STOCK PURCHASE AGREEMENT
by and between
LODGENET ENTERTAINMENT CORPORATION
PAR INVESTMENT PARTNERS, L.P.
December 7, 2006
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the " Agreement ") is entered into as of December 7, 2006 (the " Agreement Date "), by and between LodgeNet Entertainment Corporation, a Delaware corporation (" Seller " or " LodgeNet "), and PAR Investment Partners, L.P., a Delaware limited partnership ("Buyer"; Buyer and Seller are referred to individually as a " Party " and collectively as the " Parties .")
A. Seller has entered into a Stock Purchase Agreement, of even date herewith, with Liberty Satellite & Technology, Inc. ("LS&T") and Liberty Media Corporation (in the form attached hereto as Exhibit A, the "Liberty SPA"), pursuant to which Seller will acquire 100% of the issued and outstanding shares of capital stock of Ascent Entertainment Group, Inc. (the "Acquisition"), which prior to the Acquisition owned 100% of the issued and outstanding shares of capital stock of On Command Corporation, a Delaware corporation (" ONCO ").
B. Pursuant to the Liberty SPA, at the closing of the Acquisition, and as part of the consideration for such Acquisition, Seller will issue 2,050,000 shares of its common stock to LS&T.
C. Concurrently therewith, Seller desires to sell to the Buyer and Buyer desires to purchase from the Seller 1,000,000 shares of common stock, par value $.01 per share (the "Shares") of the Seller, for the consideration and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and intending to be legally bound, the parties agree as follows:
Section 1.1. Definitions. The following terms have the following meanings for purposes of this Agreement:
" Affiliate " means, with respect to any Person, any other Person that, directly or indirectly, Controls or is Controlled by or is under common Control with such Person.
" Agreement " has the meaning set forth in the preamble.
" Agreement Date " has the meaning set forth in the preamble.
" Buyer " has the meaning set forth in the preamble.
" Closing " has the meaning set forth in Section 2.3.
" Closing Date " has the meaning set forth in Section 2.34.
" Blackout Period ." As defined in Section 7.6 below.
" Board ." The Board of Directors of LodgeNet.
" Issuer Free Writing Prospectus ." An issuer free writing prospectus as defined in Rule 433 under the Securities Act.
" LodgeNet " has the meaning set forth in the preamble.
"LodgeNet Securities" means any equity securities of LodgeNet.
" Piggyback Notice ." As defined in Section 7.3 below.
" Piggyback Registration ." As defined in Section 7.3 below.
" Purchase Price " has the meaning set forth in Section 2.2.
" Registration Expenses ." As defined in Section 7.14 below.
Section 2.1. Purchase and Sale of Shares . Subject to the terms and conditions set forth in this Agreement, at the Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares from Seller, free and clear of any and all Encumbrances, as set forth in this Article II.
Section 2.2. Purchase Price . The aggregate purchase price for the Shares will be $23,370,000 (the " Purchase Price ").
(a) The Purchase Price will be paid at the Closing by wire transfer of immediately available funds pursuant to wire instructions provided by Seller to Buyer no later than two (2) Business Days prior to the Closing Date, or by such other means as may be agreed between the Parties hereto. Seller shall deliver to Buyer a certificate or certificates representing the Shares to be purchased by, and sold to, the Buyer pursuant to Section 2.1 hereof, registered in the names and in the denominations designated and provided by the Buyer at least three (3) Business Days prior to the Closing Date.
Section 2.3. Closing . The closing of the transactions contemplated by this Agreement (the " Closing ") will take place at the offices of Leonard, Street and Deinard in Minneapolis, Minnesota on the date on which the Acquisition is closed or at such other time and place as the Parties may mutually agree in writing (the " Closing Date ").
Section 3.1. Organization of Buyer . Buyer is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware.
Section 3.2. Authorization; Binding Effect . Buyer has all requisite partnership power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement, and this Agreement has been duly executed and delivered by Buyer. This Agreement constitutes and, when executed and delivered by Buyer at the Closing will constitute, a legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except insofar as enforcement may be limited
Section 3.3. Noncontravention; Consents . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement, will (a) violate any material legal requirement to which Buyer is subject or any provision of the certificate of limited partnership or governing documents of Buyer or (b) result in a material breach of, constitute a material default under, result in the acceleration of, create in any Person the right to accelerate, terminate, modify or cancel, any contract, agreement, lease, license or other arrangement to which Buyer is a party or by which it is bound or to which its assets are subject. Except for an filing required under the hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") (if any) Buyer is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or other Person in order for Buyer to consummate the transactions contemplated by this Agreement.
Section 3.4. Brokers’ Fees . Buyer has no obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
Section 3.5. Investment Intent . Buyer is acquiring the Shares under this Agreement solely for the purpose of investment for its own account, not as a nominee or agent, and not with a view to, or for sale in connection with, any distribution of any part thereof within the meaning of Section 2(11) of the Securities Act or any applicable state securities or "blue sky laws".
Section 3.6. Disclosure of Information; Non-reliance . Buyer has been furnished all information it considers necessary or appropriate for deciding whether to accept the Shares. Buyer has had an opportunity to ask questions and receive answers from Seller regarding the business, properties, financial condition and prospects of the Seller, and all such questions have been answered to the full satisfaction of the Buyer. In making its decision to purchase the Shares, Buyer has relied solely on its own investigation of Seller and has not relied on any opinions, analyses, representations or warranties of Seller or any third party, except for the representations and warranties contained in Article IV hereof.
Section 3.7. Accredited Investor . Buyer is an "accredited investor" as such term is defined in Rule 501 of Regulation D under the Securities Act.
Section 3.8. Current Ownership . As of the Agreement Date, Buyer owns 1,156,997 shares of common stock of Seller.
Section 3.9. Restricted Securities . Buyer understands that the Shares are characterized as "restricted securities" under the United States federal securities laws inasmuch as such Shares are being acquired in a transaction not involving a public offering and that under such laws and applicable regulations such Shares may be resold without registration under the Securities Act only in certain limited circumstances. In the
Seller represents and warrants to Buyer as follows:
Section 4.1. Organization of Seller . Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.
Section 4.2. Authorization; Binding Effect .
(a) Seller has all requisite corporate power and authority to execute and deliver this Agreement and such other documents as required to consummate the Acquisition and to perform its obligations under this Agreement and such other documents as required to consummate the Acquisition. As of the Closing Date, this Agreement has been duly executed and delivered by Seller.
(b) This Agreement constitutes the legal, valid, and binding obligation of Seller, enforceable against Seller in accordance with its terms, except insofar as enforcement may be limited by bankruptcy, insolvency, or other laws affecting generally the enforceability of creditors’ rights and by limitations on the availability of equitable remedies.
Section 4.3. Noncontravention; Consents . Neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will (a) violate any material legal requirement to which Seller is subject or any provision of the certificate of incorporation or bylaws (or comparable constituent documents) of Seller or (b) result in a material breach of, constitute a material default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, any contract, agreement, lease, license, or other arrangement to which Seller is a party or by which it is bound or to which its assets are subject. Except for the filing of a Form D with the SEC (if required), Seller does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or other Person in order for Buyer and Seller to consummate the transactions contemplated by this Agreement.
Section 4.4. Certain Proceedings . There is no proceeding against or involving Seller or any Affiliate of Seller that has been commenced or, to Seller’s knowledge, threatened against or involving Seller or any Affiliate of Seller that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement.
Section 4.5. Brokers’ Fees . Seller has no obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
Section 4.6. Delivery of Shares . The Shares being issued and delivered hereunder, when issued and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly authorized, validly issued, fully paid and non-assessable. The transfer and delivery of such Shares by Seller to Buyer against the payment of the Purchase Price as contemplated by this Agreement will transfer good and valid title to the Shares, free and clear of all Encumbrances.
Section 4.7. SEC Filings; Financial Information .
(a) Seller is a publicly traded company that is listed on The NASDAQ Global Market under the ticker symbol "LNET" and files reports, registration and proxy statements and other information with the SEC on its EDGAR System, all of which are available to Buyer over the internet at the SEC’s web site at http://www.sec.gov.
(b) Since January 1, 2006, Seller has filed in a timely manner all required reports, schedules, forms, statements, and other documents with the SEC that Seller was required to file under Section 13, 14(a), and 15(d) of the Exchange Act (the "SEC Filings"). As of their respective filing dates, (i) the SEC Filings complied in all material respects with requirements of the Securities Act or the Exchange Act, as the case may be and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Filings, and (ii) none of the SEC Filings contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent that information contained in any SEC Filing has been revised or superseded by a later filed SEC Filing, none of the SEC Filings contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(c) The financial information for Seller and its subsidiaries contained in the SEC Filings fairly present in all material respects, as of the dates thereof and for the periods then ended, the financial position and results of operations of Seller and its consolidated subsidiaries in conformity with GAAP (except as indicated in the notes thereto), subject to normal year-end adjustments (that are not material, either individually or in the aggregate) with respect to unaudited financial statements. Except as set forth in the SEC Filings, neither Seller nor any of its subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Seller and its consolidated subsidiaries or in the notes thereto.
Section 4.8. Capital Stock and Ownership of Seller .
(a) The authorized capital stock of Seller consists of 50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, $.01 par value. As of the date hereof, Seller has (i) 18,690,073 issued and outstanding shares of Common Stock, all of which are validly issued, fully paid, and non-assessable; and (ii) no shares of issued or
(b) As of the date hereof, Seller has (i) outstanding options to purchase a total of 2,175,775 shares of Common Stock under the LodgeNet Entertainment Corporation 2003 Stock Option and Incentive Plan and the LodgeNet Entertainment Corporation 1993 Stock Option Plan (collectively, the "Plans") and (ii) 180,050 shares of unvested restricted stock outstanding. As of the date hereof, 696,638 additional shares of Common Stock are available for issuance under the Plans.
(c) Except for (x) options issued under and in accordance with the Plans; and (z) as contained in this Agreement and the Liberty SPA, there are no options, warrants, convertible securities, or other rights, agreements, arrangements, or commitments of any character obligating Seller to issue or sell any additional shares of capital stock of, or other equity interest in, Seller.
Section 4.9. Liberty SPA . True, correct and complete copies of the Liberty SPA and the Stockholders Agreement, dated December 6, 2006, among LodgeNet, LS&T and Liberty Media Corporation are attached hereto as Exhibits A and B, respectively.
Section 4A.1. Taking of Necessary Action . (a) Seller and Buyer shall cooperate with each other and use their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable law to consummate and make effective the transactions contemplated by this Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any governmental authority, including under the HSR Act.
Section 4A.2. Notification Requirements . Seller shall promptly, but in no event later than five (5) Business Days, notify Buyer in writing if any of the events referred to in Sections 8.1(b), (c) or (d) shall have occurred or if Seller intends to take any of the actions referred to in Sections 8.1(b) or (c).
Section 5.1. Conditions to Obligation of Buyer . The obligation of Buyer to purchase the Shares and to take any other such actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part):
(a) the representations and warranties set forth in Article III shall be true and correct as of the date hereof and true and correct in all material respects as of the Closing Date;
(b) the closing of the Acquisition shall have occurred on the terms set forth in the Liberty SPA;
(c) if required, the waiting period under the HSR Act shall have expired or been terminated and any applicable foreign antitrust approvals required by applicable Antitrust Law shall have been obtained without any Governmental Authority taking any action to prevent the consummation of the transactions contemplated by this Agreement;
(d) no Proceeding against the Buyer shall be pending before any Governmental Authority and no statute, judgment, order, decree, ruling, injunction, or charge shall be in effect, which reasonably could (i) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement, or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation; and
(e) the Shares to be issued to Buyer under this Agreement shall have been authorized for listing or quotation, as applicable, on the NASDAQ Stock Market upon official notice of issuance.
Section 5.2. Conditions to Obligation of Seller . The obligation of Seller to sell the Shares and to take any other such actions required to be taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller, in whole or in part):
(a) the representations and warranties set forth in Article IV shall be true and correct in all material respects as of the Closing Date;
(b) if required, the waiting period under the HSR Act shall have expired or been terminated and any applicable foreign antitrust approvals shall have been obtained without any Governmental Authority taking any action to prevent the consummation of the transactions contemplated by this Agreement;
(c) no Proceeding against the Seller shall be pending before any Governmental Authority, and no statute, judgment, order, decree, ruling, injunction, or charge shall be in effect, which reasonably could (i) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation; and
(d) the closing of the Acquisition shall have occurred.
Section 6.1. Dispositions of LodgeNet Securities .
(a) Transfer Prohibited . For a period of six (6) months following the Closing Date, Buyer will not Transfer any of the Shares acquired under this Agreement. For purposes of this Agreement, "Transfer" means any attempt by Buyer to take any of the following actions in connection with the Shares:
(i) 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 a Permitted Transfer, defined herein;
(ii) 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 the Shares or any securities convertible into or exercisable for the Shares or other rights to purchase the Shares, whether any such transaction is to be settled by delivery of the Shares 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
(iii) publicly announce an intention to effect any transaction prohibited by this Section 6.1.
(b) Attempted Transfers Void . Any attempted Transfer by Buyer of the Shares in violation of this Agreement is void.
Section 6.2. Permitted Transfer . Notwithstanding anything herein to the contrary, the provisions of Sections 6.1 and 6.2 shall not apply to any Transfers by the Buyer to its limited partners (a "Permitted Transfer"); provided, however , that such limited partner, as Transferee, shall be bound by and subject to all provisions of this Agreement as if such Shares were still held by the Buyer.
Section 7.1. Shelf Registration . Seller shall (i) cause a shelf registration statement on Form S-3 (or other appropriate form) covering the resale of all of the Registrable Securities to be filed with the SEC within six (6) months after the Closing Date, (ii) cause such registration statement to be declared effective by the SEC no later than six (6) months after the Closing Date and (iii) keep such registration statement continuously effective until Buyer no longer holds any Registrable Securities (the "Shelf Registration").
Section 7.2. Underwritten Offering . Buyer will have the right to request one Underwritten Offering of Registrable Securities under the Shelf Registration. In the event that Buyer requests an Underwritten Offering, LodgeNet shall, subject to Buyer’s
Section 7.3. 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 Buyer at least ten (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 o