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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 1)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
INTERACTIVE NETWORK, INC.
-------------------------
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
------------------------------
(Title of Class of Securities)
45837P 10 8
--------------
(CUSIP Number)
MARILYN J. WASSER, ESQ.
VICE PRESIDENT -- LAW AND SECRETARY
AT&T CORP.
295 NORTH MAPLE AVENUE
BASKING RIDGE, N.J. 07920
(908) 221-2000
---------------------------------------------
(Name, Address and Telephone Number of Person
Authorized
to Receive Notices and Communications)
APRIL 23, 1999
-------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box: [ ].
Page 1 of 25 Pages
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SCHEDULE 13D
- ------------------------ --------
CUSIP NO. 45837P 10 8 Page 2
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
AT&T CORP.
I.R.S. IDENTIFICATION NO. 13-4924710
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY [ ]
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER 4,830,908
------------------------------------------------------------
SHARES 8 SHARED VOTING POWER* 2,942,907
BENEFICIALLY
------------------------------------------------------------
OWNED BY EACH 9 SOLE DISPOSITIVE POWER 7,773,815
------------------------------------------------------------
REPORTING 10 SHARED DISPOSITIVE POWER -0-
PERSON WITH
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,773,815**
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES** [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)***
20.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
*Tele-Communications, Inc., a wholly-owned subsidiary of AT&T Corp. ("TCI"),
acquired 2,942,907 shares of Interactive Network, Inc. Common Stock upon
consummation of a Settlement Agreement among Interactive Network, Inc. (the
"Issuer"), TCI and certain other parties (the "Settlement Agreement"). Such
Settlement Agreement was conditioned upon the entry of a final non-appealable
order confirming the Issuer's Plan of Reorganization (the "Plan") under Chapter
11 of the Bankruptcy Code by the United States Bankruptcy Court for the
Northern District of California. A final, non-appealable order confirming the
Plan was entered on April 22, 1999. Such 2,942,907 shares of Common Stock are
subject to the terms of a Voting Agreement (the "Voting Agreement") which was
entered into in connection with the approval of the Plan. (See Items 3 and 6
herein.)
**Excludes (i) 1,101,866 shares of Issuer Common Stock issuable in exchange for
services which were to be rendered by TCI pursuant to an Amended and Restated
Stock Purchase Agreement, dated June 4, 1993 (the "Stock Purchase Agreement");
and (ii) 108,696 shares issuable pursuant to the exercise of warrants which
were to have been issued to TCI in connection with a Note Purchase Agreement,
dated as of September 19, 1994 (the "Note Purchase Agreement"). Pursuant to the
terms of the Settlement Agreement, upon confirmation of the Plan and as
consideration for a release of any obligations to Interactive Network, TCI
released the Issuer from its obligations under the Note Purchase Agreement and
the Stock Purchase Agreement. (See Items 3 and 6 herein.)
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***Percentage of class calculation based upon 30,840,441 shares of Common Stock
outstanding as of December 31, 1998, plus 7,814,588 shares of Common Stock
issued to TCI and other parties pursuant to the terms of an Exchange Agreement
with the Issuer, dated as of April 23, 1999 (the "Exchange Agreement"), which
was executed in connection with the Settlement Agreement.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 1)*
STATEMENT OF
AT&T CORP.
PURSUANT TO SECTION 13(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
IN RESPECT OF
INTERACTIVE NETWORK, INC.
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (this "Statement") relates to shares of
Common Stock, no par value (the "Common Stock"), of Interactive Network, Inc.,
a California corporation (the "Issuer"). The Issuer's principal executive
offices are located at 1161 Old County Road, Belmont, California, 94002.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is being filed by AT&T Corp., a New York corporation
("AT&T"). AT&T is among the world's communications leaders, providing voice,
data and video telecommunications services to large and small businesses,
consumers and government entities. AT&T and its subsidiaries furnish regional,
domestic, international, local and Internet communication transmission
services, including cellular telephone and other wireless services, and cable
television services. The principal executive offices of AT&T are located at 32
Avenue of the Americas, New York, New York 10013-2412.
The name, business address, present principal occupation or employment
and citizenship of each director and executive officer of AT&T are set forth in
Schedule I hereto and are incorporated herein by reference. In addition, the
name, business address, present principal occupation or employment and
citizenship of the members of a committee established pursuant to the Voting
Agreement (as defined in Item 3 hereof) are set forth in Schedule II hereto and
are incorporated herein by reference.
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During the last five years, neither AT&T, nor, to the knowledge of
AT&T, any of the persons listed on Schedule I and Schedule II hereto (i) has
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (ii) has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or a finding of any violation with respect
to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Settlement of Litigation
In August 1995, the Issuer commenced litigation (the "Litigation")
against TCI, TCI Communications, Inc., TCI Development, LLC (as successor in
interest to TCI Development Corporation), TCI Programming Holding Company III,
TCI Cablevision of California, Inc., and Gary S. Howard (collectively, the "TCI
Parties"). The Issuer alleged that the TCI Parties had sought to acquire the
Issuer's intellectual property by obtaining liens on the intellectual property
through the secured loans made by them, refusing to honor purported commitments
to make further loans and then seeking to foreclose on the Issuer's
intellectual property when the Issuer could not sustain its business without
additional funds. The TCI Parties vigorously denied the Issuer's allegations
and counterclaimed to foreclose their liens through the Litigation.
On July 10, 1998, the Issuer and the TCI Parties, the National
Broadcasting Company, Inc. ("NBC"), Sprint Corporation ("Sprint"), and
Motorola, Inc. ("Motorola") (collectively, the "Settling Parties") entered into
an agreement (the "Settlement Agreement") whereby the Issuer agreed to file a
petition under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of California (the "Bankruptcy
Court"). The filing was made on September 14, 1998 (the "Petition Date"). Under
the terms of the Settlement Agreement, upon entry by the Bankruptcy Court of a
final non-appealable order (the "Final Order") confirming the Issuer's Plan of
Reorganization (the "Plan"), which occurred on April 22, 1999, the Issuer was
paid $10 million (including accrued interest thereon) which had been held in
escrow since March 1998. An additional amount of $2.5 million (which had also
been held in escrow since March 1998) was paid directly to the Issuer's
attorneys in respect of the Issuer's legal fees associated with the Litigation.
In addition, security interests in the Issuer's assets were released and the
Issuer released the Settling Parties, and the Settling Parties released the
Issuer and each other, with respect to all claims relating to or arising out of
any matter, conduct, transaction or activity involving the Issuer and the
Settling Parties up until the date of the Settlement Agreement including, but
not limited to, such matters, conduct, transactions and/or activities related
to the Litigation.
Pursuant to the terms of the Settlement Agreement, immediately
following the entry of the Final Order, each of TCI Programming Holding Company
III, TCI Development,
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LLC, NBC, Sprint and Motorola (each a "Holder") and the Issuer entered into an
exchange agreement, dated as of April 23, 1999 (the "Exchange Agreement"),
pursuant to which each Holder exchanged certain notes of the Issuer held by
such Holder for newly issued shares of Common Stock (the "Exchange Shares").
The number of Exchange Shares received by each Holder equaled (x) the aggregate
principal amount of the notes of the Issuer to be exchanged, together with all
interest accrued and unpaid thereon, divided by (y) $5.00. In addition, in
connection with the execution of the Settlement Agreement, each Holder and the
Issuer executed a voting agreement, dated as of April 23, 1999 (the "Voting
Agreement") containing a term of four years (unless earlier terminated pursuant
to its provisions). The Voting Agreement provides that the Holders will vote
their Exchange Shares as directed by a committee of three independent persons
which shall make its decisions by majority vote; provided that each Holder will
be able to vote its Exchange Shares in its sole discretion on certain matters,
including matters regarding David B. Lockton, matters regarding the liquidation
or dissolution of the Issuer and matters regarding the sale of the Issuer or
the declaration or payment of dividends or other distributions. Such committee
initially consists of Bruce Bauer, John Bohrer and Donald Graham, each of whom
currently serves on the Issuer's board of directors.
The foregoing summary of the terms of the Settlement Agreement is
qualified in its entirety by reference to the text of the Settlement Agreement,
which is attached as an Exhibit to the Reporting Person's initial Statement on
Schedule 13D and is incorporated herein by reference. The foregoing summaries
of the terms of the Exchange Agreement and the Voting Agreement are qualified
in their entirety by reference to the text of such agreements, which are
attached hereto as Exhibits 8 and 9, respectively, and are incorporated herein
by reference.
ITEM 4. PURPOSE OF THE TRANSACTION.
AT&T currently holds its interest in the Issuer for investment
purposes. Except as otherwise set forth in this Statement, neither AT&T nor, to
the best of its knowledge, any of its executive officers, directors or
controlling persons has any current plan or proposal which relates to or would
result in: (i) any acquisition by any person of additional securities of the
Issuer, or any disposition of securities of the Issuer; (ii) any extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Issuer or any of its subsidiaries; (iii) any sale or transfer of
a material amount of assets of the Issuer or any of its subsidiaries; (iv) any
change in the present board of directors or management of the Issuer, including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board; (v) any material change in the present
capitalization or dividend policy of the Issuer; (vi) any other material change
in the Issuer's business or corporate structure; (vii) any changes in the
Issuer's charter, by-laws, or other instruments corresponding thereto or other
actions which may impede the acquisition of control of the Issuer by any
person; (viii) any delisting from a national securities exchange or any loss of
authorization for quotation in an inter-dealer quotation system of a registered
national securities association of a class of securities of the Issuer; (ix)
any termination of registration pursuant to section 12(g)(4) of the Exchange
Act of a class of equity securities of the Issuer; or (x) any action similar to
any of those enumerated above.
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<PAGE> 7
Notwithstanding the foregoing, AT&T may determine to change its
investment intent with respect to the Issuer at any time in the future. In
reaching any conclusion as to its future course of action, AT&T will take into
consideration various factors, such as the Issuer's business and prospects,
other developments concerning the Issuer, other business opportunities
available to AT&T, developments with respect to the business of AT&T, and
general economic and stock market conditions, including, but not limited to,
the market price of the Common Stock of the Issuer. AT&T reserves the right,
based on all relevant factors, to acquire additional shares of the Common Stock
of Issuer in the open market or in privately negotiated transactions, to
dispose of all or a portion of its holdings of shares of the Common Stock of
the Issuer, or to change its intention with respect to any or all of the
matters referred to in this Item.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) AT&T presently beneficially owns 7,773,815 shares of Issuer Common
Stock, including 2,942,907 shares which were issued in connection with the
approval of the Plan and consummation of the Settlement Agreement. The
7,773,815 shares of Common Stock owned by AT&T represent 20.1% of the total of
(i) the 30,840,441 shares of Common Stock outstanding as of December 31, 1998,
plus (ii) the 7,814,588 shares of Common Stock that were issued to the Holders
in connection with the consummation of the Settlement Agreement and the
approval of the Plan.
(b) The power to vote or to direct the voting of the 2,942,907 shares
of Common Stock issued in connection with the Settlement Agreement is subject
to the terms of the Voting Agreement. AT&T has sole voting power over the
remaining 4,830,908 shares beneficially owned by AT&T. AT&T has sole power to
dispose of, or to direct the disposition of, the shares of Common Stock
beneficially owned by it.
(c) Except for the securities of the Issuer acquired in connection
with the Merger, as described in Reporting Person's initial Statement on
Schedule 13D and the securities of the Issuer acquired in connection with the
consummation of the Settlement Agreement, neither AT&T nor, to the knowledge of
AT&T, any of the persons listed on Schedule I or Schedule II hereto, has
executed transactions in the Common Stock of the Issuer during the past sixty
(60) days.
(d) There is no person that has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
Common Stock beneficially owned by AT&T.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
See Item 3 herein.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
8. Exchange Agreement, dated as of April 23, 1999, among TCI, Sprint,
NBC, Motorola and the Issuer.
9. Voting Agreement, dated as of April 23, 1999, among TCI, Sprint,
NBC, Motorola and the Issuer.
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<PAGE> 9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 27, 1999
AT&T CORP.
By: /s/ Robert S. Feit
--------------------------------
Name: Robert S. Feit
Title: Authorized Signatory
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SCHEDULE I
The name and present principal occupation of each director and
executive officer of AT&T Corp. are set forth below. The business address for
each person listed below is c/o AT&T Corp., 295 North Maple Avenue, Basking
Ridge, New Jersey 07920. All executive officers and directors listed on this
Schedule I are United States citizens.
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
C. Michael Armstrong Chairman of the Board and Chief Executive Officer and Director
Kenneth T. Derr Director; Chairman & Chief Executive Officer of Chevron Corporation
M. Kathryn Eickhoff Director; President of Eickhoff Economics, Inc.
Walter Y. Elisha Director; Retired Chairman and Chief Executive Officer of Springs
Industries, Inc.
George M. C. Fisher Director; Chairman and Chief Executive Officer of Eastman Kodak
Company
Donald V. Fites Director; Chairman, Retired - Caterpillar, Inc.
Ralph S. Larsen Director; Chairman and Chief Executive Officer of Johnson &
Johnson
John C. Malone Director; Chairman of Liberty Media Corporation
Donald F. McHenry Director; President of IRC Group
Michael I. Sovern Director; President Emeritus and Chancellor Kent Professor of Law
at Columbia University
Sanford I. Weill Director; Chairman and Co-Chief Executive Officer of Citigroup Inc.
Thomas H. Wyman Director; Senior Advisor of SBC Warburg, Inc.
John D. Zeglis President and Director
Harold W. Burlingame Executive Vice President-Merger & Joint Venture Integration
James Cicconi Executive Vice President-Law & Government Affairs and General
Counsel
Mirian Graddick Executive Vice President, Human Resources
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C>
Daniel R. Hesse Executive Vice President and President & Chief Executive Officer
of AT&T Wireless Services, Inc.
Leo J. Hindery, Jr. President and Chief Executive Officer, AT&T Broadband and
Internet Services
Frank Ianna Executive Vice President and President, AT&T Network Services
Michael G. Keith Executive Vice President and President, AT&T Business Services
H. Eugene Lockhart Executive Vice President, Chief Marketing Officer
Richard J. Martin Executive Vice President, Public Relations and Employee
Communication
David C. Nagel President, AT&T Labs & Chief Technology Officer
John C. Petrillo Executive Vice President, Corporate Strategy and Business
Development
Richard Roscitt Executive Vice President and President & CEO, AT&T Solutions
D.H. Schulman Executive Vice President AT&T Consumer Services
Daniel E. Somers Senior Executive Vice President and Chief Financial Officer
</TABLE>
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<PAGE> 12
SCHEDULE II
The name, business address and present principal occupation of each
member of the committee established pursuant to the Voting Agreement are set
forth below. Based on information provided by such individuals, all of the
members of the committee are United States citizens.
Bruce W. Bauer:
Business address: Interactive Network, Inc., 1161 Old County Road, Belmont, CA
94002; principal occupation: Chairman of the Board of Directors, President and
Chief Executive Officer of Interactive Network, Inc.; mailing address: same as
above.
John J. Bohrer:
Business address: 705 Sugar Ridge Road, Corpus Christi, TX 78413; principal
occupation: Director, Secretary and Treasurer of Interactive Network, Inc., and
semi-retired investor; mailing address: same as above.
Donald D. Graham:
Business address: 14012 Giles Road, Omaha, NE, 68138; principal occupation:
Owner and President of Graham Enterprises, Inc., a management, investment and
consulting firm, and a current Director of Interactive Network, Inc.; mailing
address: same as above.
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
8. Exchange Agreement, dated as of April 23, 1999, among TCI,
Sprint, NBC, Motorola and the Issuer.
9. Voting Agreement, dated as of April 23, 1999, among TCI, Sprint,
NBC, Motorola and the Issuer.
</TABLE>
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<PAGE> 1
EXHIBIT 8
EXCHANGE AGREEMENT
This Exchange Agreement is made and entered into as of the 23rd day of
April, 1999, by and between Interactive Network, Inc. ("IN"), a California
corporation, First Party, and TCI Programming Holding Company, III ("TCI
Programming"), TCI Development, LLC ("TCID") (the successor-in-interest to TCI
Development Corporation) (TCI Programming and TCID being hereafter collectively
referred to as "TCI") National Broadcasting Company, Inc. ("NBC"), Sprint
Corporation ("Sprint"), and Motorola, Inc. ("Motorola") (TCI, NBC, Sprint and
Motorola being collectively referred to herein as the "Noteholders"), Second
Parties.
RECITALS
1. IN and the Noteholders have entered into a Mutual Release and
Settlement Agreement (the "Settlement Agreement") dated as of July 10, 1998,
Section 5 of which contemplates the execution of this Agreement in order to
effectuate the exchange of certain promissory notes of IN held by the
Noteholders for shares of IN's common stock.
2. Pursuant to Section 7 of the Settlement Agreement, IN filed a
petition with the United States Bankruptcy Court of the Northern District of
California under Chapter 11 of the Bankruptcy Code (Case No. 98-34055-DM-11) on
September 14, 1998, and on December 22, 1998, filed its plan of reorganization.
On April 12, 1999, the Bankruptcy Court entered its order (the "Bankruptcy
Court Confirming Order") confirming IN's plan of reorganization (a copy of
which has been delivered to each Noteholder).
Now, therefore, in consideration of the foregoing premises and the
following terms, covenants and conditions, the Parties hereby agree as follows:
1. EXCHANGE OF SECURITIES
1.1 Subject to the terms and conditions set forth herein, the
Noteholders agree to convey to IN at the Closing (as that term is defined
below) for cancellation promissory notes of IN (the "Notes") in the aggregate
principal amounts indicated below, duly endorsed to IN, and in exchange IN
agrees to deliver to each Noteholder a stock certificate of IN issued in the
name of each Noteholder evidencing the number of shares of IN's common stock,
no par value, indicated below after the name of each Noteholder (the aggregate
number of shares issuable hereunder being referred to herein as the "Shares"):
<TABLE>
<CAPTION>
NUMBER OF SHARES OF IN COMMON STOCK TO
NOTEHOLDER PRINCIPAL AMOUNT OF NOTES BE RECEIVED BY NOTEHOLDER
<S> <C> <C>
TCI Programming 2,600,351 (TCI Programming)
and TCID $10,008,216.80 342,556 (TCID)
NBC 6,503,287.65 1,902,279
Sprint 5,000,000.00 1,484,520
Motorola 5,001,220.88 1,484,883
-------------- ---------
TOTAL: $26,512,723.00 7,814,589
</TABLE>
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1.2 The Noteholders hereby acknowledge that upon transfer of the Notes
to IN, and upon receipt of the Shares in exchange therefor, all obligations of
IN with respect to the Notes, including principal and interest accrued thereon,
will be deemed cancelled and extinguished.
1.3 The IN Stock Certificates being delivered to the Noteholders in
accordance with Section 1.1 will have endorsed on the face thereof a legend
conspicuously stating: "The shares evidenced hereby are subject to a voting
agreement, dated as of April 23, 1999, and expiring on April 22, 2003, a copy
of which is on file at the office of Interactive Network, Inc."
2. DISBURSEMENT OF ESCROW FUNDS
TCI will cause Wells Fargo Bank, 525 Market Street, San Francisco,
California 94163, contemporaneously with the exchange of securities at the
Closing contemplated in section 1 of this Agreement, to wire transfer (a) to
IN's Account No. 0029106168 at Wells Fargo Bank's IRA Operations Office, 525
Market Street, 4th Floor (Transit No. 121000248), the sum of $10,000,000,
currently held in its Escrow Account No. 6029 108453, plus any accrued interest
or appreciation thereon, and (b) to the Account No. 01-13449-3 maintained in
the name of Cotchett, Pitre & Simon - Money Market Account, at Peninsula Bank
of Commerce, 1001 Broadway, Millbrae, California, the sum of $2,500,000,
currently held in Wells Fargo Bank, Escrow Account No. 6029-108461, plus any
accrued interest or appreciation thereon. TCI will secure the cooperation of
Legal Strategies Group in effecting the aforesaid transfer to Cotchett, Pitre &
Simon.
3. RELEASE OF SECURITY INTERESTS
At the Closing, TCI will, contemporaneously with the exchange of
securities contemplated in Section 1 of this Agreement, deliver to IN any
intellectual property of IN and a release of all security liens and/or
interests held by any of the TCI Parties (as defined in the Settlement
Agreement), NBC, Sprint or Motorola in any IN assets, as contemplated in
Section 4 of the Settlement Agreement. Such release will be in the form
attached hereto as Exhibit 1. The Noteholders will execute such further
documents and take such further actions as IN may reasonably require to
effectuate the release of liens on the assets of IN held by or for the benefit
of the Noteholders at the time of Closing.
4. VOTING AGREEMENT
At the Closing, the Noteholders and IN will contemporaneously with the
exchange of securities contemplated in Section 1 of the Agreement enter into a
voting agreement (the "Voting Agreement") with respect to the shares of IN
common stock issued to the Noteholders pursuant to this Agreement. Such Voting
Agreement will be in the form attached hereto as Exhibit 2.
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<PAGE> 3
5. OPINION OF COUNSEL
At the Closing, IN will deliver to the Noteholders an opinion of
Morrison & Foerster LLP, counsel to IN, in the form attached hereto as Exhibit
3.
6. CLOSING
The closing will be held at 10:00 a.m. Pacific Time, on April 23,
1999, at the offices of Morrison & Foerster LLP, 425 Market Street, San
Francisco, California 94105, or at such other time and place as the parties
shall mutually agree.
7. REPRESENTATIONS AND WARRANTIES OF THE NOTEHOLDERS
Each of the Noteholders represents and warrants to IN, severally and
not jointly as to itself only and not to any other Noteholder, that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of its respective state of incorporation and has full
corporate power to carry on its business as it is now being conducted.
(b) It has full right, power and authority to execute, deliver and
perform this Agreement and the Voting Agreement.
(c) This Agreement and the Voting Agreement each constitutes a valid
and binding agreement of it enforceable in accordance with its terms.
(d) It has good and marketable title to all of the Notes to be
exchanged by it pursuant to Section 1 of this Agreement free and clear of any
lien, claim, charge, restriction, security interest, equity or encumbrance of
any kind whatsoever and, except as otherwise provided in the Notes (which
restrictions are hereby waived), has the complete and unrestricted right, power
and authority to sell, transfer and deliver said Notes.
(e) To the best of its knowledge, the only place where filings are
required to effect the release of liens held by it at the time of Closing on
the assets of IN as contemplated in Section 3 of this Agreement are set forth
in Exhibit 4 attached hereto.
8. REPRESENTATIONS AND WARRANTIES OF IN
IN represents and warrants to the Noteholders that:
(a) IN is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has full corporate power
to carry on its business as it is now being conducted.
(b) IN has full right, power and authority to execute, deliver and
perform this Agreement and the Voting Agreement.
(c) This Agreement and the Voting Agreement each constitutes a valid
and binding
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<PAGE> 4
agreement of IN enforceable in accordance with its terms.
(d) The shares of common stock to be issued to each of the Noteholders
pursuant to Section 1 hereof have been duly authorized by the board of
directors of IN, will be validly issued, fully paid and non-assessable, and
will be free and clear of any lien, claim, charge, restriction, security
interest, equity or encumbrance of any kind whatsoever.
(e) Neither the execution of this Agreement nor the consummation of
the transactions contemplated herein require the consent of, approval of,
declaration of, filing with or registration with any governmental or
non-governmental person, entity or authority, including, without limitation,
any filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
(f) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will (i) not conflict with, or result
in (or with notice or lapse of time result in) a breach of the terms of or
default under or violate (A) any provision of applicable law, or (B) any
agreement, commitment, contract, instrument, order, decree, ruling or
injunction to which IN is subject or a party or by which IN is bound or to
which any shares or properties or assets of IN are subject; (ii) not cause the
cancellation, discontinuance or alteration of any contract or agreement held by
IN, or to which IN is a party; (iii) not result in a default or breach under
the provisions of any note of which IN is the maker or guarantor or under any
indenture, agreement or other instrument to which IN is a party or by which IN
is bound or to which the properties or assets of IN are subject; (iv) not cause
any acceleration of maturity of any loan or material obligations to which IN is
a party or by which IN is bound or with respect to which IN is an obligor or
guarantor; or (v) not result in the creation or imposition of any material
lien, claim, charge, restriction or encumbrance of any kind whatsoever upon, or
give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to, any of the material
properties, assets, business, agreements or contracts of IN or the stock of IN.
(g) The issuance of the shares contemplated by this Agreement is
exempt under Section 3(a)(9) of the Securities Act of 1933.
(h) No commission or other remuneration was or will be paid or given,
directly or indirectly, by IN to any person or entity for soliciting the
exchange of the Notes contemplated by this Agreement.
(i) There are 30,840,441 shares of common stock of IN issued and
outstanding as of the date hereof, immediately prior to consummation of this
Agreement. No shares or rights or options to purchase shares of common stock of
IN have been issued or granted since July 10, 1998, except for options granted
on February 26, 1999, to William H. Green and William L. Groeneveld, as
Directors of the Company, to purchase 25,000 shares and 12,500 shares,
respectively, of the Company's Common Stock at 42 cents per share under the
Company's 1999 Stock Option Plan.
(j) The number of shares of common stock of IN and/or stock options
held or claimed to be held by David Lockton, or for the benefit of David
Lockton, as disclosed on the
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<PAGE> 5
stock records of the Company are set forth in Exhibit 5 attached hereto. IN's
current management is not aware of any common stock and/or stock options of IN
held by or for the benefit of any members of Mr. Lockton's family or any
corporations or other entities directly or indirectly controlled by Mr.
Lockton, except as disclosed in Amendment No. 1 to his Schedule 13D filed with
the Securities and Exchange Commission on December 7, 1998, and reflected in
Exhibit 5 attached hereto.
9. TCI AS AGENT
The Noteholders hereby appoint TCI as their agent-in-fact to take any
actions and execute any documents for their benefit to carry out the provisions
of this Agreement, including, without limitation, approval of documents as to
form, and executing instruments to effectuate the release of liens on IN's
assets as contemplated in Section 3 of this Agreement, and (except for NBC,
which reserves its right to consider any such waiver) waiver of the requirement
that the Bankruptcy Court's Confirming Order be final and non-appealable,
provided that TCI shall not take any action that would alter the provisions for
exchange of securities set forth in Section 1 of this Agreement or adversely
affect the rights of the Noteholders hereunder or under the Voting Agreement.
The Noteholders will each arrange to receipt for and take possession of the
stock certificates evidencing their shares.
10. MISCELLANEOUS PROVISIONS
(a) No Waiver. No failure to exercise, and no delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof. No
waiver of any breach of any provision shall be deemed to be a waiver of any
proceeding or succeeding breach of the same or any other provision. No
extension of time of performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts.
(b) No Assignment. The rights and obligations of this Agreement may
not be assigned in whole or in part without the prior written consent of the
other party hereto.
(c) Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original but all of which together shall constitute one
and the same instrument.
(d) Entire Agreement/Amendments/Titles. This Agreement constitutes the
entire agreement between the parties and no waiver, modification or termination
of the terms hereof shall be valid unless in writing signed by the parties and
only to the extent therein set forth. The capitalized titles to the various
paragraphs and subparagraphs hereof are for convenience only and shall not
effect the construction or interpretation of the actual provisions.
(e) Reaffirmation and Survival of Warranties. The representations and
warranties set forth herein shall be deemed to have been made again at and as
of the Closing, and said representations and warranties shall survive the
Closing.
(f) Expenses. Each party hereto shall pay its own expenses incident to
this Agreement and the transactions contemplated hereby except (i) any
applicable excise, sales, transfer, documentary or other similar taxes, if any,
that may be imposed upon or payable or
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<PAGE> 6
collectible as a consequence of the transactions provided for herein shall be
payable by the Noteholders and (ii) as may be provided otherwise in this
Agreement.
(g) Notices. All notices, requests, demands and other communications
shall be in writing and shall be deemed to have been duly given only if for
delivery prepaid via a traceable over-business-night delivery service.
To the Noteholders:
TCI:
Tele-Communications, Inc.
9197 South Peoria Street
Englewood, Co 80112
Attn: Gary Howard
with copies to:
Bertram Perkel, Esq.
Baker & Botts
599 Lexington Avenue
New York, NY 10022-6030
and
Joshua R. Floum
Legal Strategies Group
5905 Christie Avenue
Emeryville, CA 94608-1925
National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, NY 10112
Attn: Thomas S. Rogers, President
NBC Cable and Business Development
with a copy to:
Elizabeth Newell, Esq.
Law Department, Suite 1075E
National Broadcasting Company
30 Rockefeller Plaza
New York, NY 10112
Motorola, Inc., Law Department
1303 East Algonquin Road
Schaumburg, IL 60196
Attn: Linda B. Valentine, Vice President
and Assistant General Counsel
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<PAGE> 7
with a copy to:
Hans Stucki, Esq.
Dickinson-Wright
225 W. Washington Street, Suite 400
Chicago, IL 60606
Sprint Corporation
Department of Law
2330 Shawnee Mission Parkway
Westwood, KS 66205
Attn: Corporate Secretary
or such other addresses as may be subsequently designated by each of the
Noteholders.
To IN:
Bruce Bauer, Chairman of the Board, President
and Chief Executive Officer
Interactive Network, Inc.
1161 Old County Road
Belmont, CA 94002
with a copy to:
Marshall L. Small, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
or such other address as may be subsequently designated by IN.
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<PAGE> 8
(h) Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the state of California as applied to contracts
made and performed in such State.
In witness whereof, IN and the Noteholders have duly executed this
Agreement on the date first set forth above.
Interactive Network, Inc. TCI Programming Holding Company, III
By: /s/ Bruce W. Bauer By: /s/ Gary Howard
------------------------------- --------------------------------
Bruce W. Bauer, Gary Howard,
Chairman of the Board, President and
President and Chief Executive Officer
Chief Executive Officer
TCI Development, LLC
First Party
By: /s/ Stephen M. Brett
--------------------------------
Stephen M. Brett,
Vice President
National Broadcasting Company, Inc.
By: /s/ Thomas S. Rogers
--------------------------------
Thomas S. Rogers, President
NBC Cable and
Business Development
Sprint Corporation
By: /s/ Don A. Jensen
--------------------------------
Motorola, Inc.
By: /s/ Linda Valentine
--------------------------------
Linda Valentine, Senior
Vice President
Second Parties
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<PAGE> 9
SCHEDULE OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1 Instrument(s) releasing liens on IN assets
2 Voting Agreement
3 Opinion of Morrison & Foerster LLP
4 Places where filings are required to effect release of liens
on IN assets
5 Stockholdings and options of David Lockton
</TABLE>
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<PAGE> 1
EXHIBIT 9
VOTING AGREEMENT
This Voting Agreement is made and entered into as of the 23rd day of
April, 1999, by and between Interactive Network, Inc. ("IN"), a California
corporation, First Party, and TCI Programming Holding Company, III ("TCI
Programming"), TCI Development, LLC ("TCID") (the successor-in-interest to TCI
Development Corporation) (TCI Programming and TCID being hereafter sometimes
collectively referred to as "TCI"), National Broadcasting Company, Inc.
("NBC"), Sprint Corporation ("Sprint"), and Motorola, Inc. ("Motorola") (TCI,
NBC, Sprint and Motorola being collectively referred to herein as the
"Shareholders"), Second Parties.
RECITALS
1. IN and the Shareholders entered into a Mutual Release and
Settlement Agreement (the "Settlement Agreement"), dated as of July 10, 1998,
Section 6 of which contemplates the execution of this Agreement in connection
with consummation of the Exchange Agreement (the "Exchange Agreement) to which
a copy of this Agreement is attached as Exhibit 2.
2. The Exchange Agreement has been consummated on this date, and each
of the Shareholders has received a certificate evidencing the numbers of shares
of common stock of IN set opposite its name in Section 1 of this Agreement.
Now, therefore, in consideration of the foregoing premises and the
following terms, covenants and conditions, the Parties hereto agree as follows:
1. SHARES SUBJECT TO THIS AGREEMENT
The shares of common stock of IN (hereinafter referred to as the
"Shares") subject to this Agreement are the shares set forth opposite the name
of each Shareholder below issued pursuant to the Exchange Agreement and
initially represented by the stock certificate indicated below:
<TABLE>
<CAPTION>
SHAREHOLDER NUMBER OF SHARES CERTIFICATE NUMBER
<S> <C> <C>
TCI Programming 2,600,351
TCID 347,556
NBC 1,902,279
Sprint 1,484,520
Motorola 1,484,883
---------
TOTAL: 7,814,589
</TABLE>
2. AGREEMENT TO VOTE SHARES
Each holder will vote the shares received by it under the Exchange
Agreement as directed by a committee of Independent Persons (as such term is
defined in the Settlement Agreement)
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<PAGE> 2
who shall consist of three persons and shall make its decisions by majority
vote. The committee shall initially consist of John Bohrer, Donald Graham and
Bruce Bauer. If any of them shall resign, die or become incapacitated, he shall
first be replaced by William Green, if William Green is then available and
willing to serve in such capacity. If Green is unavailable and/or unwilling,
the members of the committee shall, by majority vote, select a new member or
members in their discretion, provided that no new member shall be David Lockton
or a member of David Lockton's family. If the remaining members are unable to
agree upon a new member by majority vote, then they shall apply to the chief
Judge of the Superior Court of Alameda County to appoint such a member.
However, (i) each Holder shall be entitled to vote its Shares as it determines
in its sole discretion with respect to the election of David Lockton or any of
his family members as a director of IN, or any other matter regarding Mr.
Lockton, and (ii) each Holder shall be entitled to vote its Shares (to the
extent stockholder approval or a consent to such action is required, whether
sought by IN or any other person) as it determines in its sole discretion with
respect to the following matters:
(a) any liquidation or dissolution of IN or the filing of any
voluntary bankruptcy petition (other than as contemplated in the Settlement
Agreement);
(b) any sale of IN; or
(c) the declaration and payment of any cash dividends or
other distributions on the common stock or any other cash payments to
stockholders as such.
This Agreement shall constitute a voting agreement within the meaning
of Section 706 of the California Corporations Code.
3. DURATION OF AGREEMENT
This Agreement will terminate on April 22, 2003, unless sooner
terminated upon a breach of its terms.
4. APPLICATION TO TRANSFEREES; LEGENDING OF STOCK CERTIFICATES
The terms of this Agreement shall be binding upon any transferee(s) of
the shares, who, as a condition to transfer of the shares, shall sign a
counterpart of this Agreement evidencing the agreement of the transferee to be
bound by this Agreement. Stock certificates evidencing the shares shall be
evidenced with a conspicuous legend on the face thereof stating: "The shares
evidenced hereby are subject to a voting agreement dated as of April 23, 1999,
and expiring on April 22, 2003, a copy of which is on file at the office of
Interactive Network, Inc." Each of the Second Parties reserves the right upon 5
business days prior written notice to the other Second Parties and the Company
to assert under Section 12.2 of the Settlement Agreement that transferees of
its shares may not be bound by this Agreement.
In witness whereof, IN and the Shareholders have duly executed this
Agreement on the date first set forth above.
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<PAGE> 3
Interactive Network, Inc. TCI Programming Holding Company, III
By: /s/ Bruce W. Bauer By: /s/ Gary Howard
------------------------------- --------------------------------
Bruce W. Bauer, Gary Howard,
Chairman of the Board, President and
President and Chief Executive Officer
Chief Executive Officer
TCI Development LLC
First Party
By: /s/ Stephen M. Brett
--------------------------------
Stephen M. Brett,
Vice President
National Broadcasting Company, Inc.
By: /s/ Thomas S. Rogers
--------------------------------
Thomas S. Rogers, President
NBC Cable and
Business Development
Sprint Corporation
By: /s/ Don A. Jensen
--------------------------------
Motorola, Inc.
By: /s/ Linda Valentine
--------------------------------
Linda Valentine, Senior
Vice President
Second Parties
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