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Exhibit 10.35
Execution Copy
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this
" Agreement ") is entered into as of December 13, 2006,
by and among LodgeNet Entertainment Corporation, a Delaware
corporation (" LodgeNet "), Liberty Satellite &
Technology, Inc., a Delaware corporation (" Liberty
Satellite "), and Liberty Media Corporation, a Delaware
corporation (" Liberty Media ").
BACKGROUND
A. Pursuant to that certain
Stock Purchase Agreement, dated December 11, 2006 (the "
Purchase Agreement "), by and between LodgeNet, Liberty
Satellite and Liberty Media, LodgeNet agreed to purchase 100% of
the issued and outstanding shares of capital stock of Ascent
Entertainment Group, Inc., a Delaware corporation. As part of the
consideration for LodgeNet’s purchase, Liberty Satellite will
receive the Share Consideration (as defined in the Purchase
Agreement) in the form of 2,050,000 shares of common stock of
LodgeNet.
B. As required by the
Purchase Agreement, the parties hereto are entering into this
Agreement to provide for certain transfer and voting restrictions,
as well as to grant certain registration rights, with respect to
the LodgeNet Securities issued as the Share Consideration.
AGREEMENT
In consideration of the foregoing
premises and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree
as follows:
Section 1. Certain
Definitions . In this Agreement, the following terms have the
following meanings.
Affiliate . When used with
reference to a specified Person, any Person who directly or
indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, the Person
specified.
Agreement . As defined in
the preamble.
Beneficial Ownership and
derivative terms . As determined pursuant to Rule 13d-3
and Rule 13d-5 under the Exchange Act and any successor
regulation, except that in determining Beneficial Ownership,
without duplication, equity securities that may be acquired
pursuant to rights to acquire equity securities that are
exercisable more than sixty days after a date shall nevertheless be
deemed to be Beneficially Owned.
Blackout Period . As
defined in Section 6.10 below.
Board . The Board of
Directors of LodgeNet.
Business Day . Any day,
other than a Saturday or Sunday, on which national banking
institutions are open.
Closing Date . As defined
in the Purchase Agreement.
Control and derivative
terms . The possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
another Person, whether through the ownership of voting securities,
by contract or otherwise.
Demand Registration . As
defined in Section 6.1 below.
Exchange Act . The
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
Free Writing Prospectus .
A free writing prospectus as defined in Rule 405 under the
Securities Act.
Hilton . As defined in
Section 6.5 below.
Hilton Warrant . As
defined in Section 6.5 below.
Issuer Free Writing
Prospectus . An issuer free writing prospectus as defined in
Rule 433 under the Securities Act.
Law . Any U.S. federal,
state or local or any foreign statute, code, ordinance, decree,
rule, regulation or general principle of common or civil law or
equity.
Liberty . Liberty Media
and Liberty Satellite, collectively, and any Affiliate of either
Liberty Media or Liberty Satellite.
Liberty Media . As defined
in the preamble.
Liberty Satellite . As
defined in the preamble or a Person that is a transferee of
LodgeNet Securities that constitute Share Consideration pursuant to
a Permitted Transfer.
LodgeNet . As defined in
the preamble.
LodgeNet Securities . The
common stock and any other voting securities issued by
LodgeNet.
Losses . As defined in
Section 6.15 below.
Permitted Transfer . Any
Transfer to a Person that is an Affiliate of Liberty Satellite at
the time of such Transfer.
Person . Any individual,
firm, corporation, partnership, limited liability company, trust,
joint venture, or other entity, and shall include any successor (by
merger or otherwise) of such entity.
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Piggyback Notice . As
defined in Section 6.7 below.
Piggyback Registration .
As defined in Section 6.7 below.
Prospectus . The
prospectus included in the applicable Registration Statement, as
supplemented by any and all prospectus supplements and as amended
by any and all amendments (including post-effective amendments) and
including all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement . As
defined under "Background" on the first page of this Agreement.
Registrable Securities .
Any LodgeNet Securities held by Liberty as the Share Consideration;
provided, however, that as to any Registrable Securities,
such securities will irrevocably cease to constitute Registrable
Securities when: (i) the securities are disposed of pursuant
to an effective registration statement under the Securities Act;
(ii) to the extent such securities can be sold by Liberty,
taking into consideration the volume limitations of Rule 144,
such securities are eligible to be sold by Liberty to the public
pursuant to Rule 144 (or any successor provision) under the
Securities Act; (iii) such securities have been transferred to
any Person other than Liberty; or (iv) such securities cease
to be outstanding.
Registration Expenses . As
defined in Section 6.14 below.
Registration Statement .
Any registration statement of LodgeNet under the Securities Act
that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement
(including post-effective amendments), and all exhibits and all
materials incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Required Effective Period
. The 180 days following the first day of effectiveness of a
Registration Statement.
Restricted Period . The
period of time commencing on the Closing Date and ending on the
date that is 12 months after the Closing Date.
Rule 144 .
Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC . The United States
Securities and Exchange Commission and any successor United States
federal agency or governmental authority having similar powers.
Securities Act . The
Securities Act of 1933, as amended, and the rules and regulations
thereunder.
Share Consideration . As
defined in the Purchase Agreement, and including, for purposes
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of this Agreement, any securities paid, issued or distributed in
respect of any such shares by way of stock dividend, stock split or
distribution, or in connection with a combination of shares or
recapitalization, or merger where LodgeNet is the surviving
entity.
Transfer . As defined in
Section 3.1 below.
Underwritten Registration
or Underwritten Offering . A registration in which LodgeNet
Securities are sold to an underwriter for reoffering to the
public.
Section 2. Acquisition of
LodgeNet Securities. Except for the Share Consideration,
Liberty has not acquired and shall not, during the Restricted
Period, acquire Beneficial Ownership of any LodgeNet
Securities.
Section 3. Dispositions
of LodgeNet Securities.
3.1 Transfer Prohibited .
During the Restricted Period, Liberty will not Transfer any
LodgeNet Securities that constitute the Share consideration. For
purposes of this Agreement, " Transfer " means any attempt
by Liberty to take any of the following actions:
(a) sell, offer to sell,
contract or agree to sell, hypothecate, pledge, grant any option to
purchase or otherwise dispose of or agree to dispose of, directly
or indirectly, or establish or increase a put equivalent position
or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act other than
(i) a Permitted Transfer and (ii) as permitted in
(b) below;
(b) enter into any swap or
other arrangement that transfers to another Person, in whole or in
part, any of the economic consequences of ownership of LodgeNet
Securities or any securities convertible into or exchangeable or
exercisable for LodgeNet Securities, or other rights to purchase
LodgeNet Securities, whether any such transaction is to be settled
by delivery of LodgeNet Securities or such other securities, in
cash or otherwise, other than a variable forward sale or collar or
similar transaction involving a put and/or call option settled in
cash or securities; or
(c) publicly announce an
intention to effect any transaction prohibited by this Section.
3.2 Attempted Transfers
Void . Any attempted Transfer by Liberty of LodgeNet Securities
in violation of this Agreement is void.
Section 4. Voting
.
4.1 Voting . Until the
beginning of the 19th month after the Closing Date, Liberty shall
cause all Registrable Securities held by it to be present at all
meetings of the stockholders of LodgeNet at which such shares are
entitled to vote, or shall cause proxies to be present at all such
meetings, so as to enable all of such securities to be counted for
quorum purposes. Liberty will vote its Registrable Securities with
respect to any matter submitted for approval of
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stockholders of LodgeNct in the same proportion for and against
each such matter as the other LodgeNet Securities are voted with
the intent of this provision being that the proportion voted for
and against each such matter will not be changed by Liberty’s
voting of Registrable Securities.
Section 5. Control of
LodgeNet . Until the beginning of the 19th month after the
Closing Date, Liberty shall not take any actions to attempt
directly or indirectly to influence or control the management and
policies of LodgeNet, including the following:
(a) soliciting proxies or
participating in a proxy contest in any matter not approved by a
majority of the Board;
(b) initiating or
participating in stockholder proposals,
(c) seeking to nominate a
candidate for, or to remove any member of, the Board;
(d) calling a special meeting
of stockholders;
(e) acting in concert with
anyone with respect to LodgeNet or LodgeNet Securities;
(f) depositing LodgeNet
Securities in a voting trust or subjecting them to any voting
arrangement or agreement, except as expressly provided for herein;
or
(g) soliciting, seeking to
effect, or making any public statement regarding any business
combination, restructuring, recapitalization or any proposal to
amend or modify, or otherwise inconsistent with, the provisions of
this Agreement.
Section 6. Registration
Rights.
6.1 Right to Demand
Registration . At any time commencing on the 19th month after
the Closing Date, Liberty Satellite may request in writing that
LodgeNet effect the registration (a " Demand Registration ")
of all or part of the Registrable Securities held by Liberty
Satellite with the SEC under and in accordance with the provisions
of the Securities Act (which written request will specify
(i) the then current name and address of Liberty Satellite,
(ii) the aggregate number of shares of Registrable Securities
requested to be registered, (iii) the total number of shares
of LodgeNet Securities then held by Liberty Satellite, and
(iv) the intended means of distribution). Liberty Satellite
shall have the right to two Demand Registrations, one of which may
be an Underwritten Registration. LodgeNet will file a Registration
Statement covering such Registrable Securities requested to be
registered as promptly as practicable after receipt of such
request; provided, however, that LodgeNet will not be
required to effect any Demand Registration:
(a) if the request is for an
Underwritten Registration and either (i) prior to the date of
such request LodgeNet has effected one Demand Registration as an
Underwritten Registration or (ii) the Registrable Securities
requested to be registered have an aggregate then-current market
value of less than $30 million (before deducting underwriting
discounts and commission);
(b) if the request is for a
registration which will not be underwritten and either
(i) prior to the date of such request LodgeNet has effected
two Demand Registrations or (ii) the
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Registrable Securities requested to be registered have an
aggregate then-current market value of less than
$10 million;
(c) if within the six-month
period preceding such request LodgeNet has effected either
(i) a Demand Registration or (ii) a registration pursuant
to which Liberty Satellite was entitled to Piggyback Registration
rights;
(d) if a Registration
Statement is effective at the time such request is made and such
Registration Statement may be utilized for the offering and sale of
the Registrable Securities requested to be registered and LodgeNet
allows or causes such Registrable Securities to be registered under
such Registration Statement; or
(e) during the pendency of
any Blackout Period as set forth in Section 6.10.
6.2 Effective Demand
Registrations . LodgeNet may satisfy its obligations under
Section 6.1 by amending (to the extent permitted by applicable law)
any registration statement previously filed by LodgeNet under the
Securities Act so that such amended registration statement will
permit the disposition of all of the Registrable Securities for
which a demand for registration has been properly made under
Section 6.1. If LodgeNet so amends a previously filed
registration statement, it will be deemed to have effected a Demand
Registration; provided that the date such registration
statement is amended pursuant to this Section shall be the "the
first day of effectiveness" of such registration statement for
purposes of determining the Required Effective Period with respect
to such registration statement.
6.3 Continuous Effectiveness of
Registration Statement .
(a) LodgeNet will use its
reasonable efforts to keep a Registration Statement that has become
effective continuously effective, and not subject to any stop
order, injunction or other similar order or requirement of the SEC,
until the earlier of (a) the expiration of the Required
Effective Period and (b) the date on which all Registrable
Securities covered by such Registration Statement (i) have
been disposed of pursuant to such Registration Statement or (ii)
cease to be Registrable Securities; provided, however, that
in no event will such period expire prior to the expiration of the
applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 promulgated thereunder.
(b) In the event of any stop
order, injunction or other similar order or requirement of the SEC
relating to any Registration Statement, the Required Effective
Period for such Registration Statement will be extended by the
number of days during which such stop order, injunction or similar
order or requirement is in effect.
6.4 Underwritten Demand
Registration . In the event that a registration requested
pursuant to Section 6.1 is to be an Underwritten Registration,
LodgeNet shall select one or more investment banking firms of
national standing to be the managing underwriter for the
Underwritten Offering relating thereto. Liberty Satellite agrees to
enter into an underwriting agreement with the underwriters,
provided that the underwriting agreement is in customary form and
reasonably acceptable to Liberty Satellite.
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6.5 Priority on Demand
Registrations . If a Demand Registration is to be an
Underwritten Registration and the managing underwriter of the
Underwritten Offering relating thereto advises Liberty Satellite
that the total amount of Registrable Securities requested to be
registered, together with such other securities that LodgeNet and
any stockholders propose to include in such offering is such as to
adversely affect the success of such offering, then LodgeNet will
include in such registration all Registrable Securities requested
to be included therein, up to the full amount that, in the view of
such managing underwriter, can be sold without adversely affecting
the success of such offering, before including any securities of
any Person (including LodgeNet) other than Liberty Satellite.
Notwithstanding the foregoing, in the event that Hilton Hotels
Corporation or its assignee (" Hilton "), has demanded
registration of its LodgeNet Securities pursuant to the
registration rights contained in that certain Warrant
No. W-17, dated October 9, 2000 (the " Hilton
Warrant "), and that request was postponed by LodgeNet due to
its contemplation of filing the Demand Registration under
Section 6.1 hereof, the number of shares to be included in the
Underwritten Offering shall be allocated first to Liberty Satellite
and Hilton based upon the respective number of shares sought by
each to be included in the offering.
6.6 Revocation of Demand
Registration . At any time prior to the effective date of the
Registration Statement, Liberty Satellite may revoke its request to
have Registrable Securities included therein by providing a written
notice to LodgeNet. In the event Liberty Satellite revokes such
request, either (a) Liberty Satellite shall reimburse LodgeNet
for all of its out-of-pocket expenses incurred in the preparation,
filing and processing of the Registration Statement or (b) the
requested registration that has been revoked will be deemed to have
been a Demand Registration effected for purposes of
Section 6.1, as determined by LodgeNet.
6.7 Right to Piggyback
Registration . If at any time after the Restricted Period
LodgeNet proposes to file a registration statement under the
Securities Act with respect to an offering of LodgeNet Securities
(other than a registration statement (a) on Form S-8 or any
successor form thereto, (b) on Form S-4 or any successor form
thereto relating solely to the sale of securities to employees,
directors, officers, consultants or advisors of LodgeNet or its
Affiliates pursuant to a stock option, stock purchase or similar
benefit plan or (c) relating to a transaction under
Rule 145 under the Securities Act), whether or not for its own
account, on a form that would permit registration of Registrable
Securities for sale to the public under the Securities Act, then
LodgeNet will give written notice (the " Piggyback Notice ")
of such proposed filing to Liberty Satellite at least 10 days
before the anticipated filing date. Such notice will include the
number and class of equity securities proposed to be registered,
the proposed date of filing of such registration statement, any
proposed means of distribution of such equity securities, any
proposed managing underwriter of such equity securities, the name
of the holders whose LodgeNet Securities are being registered if
the registration is a secondary offering, to the extent then known
to LodgeNet, and a good faith estimate by LodgeNet of the proposed
maximum offering price of such equity securities as such price is
proposed to appear on the facing page of such registration
statement, and will offer Liberty Satellite the opportunity to
register such amount of Registrable Securities as it may request on
the same terms and conditions as the registration of
LodgeNet’s or other Person’s securities, as the case
may be (a "Piggyback Registration "). LodgeNet will include
in each Piggyback Registration all Registrable Securities for which
LodgeNet has received written requests for inclusion within
5 days after delivery of
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the Piggyback Notice, subject to Section 6.8. With respect
to Piggyback Registration effected under the Hilton Warrant,
Liberty Satellite must also send written requests for inclusion to
both LodgeNet and the holder whose LodgeNet Securities are being
registered, and Liberty Satellite shall comply with the
requirements set forth in the Hilton Warrant as well as this
Agreement.
6.8 Priority on Piggyback
Registrations .
(a) If the Piggyback
Registration is an Underwritten Offering, LodgeNet will cause the
managing underwriter of that proposed offering to permit Liberty
Satellite’s requested Registrable Securities to be included
in the Piggyback Registration and to include all such Registrable
Securities on the same terms and conditions as any similar LodgeNet
Securities. Notwithstanding the foregoing, if the managing
underwriter of such Underwritten Offering advises LodgeNet that, in
its view, the total amount of securities that LodgeNet, Liberty
Satellite and any other holders propose to include in such offering
is such as to adversely affect the success of such Underwritten
Offering, then:
(i) if such Piggyback Registration is a primary
registration by LodgeNet for its own account, LodgeNet will include
in such Piggyback Registration: (A) first, all securities to
be offered by LodgeNet and all securities requested to be included
by Hilton, to the extent Hilton’s previously demanded
registration has been postponed pursuant to clause (i) of the
last paragraph of Section 2.1 of the Hilton Warrant and Hilton
is entitled to include its shares on a pro rata basis under the
terms of the Hilton Warrant; (B) second, up to the full amount
of securities requested to be included in such Piggyback
Registration by Hilton, to the extent not already included above,
and (C) third, up to the full amount of securities requested
to be included in such Piggyback Registration by Liberty Satellite
and all other holders having registration rights, allocated pro
rata among such holders, on the basis of the amount of
securities requested to be included therein by each such holder, so
that the total amount of securities to be included in such
Underwritten Offering is the full amount that, in the view of such
managing underwriter, can be sold without adversely affecting the
success of such Underwritten Offering; and
(ii) if such Piggyback Registration is an underwritten
secondary registration for the account of holders of securities of
LodgeNet, LodgeNet will include in such registration:
(A) first, all securities of the Persons exercising "demand"
registration rights requested to be included therein and all
securities requested to be included by Hilton, to the extent
Hilton’s previously demanded registration has been postponed
pursuant to clause (i) of the last paragraph of
Section 2.1 of the Hilton Warrant and Hilton is entitled to
include its shares on a pro rata basis under the terms of the
Hilton Warrant; (B) second, up to the full amount of
securities requested to be included in the registration by Hilton,
to the extent not already included above; and (C) third, up to
the full amount of securities requested to be included therein by
Liberty Satellite and all other holders having registration rights,
allocated pro rata among such holders, on the basis of the
amount of securities requested to be included therein by each such
holder, so that the total amount of secu
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