EXHIBIT 10.18
STANDSTILL AGREEMENT
BY AND BETWEEN
LODGENET ENTERTAINMENT CORPORATION
AND
TCI SATELLITE ENTERTAINMENT, INC.
Dated as of June 4, 1997
STANDSTILL AGREEMENT
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This STANDSTILL AGREEMENT (the "Agreement"), is entered into as of
June 4, 1997, by and between LodgeNet Entertainment Corporation, a Delaware
corporation ("LodgeNet"), and TCI Satellite Entertainment, Inc., a Delaware
corporation ("TCI-Satellite") (collectively, LodgeNet and TCI-Satellite are
referred to as the "Parties" and individually as a "Party").
RECITALS
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A. LodgeNet or its subsidiary, ResNet Communications, Inc., a
Delaware corporation ("ResNet"), and TCI Satellite MDU, Inc., a Delaware
corporation and a wholly owned subsidiary of TCI-Satellite ("TSAT-MDU"),
simultaneously with the execution of this Agreement, are entering into
Subscription Agreements to acquire Ownership Interests in ResNet Communications,
LLC, a Delaware limited liability company ("ResNet LLC") and the Limited
Liability Company Agreement of ResNet LLC, and ResNet LLC and TSAT-MDU are
entering into an Equipment Sale Agreement, a Signal Availability Agreement, a
Subordinated Convertible Term Loan Agreement, and an Option Agreement
(collectively, the "Transaction Documents"), providing for a series of
transactions, including the acquisition by TSAT-MDU of 4.99% of the Ownership
Interests in ResNet LLC; and
B. The remaining Ownership Interests in ResNet LLC are owned by
ResNet which, immediately after the consummation of the transactions
contemplated by the Transaction Documents, will be a wholly owned subsidiary of
LodgeNet, which is publicly traded, and LodgeNet and ResNet have requested that
TCI-Satellite and its Controlled Affiliates agree to, and TCI-Satellite has
agreed to and to cause its Controlled Affiliates to agree to, restrictions on
acquiring shares of the capital stock of LodgeNet and shares of the capital
stock of ResNet that may in the future be publicly traded.
AGREEMENT
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For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
ARTICLE I
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Definitions
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(a) As used in this Agreement, the following terms shall have the
following meanings (unless indicated otherwise, all Article and Section
references are to Articles and Sections of this Agreement):
"Affiliate": With respect to any Person, any other Person
Controlling, Controlled by or under common Control with such Person.
"Beneficial ownership": As defined in Rule 13d-3 under the Exchange
Act, as such rule is currently in effect.
"Control": The ownership, directly or indirectly, of Voting Power
representing the right generally to elect a majority of the directors (or
similar officials) of any Person, or the possession, by contract or otherwise,
of the authority to direct the management and policies of such Person.
"Controlled Affiliate": With respect to any Person, any Wholly Owned
Subsidiary of such Person and any other Person under the Control of such Person.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations thereunder, all as
the same may be in effect from time to time.
"Group": As defined in Section 13(d)(3) of the Exchange Act.
"Person": Any individual, partnership, limited liability company,
corporation, trust, unincorporated organization or other entity, or a government
or agency or political subdivision thereof.
"SEC": The United States Securities and Exchange Commission or its
successor.
"Subsidiary": With respect to LodgeNet or TCI-Satellite, any Person
with respect to which the Voting Power to elect a majority of the board of
directors (or similar governing body) is held by LodgeNet or TCI-Satellite, as
may be the case.
"Voting Power": The right to vote generally in the election of
directors, or other similar officials, through the beneficial ownership of
common stock or other securities or ownership interests entitled to vote
generally in the election of directors or such officials. For purposes of
calculating the percentage ownership of Voting Power of any Person, all
warrants, options or rights held by any Person shall be deemed to have been
exercised and all convertible or exchangeable securities shall be deemed to have
been converted or exchanged, as the case may be (disregarding for such purposes
any restrictions on conversion, exchange or exercise), in each case for the
maximum number of shares of common stock or other securities entitled to vote
generally in the election of directors or similar officials; provided that, any
rights to acquire Voting Securities held by TCI-Satellite under any Transaction
Document shall not be taken into account for purposes of determining the Voting
Power held by TCI-Satellite with respect to such Voting Securities.
"Voting Securities": Any securities, including instruments
convertible into Voting Securities, of LodgeNet and ResNet (unless the context
specifically contemplates ResNet or LodgeNet) having the ordinary power to vote,
in the absence of contingencies, in the election of directors of LodgeNet or
ResNet, as the case may be.
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"Wholly Owned Subsidiary": With respect to any Person, any entity as
to which 100% of the Voting Securities or other ownership interests having power
to elect the board of directors or other officials performing similar functions
are owned directly or indirectly by any Person.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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Percentage Limitation Article III(i)
Standstill Period Article II
Transaction Documents Recital A
ARTICLE II
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Term
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The term of this Agreement (the "Standstill Period") shall commence on
the date hereof and terminate on July 21, 2005.
ARTICLE III
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Standstill Provisions
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TCI-Satellite agrees, and agrees to cause its Controlled Affiliates to
agree, with LodgeNet that, except as may be specifically permitted by this
Agreement or the Transaction Documents or unless it is specifically authorized
in writing to do so by LodgeNet, during the Standstill Period TCI-Satellite and
its Controlled Affiliates will not, directly or indirectly:
(i) in any way acquire or agree to acquire (other than pursuant
to any of the Transaction Documents) beneficial ownership of any
Voting Securities or any direct or indirect rights or options to
acquire beneficial ownership of any Voting Securities (A) of ResNet or
(B) of LodgeNet if the aggregate percentage (calculated by Voting
Power) of the Voting Securities beneficially owned by TCI-Satellite
and its Controlled Affiliates after giving effect to such acquisition
would exceed 10% of the Voting Power of LodgeNet (the "Percentage
Limitation");
(ii) make any public announcement with respect to, or submit to
ResNet or LodgeNet or any of their respective directors, officers,
representatives, employees, attorneys, advisers, agents or Affiliates
(whether publicly or otherwise) any proposal for, the acquisition of
Voting Securities not permitted by paragraph (i) above;
(iii) propose to (a) enter into, directly or indirectly, any
merger, consolidation or business combination involving ResNet or
LodgeNet or any merger or business combination
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involving any of ResNet's or LodgeNet's Subsidiaries the consummation
of which would result in TCI-Satellite or its Controlled Affiliates
exceeding the Percentage Limitation, or (b) purchase, directly or
indirectly, substantially all of the assets of ResNet or LodgeNet or
any of their respective Subsidiaries outside the ordinary course of
business;
(iv) make, or in any way participate in, any "solicitation" of
"proxies" to vote any Voting Securities (as such terms are defined or
used in Regulation 14A under the Exchange Act, as such Regulation is
currently in effect) of ResNet, if ResNet is at the time publicly
traded and subject to the proxy rules, or LodgeNet;
(v) form, join or in any way participate in a Group with
respect to any Voting Securities of LodgeNet or ResNet if ResNet is at
the time publicly traded;
(vi) deposit any Voting Securities of LodgeNet in a voting
trust or subject any Voting Securities of LodgeNet to any proxy or
other arrangement or agreement with respect to the voting of such
Voting Securities or other agreement having similar effect other than
a proxy, trust or other arrangement or agreement the beneficial
ownership of which is held by TCI-Satellite and/or its Controlled
Affiliates and is not effected for a purpose inconsistent with this
Agreement;
(vii) disclose publicly any intention, plan or arrangement
inconsistent with the foregoing; or
(viii) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or policies of
LodgeNet.
ARTICLE IV
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Voting of Voting Securities
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TCI-Satellite agrees that it shall appear, and shall cause its
Controlled Affiliates to appear, as appropriate, in person or by proxy, at all
shareholder meetings of ResNet and LodgeNet, as the case may be, at which
matters are submitted to shareholders for a vote; provided that such appearance
will occur only if TCI-Satellite (or its Controlled Affiliates) hold Voting
Securities eligible to vote at any such meeting, and TCI-Satellite (and its
Controlled Affiliates) shall be free to vote such Voting Securities at such
meeting in their discretion with respect to any such matters.
ARTICLE V
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Miscellaneous
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5.1 Except as expressly set forth herein, the fees and expenses
(including the fees of any lawyers, accountants, investment bankers or others
engaged by a Party) in connection with this
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Agreement and the transactions contemplated hereby, whether or not the
transactions contemplated hereby are consummated, will be paid by the Party
incurring the same.
5.2 All documentation, notices, reports and correspondence under this
Agreement shall be submitted and maintained in the English language. As used
herein, the singular shall include the plural and the plural may refer to only
the singular. The use of any gender shall be applicable to all genders. The
captions contained herein are for purpose of convenience only and are not part
of the Agreement.
5.3 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 LodgeNet: 808 West Avenue North
Sioux Falls, South Dakota 57104
Attn: Chief Operating Officer
Telephone: (605) 330-1330
With a copy similarly addressed to the attention
of Eric R. Jacobsen, Vice President and General
Counsel
With a copy to: Pillsbury Madison & Sutro L.L.P.
235 Montgomery Street
San Francisco, California 94104
Attn: Gregg F. Vignos, Esq.
Telephone: (415) 983-1649
If to TCI-Satellite: 8085 South Chester Street
Suite 300
Englewood, Colorado 80112
Attn: Toby DeWeese
Telephone: (303) 712-4725
With a copy similarly addressed to the
attention of Corporate Counsel
Telephone: (303) 712-4618
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With a copy to: Sherman & Howard L.L.C.
633 Seventeenth Street
Suite 3000
Denver, Colorado 80202
Attn: Peggy Knight, Esq.
Telephone: (303) 299-8140
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.
5.4 If any portion or portions of this Agreement shall be deemed, for
any reason, invalid or unenforceable, the remaining portion or portions shall
nevertheless be valid, enforceable, and in effect, unless such remaining portion
or portions are not reasonably adequate to accomplish the basic purposes and
intent of the Parties. The Parties will negotiate in good faith to replace any
invalid or unenforceable provision of this Agreement with an enforceable
provision that accomplishes the original intent of the Parties to the extent
reasonably practicable.
5.5 This Agreement cannot be amended except by a written instrument
signed by the Parties hereto.
5.6 Either Party's failure to enforce any provision of this Agreement
shall not in any way be construed as a waiver of any such provision as to any
future violations thereof or prevent that Party thereafter from enforcing each
and every other provision of this Agreement. No waiver of any right or remedy
hereunder shall be effective unless contained in a writing signed by the waiving
Party. The rights granted to the Parties herein are cumulative and the waiver by
a Party of any single remedy shall not constitute a waiver of such Party's right
to assert all other legal remedies available to it under the circumstances.
5.7 This Agreement shall be governed and interpreted by the laws of
the State of Delaware, without regard to its conflict of law rules. The Parties
agree that all litigation relating to this Agreement shall be brought in the
state and federal courts of appropriate subject matter jurisdiction in Delaware,
and each Party hereby submits itself to the non-exclusive in personam
jurisdiction of such courts for purposes of any such litigation. Neither Party
shall object to venue in such courts on the grounds of an inconvenient forum or
otherwise. In the event of any litigation between the Parties relating to this
Agreement, the prevailing Party shall be entitled to recover, in addition to any
other relief awarded by the court, its reasonable attorneys fees and all other
costs of preparing for and participating in the litigation, including all
appeals.
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5.8 Neither Party will be in default or otherwise liable for any
delay in or failure of its performance under this Agreement where such delay or
failure arises by reason of any act of God, acts of the common enemy, the
elements, earthquake, floods, fires, epidemics, quarantine restrictions, riots,
strikes, failure or delay in transportation, freight embargoes or other causes
beyond its control.
5.9 This Agreement expresses the understanding of the Parties hereto
and supersedes all prior agreements, whether oral or written, relating to the
subject matters specifically expressed herein; provided, however, that the
Parties acknowledge that simultaneously with the execution of this Agreement
they or their Affiliates are entering into the Transaction Documents which are
related to this Agreement in that they collectively document a transaction
between the Parties of which this Agreement is a part.
5.10 Neither Party may assign any of its rights or delegate any of its
duties hereunder without the prior written consent of the other Party; provided
that either Party may assign this entire Agreement to an Affiliate of such Party
or to a Person that acquires all or substantially all of the assets or business
of such Party if such Party gives prior written notice to the other Party and
delivers an assumption agreement of such assignee in form and substance
reasonably satisfactory to the other Party pursuant to which such assignee
assumes the obligations of the assigning Party under this Agreement. Each Party
agrees that it will cause any acquiror of all or substantially all of the assets
or business of such Party to assume this Agreement. Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
Parties, their respective successors and permitted assigns. For purposes of
this paragraph, "assign" shall mean to directly or indirectly sell, assign,
convey, lease, sublease or permit the use of, in any manner, any rights or
obligations under this Agreement.
5.11 This Agreement may be executed in any number of counterparts each
of which shall be an original with the same effect as if the signatures thereof
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
LODGENET ENTERTAINMENT TCI SATELLITE ENTERTAINMENT,
CORPORATION INC.
By: /s/ Eric R. Jacobsen By: /s/ Gary S. Howard
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Name: Eric R. Jacobsen Name: Gary S. Howard
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Title: Vice President Title: President
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