EXHIBIT 10.15
OPTION AGREEMENT
BETWEEN
RESNET COMMUNICATIONS, LLC
AND
TCI SATELLITE MDU, INC.
Dated as of June 4, 1997
TABLE OF CONTENTS
Page
----
RECITALS...................................................................... 1
AGREEMENT..................................................................... 1
1. Definitions......................................................... 1
2. Option to Acquire Ownership Interests............................... 3
3. Representations and Warranties of TCI-Satellite..................... 6
4. Representations and Warranties of ResNet............................ 9
5. Further Assurances..................................................10
6. Conditions to the Obligations of TCI-Satellite......................11
7. Conditions to the Obligations of ResNet.............................11
8. Miscellaneous.......................................................12
-i-
OPTION AGREEMENT
----------------
This OPTION AGREEMENT (this "Agreement") is entered into as of June 4,
1997, by and between ResNet Communications, LLC, a Delaware limited liability
company ("ResNet"), and TCI Satellite MDU, Inc., a Delaware corporation ("TCI-
Satellite") (each of TCI-Satellite and ResNet being referred to herein
individually as a "Party" and together as the "Parties").
RECITALS
--------
A. Simultaneously with the execution of this Agreement, the Parties are
entering into a Subscription Agreement (the "TSAT Subscription Agreement")
pursuant to which TCI-Satellite is purchasing from ResNet, and ResNet is issuing
to TCI-Satellite, Ownership Interests in ResNet (as defined in the Limited
Liability Company Agreement of ResNet) representing, immediately after such
issuance, 4.99% of the Ownership Interests in ResNet (the "Initial Ownership
Interests").
B. Simultaneously with the execution of this Agreement, the Parties are
entering into a Subordinated Convertible Term Loan Agreement (the "Loan
Agreement") between TCI-Satellite, as lender, and ResNet, as borrower, the loans
under which are convertible under certain circumstances into Ownership Interests
in ResNet (the "Conversion Ownership Interests").
C. ResNet wishes to grant to TCI-Satellite an option to acquire additional
Ownership Interests in ResNet that when combined with the Initial Ownership
Interests and the Conversion Ownership Interests will give TCI-Satellite the
right to acquire Ownership Interests in ResNet representing, immediately after
issuance of all such Ownership Interests, assuming no issuance of any additional
equity in ResNet after the date of formation of ResNet other than the Conversion
Ownership Interests, 49.99% of the Ownership Interests in ResNet on a fully
diluted basis, and TCI-Satellite wishes to obtain such an option, all on the
terms and conditions set forth herein.
AGREEMENT
---------
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties hereby agree as follows:
1. Definitions.
-----------
For purposes of this Agreement, the following terms shall have the
following meanings:
"Affiliate" of any Person at any time shall mean any other Person directly
---------
or indirectly controlling, controlled by or under common control with such
Person at such time; with "control" for such purposes meaning ownership of
securities representing at least 75% of the economic interests in and 75% of the
voting power of a Person.
"Agreement" shall mean this Option Agreement, including any exhibits and
---------
attachments hereto, as amended from time to time.
"Conversion Ownership Interests" shall have the meaning specified in
------------------------------
Recital B.
"Conversion Warrant" shall have the meaning specified in Section 2(e).
------------------
"Final ResNet Fair Market Value" shall have the meaning specified in
------------------------------
Section 2.1(b)(i).
"Governmental Authority" shall mean any federal, state, municipal or local
----------------------
governmental authority or political subdivision thereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations thereunder, as in effect from
time to time.
"Initial Ownership Interests" shall have the meaning specified in Recital
---------------------------
A.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
----------------------
amended, and the rules and regulations thereunder as in effect from time to
time.
"Legal Requirement" shall mean the requirements of any law, ordinance,
-----------------
statute, rule, regulation, code, order, judgment, decree, injunction, franchise,
determination, approval, permit, license, authorization or other requirement of
any Governmental Authority.
"Lien" shall mean any mortgage, lien, pledge, charge, claim, security
----
interest or encumbrance of any kind.
"Loan Agreement" shall have the meaning specified in Recital B.
--------------
"LodgeNet" shall mean LodgeNet Entertainment Corporation, a Delaware
--------
corporation, including any successor corporation.
"1933 Act" shall mean the Securities Act of 1933, as amended, and the rules
--------
and regulations thereunder as in effect from time to time.
"Option" shall have the meaning specified in Section 2(a).
------
"Option Notice" shall have the meaning specified in Section 2(c).
-------------
"Option Ownership Interests" shall have the meaning specified in Section
--------------------------
2(a).
"Option Warrant" shall have the meaning specified in Section 2(e).
--------------
-2-
"Parties" and "Party" shall have the meanings specified in the Preamble.
------- -----
"Person" shall mean and include an individual, a corporation, a partnership
------
(general, limited or limited liability), a joint venture, a limited liability
company, an association, a trust or any other organization or entity, including
a Governmental Authority.
"Preliminary ResNet Fair Market Value" shall have the meaning specified in
------------------------------------
Section 2.1(b)(i).
"Purchase Price" shall have the meaning specified in Section 2(b).
--------------
"Regulatory Restrictions" shall have the meaning specified in Section 2(f).
-----------------------
"ResNet" shall have the meaning specified in the Preamble.
------
"ResNet Corp." shall have the meaning specified in Section 4(d).
------------
"TCI-Satellite" shall have the meaning specified in the Preamble.
-------------
"Transaction Documents" shall have the meaning specified in Section 8(i).
---------------------
"TSAT Subscription Agreement" shall have the meaning specified in Recital
---------------------------
A.
2. Option to Acquire Ownership Interests.
-------------------------------------
(a) Grant of Option. Upon the terms and subject to the conditions set
---------------
forth in this Agreement, ResNet hereby grants to TCI-Satellite an irrevocable
option (the "Option") to purchase the Option Ownership Interests. In no event
shall TCI-Satellite have the right to acquire in excess of 49.99% of the
Ownership Interests in ResNet, taking into account the Initial Ownership
Interests, the Conversion Ownership Interests, and the Option Ownership
Interests on a combined basis.
(b) The purchase price for the Option Ownership Interests (the "Purchase
Price") shall be determined in accordance with the following procedures:
(i) TCI-Satellite and ResNet each shall select a nationally recognized
investment banker who shall determine, within 30 days after selection, the net
fair market value of ResNet on a going concern basis, as of the date of exercise
of the Option, taking into account all indebtedness of ResNet (including any
guarantees of indebtedness for borrowed money) and the current assets and
current liabilities of ResNet, based upon a transaction negotiated on an arms'-
length basis between a willing buyer and willing seller, with neither having any
compulsion to buy or sell and with each party having full knowledge of all of
the facts and circumstances of ResNet's business and properties (the
"Preliminary ResNet Fair Market Value"). If the Preliminary ResNet Fair Market
Value determinations of the two investment bankers vary by 10% or less of the
higher determination, the average of the two such determinations shall
constitute the final determination of the net fair market
-3-
value of ResNet (the "Final ResNet Fair Market Value"). If the Preliminary
ResNet Fair Market Value determinations of the two investment bankers vary by
more than 10% of the higher determination, within 10 days after such
determinations of the Preliminary ResNet Fair Market Value, such investment
bankers shall select a third nationally recognized investment banker who shall
make an independent determination of the Preliminary ResNet Fair Market Value
within 30 days after being selected. In that case, the Final ResNet Fair Market
Value will be the average of the Preliminary ResNet Fair Market Value
determination of such third investment banker and the Preliminary ResNet Fair
Market Value determination of the one of the first two investment bankers that
is closest to the Preliminary ResNet Fair Market Value determination of such
third investment banker.
(ii) The Purchase Price shall be determined by the two investment
bankers whose valuations determined the Final ResNet Fair Market Value by
multiplying (A) the sum of (1) the Final ResNet Fair Market Value, and (2) the
Purchase Price, by (B) the percentage interest in ResNet determined on a fully
diluted basis represented by the Ownership Interests in ResNet to be acquired by
TCI-Satellite pursuant to exercise of the Option and adjusting the resulting
product as such investment bankers determine to be appropriate to reflect any
voting power, control premium or discount for lack of marketability associated
with the issuance of the Option Ownership Interests to TCI-Satellite pursuant to
exercise of the Option, provided that if such investment bankers do not agree on
the appropriate amount of any control premium or discount for lack of
marketability associated with the issuance of the Option Ownership Interests to
TCI-Satellite pursuant to exercise of the Option, then any such premium or
discount shall be determined by averaging the determinations of such investment
bankers.
(iii) ResNet shall pay the fees and expenses of the investment banker
selected by it, TCI-Satellite shall pay the fees and expenses of the investment
banker selected by it, and ResNet and TCI-Satellite each shall pay one-half of
the fees and expenses of any third investment banker selected by the first two
investment bankers; provided, however, that if TCI-Satellite elects not to
purchase the Option Ownership Interests after the determination of the Purchase
Price, TCI-Satellite shall pay all fees and expenses of both or all three of the
investment bankers, as applicable, and TCI-Satellite shall have no other
obligation or liability with respect to its decision not to purchase the Option
Ownership Interests.
(c) Manner of Exercise. TCI-Satellite shall exercise the Option by
------------------
delivering a written notice of exercise (the "Option Notice") to ResNet;
provided, however, that TCI-Satellite may rescind its notice of exercise by
delivering to ResNet a written notice of rescission within 30 days after the
determination of the Purchase Price in accordance with Section 2(b), subject to
the provisions of Section 2(b)(iii).
(d) Payment of Purchase Price; Issuance of Ownership Interests. The
----------------------------------------------------------
Purchase Price shall be payable on the date selected by TCI-Satellite that is
within 30 days after the date of the Option Notice, subject to obtaining any
required approval from a Governmental Authority, including compliance with the
HSR Act, by wire transfer of immediately available funds to an account that has
been designated by written notice by ResNet to TCI-Satellite. Notwithstanding
the preceding
-4-
sentence, in ResNet's sole discretion, the Purchase Price may be paid in whole
or in part in property or services mutually acceptable to ResNet and TCI-
Satellite in lieu of cash. Upon receipt of the Purchase Price, the Parties will
execute and deliver a cross-receipt for the Purchase Price and any such other
documents as may be reasonably requested by any Party to reflect the acquisition
of the Option Ownership Interests in ResNet by TCI-Satellite.
(e) Time for Exercise and Lapse of Option. The Option may be exercised at
-------------------------------------
any time for all of the Option Ownership Interests on or after December 21,
1999. The Option shall lapse if not previously exercised upon the Maturity Date
(including any Extension thereof) under and as defined in the Loan Agreement;
provided, however, that if on such Maturity Date under the Loan Agreement,
ResNet issues to TCI-Satellite a warrant to acquire the unconverted portion of
the Conversion Ownership Interests (the "Conversion Warrant"), then ResNet also
shall issue to TCI-Satellite, on the same date as issuance of the Conversion
Warrant, a warrant to acquire the unexercised portion of the Option Ownership
Interests (the "Option Warrant"). The Option Warrant shall be in the form of
EXHIBIT A to this Agreement and shall provide that (i) TCI-Satellite may acquire
the Option Ownership Interests not previously acquired by TCI-Satellite by
exercise of the Option hereunder if TCI-Satellite was prevented from acquiring
such Option Ownership Interests due to the Regulatory Restrictions for
consideration equal to the Purchase Price for such Option Ownership Interests
hereunder assuming an exercise of the Option on the date of issuance of the
Option Warrant for a period of nine months thereafter and for consideration
equal to the Purchase Price determined at the time of exercise of the Option
Warrant for an additional two-year period, (ii) TCI-Satellite may transfer the
Option Warrant together with, but not separately from, the Conversion Warrant,
subject to a right of first refusal by LodgeNet, and (iii) the Option Warrant
either must be exercised to acquire the Option Ownership Interests
simultaneously with exercise of the Conversion Warrant or the Option Warrant
will be terminated upon exercise of the Conversion Warrant without a
simultaneous exercise of the Option Warrant and in any event the Option Warrant
will expire two years and nine months after the date of issuance if not
previously exercised.
(f) Limitation on Exercise of Option. TCI-Satellite will not exercise the
--------------------------------
Option to the extent that such exercise would cause ResNet or TCI-Satellite to
violate any Legal Requirement, including, without limitation, a violation of 47
U.S.C. (S) 533(a)(2) or any regulations of the FCC promulgated thereunder if any
SMATV service offered by ResNet continued to be offered after such exercise of
the Option separate and apart from any applicable franchised cable service (the
"Regulatory Restrictions"), and any purported exercise of the Option that would
result in a violation of the Regulatory Restrictions shall be deemed null and
void. TCI-Satellite shall have the right, but shall have no obligation, to
exercise the Option at any time permitted under Section 2(e) that such exercise
would not violate the Regulatory Restrictions.
(g) Adjustment. The percentage Ownership Interests issuable upon exercise
----------
of this Option are based on the Ownership Interests in ResNet as of the date
first above written and assume that no additional Ownership Interests (other
than the Conversion Ownership Interests) have been issued. If additional
Ownership Interests (other than the Conversion Ownership Interests) have been
issued after the date first above written and prior to the date of any exercise
of the Option, and if TCI-
-5-
Satellite did not exercise its preemptive rights to acquire its proportionate
share of such Ownership Interests pursuant to Section 7.7 of the Limited
Liability Company Agreement of ResNet, then the percentage Ownership Interests
issuable upon exercise of the Option shall be reduced pro rata to reflect the
dilution resulting from the issuance of such additional Ownership Interests by
ResNet and the failure by TCI-Satellite to exercise its preemptive rights with
respect thereto. ResNet and TCI-Satellite will negotiate in good faith regarding
the appropriate adjustment to the percentage Ownership Interests issuable upon
exercise of the Option consistent with the basic intent and principles of the
provisions of this Agreement if (i) additional Ownership Interests (other than
the Conversion Ownership Interests) are issued by ResNet and TCI-Satellite does
not exercise its preemptive rights with respect thereto, or (ii) any other event
occurs that requires such an adjustment to fairly protect the rights of ResNet,
TCI-Satellite or ResNet Corp. If ResNet and TCI-Satellite are unable to agree on
an appropriate adjustment within 30 days, then ResNet shall appoint a firm of
certified public accountants (which may be the regular auditors of ResNet) of
recognized standing, which shall give their opinion on the appropriate
adjustment, if any, to the percentage Ownership Interests issuable upon exercise
of the Option on a basis consistent with the basic intent and principles
established in this Agreement. Upon receipt of such opinion, ResNet, TCI-
Satellite, and ResNet Corp. shall forthwith take all actions that may be
necessary or appropriate to make the adjustments described therein.
3. Representations and Warranties of TCI-Satellite.
-----------------------------------------------
TCI-Satellite represents and warrants to ResNet that:
(a) It (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) is authorized to transact
business and is in good standing in each state in which its ownership of assets
or conduct of business requires such qualification, and (iii) has all corporate
powers required to carry on its business as conducted on the date hereof, with
such exceptions to clauses (ii) and (iii) as would not have a material adverse
effect on the ability of TCI-Satellite to perform its obligations under this
Agreement or under the Transaction Documents.
(b) The execution, delivery and performance by it of this Agreement and the
Transaction Documents are within its corporate powers and have been duly
authorized by all necessary corporate action on its part. Each Person executing
this Agreement and the Transaction Documents on behalf of TCI-Satellite is fully
authorized to execute and deliver the same.
(c) The execution, delivery and performance by it of this Agreement and the
Transaction Documents require no material action by or in respect of, or filing
with, any Governmental Authority other than those that have been obtained or
made and are in full force and effect.
(d) No consent by any Person under any contract to which it is a party or
to which its assets are subject is required or necessary for the execution,
delivery and performance by it of this Agreement and the Transaction Documents,
with such exceptions as would not have a material
-6-
adverse effect on the ability of TCI-Satellite to perform its obligations under
this Agreement or under the Transaction Documents.
(e) The execution, delivery and performance by it of this Agreement and the
Transaction Documents do not and will not (x) contravene its certificate of
incorporation or bylaws or (y) result in or constitute a breach or default
(including any event that, with the passage of time or giving of notice, or
both, would become a breach or default) under any applicable Legal Requirement
or any judgment, order, decree, contract, license, lease, indenture, mortgage,
loan agreement, note, security agreement or other agreement or instrument to
which it is a party or by which any of its properties may be bound, the effect
of which would be to cause a material adverse effect on the ability of TCI-
Satellite to perform its obligations under this Agreement or under the
Transaction Documents.
(f) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by the principles governing the availability of
equitable remedies.
(g) There is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of TCI-Satellite or
any of its Affiliates who might be entitled to any fee or commission from ResNet
or any of its Affiliates in connection with the execution, delivery and
performance of this Agreement or the Transaction Documents.
(h) TCI-Satellite is acquiring the Option Ownership Interests for its own
account, not as a nominee or agent, for investment purposes only and not with a
view to or for the resale, distribution or fractionalization thereof, in whole
or in part.
(i) TCI-Satellite acknowledges that the offer and sale of the Option
Ownership Interests to it has not been accomplished by any form of general
solicitation or general advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media, or broadcast over television or radio and
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(j) TCI-Satellite acknowledges its understanding that the offering and sale
of the Option Ownership Interests is intended to be exempt from registration
under the 1993 Act by virtue of section 4(2) of the 1933 Act and the provisions
of Rule 506 of Regulation D promulgated thereunder. In furtherance thereof, TCI-
Satellite acknowledges that:
(i) It has the financial ability to bear the economic risk of its
investment in the Option Ownership Interests (including its possible loss),
has adequate means for providing for its current needs and contingencies
and has no need for liquidity with respect to its investment in the Option
Ownership Interests;
-7-
(ii) It has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the Option Ownership Interests and protecting its own
interests in connection with the investment and has obtained, in its
judgment, sufficient information from ResNet to evaluate the merits and
risks of an investment in the Option Ownership Interests, and it has not
utilized any Person as its purchaser representative in connection with
evaluating such merits and risks; and
(iii) It is an "accredited investor" within the meaning of Regulation
D promulgated under the 1933 Act.
(k) TCI-Satellite acknowledges that:
(i) It has been furnished any documents it has requested, has
carefully read any such documents and understands and has evaluated the
risks of a purchase of the Option Ownership Interests, and has relied
solely (except as indicated in subsections (ii) and (iii) below) on the
information contained in any such documents;
(ii) It has been provided an opportunity to obtain any additional
information concerning the Option Ownership Interests and ResNet;
(iii) It has been given the opportunity to ask questions of, and
receive answers from, representatives of ResNet concerning the terms and
conditions of the Option and other matters pertaining to this investment,
and has been given the opportunity to obtain such additional information
necessary to verify the accuracy of the information which was provided in
order for it to evaluate the merits and risks of an investment in the
Option Ownership Interests to the extent ResNet possesses such information
or can acquire it without unreasonable effort or expense, and has not been
furnished any other offering literature or prospectus except as mentioned
herein; and
(iv) It has determined that the Option Ownership Interests is a
suitable investment for it and that at this time it could bear a complete
loss of its investment.
(l) TCI-Satellite agrees that it will not sell or otherwise transfer the
Option Ownership Interests without registration under the 1993 Act or an
exemption therefrom, and fully understands and agrees that it must bear the
economic risk of its investment for an indefinite period of time because, among
other reasons, the Option Ownership Interests will not be registered under the
1993 Act or under the securities laws of certain states and, therefore, cannot
be resold, pledged, assigned or otherwise disposed of unless the Option
Ownership Interests are subsequently registered under the 1933 Act and under the
applicable securities laws of such states or an exemption from such registration
is available. TCI-Satellite understands that ResNet is under no obligation to
register the Option Ownership Interests on its behalf or to assist it in
complying with any exemption from registration under the 1933 Act or any
applicable state securities laws. TCI-Satellite also understands
-8-
that sales or transfers of the Option Ownership Interests are further restricted
by the provisions of the Limited Liability Company Agreement of ResNet included
in the Transaction Documents.
(m) There are no suits, claims, grievances, actions, proceedings, or
governmental investigations pending or, to the best knowledge of TCI-Satellite,
threatened against or affecting TCI-Satellite which (i) seek to restrain or
enjoin the consummation of the transactions contemplated by this Agreement or
the Transaction Documents or (ii) might have a material adverse effect on the
ability of TCI-Satellite to perform its obligations under this Agreement or
under the Transaction Documents. TCI-Satellite is not in violation of any term
of any judgment, decree, injunction, or order to which it is subject, which
violation could have a material adverse effect on the ability of TCI-Satellite
to perform its obligations under this Agreement or under the Transaction
Documents.
4. Representations and Warranties of ResNet.
----------------------------------------
ResNet represents and warrants to TCI-Satellite that:
(a) It (i) is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) is authorized
to transact business and is in good standing in each state in which its
ownership of assets or conduct of business requires such qualification, and
(iii) has all requisite powers required to carry on its business as conducted on
the date hereof and as proposed to be conducted, with such exceptions to clauses
(ii) and (iii) as would not have a Material Adverse Effect on ResNet or a
material adverse effect on the ability of ResNet to perform its obligations
under this Agreement or under the Transaction Documents.
(b) The execution, delivery, and performance by it of this Agreement and
the Transaction Documents are within its powers and have been duly authorized by
all necessary action on its part. Each Person executing this Agreement and the
Transaction Documents on behalf of ResNet is fully authorized to execute and
deliver the same.
(c) The execution, delivery and performance by it of this Agreement and the
Transaction Documents require no material action by or in respect of, or
material filing with, any Governmental Authority other than those that have been
obtained or made and are in full force and effect.
(d) No consent by any Person under any contract to which it, ResNet
Communications, Inc. ("ResNet Corp."), or LodgeNet is a party or to which their
respective assets are subject is required or necessary for the execution,
delivery and performance by it of this Agreement and the Transaction Documents,
except those set forth on Schedule 4(d) all of which have been obtained and are
in full force and effect.
(e) The execution, delivery and performance by it of this Agreement and the
Transaction Documents do not and will not (x) contravene its certificate of
formation or Limited Liability Company Agreement or (y) result in or constitute
a breach or default (including any event that, with the passage of time or
giving of notice, or both, would become a breach or default) under any
-9-
applicable Legal Requirement or any judgment, injunction, order, decree,
contract, license, lease, indenture, mortgage, loan agreement, note or other
agreement or instrument to which it is a party or by which any of its properties
may be bound, the effect of which would be to cause a Material Adverse Effect on
ResNet or a material adverse effect on the ability of ResNet to perform its
obligations under this Agreement or under the Transaction Documents.
(f) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by the principles governing the availability of
equitable remedies.
(g) LodgeNet, ResNet Corp., and ResNet are being represented in connection
with the transactions contemplated by the Transaction Documents by Xxxxx Xxxxxx,
Inc., and LodgeNet will be responsible for payment of all fees and expenses in
connection with such representation. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of ResNet or any of its Affiliates who might be entitled to any fee or
commission from TCI-Satellite or any of its Affiliates in connection with the
execution, delivery and performance of this Agreement or the Transaction
Documents.
(h) The Option Ownership Interests, when paid for by and issued to TCI-
Satellite in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and non-assessable. Upon issuance of the Option
Ownership Interests, ResNet will deliver to TCI-Satellite good and valid title
to the Option Ownership Interests, free and clear of any Liens. The Option
Ownership Interests are not subject to any preemptive rights or other similar
rights. Assuming that the representations and warranties of TCI-Satellite
contained in Sections 3(h), (i), (j), (k), and (l) are true and correct, when
issued to TCI-Satellite in accordance with the provisions hereof, the Option
Ownership Interests will have been issued in accordance with the registration or
qualification provisions of the 1933 Act and any relevant state securities laws
or pursuant to valid exemptions therefrom.
(i) ResNet is not an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act, and ResNet
has not relied on rule 3a-2 under the Investment Company Act as a means of
excluding it from the definition of an "investment company" under the Investment
Company Act at any time within the three year period preceding the date of
issuance of the Initial Ownership Interests to TCI-Satellite under the
Subscription Agreement.
(j) There are no suits, claims, grievances, actions, proceedings, or
governmental investigations pending or, to the best knowledge of ResNet, ResNet
Corp., or LodgeNet, threatened against or affecting ResNet which (i) seek to
restrain or enjoin the consummation of the transactions contemplated by this
Agreement or (ii) might have a Material Adverse Effect on ResNet or a material
adverse effect on the ability of ResNet to perform its obligations under this
Agreement or under the Transaction Documents. ResNet is not in violation of any
term of any judgment, decree, injunction,
-10-
or order to which it is subject, which violation could have a Material Adverse
Effect on ResNet or a material adverse effect on the ability of ResNet to
perform its obligations under this Agreement or under the Transaction Documents.
5. Further Assurances. From time to time after the date hereof and without
------------------
further consideration, the Parties will execute and deliver, or arrange for the
execution and delivery of such other instruments of conveyance and transfer or
other instruments or documents and take or arrange for such other actions as may
reasonably be requested to complete more effectively the transactions
contemplated by this Agreement or the Transaction Documents.
6. Conditions to the Obligations of TCI-Satellite.
----------------------------------------------
The obligation of TCI-Satellite to pay the Purchase Price for the Option
Ownership Interests is subject to the prior satisfaction of each of the
following conditions:
(a) Any applicable waiting period (and any extension thereof) under the HSR
Act will have expired or been terminated without the commencement or threat of
any litigation by a Governmental Authority of competent jurisdiction to restrain
the issuance of the Option Ownership Interests to TCI-Satellite.
(b) All consents required to be obtained by ResNet in connection with the
issuance of the Option Ownership Interests to TCI-Satellite shall have been
obtained and remain in full force and effect.
(c) No order, stay, judgment or decree shall have been issued by any court
and be in effect restraining or prohibiting the issuance of the Option Ownership
Interests to TCI-Satellite.
7. Conditions to the Obligations of ResNet.
---------------------------------------
The obligations of ResNet to be performed by ResNet in connection with
issuance of the Option Ownership Interests to TCI-Satellite upon an exercise of
the Option are subject to the satisfaction of each of the following conditions:
(a) Any applicable waiting period under the HSR Act (and any extension
thereof) shall have expired or been terminated without the commencement or
threat of any litigation by a Governmental Authority of competent jurisdiction
to restrain the issuance of the Option Ownership Interests to TCI-Satellite.
(b) All consents required to be obtained by TCI-Satellite in connection
with the issuance of the Option Ownership Interests to TCI-Satellite shall have
been obtained and remain in full force and effect.
-11-
(c) No order, stay, judgment or decree will have been issued by any court
and be in effect restraining or prohibiting the issuance of the Option Ownership
Interests to TCI-Satellite.
(d) TCI-Satellite shall have paid the Purchase Price to ResNet in the
manner specified in Section 2(d).
(e) The Conversion Ownership Interests shall have been issued or shall be
issued simultaneously with issuance of the Option Ownership Interests
8. Miscellaneous.
-------------
(a) Except as expressly set forth herein, the fees and expenses (including
the fees of any lawyers, accountants, investment bankers or others engaged by
such party) in connection with this Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are consummated will
be paid by the Party incurring the same.
(b) All documentation, notices, reports and correspondence under this
Agreement shall be submitted and maintained in the English language. As used
herein, the singular shall include the plural and the plural may refer to only
the singular. The use of any gender shall be applicable to all genders. The
captions contained herein are for purpose of convenience only and are not part
of the Agreement. Unless otherwise specified, all references to Sections and
Exhibits in this Agreement are references to Sections of, and Exhibits to, this
Agreement.
(c) If any portion or portions of this Agreement shall be deemed, for any
reason, invalid or unenforceable, the remaining portion or portions shall
nevertheless be valid, enforceable, and in effect, unless such remaining portion
or portions are not reasonably adequate to accomplish the basic purposes and
intent of the Parties. The Parties will negotiate in good faith to replace any
invalid or unenforceable provision of this Agreement with an enforceable
provision that accomplishes the original intent of the Parties to the extent
reasonably practicable.
(d) This Agreement cannot be amended except by a written instrument signed
by both Parties hereto.
(e) Either Party's failure to enforce any provision of this Agreement shall
not in any way be construed as a waiver of any such provision as to any future
violations thereof, or prevent that Party thereafter from enforcing each and
every other provision of this Agreement. No waiver of any right or remedy
hereunder shall be effective unless contained in a writing signed by the waiving
Party. The rights granted to the Parties herein are cumulative and the waiver by
a Party of any single remedy shall not constitute a waiver of such Party's right
to assert all other legal remedies available to it under the circumstances.
(f) Termination or expiration of this Agreement for any reason shall not
release either Party from any liabilities or obligations set forth in this
Agreement which the Parties have expressly
-12-
agreed shall survive any termination or expiration, or remain to be performed or
by their nature would be intended to be applicable following any such
termination or expiration.
(g) This Agreement shall be governed and interpreted by the laws of the
State of Delaware, without regard to its conflict of law rules. The Parties
agree that all litigation relating to this Agreement shall be brought in the
state and federal courts of appropriate subject matter jurisdiction in Delaware
and each Party hereby submits itself to the non-exclusive in personam
jurisdiction of such courts for purposes of any such litigation. Neither Party
shall object to venue in such courts on the grounds of an inconvenient forum or
otherwise. In the event of any litigation between the Parties relating to this
Agreement, the prevailing Party shall be entitled to recover, in addition to any
other relief awarded by the court, its reasonable attorneys' fees and all other
costs of preparing for and participating in the litigation, including all
appeals.
(h) Neither Party will be in default or otherwise liable for any delay in
or failure of its performance under this Agreement where such delay or failure
arises by reason of any act of God, acts of the common enemy, the elements,
earthquake, floods, fires, epidemics, quarantine restrictions, riots, strikes,
failure or delay in transportation, freight embargoes or other causes beyond its
control.
(i) This Agreement, together with any exhibits, schedules, appendices, and
other attachments, expresses the understanding of the Parties hereto and
supersedes all prior agreements, whether oral or written, relating to the
subject matters specifically expressed herein, including, without limitation,
the Option Agreement between ResNet Corp. and TCI-Satellite dated as of October
21, 1996, which shall be terminated as of the effective date of this Agreement;
provided, however, that the Parties acknowledge that simultaneously with the
execution of this Agreement they or their affiliates are entering into the
Limited Liability Company Agreement of ResNet, a Redemption Agreement, the Loan
Agreement, Subscription Agreements, an Equipment Sale Agreement, a Signal
Availability Agreement, and a Standstill Agreement, which documents are related
to this Agreement in that they collectively document a transaction between the
Parties of which this Agreement is a part (collectively, the "Transaction
Documents").
(j) Neither Party may assign any of its rights or delegate any of its
duties hereunder without the prior written consent of the other Party; provided
that either Party may assign this entire Agreement to an Affiliate of such Party
or to a Person that acquires all or substantially all of the assets or business
of such Party if such Party gives prior written notice to the other Party and
delivers an assumption agreement of such assignee in form and substance
reasonably satisfactory to the other Party pursuant to which such assignee
assumes the obligations of the assigning Party under this Agreement. Each Party
agrees that it will cause any acquiror of all or substantially all of the assets
or business of such Party to assume this Agreement. Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
Parties, their respective successors and permitted assigns. For purposes of
this paragraph, "assign" shall mean to directly or indirectly sell, assign,
convey, lease, sublease or permit the use of, in any manner, any rights or
obligations under this Agreement.
-13-
(k) All notices, demands, requests, or other communications which may be or
are required to be given, served, or sent by one Party to the other Party
pursuant to this Agreement (except as otherwise specifically provided in this
Agreement) shall be in writing and shall be delivered personally, by overnight
messenger, or mailed by first-class certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to ResNet: 000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attn: Chief Operating Officer
Telephone: (000) 000-0000
With a copy similarly addressed to the attention
of Xxxx X. Xxxxxxxx, Vice President and General
Counsel
With a copy to: Pillsbury Madison & Sutro L.L.P.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
If to TCI-Satellite: 0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx XxXxxxx
Telephone: (000) 000-0000
With a copy similarly addressed to the
attention of Corporate Counsel
Telephone: (000) 000-0000
With a copy to: Xxxxxxx & Xxxxxx L.L.C.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Either Party may designate by notice in writing a new address or addressee
to which any notice, demand, request, or communication may thereafter be so
given, served or sent. Each notice, demand, request, or communication shall be
deemed sufficiently given, served, sent or received for all purposes at such
time as it is delivered to the addressee named above as to each Party, with the
signed messenger receipt, return receipt, or the delivery receipt being deemed
conclusive evidence of such delivery, or at such time as delivery is refused by
the addressee upon presentation.
-14-
(l) This Agreement may be executed in any number of counterparts each of
which shall be an original with the same effect as if the signatures thereof and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
RESNET COMMUNICATIONS, INC. TCI SATELLITE MDU, INC.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------- ----------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxx
----------------------------- --------------------------
Title: Vice President Title: President
---------------------------- -------------------------
-15-
