EXHIBIT 10.14
SUBORDINATED CONVERTIBLE
TERM LOAN AGREEMENT
BY AND BETWEEN
RESNET COMMUNICATIONS, LLC
AS BORROWER
AND
TCI SATELLITE MDU, INC.
AS LENDER
Dated as of June 4, 1997
$34,603,947
TABLE OF CONTENTS
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Page
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ARTICLE 1 - Definitions.....................................................................1
ARTICLE 2 - Terms of Loans..................................................................5
2.1 Loans. .........................................................................5
2.2 Procedure for Loans.............................................................5
2.3 Interest........................................................................5
(a) Interest................................................................5
(b) Computation of Interest.................................................6
(c) Maximum Interest Rate...................................................6
2.4 Payments........................................................................6
(a) Payments of Loans.......................................................6
(b) No Prepayment...........................................................6
2.5 No Security.....................................................................6
2.6 Subordination...................................................................6
ARTICLE 3 - Conditions Precedent............................................................6
3.1 Termination of Prior Loan Agreement.............................................6
3.2 No Existing Default.............................................................7
3.3 Purchase Order; Invoice.........................................................7
ARTICLE 4 - Representations and Warranties of Borrower......................................7
4.1 Due Organization and Authority..................................................7
4.2 Authorization...................................................................7
4.3 Governmental Requirements.......................................................7
4.4 Consents........................................................................7
4.5 No Conflict.....................................................................7
4.6 Binding Effect..................................................................8
4.7 Litigation......................................................................8
ARTICLE 5 - Representations and Warranties of Lender........................................8
5.1 Due Organization and Authority..................................................8
5.2 Authorization...................................................................8
5.3 Governmental Requirements.......................................................9
5.4 Consents........................................................................9
5.5 No Conflict.....................................................................9
5.6 Binding Effect..................................................................9
5.7 Litigation......................................................................9
(i)
ARTICLE 6 - Covenants........................................................................9
6.1 Accounting Records..............................................................10
6.2 Existence. .....................................................................10
6.3 Compliance With Governmental Requirements. .....................................10
6.4 Taxes and Other Liabilities.....................................................10
6.5 Indemnification.................................................................10
6.6 Use of Proceeds.................................................................10
6.7 Financial Statements............................................................10
6.8 Insurance.......................................................................10
6.9 Maintenance of Property.........................................................10
6.10 Conduct of Business.............................................................11
6.11 Notification of Events of Default and Adverse Developments......................11
6.12 Limitation on Transactions with Affiliates......................................11
6.13 Limitation on Restricted Payments...............................................11
6.14 Merger, Consolidation and Sale of Assets........................................13
6.15 Limitation on Other Business....................................................13
ARTICLE 7 - Events of Default...............................................................13
7.1 Events of Default...............................................................13
(a) Bankruptcy................................................................13
(b) Material Violation of Transaction Documents...............................14
7.2 Termination of Commitment. .....................................................14
7.3 Other Remedies. ................................................................14
ARTICLE 8 - Conversion......................................................................14
8.1 Conversion by Lender............................................................14
8.2 Effect of Conversion............................................................17
8.3 Limitation on Conversion Rights.................................................17
8.4 MANDATORY CONVERSION............................................................17
ARTICLE 9 - Conversion Warrant..............................................................17
9.1 Issuance of Warrant.............................................................17
9.2 Effect of Issuance of Warrant...................................................18
9.3 Transferability of Warrant......................................................18
ARTICLE 10 - Further Assurances..............................................................18
ARTICLE 11 - Miscellaneous...................................................................18
11.1 Successors and Assigns..........................................................18
11.2 No Implied Waiver...............................................................18
11.3 Amendments; Waivers.............................................................19
11.4 Severability. ..................................................................19
(ii)
11.5 Notices....................................................................19
11.6 Construction...............................................................20
11.7 Survival...................................................................20
11.8 Governing Law; Choice of Forum.............................................20
11.9 Integration................................................................20
11.10 Counterparts...............................................................21
(iii)
SUBORDINATED CONVERTIBLE
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TERM LOAN AGREEMENT
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This SUBORDINATED CONVERTIBLE TERM LOAN AGREEMENT is dated as of June 4,
1997, by and between ResNet Communications, LLC, a Delaware limited liability
company ("Borrower"), and TCI Satellite MDU, Inc., a Delaware corporation
("Lender").
RECITALS
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WHEREAS, Borrower has requested Lender to lend funds to Borrower to enable
Borrower to acquire certain equipment from Lender; and
WHEREAS, Lender has agreed to lend to Borrower, subject to the terms and
conditions hereof, and Borrower desires to obtain from Lender, a loan in a
maximum principal amount not to exceed $34,603,947 to be used as a credit
facility for Borrower to draw down the purchase price to be paid by Borrower to
Lender for the purchase of certain equipment.
NOW, THEREFORE, in consideration of the premises set forth above and the
mutual promises and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
specifically acknowledged, the parties hereto agree as follows:
ARTICLE 1
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Definitions
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In addition to any terms defined elsewhere in this Agreement, the following
terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"Adjusted Conversion Formula" shall have the meaning set forth in Section
8.1(b).
"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" means this Subordinated Convertible Term Loan Agreement, as
amended from time to time.
"Base Conversion Formula" shall have the meaning set forth in Section
8.1(a).
"Borrower" shall have the meaning set forth in the heading to this
Agreement.
"Borrower Bank Guaranty" shall mean that certain Guaranty of ResNet dated
as of March 11, 1996, as amended by Amendment No. 1 to Guaranty dated as of
October 21, 1996, executed and delivered in connection with that certain Loan
Agreement dated as of March 11, 1996, as amended by Amendment No. 1 to Loan
Agreement dated as of October 21, 1996, among LodgeNet, the Banks named therein,
National Westminster Bank Plc, New York Branch, as Agent, and National
Westminster Bank of Canada, as Issuing Bank, and any Guaranty executed or to be
executed by Borrower in connection therewith.
"Borrowing Date" shall have the meaning set forth in Section 2.2.
"Business" shall mean the business of Borrower, operating as a "private
cable operator" under applicable federal law providing video on-demand, basic
and premium cable television programming and other interactive, multi-media
entertainment and information services to subscribers in multiple dwelling units
with facilities that do not use any public right-of-way.
"Closing Date" means the date of execution of this Agreement by Lender and
Borrower.
"Commitment" means the commitment by Lender to make loans to Borrower under
this Agreement up to a maximum principal amount of $34,603,947.
"Common Control Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person; with "control" for such purposes meaning the right
generally to elect a majority of the directors (or similar officials) of a
Person or the possession, by contract or otherwise, of authority to direct the
management and policies of a Person.
"Conversion Date" means any date specified in any notice given pursuant to
Section 8.1 for conversion of all or any portion of the principal amount of the
Loans.
"Conversion Ownership Interests" shall have the meaning set forth in
Section 8.1.
"Conversion Warrant" shall have the meaning set forth in Section 9.1.
"EBITDA" shall mean gross revenues from operations less all operating
expenses, determined on an accrual basis in accordance with GAAP for the most
recent twelve-month period ending as of the end of the month immediately
preceding the date of determination, before non-recurring items of income, gain
or expense (including gain or loss on disposition of any assets) and before
deduction of any amount on account of interest, income taxes, depreciation,
amortization, or other similar non-cash charges.
"Equipment" shall have the meaning set forth in Section 2.2.
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"Equipment Sale Agreement" shall have the meaning set forth in Section 2.2.
"Event of Default" shall have the meaning set forth in Section 7.1.
"Extension" means the right of Borrower to elect to extend the term of this
Agreement for one year beyond the Maturity Date if the maximum amount of the
Commitment has not been advanced under this Agreement on or before the Maturity
Date, which election shall be made by Borrower by giving written notice to
Lender at least 30 and not more than 180 days prior to the Maturity Date.
"FCC" means the United States Federal Communications Commission.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Governmental Requirement" means all legal requirements in effect from time
to time including all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, determinations, approvals,
notices, demand letters, directions and requirements of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, and all instruments of record, foreseen or unforeseen, ordinary or
extraordinary, including but not limited to any change in any law, regulation or
the interpretation thereof by any Governmental Authority (whether or not having
the force of law), relating now or at any time heretofore or hereafter to the
business or operations of Borrower or to any of the property owned, leased or
used by Borrower, including, without limitation, the development, design,
construction, acquisition, start-up, ownership and operation and maintenance of
property.
"Initial Ownership Interests" shall have the meaning set forth in Section
8.1(b).
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest).
"Loans" shall have the meaning set forth in Section 2.1.
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"LodgeNet" means LodgeNet Entertainment Corporation, a Delaware
corporation, including any successor corporation.
"LodgeNet Debt" shall have the meaning set forth in Section 2.6.
"Material Adverse Effect" means a material adverse effect on the business,
assets, operations or financial condition of a Person.
"Maturity Date" means October 21, 2001, subject to the Extension.
"Option Agreement" means the agreement pursuant to which Borrower is
granting to Lender an option to acquire the Option Ownership Interests, which
agreement is being executed and delivered on the date of and simultaneously with
the execution of this Agreement.
"Option Ownership Interests" means Ownership Interests in Borrower that
Lender has an option to acquire pursuant to the terms of the Option Agreement.
"Option Warrant" means a warrant that will be issued by Borrower to Lender
to acquire the unexercised portion of the Option Ownership Interests upon the
termination of the Option Agreement if Lender has not exercised its option in
full to acquire the Option Ownership Interests and the Conversion Warrant is
issued by Borrower to Lender.
"Ownership Interest" means an interest of a member in Borrower, including
such member's interest in the income and losses, capital, and distributive share
of assets of Borrower, and all rights and obligations of such member under the
Limited Liability Company Agreement of Borrower executed and delivered on the
date of and immediately prior to the execution of this Agreement, expressed as a
percentage interest carried to two decimal places.
"Permitted Third Party Equipment Purchase" shall have the meaning set forth
in Section 2.2.
"Person" means an individual, a corporation, a partnership (general,
limited or limited liability), a joint venture, an association, a trust, a
limited liability company, or any other organization or entity, including a
Governmental Authority.
"Previously Issued Ownership Interests" shall have the meaning set forth in
Section 8.1(b).
"Prior Loan Agreement" means the Subordinated Convertible Term Loan
Agreement dated as of October 21, 1996, by and between ResNet, as borrower, and
Lender, as lender.
"Regulatory Restrictions" shall have the meaning set forth in Section 8.3.
"ResNet" means ResNet Communications, Inc., a Delaware corporation,
including any successor corporation.
-4-
"Signal Availability Agreement" means the Signal Availability Agreement
being entered into between Lender and Borrower on the date of and simultaneously
with the execution of this Agreement pursuant to which Lender will provide
distribution of programming in connection with Borrower's Business.
"SMATV" means satellite master antenna television.
"Termination Date" means the date that is the earlier of (i) the Maturity
Date, or (ii) the date on which the aggregate principal amount of the Loans
converted pursuant to Section 8.1 is equal to the maximum amount of the
Commitment.
"Transaction Documents" shall have the meaning set forth in Section 11.9.
Each accounting term not defined herein and each accounting term partly defined
herein to the extent not defined shall have the meaning given to it under GAAP.
ARTICLE 2
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Terms of Loans
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2.1 Loans. Subject to the terms and conditions of this Agreement,
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Lender agrees to make loans (the "Loans") from time to time before the
Termination Date in an aggregate principal amount not to exceed the maximum
amount of the Commitment, including the total principal amount of Loans
converted into Conversion Ownership Interests in Borrower pursuant to Section
8.1. Upon prior or contemporaneous satisfaction of the conditions precedent
contained in Article 3, or waiver by Lender of any conditions not so satisfied,
Lender shall advance the Loans on the terms and conditions and for the uses
specified in this Agreement.
2.2 Procedure for Loans. Borrower may borrow pursuant to this Article 2
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by giving Lender a purchase order for integrated receiver-decoders, low-noise
block converters and other equipment (the "Equipment") pursuant to the Equipment
Sale Agreement (the "Equipment Sale Agreement") between Lender and Borrower
dated the same date as this Agreement or by giving Lender an invoice for
Equipment purchased by Borrower from a third party as permitted under the
Equipment Sale Agreement (a "Permitted Third Party Equipment Purchase"). Lender
shall advance Loans under this Agreement to pay the purchase price for the
Equipment upon shipping the Equipment to Borrower or within 30 days after
receipt of an invoice for any Permitted Third Party Equipment Purchase, as
applicable (the "Borrowing Date").
2.3 Interest.
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(a) Interest. The Loans shall accrue interest from the date of
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disbursement on the unpaid principal amount thereof until such amount is paid in
accordance with Section 2.4(a) at a rate per annum equal to seven and nine-
tenths percent (7.9%), but not to exceed the Maximum Rate.
-5-
(b) Computation of Interest. Interest shall accrue daily and shall be
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computed for the actual number of days elapsed on the basis of a year consisting
of 365 days. Accrued but unpaid interest shall be accumulated and shall not be
added to principal.
(c) Maximum Interest Rate. Nothing in this Agreement shall require
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Borrower to pay interest at a rate (the "Maximum Rate") exceeding the maximum
amount permitted by applicable law to be charged by Lender. If the amount of
interest payable for the account of Lender on any day in respect of the
immediately preceding interest computation period, computed pursuant to this
Article 2, would exceed the Maximum Rate, the amount of interest payable for its
account on such interest payment date shall automatically be reduced to the
Maximum Rate.
2.4 Payments.
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(a) Payments of Loans. On the Maturity Date (subject to the Extension),
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if Lender has not converted the Loans into the maximum amount of Conversion
Ownership Interests pursuant to Section 8.1, Borrower shall issue the Conversion
Warrant to Lender pursuant to Article 9, and all principal and accrued and
unpaid interest on the Loans under this Agreement shall be cancelled upon
issuance of the Conversion Warrant to Lender. LENDER'S SOLE RECOURSE WITH
RESPECT TO THE LOANS (INCLUDING ALL ACCRUED AND UNPAID INTEREST) SHALL BE
LIMITED TO EITHER CONVERSION PURSUANT TO SECTION 8.1 OR ISSUANCE OF THE
CONVERSION WARRANT PURSUANT TO ARTICLE 9.
(b) No Prepayment. Borrower may prepay the Loans in whole or in part
-------------
only with the consent of Lender and on the terms and conditions agreed by Lender
and Borrower.
2.5 No Security. The Loans made under this Agreement shall be unsecured
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obligations of Borrower.
2.6 Subordination. The Loans (including all accrued and unpaid
-------------
interest) made under this Agreement shall be subordinated to (i) any
intercompany loans made by LodgeNet or ResNet to Borrower (the "LodgeNet Debt"),
(ii) the Borrower Bank Guaranty, and (iii) to any other debt incurred by
Borrower, all in accordance with the Subordination Provisions attached as
EXHIBIT A. The Subordination Provisions set forth in EXHIBIT A hereto are, for
every purpose, fully incorporated and made an integral part of the enforceable
terms and conditions of this Agreement.
ARTICLE 3
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Conditions Precedent
--------------------
The obligation of Lender to make any Loan is subject to the following
conditions precedent:
3.1 Termination of Prior Loan Agreement. On the Closing Date, the Prior
-----------------------------------
Loan Agreement shall be terminated and shall be deemed to be superseded by this
Agreement, and all
-6-
amounts advanced by Lender to ResNet under the Prior Loan Agreement shall be
treated as Loans by Lender to Borrower under this Agreement;
3.2 No Existing Default. No Event of Default shall exist on the
-------------------
Borrowing Date; and
3.3 Purchase Order; Invoice. Lender shall have received a purchase
-----------------------
order for Equipment or an invoice for a Permitted Third Party Equipment Purchase
for a purchase price in the amount of the Loan to be advanced on the Borrowing
Date.
ARTICLE 4
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Representations and Warranties of Borrower
------------------------------------------
In order to induce Lender to enter into this Agreement and to make the
Loans, Borrower makes the following representations and warranties to Lender:
4.1 Due Organization and Authority. It (a) is a limited liability
------------------------------
company, duly organized, validly existing, and in good standing under the laws
of the State of Delaware, (b) is authorized to transact business and is in good
standing in each state where 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 and as proposed to be
conducted, with such exceptions to clauses (ii) and (iii) as would not have a
Material Adverse Effect on Borrower or a material adverse effect on the ability
of Borrower to perform its obligations under this Agreement or under the
Transaction Documents.
4.2 Authorization. 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 Borrower is fully
authorized to execute and deliver the same.
4.3 Governmental Requirements. 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.
4.4 Consents. No consent by any Person under any contract to which it,
--------
ResNet, 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 or the Transaction Documents, except those set forth on Schedule
4.4 all of which have been obtained and are in full force and effect.
4.5 No Conflict. The execution, delivery and performance of this
-----------
Agreement and the Transaction Documents by it 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
-7-
that, with the passage of time or giving of notice, or both, would become a
breach or default) under any applicable Governmental Requirement or any
judgment, injunction, order, decree, contract, license, lease, indenture,
mortgage, loan agreement, note or other agreement or instrument to which it,
ResNet or LodgeNet is a party or by which any of their respective properties may
be bound, the effect of which would be to cause a Material Adverse Effect on
Borrower or a material adverse effect on the ability of Borrower to perform its
obligations under this Agreement or under the Transaction Documents.
4.6 Binding Effect. 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.
4.7 Litigation. There are no suits, claims, grievances, actions,
----------
proceedings, or governmental investigations pending or, to the best knowledge of
Borrower, ResNet, or LodgeNet, threatened against or affecting Borrower 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 Borrower.
Borrower 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 Borrower or a material adverse effect on the ability of Borrower to
perform its obligations under this Agreement or under the Transaction Documents.
ARTICLE 5
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Representations and Warranties of Lender
----------------------------------------
Lender represents and warrants to Borrower that:
5.1 Due Organization and Authority. 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 and as proposed to be conducted, with
such exceptions to clauses (ii) and (iii) as would not have a material adverse
effect on the ability of Lender to perform its obligations under this Agreement
or under the Transaction Documents.
5.2 Authorization. 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
Lender is fully authorized to execute and deliver the same.
-8-
5.3 Governmental Requirements. 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.
5.4 Consents. 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 or the Transaction
Documents, with such exceptions as would not have a material adverse effect on
the ability of Lender to perform its obligations under this Agreement or under
the Transaction Documents.
5.5 No Conflict. The execution, delivery and performance by it of this
-----------
Agreement and the Transactions 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
Governmental 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 Lender to perform its obligations under this Agreement or under
the Transaction Documents.
5.6 Binding Effect. 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.
5.7 Litigation. There are no suits, claims, grievances, actions,
----------
proceedings, or governmental investigations pending or, to the best knowledge of
Lender, threatened against or affecting Lender 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 Lender to perform its obligations under this Agreement or under the
Transaction Documents. Lender 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 Lender to perform its obligations
under this Agreement or under the Transaction Documents.
ARTICLE 6
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Covenants
---------
Unless Lender shall agree in writing otherwise, Borrower shall comply with
the following provisions so long as any Loans are outstanding:
-9-
6.1 Accounting Records. Borrower shall maintain adequate books and
------------------
accounts in accordance with GAAP consistently applied. Borrower shall promptly
furnish to Lender any information regarding its business or finances as Lender
may reasonably request.
6.2 Existence. Borrower shall preserve and maintain its existence as a
---------
limited liability company and shall preserve all of its licenses, privileges and
contracts and other rights necessary or desirable in the normal course of its
business, except to the extent that the failure to preserve and maintain such
rights would not have a Material Adverse Effect on Borrower or a material
adverse effect on the ability of Borrower to perform is obligations under this
Agreement or under the Transaction Documents.
6.3 Compliance With Governmental Requirements. Borrower shall comply
-----------------------------------------
with all Governmental Requirements, except where the failure to do so would not
have a Material Adverse Effect on Borrower or a material adverse effect on the
ability of Borrower to perform is obligations under this Agreement or under the
Transaction Documents.
6.4 Taxes and Other Liabilities. Borrower shall pay and discharge when
---------------------------
due any and all indebtedness, obligations, assessments and real and personal
property taxes, including, but not limited to, federal and state taxes, except
as may be subject to good faith contest diligently pursued.
6.5 Indemnification. Borrower shall indemnify and hold Lender and its
---------------
agents, successors and assigns (collectively, the "Indemnitees") harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements (including,
without limitation, the reasonable fees and disbursements of counsel) which may
be imposed on, incurred by or asserted against such Indemnitees in any manner
relating to or arising out of the making of the Loans.
6.6 Use of Proceeds. Borrower shall use the proceeds of the Loans only
---------------
to purchase Equipment from Lender or to make a Permitted Thirty Party Equipment
Purchase pursuant to the Equipment Sale Agreement.
6.7 Financial Statements. Borrower shall furnish to Lender such
--------------------
financial statements of Borrower and such additional information, reports or
statements as Lender may from time to time reasonably request.
6.8 Insurance. Borrower shall maintain insurance with responsible
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insurance companies against such risks, on such properties and in such amounts
as is customarily maintained by similar businesses and consistent with
Borrower's past practices.
6.9 Maintenance of Property. Borrower shall maintain, keep and preserve
-----------------------
all of its properties in good repair, working order and condition and from time
to time make all necessary and proper repairs, renewals, replacements and
improvements thereto, with such exceptions as would not have a Material Adverse
Effect on Borrower.
-10-
6.10 Conduct of Business. Borrower shall (i) use reasonable commercial
-------------------
efforts to preserve, renew and keep in full force and effect all of its
contracts, (ii) use reasonable commercial efforts to preserve, renew and
maintain in full force and effect all of its franchises and licenses necessary
or desirable in the normal conduct of its business, and (iii) comply with the
terms of all instruments which evidence, secure or govern its indebtedness, with
such exceptions as would not have a Material Adverse Effect on Borrower.
6.11 Notification of Events of Default and Adverse Developments.
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Borrower shall promptly notify Lender of the occurrence of (i) any Event of
Default hereunder; (ii) any event, development or circumstance whereby the
financial statements most recently furnished to Lender fail in any material
respect to present fairly, in accordance with GAAP, the financial condition and
operating results of Borrower as of the date of such financial statements; (iii)
any material litigation or proceedings that are instituted or threatened (to the
knowledge of Borrower) against Borrower; (iv) each and every event which would
be an event of default (or an event which with the giving of notice or lapse of
time or both would be an event of default) under any indebtedness of Borrower,
such notice to include the names and addresses of the holders of such
indebtedness and the amount thereof; and (v) any other development in the
business or affairs of Borrower if the effect thereof involves a significant
risk of a Material Adverse Effect on Borrower; in each case describing the
nature thereof and the action Borrower proposes to take with respect thereto.
6.12 Limitation on Transactions with Affiliates. Borrower will not amend
------------------------------------------
the Borrower Bank Guaranty to extend the liability of Borrower beyond the
LodgeNet Debt; and Borrower will not, and will not permit any of its
subsidiaries to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any of
their respective Common Control Affiliates, except upon fair and reasonable
terms no less favorable to Borrower than could be obtained, at the time of such
transaction or at the time of the execution of the agreement providing therefor,
in a comparable arm's-length transaction with a Person that is not a Common
Control Affiliate. The foregoing limitation does not limit, and shall not apply
to (i) any sale of Equipment by Borrower to LodgeNet in accordance with the
terms of the Equipment Sale Agreement; (ii) transactions for which Borrower or a
subsidiary delivers to Lender a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to Borrower or such
subsidiary from a financial point of view; (iii) any transaction solely between
Borrower and any of its wholly owned subsidiaries or solely between wholly owned
subsidiaries of Borrower; or (iv) any Restricted Payments not prohibited by
Section 6.13.
6.13 Limitation on Restricted Payments. Borrower will not, and will not
---------------------------------
permit any of its subsidiaries to, directly or indirectly, (A) make any
distributions to the members of Borrower in respect of their Ownership
Interests, other than distributions to permit such members to pay any taxes on
their proportionate share of Borrower's net income; (B) purchase, redeem, retire
or otherwise acquire for value any Ownership Interests in Borrower; or (C) make
any Investment, other than a Permitted Investment, in any Person (such payments
or any other actions described in clauses (A) through (C) of this sentence being
collectively "Restricted Payments"). Notwithstanding the foregoing, Restricted
Payments shall not include, and the limitation on Restricted Payments contained
-11-
in this Section 6.13 shall not be deemed to restrict or limit, (i) payments of
principal and interest on LodgeNet Debt in accordance with the terms and
conditions of such LodgeNet Debt which shall be a direct pass-through of the
interest rate and amortization provisions of debt incurred by LodgeNet or ResNet
from an unrelated third party some or all of the proceeds of which are used for
purposes of making an intercompany loan to Borrower, (ii) payments of principal
and interest on LodgeNet Debt the terms of which shall provide for regularly
scheduled amortization beginning three years from the date of incurrence of such
LodgeNet Debt based on the weighted average interest rate on and weighted
average term of debt (excluding revolving credit facilities) incurred by
LodgeNet or ResNet from unrelated third parties if the proceeds of any LodgeNet
Debt result from equity investments in LodgeNet or ResNet, (iii) payment of a
management fee to LodgeNet or ResNet in an amount equal to three percent (3%) of
Borrower's gross revenues from operations, not including non-recurring items
included in gross revenues, with a minimum annual payment of $500,000 and a
maximum annual payment of $2,000,000, or (iv) payment for goods and services
permitted under Section 6.12.
For purposes of this Section 6.13, an "Investment" in any Person means any
direct or indirect advance, loan or other extension of credit (including,
without limitation, by way of guarantee or similar arrangement; but excluding
installations of Equipment and advances to customers in the ordinary course of
business that are, in conformity with GAAP, recorded as assets or accounts
receivable on the balance sheet of Borrower or any of its subsidiaries) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of capital stock, bonds, notes,
debentures or other similar instruments issued by, such Person.
For purposes of this Section 6.13, a "Permitted Investment" means (i) an
Investment in a wholly owned subsidiary of Borrower or a Person which will, upon
the making of such Investment, become a wholly owned subsidiary or be merged or
consolidated with or into or transfer or convey all or substantially all its
assets to, Borrower or a wholly owned subsidiary of Borrower; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of Borrower on the date of such Investment; (ii) an Investment in a
Person that is nonrecourse to Borrower or any of its subsidiaries and for which
Borrower receives reasonably equivalent value as determined in good faith by
Borrower; or (iii) a Temporary Cash Investment.
For purposes of this Section 6.13, "Temporary Cash Investment" means an
investment in any of the following: (i) obligations issued or guaranteed by the
United States of America; (ii) certificates of deposit, bankers acceptances and
other "money market instruments" issued by any bank or trust company organized
under the laws of the United States of America or any state thereof and having
capital and surplus in an aggregate amount of not less than $100,000,000; (iii)
open market commercial paper bearing the highest credit rating issued by
Standard & Poor's Corporation or by another nationally recognized credit rating
agency; (iv) repurchase agreements entered into with any bank or trust company
organized under the laws of the United States of America or any state thereof
and having capital and surplus in an aggregate amount of not less than
$100,000,000 relating to United States of America government obligations; and
(v) shares of "money market funds," each
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having net assets of not less than $100,000,000; in each case maturing or being
due or payable in full not more than 180 days after Borrower's acquisition
thereof.
6.14 Merger, Consolidation and Sale of Assets. Borrower will not
----------------------------------------
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person (other than a consolidation or merger with or into
a wholly owned subsidiary with a positive net worth; provided that, in
connection with any such merger or consolidation, no consideration (other than
common equity in the surviving Person or Borrower) shall be issued or
distributed to the members of Borrower) or permit any Person to merge with or
into Borrower unless: (i) Borrower shall be the continuing Person, or the
Person (if other than Borrower) formed by such consolidation or into which
Borrower is merged or that acquired or leased such property and assets of
Borrower shall be an entity organized and validly existing under the laws of the
United States of America or any jurisdiction thereof; (ii) immediately after
giving effect to such transaction, no Event of Default shall have occurred and
be continuing; and (iii) immediately after giving effect to such transaction on
a pro forma basis, Borrower or any Person becoming the successor to Borrower
shall have a consolidated EBITDA equal to or greater than the consolidated
EBITDA of Borrower immediately prior to such transaction. The foregoing
limitation shall not apply to (A) any sale, lease, or other disposition of
assets in the ordinary course of business, or (B) any sale, lease, or other
disposition of assets in an aggregate amount not exceeding ten percent (10%) of
the total assets of Borrower determined on a fair market value basis so long as
Borrower receives fair and reasonable consideration for such assets as
determined in good faith by Borrower.
6.15 Limitation on Other Business. Borrower will not, during any three
----------------------------
month period, permit less than 90% of the total consolidated gross revenues of
Borrower and its subsidiaries, not including non-recurring items included in
gross revenues, for such period to be derived from the operation and maintenance
of its Business.
ARTICLE 7
---------
Events of Default
-----------------
7.1 Events of Default. Each of the following shall constitute an Event
-----------------
of Default under this Agreement:
(a) Bankruptcy. Borrower shall institute a voluntary case seeking
----------
liquidation or reorganization under Chapter 7 or Chapter 11, respectively, of
the United States Bankruptcy Code, or shall consent to the institution of an
involuntary case thereunder against it; or Borrower shall file a petition
initiating or shall otherwise institute any similar proceeding under any other
applicable federal or state law, or shall consent thereto; or Borrower shall
apply for, or by consent or acquiescence there shall be an appointment of, or a
decree or order of a court of competent jurisdiction shall have been issued for
the appointment of, a receiver, liquidator, sequestrator, trustee or other
officer with similar power; or Borrower shall make an assignment for the benefit
of creditors;
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or Borrower shall admit in writing its inability to pay its debts generally as
they become due; or, if an involuntary case shall be commenced seeking the
liquidation or reorganization of Borrower under Chapter 7 or Chapter 11,
respectively, of the United States Bankruptcy Code, or any similar proceeding
shall be commenced against Borrower under any applicable federal or state law,
and (i) the petition commencing the involuntary case is not timely controverted;
or (ii) the petition commencing the involuntary case is not dismissed within 30
days of its filing; or (iii) an interim trustee is appointed to take possession
of all or a portion of the property, to operate all or any part of the business
of Borrower; or (iv) an order for relief shall have been issued or entered
therein; provided, however, that none of the events described in this Section
7.1(a) shall be deemed to be an Event of Default if upon the happening of such
event, or during the continuation of such event, Lender is obligated to continue
to perform under and has no right to terminate the Equipment Sale Agreement, and
in such event Lender shall be obligated to continue to advance Loans under this
Agreement in the amount of the purchase price of Equipment purchased under the
Equipment Sale Agreement or to make any Permitted Third Party Equipment
Purchase.
(b) Material Violation of Transaction Documents. Borrower shall (i) make
-------------------------------------------
any material unauthorized use of the Equipment in contravention of the terms of
the Equipment Sale Agreement, (ii) make any material unauthorized use of the
programming service in contravention of the Signal Availability Agreement, (iii)
fail to issue any of the Initial Ownership Interests, Conversion Ownership
Interests or Option Ownership Interests to Lender in contravention of the
Transaction Documents, (iv) permit to occur any breach of the covenant contained
in Section 6.15 of this Agreement, or (v) fail to make any payment to Lender
required under any of the Transaction Documents, subject to any notice and
opportunity to cure provisions with respect to any such payment obligations
contained in the Transaction Documents.
7.2 Termination of Commitment. If any Event of Default shall occur,
-------------------------
Lender shall have no obligation to make further Loans hereunder.
7.3 Other Remedies. If any Event of Default shall occur and be
--------------
continuing, Lender shall have, in addition to the remedies set forth in Section
7.2 hereof, all other remedies otherwise available at law or in equity.
ARTICLE 8
---------
Conversion
----------
8.1 Conversion by Lender. The Loans (including all accrued and unpaid
--------------------
interest) shall be convertible, in whole or in part, from time to time into
Ownership Interests in Borrower (the "Conversion Ownership Interests") in
accordance with the following provisions of this Section 8.1. In order to
exercise the conversion under this Section 8.1, Lender shall send a written
notice to Borrower that Lender is exercising such conversion as of a specified
date that shall be at least five business days, but not more than 30 days, from
the date upon which the notice is sent. Such notice shall specify the total
principal amount of the Loans to be converted.
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(a) On or after October 21, 1997, (i) if the principal amount of
the Loans advanced under this Agreement prior to such date is
$1,405,785 or less, the entire outstanding principal of and
accrued interest on the Loans will be convertible into
Ownership Interests in Borrower that represent, immediately
after issuance, 1.3% of the total Ownership Interests in
Borrower, or (ii) if the principal amount of the Loans advanced
under this Agreement prior to such date is more than
$1,405,785, the entire outstanding principal of and accrued
interest on the Loans will be convertible into Ownership
Interests in Borrower that represent, immediately after
issuance, the percentage of the total Ownership Interests in
Borrower based on the following calculation (the "Base
Conversion Formula"):
(( Outstanding Principal ) )
(( + ) )
(( of Loans $5,396,053 x )36.99 )- 4.99
(( ------------------------------------ ) )
(( $40,000,000 ) )
(b) On or after October 21, 1998, (i) if the principal amount of
the Loans advanced under this Agreement as of such date is
$10,608,273 or less, the entire outstanding principal of and
accrued interest on the Loans will be convertible into
Ownership Interests in Borrower so that, when combined with the
Ownership Interests in Borrower held by Lender on the Closing
Date (the "Initial Ownership Interests") and the Conversion
Ownership Interests issued upon any previous conversion of the
Loans under this Agreement (collectively, the "Previously
Issued Ownership Interests"), Lender will hold a total of 14.8%
of the total Ownership Interests in Borrower, or (ii) if the
principal amount of the Loans advanced under this Agreement as
of such date is more than $10,608,273, the entire outstanding
principal of and accrued interest on the Loans will be
convertible into Ownership Interests in Borrower that
represent, immediately after issuance, the percentage of the
total Ownership Interests in Borrower based upon the following
calculation (the "Adjusted Conversion Formula"):
Percentage Previously
Base Conversion Formula - Issued to Lender on
Prior Conversion
(c) On or after October 21, 1999, (i) if the principal amount of
the Loans advanced under this Agreement as of such date is
$22,600,703 or less, the entire outstanding principal of and
accrued interest on the Loans will be convertible into
Ownership Interests in Borrower so that, when combined with the
Previously Issued Ownership Interests, Lender will hold
Ownership Interests in Borrower that represent, immediately
after issuance, a total of 25.89% of the total Ownership
Interests in Borrower, or (ii) if the principal
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amount of the Loans advanced under this Agreement as of such
date is more than $22,600,703, the entire outstanding principal
of and accrued interest on the Loans will be convertible into
Ownership Interests in Borrower that represent, immediately
after issuance, the percentage of the total Ownership Interests
in Borrower based on the Adjusted Conversion Formula.
(d) On and after October 21, 2000, the entire outstanding principal
of and accrued interest on the Loans will be convertible into
Ownership Interests in Borrower so that, when combined with the
Previously Issued Ownership Interests, Lender will hold
Ownership Interests in Borrower that represent, immediately
after issuance, a total of 36.99% of the total Ownership
Interests in Borrower.
(e) For purposes of any conversion under paragraphs (a), (b), (c),
and (d) above, at all times there shall be deemed to be at
least $1.00 in outstanding principal on the Loans.
(f) If this Agreement is terminated prior to Lender advancing to
Borrower the full amount of the Commitment, then Lender
acknowledges and agrees that any Conversion Ownership Interests
held by Lender in excess of the Conversion Ownership Interests
that would have been held by Lender based upon the issuance of
Conversion Ownership Interests representing, immediately after
such issuance, one percent of the total Ownership Interests in
Borrower, for each $1,081,373.30 in Loans advanced hereunder
may be cancelled by Borrower for failure of consideration.
(g) The percentage Ownership Interests into which the Loans are
convertible under paragraphs (a), (b), (c), and (d) above are
based on the Ownership Interests in Borrower as of the date
first above written and assume that no additional Ownership
Interests have been issued. If additional Ownership Interests
have been issued after the date first above written and prior
to the date of any conversion of the Loans, and if Lender 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 Borrower, then the
percentage Ownership Interests into which the Loans are
convertible shall be reduced pro rata to reflect the dilution
resulting from the issuance of such additional Ownership
Interests by Borrower and the failure by Lender to exercise its
preemptive rights with respect thereto. Borrower and Lender
will negotiate in good faith regarding the appropriate
adjustment to the percentage Ownership Interests into which the
Loans are convertible under paragraphs (a), (b), (c), and (d)
above consistent with the basic intent and principles of the
provisions of this Section 8.1 if (i) additional Ownership
Interests are issued by Borrower and Lender does not exercise
its
-16-
preemptive rights with respect thereto, or (ii) any other event
occurs that requires such an adjustment to fairly protect the
rights of Borrower, Lender, or ResNet. If Borrower and Lender
are unable to agree on an appropriate adjustment within 30
days, then Borrower shall appoint a firm of certified public
accountants (which may be the regular auditors of Borrower) of
recognized standing, which shall give their opinion on the
appropriate adjustment, if any, to the percentage Ownership
Interests into which the Loans are convertible under paragraphs
(a), (b), (c), and (d) above, on a basis consistent with the
basic intent and principles established in this Section 8.1.
Upon receipt of such opinion, Borrower, Lender, and ResNet
shall forthwith take all actions that may be necessary or
appropriate to make the adjustments described therein.
8.2 Effect of Conversion. In the event and to the extent that Lender
--------------------
exercises the conversion on each Conversion Date, the principal amount of the
Loans as to which Lender exercises the conversion (and all accrued and unpaid
interest on such principal) shall be deemed repaid by Borrower to Lender. In
the event that Lender exercises the conversion, the parties to this Agreement
agree to execute all documents necessary to reflect the effect of the exercise
of such conversion and the repayment of such Loans (and all accrued and unpaid
interest thereon) as described in the preceding sentence.
8.3 Limitation on Conversion Rights. Lender shall not convert all or
-------------------------------
any part of the Loans into Conversion Ownership Interests to the extent that
such conversion would cause Borrower or Lender to violate any Governmental
Requirement, including, without limitation, a violation of 47 U.S.C.
(S)533(a)(2), or any successor statute, or any regulations of the FCC
promulgated thereunder if any SMATV service offered by Borrower continued to be
offered after such conversion separate and apart from any applicable franchised
cable service (the "Regulatory Restrictions"), and any purported conversion by
Lender under Section 8.1 that would result in a violation of the Regulatory
Restrictions shall be deemed null and void.
8.4 MANDATORY CONVERSION. LENDER SHALL BE OBLIGATED TO CONVERT THE
--------------------
LOANS INTO CONVERSION OWNERSHIP INTERESTS IN FULL IN ACCORDANCE WITH SECTION 8.1
AT ANY TIME THAT SUCH CONVERSION WOULD NOT VIOLATE ANY GOVERNMENTAL REQUIREMENT,
INCLUDING THE REGULATORY RESTRICTIONS.
ARTICLE 9
---------
Conversion Warrant
------------------
9.1 Issuance of Warrant. On the Maturity Date (subject to the
-------------------
Extension), if Lender has not fully exercised the conversion right under Section
8.1, Borrower shall issue to Lender a warrant to acquire Ownership Interests in
Borrower equal to the unconverted portion of the Conversion
-17-
Ownership Interests (the "Conversion Warrant"). The Conversion Warrant shall be
in the form of EXHIBIT B to this Agreement.
9.2 Effect of Issuance of Warrant. Upon issuance of the Conversion
-----------------------------
Warrant by Borrower to Lender, all principal of (and accrued and unpaid interest
on) the Loans shall be cancelled and shall be deemed repaid in full by Lender.
Upon delivery of the Conversion Warrant by Borrower to Lender, the parties to
this Agreement agree to execute all documents necessary to reflect the effect of
issuance of the Conversion Warrant and the repayment of the Loans (and all
accrued and unpaid interest thereon) as described in the preceding sentence.
9.3 Transferability of Warrant. The Conversion Warrant may be
--------------------------
transferred only in accordance with its terms and only simultaneously with and
to the same Person to whom the Option Warrant (if the Option Warrant is issued,
unless the Option Warrant has been previously terminated or is terminated
simultaneously with the transfer of the Conversion Warrant) is transferred.
ARTICLE 10
----------
Further Assurances
------------------
From time to time after the date hereof and without further consideration,
Borrower and Lender 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 Transaction Documents.
ARTICLE 11
----------
Miscellaneous
-------------
11.1 Successors and Assigns. Neither Lender nor Borrower may assign any
----------------------
of its rights or delegate any of its duties hereunder without the prior written
consent of the other; provided that either Lender or Borrower may assign this
entire Agreement to an Affiliate of such Person or to a Person that acquires all
or substantially all of the assets or business of such Person if such Person
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 of Lender and Borrower agrees that it
will cause any acquiror of all or substantially all of the assets or business of
such Person to assume this Agreement. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the Lender and Borrower,
their respective successors and permitted assigns. For purposes of this Section
11.1, "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.
11.2 No Implied Waiver. 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
-18-
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.
11.3 Amendments; Waivers. No amendment, modification or waiver of, or
-------------------
consent with respect to, any provision of this Agreement shall be effective
unless the same shall be in writing and signed and delivered by Borrower and
Lender. Any amendment, modification, waiver or consent hereunder shall be
effective only in the specific instance and for the specific purpose for which
given.
11.4 Severability. 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.
11.5 Notices. 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 Borrower: 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 Lender: 0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx XxXxxxx
Telephone: (000) 000-0000
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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.
11.6 Construction. 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 only to 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.
11.7 Survival. 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 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.
11.8 Governing Law; Choice of Forum. 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 other costs of preparing for and participating in
the litigation, including all appeals.
11.9 Integration. This Agreement, together with all exhibits, schedules,
-----------
appendices, and other attachments, expresses the understanding of the parties
thereto and supersedes all prior agreements, whether oral or written, relating
to the subject matters specifically expressed herein,
-20-
including, without limitation, the Prior Loan 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 Borrower, a Redemption Agreement, the Equipment Sale Agreement,
Subscription Agreements, the Signal Availability Agreement, the Option
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").
11.10 Counterparts. 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 thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RESNET COMMUNICATIONS, LLC 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
------------------------ -------------------------
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