CONSENT AND RESTRUCTURING AGREEMENT
THIS CONSENT AND RESTRUCTURING AGREEMENT (the "Agreement"), dated as of
November _6_, 1998, is entered into by ResNet Communications, LLC, a Delaware
limited liability company (the "Company"), ResNet Communications, Inc., a
Delaware corporation ("ResNet"), and PRIMESTAR MDU, Inc., a Delaware corporation
and successor in interest to TCI Satellite MDU, Inc. ("PRIMESTAR").
A. WHEREAS, ResNet and PRIMESTAR, as the sole members of the Company,
desire, subject to the conditions set forth below, to grant their respective
consents (the "Consent") to a proposed transaction pursuant to a stock
purchase agreement, dated the Closing Date (as defined below), among the
Company, Shared Technologies Communications, Corp., a Delaware limited
liability company ("STC"), and Interactive Cable Systems, Inc., a California
corporation ("ICS"), whereby the constituent companies will each contribute
to a newly formed wholly-owned subsidiary of such company (a "Contribution
Sub" and in the case of the Company, the "ResNet Contribution Sub")
substantially all of the assets of such company, subject to certain specified
liabilities (in the case of the Company, such assets and liabilities being
referred to as the "ResNet Business"), and exchange the capital stock of each
Contribution Sub for capital stock in a newly formed Delaware corporation
("Newco") for designated percentages of Newco's common equity securities
(collectively, the "Transaction;" the date of the consummation of the
Transaction being the "Closing Date").
B. WHEREAS, in connection with the closing of the Transaction, the
parties desire to terminate and/or restructure certain agreements (collectively,
the "Existing Agreements") entered into by the parties as of June 4, 1997,
including, without limitation, (i) the limited liability company agreement of
the Company (the "LLC Agreement"), (ii) an agreement relating to the purchase by
the Company from PRIMESTAR of certain satellite receive equipment (the
"Equipment Sale Agreement"), (iii) the provision by PRIMESTAR to the Company of
a convertible credit facility repayable solely by the issuance of equity
interests in the Company (the "Subordinated Convertible Term Loan Agreement"),
(iv) the grant of certain options (the "Option Agreement") and contingent
warrants (the "Option Warrants") enabling PRIMESTAR to acquire additional equity
interests in the Company, (v) the furnishing by PRIMESTAR to the Company of the
PRIMESTAR-SM- DBS feed on a nationwide basis for multi-family dwelling units
("MDU") properties (the "Signal Availability Agreement"), (vi) a standstill
agreement (the "Standstill Agreement"), (vii) a subscription agreement (the
"Subscription Agreement"), (viii) a redemption agreement (the "Redemption
Agreement"), (ix) a related letter agreement, dated June 4, 1997, from Xxxx
XxXxxxx to Xxx Xxxxx (the "Letter Agreement"), and (x) a management and shared
services agreement (the "Management and Shared Services Agreement").
NOW, THEREFORE, in consideration of the foregoing, and for other good
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. CONSENT TO THE TRANSACTION. Subject to the satisfaction of the terms
and conditions set forth herein, the parties hereby consent to the Transaction.
2. RESTRUCTURING OF THE EXISTING AGREEMENTS. Simultaneously with the
closing of the Transaction, the parties agree that:
(a) The LLC Agreement will remain in full force and effect; PROVIDED,
HOWEVER, that if determined by ResNet to be necessary or desirable in connection
with the distribution of the Newco Shares contemplated under Section 4 hereof,
the parties hereby consent to a dissolution of the Company and a liquidating
distribution of its assets in accordance with applicable provisions of Delaware
law.
(b) The following Existing Agreements will be terminated and be of no
further force or effect: (i) the Equipment Sale Agreement, (ii) the Subordinated
Convertible Term Loan Agreement, (iii) the Option Agreement and the Option
Warrants, (iv) the Standstill Agreement, (v) the Subscription Agreement, (vi)
the Redemption Agreement, (vii) the Letter Agreement, and (viii) the Management
and Shared Services Agreement;
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(c) The Signal Availability Agreement shall be assigned to, and assumed by
Newco, pursuant to a form of assignment (the "Assignment") substantially in the
form of EXHIBIT A hereto; PROVIDED, HOWEVER, that the Signal Availability
Agreement shall be deemed to apply only to the Company's headend installations
at the sites set forth on SCHEDULE I to the Assignment (all of which sites are
subject to video services agreements of the Company existing on the Closing Date
and contributed to Newco); PROVIDED, FURTHER, that as a condition to such
assignment Newco shall be prohibited from offering digital overlays or digital
tiers of any other DBS provider to any MDU property covered by the Signal
Availability Agreement; and
(d) The inter-company promissory note evidencing advances from ResNet to
the Company shall be canceled and the outstanding amount due thereunder shall be
deemed a capital contribution by ResNet to the Company.
3. NEWCO AGREEMENT. ResNet and PRIMESTAR agree to cooperate in good
faith to explore opportunities for PRIMESTAR, Inc. and Newco to enter into a new
signal carriage services agreement ("New PRIMESTAR Agreement").
4. DISTRIBUTION OF NEWCO SHARES. The parties agree: (i) if PRIMESTAR and
Newco are unable to reach an agreement with respect to the terms of a New
PRIMESTAR Agreement, upon the written request of PRIMESTAR to be made on or
before April 1, 1999, ResNet will purchase the member interest of PRIMESTAR in
the Company for a purchase price of $5.4 million, payable in part by the
exchange of IRD receivers previously purchased by the Company from PRIMESTAR and
valued at the contract price paid by the Company for such equipment, with the
remainder payable in cash on or prior to April 9, 1999; or (ii) if PRIMESTAR and
Newco are able to reach an agreement with respect to the terms of a New
PRIMESTAR Agreement, as soon as practicable following the execution and delivery
of such agreement, the Company shall be dissolved and liquidated and the shares
of Newco capital stock received in the Transaction will be distributed 14.26% to
PRIMESTAR (representing 4.99% of Newco's outstanding equity ownership at the
closing) (free and clear of all claims, liens, security interests and other
encumbrances) and 85.74% to LNET, respectively.
5. REPRESENTATIONS. Each of the parties, severally and not jointly,
hereby represents and warrants to each other party that (a) it is an entity duly
organized and validly existing in good standing under the laws of the state of
its formation; (b) it has all necessary power and authority to execute, deliver
and perform its obligations under this Agreement and consummate the transactions
contemplated hereby; and (c) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such entity.
6. EFFECTIVENESS. This Agreement shall become effective on the Closing
Date simultaneously with the closing of the Transaction. In the event that the
Closing Date does not occur on or prior to November 30, 1998, then at the
election of any party and upon notice to the other parties, this Agreement shall
terminate.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
of the parties with respect to the subject matter hereof. This Agreement may be
amended, modified or supplemented only by an agreement in writing executed by
each of the parties. Any term of this Agreement may be waived only with the
written consent of the party sought to be bound.
8. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed from this Agreement, and in either case the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and each such executed counterpart will be an original instrument.
10. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.
Nothing herein shall be deemed to alter or amend in any respect the assignment
provisions set forth in Section 13 of the Signal Availability Agreement.
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11. NO JOINT VENTURE. Nothing in this Agreement is intended to create
a joint venture or partnership between the parties. None of the parties
undertakes by this Agreement or otherwise to perform any obligation of
another party, whether regulatory or contractual, or to assume any
responsibility for the business of any other party.
12. 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 or documents and take
or arrange for such other actions as may reasonably be requested to give full
effect to this Agreement and the transactions contemplated hereby.
13. GOVERNING LAW. This Agreement will be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, without
giving effect to the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement as of the
date first indicated above.
RESNET COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Its: Vice President - Finance
----------------------------------
RESNET COMMUNICATIONS, LLC
By: ResNet Communications, Inc.,
as Managing Member
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Its: Vice President, Finance
-----------------------------
PRIMESTAR MDU, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Its: Vice President, Finance
----------------------------------
CONSENTED TO AND AGREED:
LODGENET ENTERTAINMENT CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Its: Vice President, Finanace
---------------------------------
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EXHIBIT A
ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT
1. For good and valuable consideration, receipt of which is hereby
acknowledged, ResNet Communications, LLC, a Delaware limited liability company
("Assignor"), does hereby sell, assign, transfer and set over as of the Closing
Date (as defined below) to GLOBAL INTERACTIVE COMMUNICATIONS CORPORATION, a
Delaware corporation ("Assignee"), all of Assignor's right, title and interest
in and to that certain Signal Availability Agreement (the "Signal Availability
Agreement"), dated as of June 4, 1997, between Assignor and PRIMESTAR MDU, Inc.
("PRIMESTAR"), as successor in interest to TCI Satellite MDU, Inc.; and Assignee
hereby assumes the obligations of Assignor under, and agrees to be bound by the
terms and conditions of, the Signal Availability Agreement as modified by
Paragraph 3 below.
2. This assignment is made pursuant to a Consent and Restructuring
Agreement, dated as of November _6_, 1998, among Assignor, PRIMESTAR and the
parties named therein, and is entered into in connection with a transaction
pursuant to which Assignor and certain other parties will each contribute to
Assignee substantially all of the assets of each such company, subject to
certain specified liabilities, in exchange for capital stock in the parent
corporation of Assignee (collectively, the "Transaction;" the date of the
consummation of the Transaction being the "Closing Date").
3. The terms of the Signal Availability Agreement shall hereby be amended
such that:
(a) The Signal Availability Agreement shall be deemed to apply only to
Assignor's headend installations at the sites set forth on SCHEDULE I hereto
(all of which sites are subject to video services agreements of the Assignor
existing on the Closing Date and contributed to Assignee in connection with the
Transaction);
(b) As a condition to such assignment Assignee shall be prohibited from
offering digital overlays or digital tiers of any direct broadcast satellite
("DBS") provider other than PRIMESTAR, Inc. to any multi-family dwelling unit
property covered by the Signal Availability Agreement; and
(c) Section 11(d) of the Signal Availability Agreement shall be deemed
modified and restated as follows (except that the last unnumbered paragraph
thereof beginning with the words "Subject to the provisions of Section 17" shall
remain unmodified):
"(d) If for any reason other than an event of Force
Majeure, Satellite is unable to provide the signal of the
Programming Services, this Agreement shall terminate upon 90
days prior written notice from Satellite to ResNet. If this
Agreement is terminated pursuant to this Section 11(d),
ResNet shall use its best efforts to enter into an agreement
to receive the signal of the Programming Services at the
Headends from a signal provider (a "Compatible Signal
Provider") that provides digital signals in a format
compatible with the Equipment. If this Agreement is
terminated pursuant to this Section 11(d) prior to December
31, 2003 and ResNet is not able to enter into an agreement
with a Compatible Signal Provider, Satellite will pay to
ResNet an amount equal to the price paid by ResNet for
purchasing equipment that is compatible with the signals
provided by the new signal provider (the "Incompatible
Signal Provider") for all Headends included under this
Agreement as of the date of termination, less the fair
market value of the Equipment that is replaced, up to $200
per IRD for a maximum of 4,000 IRDs. Satellite shall have
no liability to ResNet with respect to any increase in the
transport fees payable by ResNet to the Incompatible Signal
Provider over the amount of the Availability Fees payable by
ResNet hereunder."
(d) Section 3 of the Signal Availability Agreement shall be amended to add
the following provision:
"Satellite will sell to ResNet the integrated receiver-decoders
("IRDs") (limited to no more than 4,000 IRDs), low-noise block
converters and other equipment specified on EXHIBIT A hereto (the
"Equipment"). The price payable by ResNet for the Equipment
shall equal Satellite's actual cost therefor. Payments will be
made by ResNet in cash within 30 days after shipment by Satellite
(which shipment shall be at Satellite's expense, but at ResNet's
risk of loss) and receipt of Satellite's invoice specifying the
purchase price and applicable sales taxes. Late payments shall
bear interest at the rate of 1.5% per month (or the highest
amount permitted by law, if lower). The Equipment sold by
Satellite may be new from the manufacturer or may be previously
authorized. Equipment consisting of previously authorized IRDs
will be reconditioned in accordance with the
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standards set forth on EXHIBIT B hereto. For a period of 12 months
from the date of delivery, Satellite or its authorized service
representatives will repair or replace (at its option) the Equipment
free of charge in the event of a defect in materials or workmanship.
ResNet shall bear the cost of shipment to the repair location
designated by Satellite and Satellite shall bear the cost of shipment
of replacement/repaired Equipment to the designated ResNet location.
The foregoing warranty does not apply to any appearance items of the
Equipment that do not adversely affect the performance of the
Equipment. The warranty will not apply if the Equipment is damaged
as a result of (i) improper modification, alteration, maintenance,
repair, connection or disconnection of the Equipment by anyone other
than Satellite's authorized service representatives; (ii) improper
use of the Equipment; (iii) conditions outside the control of
Satellite; or (iv) accident, abuse or neglect. SATELLITE SHALL NOT
BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE
USE OF THE EQUIPMENT OR ARISING OUT OF ANY BREACH OF THIS WARRANTY.
SATELLITE EXCLUDES AND DISCLAIMS ANY AND ALL OTHER EXPRESS OR IMPLIED
WARRANTIES, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE."
IN WITNESS WHEREOF, the Assignor, Assignee and PRIMESTAR have caused
this Agreement to be signed as of the Closing Date.
ASSIGNOR:
RESNET COMMUNICATIONS, LLC
By: ResNet Communications, Inc.,
as Managing Member
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Its: Vice President, Finance
---------------------------------
ASSIGNEE:
GLOBAL INTERACTIVE COMMUNICATIONS CORPORATION
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Its: Vice President, Secretary & General Counsel
---------------------------------------------
CONSENTED TO AND AGREED:
PRIMESTAR MDU, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Its: Vice President, Finance
-----------------------------------
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