EXECUTION COPY
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CONTINGENT VALUE RIGHTS AGREEMENT
between
ECHOSTAR COMMUNICATIONS CORPORATION,
and
VIVENDI UNIVERSAL, S.A.
_____________________________
Dated as of
January 22, 2002
_____________________________
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TABLE OF CONTENTS
Page
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ARTICLE I
TERMS OF THE CVRS
-----------------
SECTION 1.01. Issuance and Delivery of the CVRs; Form of CVRs...............1
SECTION 1.02. Maturity Date; CVR Payment Calculation........................2
SECTION 1.03. Roll-Over of the CVRs Upon Consummation of the Merger;
Change of Control Transactions During the Protection
Period......................................................3
SECTION 1.04. CVRs Not Transferable.........................................5
SECTION 1.05. Early Termination of CVRs.....................................5
SECTION 1.06. Antidilution..................................................5
SECTION 1.07. Payment Terms.................................................6
SECTION 1.08. No Interest on CVR Payments...................................6
SECTION 1.09. Determination that No Payment is Due..........................6
ARTICLE II
COVENANTS
---------
SECTION 2.01. Payment of Amounts, if any, to Holders of CVRs................6
SECTION 2.02. Reservation of Class A Common Shares..........................6
SECTION 2.03. Antimanipulation..............................................7
SECTION 2.04. Certain Notices...............................................8
ARTICLE III
REMEDIES OF THE HOLDERS OF CVRS ON EVENT OF DEFAULTS
----------------------------------------------------
SECTION 3.01. Event of Default Defined; Acceleration of Maturity............8
SECTION 3.02. Remedies Cumulative; Delay or Omission Not Waiver of
Default.....................................................9
ARTICLE IV
OTHER CHANGE OF CONTROL TRANSACTIONS
------------------------------------
SECTION 4.01. Company May Merge, Etc........................................10
SECTION 4.02. Successor Substituted.........................................10
SECTION 4.03. Termination...................................................10
-i-
ARTICLE V
GENERAL PROVISIONS
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SECTION 5.01. Notices.......................................................11
SECTION 5.02. Interpretation; Exhibits and Schedules; Certain Definitions...12
SECTION 5.03. Counterparts..................................................12
SECTION 5.04. Severability..................................................12
SECTION 5.05. Governing Law.................................................13
SECTION 5.06. Amendments and Waivers........................................13
-ii-
CONTINGENT VALUE RIGHTS AGREEMENT (this
"Agreement") dated as of January 22, 2002, between
ECHOSTAR COMMUNICATIONS CORPORATION, a Nevada corporation
(the "Company"), and VIVENDI UNIVERSAL, S.A., a societe
anonyme organized under the laws of France (the
"Investor").
WHEREAS, pursuant to the Investment Agreement dated as of December
14, 2001 (the "Investment Agreement"), between the Company and the Investor,
and as a condition to the willingness of the Investor to enter into the
Investment Agreement, the Company has agreed to issue and deliver to the
Investor, upon consummation of the transactions contemplated by the Investment
Agreement, one contingent value right having the terms set forth in this
Agreement (the "CVRs") for each share of Class A common stock, par value $0.01
per share, of the Company ("Class A Common Stock", which term shall include
any class of capital stock of the Company into which the Class A Common Stock
may be reclassified, converted or exchanged as contemplated by Section 1.06)
issuable upon the conversion of shares of Series D mandatorily convertible
participating preferred stock, par value $0.01 per share, of the Company (the
"Preferred Stock") purchased by the Investor pursuant to the Investment
Agreement;
WHEREAS the Company has duly authorized the creation and issue of
the CVRs, and to provide therefor the Company has duly authorized the
execution and delivery of this Agreement; and
WHEREAS, all things necessary have been done to make the CVRs the
valid obligations of the Company and to make this Agreement a valid agreement
of the Company, in each case in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
consummation of the transactions contemplated by this Agreement and the
Investment Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
Terms of the CVRs
-----------------
SECTION 1.01. Issuance and Delivery of the CVRs; Form of CVRs.
Effective upon the consummation of the issuance, sale and delivery of the
Preferred Stock to the Investor pursuant to the Investment Agreement, there
shall be issued and delivered to the Investor pursuant to this Agreement,
without any further action on the part of the Company or the Investor, that
number of CVRs as is equal to the number of shares of Class A Common Stock
into which the Preferred Stock is convertible as of the closing date of the
purchase and sale pursuant to the Investment Agreement (the "Initial CVR
Amount"). The CVRs shall be in uncertificated form and shall be evidenced by
Schedule I hereto, and the number of CVRs initially indicated on Schedule I
shall be equal to the Initial CVR Amount. The number of CVRs indicated on
Schedule I as being outstanding and owned by the Investor or its wholly owned
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subsidiaries shall be adjusted from time to time (i) in accordance with
Section 1.04, based on sales of Class A Common Stock by the Investor or its
wholly owned subsidiaries and (ii) pursuant to the provisions of Section 1.06.
The number of CVRs indicated on Schedule I shall be considered to be "held" by
the Investor or its wholly owned subsidiary and "outstanding", notwithstanding
the fact that the CVRs are in uncertificated form.
The Company acknowledges that pursuant to Section 7.01(a) of the
Investment Agreement, the Investor has assigned the right to receive the CVRs
to Financiere De Videocommunication, its indirect wholly owned subsidiary.
SECTION 1.02. Maturity Date; CVR Payment Calculation. The Company
shall pay to the Investor on the date (the "Maturity Date") that is the
earliest to occur of:
(i) 36 months following the consummation of the merger (the
"Merger") provided for in Article I of the Agreement and Plan of Merger
dated as of October 28, 2001, by and between the Company and Xxxxxx
Electronics Corporation, a Delaware corporation ("Xxxxxx"), as amended as
of the date of this Agreement (as it may be amended from time to time,
the "Merger Agreement");
(ii) 30 months following the acquisition by the Company of all of
Xxxxxx'x indirect equity interests in PanAmSat Corporation, a Delaware
corporation ("PanAmSat"), pursuant to the terms of the Stock Purchase
Agreement dated as of October 28, 2001, among the Company, Xxxxxx, Xxxxxx
Communications Galaxy, Inc., Xxxxxx Communications Satellite Services,
Inc. and Xxxxxx Communications, Inc. (as it may be amended from time to
time, the "PanAmSat Stock Purchase Agreement"); or
(iii) 30 months following the termination of the Merger Agreement
and the termination of the PanAmSat Stock Purchase Agreement (with (a)
any termination of the PanAmSat Stock Purchase Agreement by the Company
upon written notice to the other parties thereto in accordance with the
terms thereof being deemed a termination thereof, (b) any termination of
the PanAmSat Stock Purchase Agreement by mutual agreement of Xxxxxx and
the Company in accordance with the terms thereof being deemed a
termination thereof and (c) any purported termination of the PanAmSat
Stock Purchase Agreement by Xxxxxx upon written notice to the Company in
accordance with the terms thereof being deemed a termination thereof,
unless as promptly as practicable after the Company's receipt of Xxxxxx'x
notice purporting to terminate the PanAmSat Stock Purchase Agreement, the
Company notifies Xxxxxx in writing that it objects to such purported
termination, in which case such purported termination shall not be deemed
a termination of the PanAmSat Stock Purchase Agreement hereunder until
the earliest to occur of (1) the date on which Company notifies Xxxxxx in
writing that the Company is no longer contesting such purported
termination, (2) the date on which a court of competent jurisdiction
issues a final, non-appealable order to the effect that Xxxxxx'x
purported termination was in accordance with the terms of the PanAmSat
Stock Purchase Agreement and (3) the date that is 30 months after the
date of Xxxxxx'x written notice purporting to terminate the PanAmSat
Stock Purchase Agreement)
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(such 30- or 36-month period, as applicable, being referred to as the
"Protection Period"), for each outstanding CVR held by the Investor and
its wholly owned subsidiaries on the Maturity Date, the amount (payable
as set forth in Section 1.07), if any, as determined by the Company, by
which (x) the Reference Price (as defined below) exceeds (y) the Volume
Weighted Average Price (as defined below) of Class A Common Stock for the
20 trading days ended five trading days prior to the Maturity Date (the
"20-Day Average Price"); provided, however, that the maximum payment in
respect of each CVR shall be (i) if on or prior to the Maturity Date, the
Merger has been consummated, an amount equal to 15% of the Reference
Price and (ii) if on the Maturity Date, the Merger has not been
consummated, an amount equal to 35% of the Reference Price (such 15%
amount or 35% amount, as applicable, the "Payment Cap"), and, upon the
payment in full of any such amount, all of the CVRs then outstanding and
this Agreement shall thereupon automatically terminate and become null
and void without any further action on the part of any party hereto, and
the holders thereof and the parties hereto shall have no further rights
with respect thereto or hereto. Such determination by the Company absent
manifest error shall be final and binding on the Company and the
Investor. The term "Reference Price" shall mean $26.0395, which amount
shall be subject to adjustment from time to time as set forth in Section
1.06, and all references in this Agreement, whether or not expressly so
stated, shall be to the Reference Price then in effect. The term "Volume
Weighted Average Price" shall mean, with respect to the Class A Common
Stock on any trading day, the volume weighted average price per share for
the regular trading session (defined as 9:30 a.m. through 4:00 p.m.,
Eastern Time) during such trading day, as published by Bloomberg (or its
successor corporation) on page "AQR"(or its successor page), or if not
published by Bloomberg (or its successor corporation), on such national
securities market or exchange upon which the volume weighted average
price per share for the Class A Common Stock is reported for such trading
day, or if the volume weighted average price per share for the Class A
Common Stock is not reported on a national securities market or exchange
for such trading day, as determined in good faith by the board of
directors of the Company.
SECTION 1.03. Roll-Over of the CVRs Upon Consummation of the Merger;
Change of Control Transactions During the Protection Period. (a) Roll-Over
Upon Merger. Upon consummation of the Merger, this Agreement and the CVRs
shall become obligations of the surviving corporation in the Merger (the
"Surviving Corporation"), and at all times thereafter all references herein
(i) to Class A Common Stock, shall be deemed to be references to the Class A
common stock, par value $0.01 per share, of the Surviving Corporation into
which each share of Class A Common Stock shall be converted at the effective
time of the Merger and (ii) to the Company, shall be to the Surviving
Corporation.
(b) Change of Control Transactions; Acceleration Election. If at any
time during the Protection Period the Company proposes to enter into a
Change of Control Transaction (as defined below), the Company shall, as
soon as practicable following the first public disclosure of such Change
of Control Transaction but in no event less than five business days prior
to the consummation thereof (or such lesser period as the Company has
knowledge of the proposed consummation), provide written notice to the
Investor of its intention to enter into such Change of Control
Transaction, which notice shall specify the date on which such Change of
Control Transaction is expected to be consummated. If the Investor so
elects by providing written notice (an "Acceleration Election") to the
Company no more than two business days prior to the expected date of
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consummation of such Change of Control Transaction (as specified in the
Company's notice to the Investor), the Company shall pay to the Investor
on the date of consummation of such Change of Control Transaction (the
"Change of Control Date"), for each outstanding CVR held by the Investor
and its wholly owned subsidiaries on the Change of Control Date, the
amount (payable as set forth in Section 1.07), if any, as determined by
the Company, by which (x) the Reference Price exceeds (y) the 20-Day
Average Price (with the 20-Day Average Price calculated as if the Change
of Control Date were the Maturity Date), subject to the Payment Cap, and,
upon the payment in full of any such amount, all of the CVRs then
outstanding and this Agreement shall thereupon automatically terminate
and become null and void without any further action on the part of any
party hereto, and the holders thereof and the parties hereto shall have
no further rights with respect thereto or hereto. Such determination by
the Company absent manifest error shall be final and binding on the
Company and the Investor. If the Investor does not make an Acceleration
Election, the terms of Article IV shall, if applicable, apply by their
terms to such Change of Control Transaction. The term "Change of Control
Transaction" shall mean any merger, consolidation, tender offer,
statutory share exchange or sale, lease or transfer of all or
substantially all of the Company's assets or similar transaction or group
of related transactions, in each case to which the Company is a party
(or, in the case of a tender offer, in which capital stock of the Company
is the subject security), the consummation of which results in a Change
of Control (as defined below); provided that (a) neither the Merger nor
any of the transactions provided for by the Merger Agreement or the other
Transaction Agreements (as such term is defined in the Implementation
Agreement dated as of October 28, 2001, among the Company, Xxxxxx and
General Motors Corporation, a Delaware corporation, as amended as of the
date of this Agreement and as it may be amended from time to time), shall
constitute a Change of Control Transaction; and (b) the consummation of
the transactions contemplated by the PanAmSat Stock Purchase Agreement,
including any issuance of shares of Class A Common Stock in connection
therewith, shall not constitute a Change of Control Transaction. The term
"Change of Control" shall mean (a) any transaction or series of related
transactions (including a tender offer, merger or consolidation) the
result of which is that holders of outstanding voting capital stock of
the Company immediately prior to such transaction or series of related
transactions hold, directly or indirectly, capital stock of the surviving
person in such transaction or series of related transactions (or any
ultimate parent thereof) representing less than 50% of the voting power
in the election of members of the board of directors (or comparable
governing body) of all outstanding capital stock of such surviving person
(or such ultimate parent) immediately after such transaction or series of
related transactions; or (b) the sale, lease or transfer of all or
substantially all of the Company's assets to any "person" or "group",
within the meaning of Section 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor
provision to either of the foregoing, including any group acting for the
purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, other than to any
subsidiary or subsidiaries of the Company.
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SECTION 1.04. CVRs Not Transferable. The CVRs shall not be
transferable other than from the Investor to a wholly owned subsidiary of the
Investor or from a wholly owned subsidiary of the Investor to the Investor or
another wholly owned subsidiary of the Investor. Upon the sale, transfer or
other disposition by the Investor or a wholly owned subsidiary of the Investor
(other than to the Investor or a wholly owned subsidiary of the Investor) of
any shares of Class A Common Stock that were issued upon the conversion of
shares of Preferred Stock or upon consummation of the Merger, that number of
CVRs as is equal to the number of shares of Class A Common Stock so sold,
transferred or otherwise disposed of shall thereupon automatically terminate
and become null and void, and the Investor (or such wholly owned subsidiary)
shall have no further rights with respect thereto.
SECTION 1.05. Early Termination of CVRs. If the Volume Weighted
Average Price of the Class A Common Stock exceeds 120% of the Reference Price
on each trading day for 90 consecutive calendar days (x) if the event the
occurrence of which caused the Protection Period to commence was the
consummation of the Merger in accordance with Section 1.02(i), at any time
during the 30-month period beginning on the date that is six months after the
date on which the Merger was consummated and ending on the Maturity Date and
(y) if the commencement of the Protection Period was caused by the occurrence
of the events listed in either Section 1.02(ii) or Section 1.02(iii), at any
time during the Protection Period, in either such case all of the CVRs then
outstanding and this Agreement shall thereupon automatically terminate and
become null and void without any further action on the part of any party
hereto, and the holders thereof and the parties hereto shall have no further
rights with respect thereto or hereto.
SECTION 1.06. Antidilution. If the Company shall at any time
(whether before or after consummation of the Merger) in any manner subdivide
(by stock split, stock dividend or otherwise) or combine (by reverse stock
split or otherwise) the number of outstanding shares of Class A Common Stock
or effect a merger, consolidation, statutory share exchange or other similar
transaction in which shares of Class A Common Stock are reclassified,
converted into or exchanged for a different number of shares of Class A Common
Stock or shares of capital stock of a different class, the number of
outstanding CVRs shall thereupon automatically be similarly subdivided,
combined or changed and the Reference Price shall thereupon automatically be
appropriately adjusted (in the case of a merger, consolidation, statutory
share exchange or other similar transaction, based on the relevant exchange
ratio). Upon consummation of the Merger, the number of outstanding CVRs and
the Reference Price will automatically be adjusted to reflect the exchange of
Class A Common Stock for Class A Common Stock of the Surviving Corporation
based on the following formulas:
(i) the number of CVRs shall be adjusted by multiplying the number
of outstanding CVRs immediately prior to the consummation of the Merger
by the Class A Exchange Ratio (as such term is defined in the Merger
Agreement); and
(ii) the Reference Price shall be adjusted by dividing the Reference
Price in effect immediately prior to the consummation of the Merger by
the Class A Exchange Ratio (as such term is defined in the Merger
Agreement).
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SECTION 1.07. Payment Terms. Payments of any amounts in respect of
the CVRs shall be made, in the Company's sole discretion, subject to Section
2.02, (i) in cash by wire transfer of immediately available funds to a bank
account designated in writing by the Investor, (ii) by the issuance and
delivery to the Investor of the number of shares of Class A Common Stock
obtained by dividing (x) the payment amount by (y) the product of (I) the
20-Day Average Price applicable to such payment and (II) 0.95 or (iii) in cash
and shares of Class A Common Stock (with the number of shares of Class A
Common Stock to be issued and delivered being determined by subtracting from
the total payment amount the amount paid in cash and dividing that amount by
the product of (I) the 20-Day Average Price applicable to such payment and
(II) 0.95). No fractional shares of Class A Common Stock shall be issued to
any holder of CVRs in respect of any payment made in the form of shares of
Class A Common Stock. Instead of any fractional shares of Class A Common Stock
that would otherwise be issuable to any such holder, the Company shall pay to
such holder in respect of such fractional interest in an amount in cash equal
to the product of (x) such fractional interest and (y) the 20-Day Average
Price applicable to such payment.
SECTION 1.08. No Interest on CVR Payments. Other than in the case of
interest on the Default Amount (as defined in Section 3.01) with respect to
any CVR, which shall be calculated in accordance with Section 3.01, no
interest shall accrue on any amounts payable with respect to the CVRs.
SECTION 1.09. Determination that No Payment is Due. If the Company
determines that no amount is payable with respect to the CVRs to the holders
thereof on the Maturity Date, the Change of Control Date (if an Acceleration
Election shall have been made by the Investor with respect thereto) or the
Default Payment Date (as defined in Section 3.01), as the case may be, the
Company shall give written notice of such determination to the Investor. Upon
making such determination, absent manifest error, the CVRs and this Agreement
shall terminate and become null and void without any further action on the
part of any party hereto, and the holders thereof and the parties hereto shall
have no further rights with respect thereto or hereto. The failure to give
such notice or any defect therein shall not affect the validity of such
determination.
ARTICLE II
Covenants
---------
SECTION 2.01. Payment of Amounts, if any, to Holders of CVRs. The
Company will duly and punctually pay the amounts, if any, in the manner
provided for in Section 1.07, payable with respect to the CVRs in accordance
with the terms of this Agreement.
SECTION 2.02. Reservation of Class A Common Shares. The Company
shall be permitted to pay any amounts in respect of CVRs in shares of Class A
Common Stock pursuant to Section 1.07 only if (i) it has reserved for issuance
and delivery upon maturity or early settlement of the CVRs such number of
shares of Class A Common Stock as shall be issuable upon maturity or early
settlement of the CVRs and (ii) the Investor shall have received an opinion
from counsel to the Company, dated the date of such issuance and delivery and
7
addressed to the Investor, in form and substance reasonably acceptable to the
Investor, as to the validity of the securities so issued and delivered. All
such shares of Class A Common Stock shall be duly authorized and, when issued,
shall be validly issued, fully paid and nonassessable, free and clear of all
liens, security interests, charges and other encumbrances, and will not have
been issued in violation of any preemptive or similar rights.
SECTION 2.03. Antimanipulation. (a) During the period commencing 180
calendar days prior to the Maturity Date and ending on the date that is 30
trading days prior to the Maturity Date (the "Limited Sale Period"), in
addition to any restrictions on sales arising under the federal securities
laws or other applicable laws, the Investor shall not, and shall not permit
any of its subsidiaries or controlled affiliates to, sell (including any
constructive sale by means of a hedging, derivative or similar transaction)
shares of Class A Common Stock (i) on any trading day (x) on which the opening
bid with respect to the Class A Common Stock is lower than the closing price
on the preceding trading day by 2% or more or $0.50 or more, whichever is more
restrictive or (y) in an amount greater than the sum of (I) 3.75% of the
trading volume of the Class A Common Stock on the preceding trading day and
(II) 3.75% of the trading volume of the Class A Common Stock during the first
half of the trading day on the date of sale or (ii) during the last hour of
trading on any trading day. In addition, all sales of Class A Common Stock by
the Investor and its subsidiaries and controlled affiliates during the Limited
Sale Period (i) shall comply with the volume limitations required by Rule 144
under the Securities Act of 1933, as amended (the "Securities Act"), (ii)
shall be effected by means of "brokers' transactions" (as such term is used in
Rule 144 under the Securities Act), (iii) shall not constitute the opening
transaction in the security on any trading day and (iv) shall not be at a
price that is less than the prevailing market price (the lowest current
independent published bid).
(b) During the period commencing 30 trading days prior to the
Maturity Date and ending on the Maturity Date (the "Restricted Period"),
(i) the Investor shall not, and shall not permit any of its subsidiaries
or controlled affiliates to, sell (including any constructive sale by
means of a hedging, derivative or similar transaction), in open market
transactions, privately negotiated transactions or otherwise, any Class A
Common Stock and (ii) the Company shall not, and shall not permit any of
its subsidiaries or controlled affiliates to, repurchase or redeem (or
publicly announce an intention or plan to repurchase or redeem), or
otherwise acquire, in open market purchases, privately negotiated
transactions or otherwise, any Class A Common Stock or Class C common
stock, par value $0.01 per share, of the Surviving Corporation (the
"Class C Common Stock"), or any securities convertible into or
exchangeable for, Class A Common Stock or Class C Common Stock, other
than privately negotiated repurchases or redemptions of Class C Common
Stock.
(c) Notwithstanding anything to the contrary in this Section 2.03,
the Investor and its affiliates shall be permitted to sell Class A Common
Stock (i) during the Restricted Period or (ii) in an amount greater than
that permitted during the Limited Sale Period, in each case if the
Investor gives the Company at least 3 business days prior notice of its
intention to do so. Upon the first to occur of any sales that are the
subject of such notice or any such sales for which notice is not provided
in violation of this Section 2.03(c), all of the CVRs then outstanding
and this Agreement shall thereupon automatically terminate and become
null and void without any further action on the part of any party
8
hereto, and the holders thereof and the parties hereto shall have no
further rights with respect thereto or hereto.
SECTION 2.04. Certain Notices. (a) Subject to Section 2.03(c), as
soon as practicable after the Investor or any of its wholly owned subsidiaries
has sold, transferred or otherwise disposed of any Class A Common Stock, the
Investor shall inform the Company of such sale, transfer or other disposition
by written notice in substantially the form attached as Exhibit A hereto.
Schedule I hereto shall thereupon be adjusted to reduce the number of
outstanding CVRs in accordance with Section 1.04.
(b) Whenever an adjustment is made pursuant to Section 1.06, the
Company shall promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such
adjustment and shall as promptly as practicably thereafter deliver such
certificate to the Investor. Any such adjustment absent manifest error
shall be final and binding on the Company and the Investor. Schedule I
hereto shall thereupon be adjusted to indicate the number of outstanding
CVRs after giving effect to such subdivision, combination or change, and
to indicate the Reference Price then in effect.
(c) If an early termination of the CVRs occurs pursuant to, and in
accordance with, the provisions of Section 1.05, the Company shall
promptly provide the Investor with written notice of such occurrence,
together with all information reasonably necessary for the Investor to
confirm such occurrence.
(d) Notwithstanding anything to the contrary in this Section 2.04,
any reduction in the number of outstanding CVRs in accordance with
Section 1.04, any adjustment to the number of outstanding CVRs or the
Reference Price in accordance with Section 1.06, or any early termination
of the CVRs in accordance with Section 1.05 shall, in each case,
automatically occur upon the happening of the event giving rise to such
reduction, adjustment or termination, regardless of whether the Company
has received or given notice of such event or revised Schedule I as
provided for in this Section 2.04.
ARTICLE III
Remedies of the Holders of CVRs on Event of Defaults
----------------------------------------------------
SECTION 3.01. Event of Default Defined; Acceleration of Maturity.
"Event of Default", with respect to CVRs, means any one of the following
events which shall have occurred and be continuing (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) the Company shall default in the payment of all or any part of
the amounts payable in respect of the CVRs as and when the same shall
become due and payable either at the Maturity Date, or the Change of
Control Date or otherwise; or
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(b) a court of competent jurisdiction shall enter a decree or order
for relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Company or for any
substantial part of its property or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 days; or
(c) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee or sequestrator
(or similar official) of the Company or for any substantial part of its
property, or make any general assignment for the benefit of creditors.
If an Event of Default occurs and is continuing, then, and in each and every
such case, unless all of the CVRs shall have already become due and payable or
have expired or terminated, the Investor by notice in writing to the Company
may declare all CVRs then outstanding to be due and payable immediately (the
date of such notice being the "Default Payment Date"), and upon any such
declaration the Default Amount (as defined below) for each such CVR shall
become immediately due and payable and, thereafter, shall bear interest,
calculated at the interest rate from time to time announced by Citibank, N.A.,
as its prime rate plus 2%, until payment is made to the Investor on behalf of
the holders of all CVRs then outstanding, and, upon the payment in full of any
such amount, all of the CVRs then outstanding and this Agreement shall
thereupon automatically terminate and become null and void without any further
action on the part of any party hereto, and the holders thereof and the
parties hereto shall have no further rights with respect thereto or hereto.
The term "Default Amount" shall mean (i) with respect to an Event of Default
described in clause (a) of the first sentence of this Section 3.01, the amount
(payable as set forth in Section 1.07) that shall have become due and payable
at the Maturity Date or the Change of Control Date, as the case may be and
(ii) with respect to an Event of Default described in clauses (b) or (c) of
the first sentence of this Section 3.01, the amount (payable as set forth in
Section 1.07), if any, as determined by the Company (which determination
absent manifest error shall be final and binding on the Company and the
Investor), by which (x) the Reference Price exceeds (y) the 20-Day Average
Price (with the 20-Day Average Price calculated as if the Default Payment Date
were the Maturity Date), subject to the Payment Cap.
SECTION 3.02. Remedies Cumulative; Delay or Omission Not Waiver of
Default. No right or remedy herein conferred upon the Investor is intended to
be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy. No delay or omission of
the Investor to exercise any right or power accruing upon any Event of Default
occurring and continuing as set forth in Section 3.01 shall impair any such
right or power or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein.
10
ARTICLE IV
Other Change of Control Transactions
------------------------------------
SECTION 4.01. Company May Merge, Etc. (a) If at any time prior to
the beginning of the Protection Period the Company proposes to enter into a
Change of Control Transaction in which the capital stock of the Company is
exchanged for or changed into other stock or securities or the Investor does
not make an Acceleration Election pursuant to Section 1.03 in connection with
a Change of Control Transaction during the Protection Period, the Company
shall not consummate such Change of Control Transaction, unless:
(i) the surviving person in such Change of Control Transaction, or
any ultimate parent thereof, if not the Company (the "Surviving Person"),
is a corporation, partnership or trust organized and existing under the
laws of the United States of America, any state thereof or the District
of Columbia and expressly assumes the obligation to pay all amounts
payable in respect of the CVRs and the performance of every covenant of
this Agreement on the part of the Company to be performed or observed;
(ii) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Surviving
Person, the Company or any subsidiary of the Surviving Person or the
Company as a result of such transaction as having been incurred by the
Surviving Person, the Company or such subsidiary at the time of such
transaction, no Event of Default shall have happened and be continuing;
and
(iii) the Company has delivered to the Investor a certificate signed
by the chief executive officer or the chief financial officer of the
Company in his or her capacity as such an officer stating that such
Change of Control Transaction complies with this Article IV and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
(b) Nothing in this Section 4.01 shall affect the right of the
Investor to make an Acceleration Election pursuant to Section 1.03 with
respect to any Change of Control Transaction proposed during the Protection
Period, and, if the Investor does not make such an Acceleration Election, the
provisions of Section 1.06 shall apply to such Change of Control Transaction
in accordance with their terms.
SECTION 4.02. Successor Substituted. Upon the consummation of any
Change of Control Transaction in accordance with Section 4.01 in which the
Company is not the surviving person in such Change of Control Transaction or
the ultimate parent thereof, the Surviving Person shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if the Surviving Person had been named
as the Company herein and, thereafter, the predecessor person shall be
relieved of all obligations and covenants under this Agreement and the CVRs.
SECTION 4.03. Termination. This Agreement shall terminate and be of
no further force and effect without any further action on the part of any
party hereto automatically upon the termination of all outstanding CVRs in
accordance with the terms hereof.
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ARTICLE V
General Provisions
------------------
SECTION 5.01. Notices. All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered
by hand or sent by facsimile or sent, postage prepaid, by registered,
certified or express mail or overnight courier service and shall be deemed
given when so delivered by hand or facsimile, or if mailed, three days after
mailing (one business day in the case of express mail or overnight courier
service), as follows:
(i) if to the Investor,
Vivendi Universal
00, Xxxxxx xx Xxxxxxxxx
00000 Xxxxx Cedex 08
France
Fax: 00-0-0000-0000
Attention: Xx. Xxxxxxxxx Hannezo
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxx; and
(ii) if to the Company,
EchoStar Communications Corporation
0000 Xxxxx
Xxxxx Xx Xxxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxxxxx, General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
12
Attention: Xxxxxxx X. Xxxxxx and Xxxx X. X'Xxxxx
SECTION 5.02. Interpretation; Exhibits and Schedules; Certain
Definitions. (a) The headings contained in this Agreement, in any Annex,
Exhibit or Schedule hereto and in the table of contents to this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All Annexes, Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made a part of
this Agreement as if set forth in full herein. Any capitalized terms used in
any Annex, Schedule or Exhibit but not otherwise defined therein, shall have
the meaning as defined in this Agreement. When a reference is made in this
Agreement to a Section, Annex, Exhibit or Schedule, such reference shall be to
a Section of, or an Annex, Exhibit or Schedule to, this Agreement unless
otherwise indicated.
(b) For all purposes hereof:
"affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"control" (including the terms "controlling," "controlled by" and
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise.
"including" means including, without limitation.
"person" means any individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"subsidiary" of any person means another person, an amount of the
voting securities, other voting rights or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person.
SECTION 5.03. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 5.04. Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
13
SECTION 5.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York regardless
of the laws that might otherwise apply under applicable principles of law
thereof.
SECTION 5.06. Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. By an instrument in writing, the Investor, on the one hand, or
the Company, on the other hand, may waive compliance by the other with any
term or provision of this Agreement that such other party was or is obligated
to comply with or perform.
14
IN WITNESS WHEREOF, the Company and the Investor have duly executed
this Agreement as of the date first written above.
ECHOSTAR COMMUNICATIONS
CORPORATION,
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President and
General Counsel
VIVENDI UNIVERSAL, S.A.,
By: /s/ Xxxx-Xxxxx Xxxxxxx
-------------------------------
Name: Xxxx-Xxxxx Xxxxxxx
Title: Chairman and Chief
Executive Officer
EXHIBIT A
FORM OF NOTICE OF SALE
On [insert date], the Investor sold [insert number] shares of Class
A Common Stock, which shares were issued to the Investor upon the conversion
of shares of Preferred Stock or upon consummation of the Merger. The number of
CVRs held by the Investor as indicated on Schedule I to the Contingent Value
Rights Agreement dated as of /./, between EchoStar Communications Corporation
and Vivendi Universal, S.A. (the "CVR Agreement") should, accordingly, be
reduced by the number of shares of Class A Common Stock indicated above as
having been sold, in accordance with Section 1.04 of the CVR Agreement. Terms
used but not defined herein have the meanings ascribed thereto in the CVR
Agreement.
Very truly yours,
VIVENDI UNIVERSAL, S.A.,
by
--------------------------------
Name:
Title:
SCHEDULE I
OUTSTANDING CVRs
I. Initial CVR Amount: 57,604,790
II. Adjustments
Number of
Shares of
Adjustments for Date of Class A Adjustments
Sales of Class A Notice of Common Stock Pursuant to Number of CVRs Reference
Common Stock Sale Sold Section 1.06 Outstanding Price
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