBIT 3 [TO EXCHANGE AGREEMENT]
---------------------------------
April 23, 1999
TCI Programming Holdings, III
TCI Development, LLC
National Broadcasting Company, Inc.
Sprint Corporation
Motorola, Inc.
Re: Interactive Network, Inc.
Mesdames and Gentlemen:
This opinion is furnished to you pursuant to Section 5 of the Exchange
Agreement, dated as of April 15, 1999, between you and Interactive Network, Inc.
(the "Company").
We have examined originals or copies of the following documents (the
"Documents"):
(i) Exchange Agreement dated as of April 15, 1999, between you and
the Company (the "Exchange Agreement");
(ii) Amended and Restated Articles of Incorporation of the Company,
filed on November 14, 1991 with the California Secretary of State, and
Certificate of Amendment of Amended and Restated Articles of Incorporation of
the Company, filed on May 26, 1995 with the California Secretary of State;
(iii) Resolutions of Board of Directors of the Company, dated
December 16, 1998, and resolutions of Executive Committee of Board of Directors
of the Company, dated March 26, 1999; and
(iv) Order confirming the Company's Chapter 11 plan of
reorganization, filed on April 12, 1999, by the United States Bankruptcy Court
for the Northern District of California (the "Order").
Unless otherwise defined herein, terms defined in the Documents shall have the
same meanings herein.
In addition, we have examined such records, documents, certificates of
public officials and of the Company, made such inquiries of officials of the
Company, and considered such questions of law as we have deemed necessary for
the purpose of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures and the authenticity of
all items submitted to us as originals and the conformity with originals of all
items submitted to us as copies. In making our examination of the Documents, we
have assumed that each party to one or more of the Documents other than the
Company has the power and authority to execute and deliver, and to perform and
observe the provisions of the Documents, and has duly authorized, executed and
delivered such Documents, and that such Documents constitute the legal, valid
and binding obligations of such party.
Our opinion in paragraph (a) below as to the good standing of the Company
is based solely upon a certificate of public officials in the state named in
that paragraph. Our opinion in paragraph (d) below with
respect to preemptive rights is based upon the assumption that by executing that
certain Mutual Release and Settlement Agreement, dated as of July 10, 1998,
between you and the Company (the "Settlement Agreement"), and by executing the
Exchange Agreement, Tele-Communications, Inc. has relinquished any preemptive
right it may have under Section 10 of that certain Amended and Restated Stock
Purchase Agreement, dated as of June 4, 1993, between TCI Development
Corporation and the Company.
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge, it is intended to signify that,
in the course of our representation of the Company, none of Xxxx Xxxxx, Xxxxx
Xxxxxxxxx, Xxxxxx Xxxxx, Xxxxxxxx Small or Xxxxx Xxxxxxxxxx has acquired actual
knowledge of the existence or absence of such facts.
We have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from the fact of our
representation of the Company.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(1) Other than the effect of the Order on the Settlement Agreement, the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting the rights of creditors generally,
including, without limitation, laws relating to fraudulent transfers or
conveyances, preferences and equitable subordination.
(2) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Documents; and the effect of judicial decisions which have held that certain
provisions are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially unreasonable.
(3) We express no opinion as to the effect on the opinions expressed
herein of (1) the compliance or non-compliance of any party to the Documents
(other than the Company) with any laws or regulations applicable to it, or (2)
the legal or regulatory status or the nature of the business of any such party.
Based upon and subject to the foregoing, we are of the opinion that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
(b) The Company has the corporate power and authority to execute and
deliver, and to perform and observe the provisions of, the Exchange Agreement.
(c) The Exchange Agreement has been duly authorized, executed and
delivered by the Company. The Exchange Agreement constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
(d) The shares of Common Stock of the Company issued to you by the Company
pursuant to the Exchange Agreement are duly authorized, validly issued, fully
paid and non-assessable, free of any liens and to our knowledge, after due
investigation, subject to no-preemptive rights.
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of California and federal laws of the United
States (without reference to choice-of-law rules), which are in effect on the
date hereof.
This opinion is solely for your benefit and may not be relied upon by, nor
may copies be delivered to,
any other person without our prior written consent.
Very truly yours,
[This Letter was also itself signed by Xxxxxxxx & Xxxxxxxx as of the Closing]
EXHIBIT 4 [TO EXCHANGE AGREEMENT]
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PLACES WHERE FILINGS ARE REQUIRED
---------------------------------
TO EFFECT RELEASE OF LIENS ON IN ASSETS
---------------------------------------
1. U.S. Patent & Trademark Office
2. Canadian Patent Office
3. California Secretary of State (Uniform Commercial Code)
4. Offices of County Clerk and County Recorder
Santa Xxxxx County, California
EXHIBIT 5 [TO EXCHANGE AGREEMENT]
---------------------------------
STOCKHOLDINGS AND OPTIONS OF
XXXXX XXXXXXX
In Amendment No. 1 to the Schedule 13D filed by Xxxxx Xxxxxxx with the
Securities and Exchange Commission on December 7, 1998, he disclosed beneficial
ownership of 2,759,000 shares of IN's common stock, including vested options for
2,103,000 shares exercisable at $.09 per share.
IN's list of record shareholders as of March 1, 1999, as supplied by its
stock transfer agent, discloses that Xxxxx Xxxxxxx is the holder of record of
656,600 shares of IN's common stock and is the holder of record for 2,400 shares
of IN's common stock as custodian for Xxxxxxx X. Xxxxxxx under the Uniform Gifts
to Minors Act, and Xxxx Xxxxxxx is the holder of record of 90,000 shares of IN's
common stock.
