Exhibit 7(a)(2)
STOCK OPTION AGREEMENT
by and between
TSX CORPORATION
and
TCI TSX, INC.
Granting Preemptive Rights Stock Options on Account
of Stock Options to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Dated as of October 12, 1994
Table of Contents
1. Grant of Option........................................................2
2. Exercise of Option.....................................................2
2.1 Method of Exercise...............................................2
2.2 Payment of Exercise Price........................................2
2.3 Fair Market Value................................................2
3. Option Term............................................................3
4. Non-Transferability....................................................3
5. Representations, Warranties and Covenants of the Company...............3
5.1 Organization, Good Standing, Authority and Approval..............3
5.2 Authorization of Shares of Option Stock..........................3
5.3 Company's Obligations............................................3
6. Representations, Warranties and Covenants of Optionee..................4
6.1 Organization, Good Standing, Authority and Approval..............4
6.2 Acquisition for Own Account......................................4
7. Conditions To Issuance of Shares.......................................4
8. Transfer Restrictions; Legend on Certificate...........................4
9. Registration Rights....................................................5
10. Adjustments Upon Changes in Capitalization.............................5
11. The Optionee's Rights as Shareholder...................................6
12. Applicability of Section 16(b) of the 1934 Act.........................6
13. General................................................................6
13.1 Entire Agreement.................................................6
13.2 Waiver...........................................................6
13.3 Notices..........................................................6
13.4 Specific Performance.............................................7
13.5 Survival of Representations and Warranties.......................7
13.6 Amendments.......................................................7
13.7 Certain Rules of Construction....................................7
13.8 Benefits of Agreement............................................8
13.9 Attorneys' Fees..................................................8
13.10 Counterparts.....................................................8
i
STOCK OPTION AGREEMENT
GRANTING PREEMPTIVE RIGHTS STOCK OPTIONS ON ACCOUNT
OF STOCK OPTIONS GRANTED TO ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
STOCK OPTION AGREEMENT (this "Agreement") dated as of October 12, 1994, by
and between TSX Corporation, a Nevada corporation with its principal office at
5-D Butterfield Trail, El Paso, Texas 79906 (the "Company") and TCI TSX, Inc., a
Colorado corporation with its principal office at Terrain Tower II, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Optionee").
PRELIMINARY STATEMENT
(A) The Optionee is an indirect wholly owned subsidiary of TCI
Communications, Inc. (formerly known as Tele-Communications, Inc.), a
Delaware corporation ('TCIC").
(B) The Company and TCIC are parties to an Investment Agreement dated as
of March 14, 1994 (the "Investment Agreement") pursuant to which TCIC purchased
2,109,000 shares of TSX Common Stock, par value $.01 per share (the "Common
Stock"). Contemporaneously therewith, the Company and TCIC entered into a
Registration Rights Agreement dated as of March 14, 1994 (the "Registration
Rights Agreement") affording TCIC certain registration rights with respect to
such shares and any additional shares of Common Stock held by TCIC from time to
time during the term thereof.
(C) Section 4.04 of the Investment Agreement granted certain preemptive
rights to TCIC with respect to the issuance by the Company of, among other
things, any Additional Common Shares (as defined in the Investment Agreement) or
options to subscribe for or to purchase Additional Common Shares.
(D) The Company entered into a
Stock Option Agreement dated as of March
14, 1994 (approved by stockholders on September 21, 1994) with ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, the President, Chief Executive Officer and Chairman of the Board of the
Company, granting options to purchase 200,000 shares of Common Stock at a price
of $6.00 per share. In accordance with Section 4.04 of the Investment Agreement,
by virtue of the grant of such options, TCIC is entitled to preemptive rights to
options to purchase 143,407 shares of Common Stock at a price of $6.00 per
share.
(E) Upon receipt by TCIC from the Company of notice, pursuant to Section
4.04 of the Investment Agreement, of the grant of the options to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, TCIC by letter dated October 12, 1994 notified the Company of its
intention to acquire options in accordance with its preemptive rights under
Section 4.04 of the Investment Agreement and instructed the Company to issue
such options to the Optionee. Accordingly, the parties have entered into this
Agreement for the purpose of granting to the Optionee the options to purchase
Common Stock in accordance with such preemptive rights.
1
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the parties hereby agree as follows:
1.1 GRANT OF OPTION.
The Company hereby grants to the Optionee, on the terms and conditions
hereinafter provided, the option (the "Option") to purchase one hundred forty
three thousand four hundred seven (143,407) shares of Common Stock (the "Option
Stock") at a purchase price of $6.00 per share (the "Exercise Price").
2. EXERCISE OF OPTION.
2.1 METHOD OF EXERCISE.
The Option shall be exercisable, in whole or in part, by written notice,
delivered in person or by certified mail to the Secretary of the Company, which
shall:
(1) state the election to exercise the Option, the number of shares
in respect of which it is being exercised and the name(s) in which the
certificate for such shares is to be registered; and
(2) be signed by the Optionee, or if the Option is being exercised
by any party other than the Optionee in compliance with Section 4 hereof,
be signed by such permitted transferee.
2.2 PAYMENT OF EXERCISE PRICE.
The Optionee shall, together with the notice required by Section 2.1,
tender, in cash or by certified or bank cashier's check, or by shares of Common
Stock of the Company valued at Fair Market Value as of the date of tender, or
combination of cash and shares of Common Stock, payment in full to the Company
at its principal office of the amount of the Exercise Price for the number of
Shares with respect to which the Option is then being exercised.
2.3 FAIR MARKET VALUE.
For purposes of this Agreement, "Fair Market Value" of the Common Stock
shall be calculated, on a per share basis, based upon either (i) the average of
the closing prices of a share of Common Stock on the American Stock Exchange
("AMEX") on the five AMEX trading days immediately preceding the date of
exercise, (ii) if the Common Stock is not listed or admitted for trading on the
AMEX, the average of the closing prices of a share of Common Stock on the
principal national securities exchange on with the Common Stock is listed or
admitted for trading on the five exchange trading days immediately preceding the
date of exercise, or (iii) if the Common Stock is not listed or admitted for
trading on any national securities exchange, the average of the highest closing
bid and ask prices as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on the five NASDAQ trading days
immediately preceding date of exercise.
2
3. OPTION TERM.
The Option shall be exercisable by the Optionee in whole or in part at any
time or times for a period commencing on the date hereof and expiring at the
close of business on March 14, 2004.
4. NON-TRANSFERABILITY.
The Option granted hereby may not be transferred by the Optionee other
than to a corporation, partnership or other entity controlling, controlled by or
under common control with TCIC (collectively, the "TCIC Affiliates").
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company represents and warrants to and agrees with Optionee as
follows:
5.1 ORGANIZATION, GOOD STANDING, AUTHORITY AND APPROVAL.
The Company is duly organized as a corporation and is validly existing and
in good standing under the laws of Nevada. The Company has the corporate power
and authority to execute and deliver this Agreement. The execution and delivery
of this Agreement by the Company and the consummation of the transactions
contemplated by this Agreement (including the issuance of the shares of Option
Stock) have been duly authorized and approved by all necessary corporate action
of the Company, and this Agreement is a valid and binding obligation of the
Company, enforceable in accordance with its terms. This Agreement and its
execution and delivery by the Company do not, and the consummation of the
transaction contemplated by this Agreement and the issuance of the shares of
Option Stock will not, constitute a violation of or a default (whether with
notice or the lapse of time or both) under the Articles of Incorporation or
Bylaws of the Company, any law to which the Company is subject, any provision of
any agreement, instrument, order, judgment or decree to which the Company is a
party or to which the Company or any of its assets is subject, or any rule of,
or any provision of the Company's Listing Agreement with, the American Stock
Exchange.
5.2 AUTHORIZATION OF SHARES OF OPTION STOCK.
Upon delivery of stock certificates by the Company and receipt by the
Company of the full amount of the Exercise Price therefor, the shares of Option
Stock, when issued and delivered in accordance with the provisions of this
Agreement, will be duly authorized, validly issued, fully paid and nonassessable
outstanding shares of Common Stock of the Company.
5.3 COMPANY'S OBLIGATIONS.
The Company shall (1) at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Agreement, (2) pay all original issue and
transfer taxes with respect to the issue and transfer to the Optionee of shares
of Option Stock pursuant to the Option and all other fees and expenses
necessarily incurred by the Company in connection therewith, and (3) from
3
time to time use its best efforts to comply with all laws and regulations which
shall be applicable thereto.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OPTIONEE.
Optionee represents and warrants to and agrees with the Company as
follows:
6.1 ORGANIZATION, GOOD STANDING, AUTHORITY AND APPROVAL.
Optionee is duly organized as a corporation and is validly existing and in
good standing under the laws of Delaware. Optionee has the corporate power and
authority to execute and deliver this Agreement. The execution and delivery of
this Agreement by Optionee and the consummation of the transactions contemplated
by this Agreement have been duly authorized and approved by all necessary
corporate action of Optionee, and this Agreement is a valid and binding
obligation of Optionee.
6.2 ACQUISITION FOR OWN ACCOUNT.
The shares of Option Stock to be issued and delivered to the Optionee
pursuant to this Option (unless such shares have first been registered under the
Securities Act of 1933, as amended (the "1933 Act")) shall be acquired by the
Optionee for investment for the Optionee's own account and not with a view to,
or for, sale or other distribution thereof, and that the Optionee has no present
intention to sell or otherwise distribute any shares of Option Stock to be
issued or delivered to the Optionee pursuant to this Option, except in a manner
which will not violate the provisions of any applicable federal or state
securities laws, rules or regulations.
7. CONDITIONS TO ISSUANCE OF SHARES.
If at the time of exercise of an Option, there does not exist either (a)
an effective registration statement under the 1933 Act, with respect to the
shares of Option Stock subject to the Option, (b) an opinion of counsel,
satisfactory to the Company, to the effect that such registration is not
required under one or more of the exemptions provided under the 1933 Act, or (c)
a "no action" letter, with respect to the proposed issuance of such shares,
issued by the staff of the Securities and Exchange Commission and delivered to
the Company, then such shares of Option Stock may only be issued with an
appropriate restrictive legend in accordance with Section 8 hereof.
8. TRANSFER RESTRICTIONS; LEGEND ON CERTIFICATE.
The Optionee acknowledges that the Option Stock must be held
indefinitely unless registered under the 1933 Act and the securities laws of
every jurisdiction applicable to such resale or unless exemptions from such
registration requirements are available. The Company will be entitled to place
conspicuously upon each certificate representing shares of Option Stock a legend
as required by Article 15 of the Articles of Incorporation of the Company and a
legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE
4
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL
OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION
THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF THE HOLDER'S COUNSEL, IN FORM REASONABLY
ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.
Notwithstanding the foregoing, the Optionee may transfer the shares of
Option Stock to any TCIC Affiliate.
9. REGISTRATION RIGHTS.
The provisions of the Registration Rights Agreement shall be applicable to
the shares of the Option Stock, and the Optionee shall be entitled to exercise
all of the rights granted to TCIC under the Registration Rights Agreement with
respect to the shares of Option Stock.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
The Exercise Price and the number or kind of shares subject to the Option
are subject to adjustment in case the Company should at any time issue
additional shares of its Common Stock as a stock dividend, or in case the shares
of its Common Stock should at any time be subdivided into a greater number of
shares, or in case the outstanding shares of its Common Stock should be combined
by reclassification or otherwise into a lesser number of shares, or in case the
Company shall merge, consolidate with or into another corporation or entity, or
another corporation or entity merges into the Company, or in the case of any
sale or transfer of all or substantially all of the assets of the Company, or in
the case of a capital reorganization or recapitalization not involving a merger,
consolidation or sale or transfer of all or substantially all of the assets of
the Company. The adjustment will entitle the Optionee to receive, for the same
aggregate Exercise Price, in lieu of securities receivable upon the exercise of
any part of the Option prior to any such dividend, subdivision,
reclassification, combination, sale, transfer or reorganization, the securities
to which the Optionee would have been entitled if the Optionee had exercised any
part of the Option immediately prior to the record date or effective date of the
stock dividend, subdivision, reclassification, combination, sale, transfer or
reorganization. Neither the issuance of stock for consideration, the issuance of
stock on the exercise of stock rights, options or warrants, nor the issuance of
stock on the conversion of a debenture or of a share of capital stock shall be
considered a change in the Company's capital structure.
No fractional shares of Option Stock shall be issued upon any exercise of
the Option following an adjustment made pursuant to this Section 10, and the
aggregate Exercise Price paid shall be appropriately adjusted on account of any
fractional share not issued upon such an exercise.
5
11. THE OPTIONEE'S RIGHTS AS SHAREHOLDER.
The Optionee shall have no rights as a shareholder with respect to any
shares of Option Stock until the date of the exercise of the Option and the
issuance of the shares of Option Stock and then only to the extent that there
has been issued one or more certificates for such shares of Option Stock to said
the Optionee upon the due exercise in whole or in part of the Option. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date precedes the date such stock certificates are issued.
12. APPLICABILITY OF SECTION 16(B) OF THE 1934 ACT.
The grant of the Option may, under Section 16 of the 1934 Act, be
considered a "purchase" of an equity security subject to the "short-swing"
profit rules of Section 16(b). The Optionee is urged to consult its legal
advisor regarding the applicability of Section 16 to its transactions in equity
securities of the Company, including the granting to the Optionee of the Option.
In this connection, the Optionee agrees not to sell, during the six month period
immediately following the date of this Agreement, any shares of Option Stock
which may be acquired during such period upon exercise of the Option.
13. GENERAL.
13.1 ENTIRE AGREEMENT.
This Agreement, subject to the matters contained in the Preliminary
Statement, contains all of the agreements and understandings between the parties
hereto, and no oral agreements or written correspondence shall be held to affect
the provisions hereof.
13.2 WAIVER.
No waiver by any party hereto of any breach of any covenant, condition or
agreement hereof on the part of the parties hereto to be kept and performed
shall be considered to constitute a waiver of any other covenant, condition or
provision, or of any subsequent breach thereof.
13.3 NOTICES.
Any notice, demand, request, waiver or other communication under this
Agreement must be in writing and will be deemed to have been duly given (i) on
the date of delivery if delivered to the address of the party specified below
(including delivery by courier), (ii) on the fifth day after mailing if mailed
to the party to whom notice is to be given to the address specified below, by
first class mail, certified or registered, return receipt requested, postage
prepaid, or (iii) on the date of transmission if sent by facsimile transmission
to the facsimile number given below and if telephonic confirmation of receipt is
obtained promptly after completion of transmission, as follows:
If to Optionee: c/o Tele-Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
6
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy similarly addressed: Attn: Legal Department
If to the Company: TSX Corporation
5-D Butterfield Trail
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Kemp, Smith, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may from time to time change its address or facsimile number for
the purpose of notices to that party by a similar notice specifying a new
address or facsimile number, but no such change will be deemed to have been
given until it is actually received by the party sought to be charged with its
contents.
13.4 SPECIFIC PERFORMANCE.
The parties acknowledge that there will be no adequate remedy at law for a
violation by the Company of its obligations set forth in this Agreement and its
obligations to issue and sell the shares of Option Stock pursuant to this
Agreement and that, in addition to any other remedies which may be available to
Optionee for a violation of those obligations, those obligations will be
specifically enforceable by Optionee in accordance with their terms.
13.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties set forth in this Agreement will
survive the Closing.
13.6 AMENDMENTS.
This Agreement may not be amended, modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement thereof is sought.
13.7 CERTAIN RULES OF CONSTRUCTION.
This Agreement shall be construed in accordance with, and shall be
governed by, the laws of the State of Texas. In the event any court of competent
jurisdiction shall declare any portion of this Agreement to be invalid, the
remainder of this Agreement shall not be invalidated
7
thereby, but shall remain in full force and effect. The captions in this
Agreement are for reference purposes only and will not in any way affect the
meaning or interpretations of the text of this Agreement. Where the context
requires, words in the singular shall be deemed to include the plural and vice
versa.
13.8 BENEFITS OF AGREEMENT.
Subject to the provisions of Section 4, this Agreement will be binding
upon and will inure to the benefit of the parties and their respective
successors and assigns. Neither this Agreement nor any of the right or
obligations of a party hereunder may be assigned without the consent of the
other party, provided that the Optionee may assign its rights and delegate its
obligations to any TCIC Affiliate.
13.9 ATTORNEYS' FEES.
In the event of any action or suit based upon or arising out of any
alleged breach by any party of any representation, warranty, covenant or
agreement contained in this Agreement, the prevailing party will be entitled to
recover reasonable attorneys' fees and other costs of such action or suit from
the other party.
13.10 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
will be deemed an original.
8
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement.
TSX CORPORATION
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and
Chief Financial Officer
TCI TSX, INC.
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇
Senior Vice President and Treasurer
9