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EXHIBIT 8
EXCHANGE AGREEMENT
This Exchange 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 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
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 COMMON STOCK TO
NOTEHOLDER PRINCIPAL AMOUNT OF NOTES BE RECEIVED 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
-------------- ---------
TOTAL: $26,512,723.00 7,814,589
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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 ▇▇▇▇▇ Fargo Bank, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 ▇▇▇▇▇ Fargo Bank's ▇▇▇ Operations Office, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ (Transit No. ▇▇▇▇▇▇▇▇▇), 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. ▇▇-▇▇▇▇▇-▇ maintained in
the name of Cotchett, ▇▇▇▇▇ & Simon - Money Market Account, at Peninsula Bank
of Commerce, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, the sum of $2,500,000,
currently held in ▇▇▇▇▇ 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, ▇▇▇▇▇ &
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.
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5. OPINION OF COUNSEL
At the Closing, IN will deliver to the Noteholders an opinion of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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
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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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇, or for the benefit of ▇▇▇▇▇
▇▇▇▇▇▇▇, as disclosed on the
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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 ▇▇. ▇▇▇▇▇▇▇'▇ family or any
corporations or other entities directly or indirectly controlled by ▇▇.
▇▇▇▇▇▇▇, 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
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 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
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
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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 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.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Legal Strategies Group
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
National Broadcasting Company, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
NBC Cable and Business Development
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Law Department, Suite 1075E
National Broadcasting Company
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Motorola, Inc., Law Department
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
and Assistant General Counsel
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with a copy to:
▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sprint Corporation
Department of Law
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
or such other addresses as may be subsequently designated by each of the
Noteholders.
To IN:
▇▇▇▇▇ ▇▇▇▇▇, Chairman of the Board, President
and Chief Executive Officer
Interactive Network, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. Small, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other address as may be subsequently designated by IN.
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(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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
Chairman of the Board, President and
President and Chief Executive Officer
Chief Executive Officer
TCI Development, LLC
First Party
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President
National Broadcasting Company, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
NBC Cable and
Business Development
Sprint Corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Motorola, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Senior
Vice President
Second Parties
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SCHEDULE OF EXHIBITS
Exhibit No. Description
----------- -----------
1 Instrument(s) releasing liens on IN assets
2 Voting Agreement
3 Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
4 Places where filings are required to effect release of liens
on IN assets
5 Stockholdings and options of ▇▇▇▇▇ ▇▇▇▇▇▇▇
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