EXECUTION COPY
GLOBAL SETTLEMENT AGREEMENT
---------------------------
THIS GLOBAL SETTLEMENT AGREEMENT (this "Agreement") is made and entered
into as of July 30, 2004 (the "Signing Date"), by and among the following (each,
a "Party" and, collectively, the "Parties"):
(a) Pegasus Satellite Communications, Inc. ("PSC") (on its own behalf
and on behalf of its direct and indirect subsidiaries listed on Exhibit A hereto
(collectively with PSC, "Pegasus" or the "Pegasus Debtors"; the Pegasus Debtors
listed in Part I of Exhibit A are referred to as the "Selling Pegasus Debtors"
and the Pegasus Debtors listed in Part II of Exhibit A are referred to as the
"Other Pegasus Debtors")),
(b) Pegasus Communications Corporation ("PCC") (on its own behalf and
on behalf of its direct and indirect subsidiaries, other than the Pegasus
Debtors (collectively, "Pegasus Non-Debtors")),
(c) DIRECTV, Inc. ("DIRECTV") (on its own behalf and on behalf of its
direct and indirect subsidiaries (collectively, the "DTV Parties")),
(d) The DIRECTV Group, Inc. ("DTVG") (on its own behalf and on behalf
of its direct and indirect subsidiaries, with the exclusion of the DTV Parties
(collectively, the "DTVG Parties")),
(e) National Rural Telecommunications Cooperative ("NRTC"),
(f) The statutory committee of unsecured creditors duly appointed in
the Chapter 11 Case (the "Committee"), and
(g) the members of the Committee listed on the signature pages hereto
(collectively, the "Releasing Members"), solely with respect to those Sections
of this Agreement specified for each such Releasing Member on the signature
pages hereto.
RECITALS
--------
INTRODUCTION
------------
A. On June 2, 2004 (the "Commencement Date"), each of the Pegasus
Debtors filed a voluntary petition (collectively, the "Petitions") for relief
with the United States Bankruptcy Court for the District of Maine (the
"Bankruptcy Court"), commencing cases (collectively, the "Chapter 11 Case")
under chapter 11, title 11 of the United States Code (the "Bankruptcy Code").
B. The Pegasus Debtors have been authorized to remain in possession of
their property and to continue in the operation and management of their
businesses as debtors and debtors-in-possession pursuant to sections 1107 and
1108 of the Bankruptcy Code.
C. PCC is the ultimate corporate parent of the Pegasus Debtors and the
Pegasus Non-Debtors.
D. Prior and subsequent to the Commencement Date, Pegasus was, and
continues to be, in the business of, among other things, providing direct
broadcast satellite television ("DBS") services in certain territories in
predominantly rural areas in the United States through agreements with NRTC, a
not-for-profit cooperative, called the "NRTC/Member Agreements for Marketing and
Distribution of DBS Services" (as amended, the "Member Agreements"). NRTC
obtained the DBS services it distributes to Pegasus and to other members and
affiliates of NRTC through a contract with DIRECTV called the "DBS Distribution
Agreement," dated as of April 10, 1992, as amended, between NRTC and DIRECTV as
well as its predecessor, Xxxxxx Communications Galaxy, Inc. (the "DBS
Agreement"). In addition, Pegasus obtained certain rights to sell certain
programming services provided by DIRECTV pursuant to the Revised Seamless
Consumer Program, dated October 3, 2001, as amended, between DIRECTV and Pegasus
(the "Seamless Agreement"). To provide for the use of DIRECTV's tradenames and
trademarks in connection with the provision of the DBS services, DIRECTV and
NRTC entered into the Trademark License Agreement, dated as of September 12,
1994 (the "Trademark License Agreement"). (The DBS Agreement, Member Agreements,
Seamless Agreement, and Trademark License Agreement are collectively referred to
as the "DIRECTV Agreements.").
THE CALIFORNIA LITIGATION
-------------------------
E. On or about January 10, 2000, Pegasus initiated a lawsuit against
DIRECTV and Xxxxxx Communications Galaxy, Inc. in the United States District
Court for the Central District of California, Case No. 00-00368LGB(CWx), seeking
equitable, declaratory and monetary relief for alleged violations of DIRECTV's
obligations to provide certain DBS services under the DBS Agreement for
exclusive distribution by Pegasus in the territories covered by the Member
Agreements and alleged misuse by DIRECTV of DBS subscriber information (the
"California Litigation"), among other claims. Thereafter, DIRECTV and Xxxxxx
Communications Galaxy, Inc. filed counterclaims against Pegasus in the
California Litigation seeking certain declaratory rulings as to Pegasus' rights
under its Member Agreements.
F. Pegasus voluntarily dismissed certain of its claims, and in a series
of rulings issued during the California Litigation, the last of which was
entered on or about May 11, 2004, the California Court adjudicated and/or
dismissed all of Pegasus' remaining claims. The court entered a declaratory
judgment on certain of DIRECTV's counterclaims and dismissed the remainder.
G. On or about June 19, 2001, DIRECTV brought claims in the Superior
Court of California for Los Angeles for breach of contract and an accounting
against Pegasus for violations of a joint marketing agreement. Pegasus removed
the case to the United States District Court for the Central District of
California, Case No. 01-06220LGB (CWx) (the "Seamless Marketing Litigation").
Pegasus denied DIRECTV's allegations and filed counterclaims against DIRECTV for
compensatory and punitive damages and for rescission for fraud,
misrepresentation, breach of contract and breach of the implied covenant of good
faith and fair dealing.
2
H. A jury trial commenced in the Seamless Marketing Litigation on March
23, 2004. On April 14, 2004, the jury returned a verdict in favor of DIRECTV on
two of its causes of action. The jury awarded DIRECTV damages in the amount of
$51,499,999, and the judge awarded DIRECTV prejudgment interest in the amount of
$10,699,601.32. Judgment was entered by the Court in the Seamless Marketing
Litigation in the amount of $62,586,479.43 on or about May 21, 2004.
I. Pegasus has appealed most of the District Court's rulings in both
the California Litigation (Case No. 04-56076) and the Seamless Marketing
Litigation (Case No. 04-56098) to the United States Court of Appeals for the
Ninth Circuit. These appeals remain pending.
THE BEST EFFORTS LITIGATION
---------------------------
J. On or about June 2, 2004, DIRECTV filed a complaint against PCC and
Pegasus in the United States District Court for the Central District of
California, Case No. 04-3895RGK (the "Best Efforts Litigation"), seeking
preliminary and permanent injunctive relief to prevent unauthorized use by
Pegasus of DIRECTV trademarks and also seeking monetary damages for alleged
violations by Pegasus of obligations under the Member Agreements to use best
efforts in marketing DIRECTV services. Further proceedings in the Best Efforts
Litigation have been stayed due to the commencement of the Chapter 11 Case.
PROCEEDINGS IN THE BANKRUPTCY COURT
-----------------------------------
K. On June 2, 2004, DIRECTV and NRTC notified Pegasus that on June 1,
2004, DIRECTV and NRTC had mutually agreed to terminate the DBS Agreement and
the Trademark License Agreement. On June 2, 2004, NRTC also notified Pegasus
that NRTC had terminated Pegasus' Member Agreements effective August 31, 2004,
and DIRECTV notified Pegasus that it had terminated the Seamless Agreement, also
effective August 31, 2004. Pegasus disputes the legality of the foregoing
terminations.
L. Shortly after the Commencement Date, Pegasus sought a determination
from the Bankruptcy Court that DIRECTV had violated the automatic stay provided
for in section 362(a)(3) of the Bankruptcy Code by (i) marketing to new
subscribers and existing subscribers in Pegasus' territories and (ii) allegedly
soliciting those subscribers using subscriber information. In a bench decision
rendered on June 10, 2004 and by order of the same date, the Bankruptcy Court
held that "[c]ertain, limited, action of DIRECTV ... violates the automatic stay
imposed by 11 U.S.C. Section 362," with respect to DIRECTV's use of certain
subscriber information, but that DIRECTV's efforts to solicit customers in
Pegasus' territories did not otherwise violate the automatic stay (the "June
10th Decision"). Although DIRECTV and Pegasus each dispute that portion of the
June 10th Decision adverse to it, neither of them appealed or otherwise sought
reconsideration of the June 10th Decision.
3
M. On or about June 14, 2004, Pegasus filed an adversary proceeding in
the Bankruptcy Court (the "Adversary Proceeding") in which DIRECTV, NRTC, and
NRTC's officers and directors were named as defendants. Pegasus alleged, inter
alia, that the actions taken by DIRECTV, NRTC and NRTC's officers and directors
to terminate the DIRECTV Agreements violated Pegasus' rights under, or in
respect of, those agreements and duties owed to Pegasus under cooperative and
fiduciary principles. DIRECTV and NRTC dispute Pegasus' allegations and claims.
Pegasus sought, inter alia, preliminary and permanent injunctive relief with
respect to the actions taken to terminate the DIRECTV Agreements. No trial has
been scheduled in the Adversary Proceeding.
N. In connection with the Adversary Proceeding, on or about June 14,
2004, Pegasus requested a temporary restraining order seeking, inter alia, to
prevent the scheduled termination of the Member Agreements and the Seamless
Agreement from taking effect. In a bench decision rendered on June 21, 2004 (the
"Injunction Denial Decision"), and by order dated June 21, 2004, the Bankruptcy
Court denied Pegasus' request for a temporary restraining order. With Pegasus'
consent, by order dated June 24, 2004 (the "Injunction Denial Order"), the
Bankruptcy Court denied Pegasus' request for a preliminary injunction for the
same reasons stated in the Injunction Denial Decision. Pegasus has appealed the
Injunction Denial Order to the United States District Court for the District of
Maine (Case No. 2:04-cv-00140) (the "Appeal"). In an order dated July 9, 2004,
the District Court granted Pegasus' motion for an expedited briefing of the
Appeal. No decision has been rendered with respect to the Appeal.
BANK CREDIT AGREEMENTS
----------------------
O. Pursuant to certain pre-Commencement Date loan and security
agreements, as set forth more fully in the final order authorizing the use of
collateral and granting other relief, dated June 25, 2004, Bank of America,
N.A., as administrative agent under the Fourth Amendment and Restatement of
Credit Agreement, dated as of October 22, 2003, as further amended, with debtor
Pegasus Media & Communications, Inc. ("PMC") and the lenders parties thereto,
and Xxxxxxxxx L.L.C., as administrative agent, and Banc of America Securities
LLC, as sole lead arranger and sole book manager, under the Credit Agreement,
dated as of December 19, 2003, with PMC and the lenders party thereto (on behalf
of their respective lenders) have asserted claims and liens against
substantially all of the assets of Pegasus Satellite Television, Inc. and its
direct and indirect subsidiaries, and Wilmington Trust Company, as
administrative agent, under the Amended and Restated Term Loan Agreement, dated
as of August 1, 2003, with PSC and the lender parties thereto (on behalf of its
lenders) has asserted claims and liens against certain assets of PSC.
4
INTER-COMPANY CLAIMS
--------------------
P. The Pegasus Non-Debtors have provided, and continue to provide, a
variety of services and support to the Pegasus Debtors and currently assert
certain claims against the Pegasus Debtors, including, but not limited to, in
respect of an inter-company note due from PSC and inter-company receivables due
from the Pegasus Debtors for services provided and reimbursement of expenses.
The Committee has questioned the enforceability of these claims and alleged the
possible existence of claims of the Pegasus Debtors against PCC and the other
Pegasus Non-Debtors relating to these claims, as well as transfers from the
Pegasus Debtors to PCC and the other Pegasus Non-Debtors.
SETTLEMENT DISCUSSIONS
----------------------
Q. Pegasus acknowledges that its ability to retain and service its
subscriber base will be severely impaired if DIRECTV refuses to provide
programming services (and is not required to do so by a court order) after
August 31, 2004, as a consequence of (a) the disputed termination of the DBS
Agreement and the Trademark License Agreement on June 1, 2004, and (b) the
disputed notice of termination of the Member Agreements and the Seamless
Agreement on June 2, 2004, with the disputed effective date of termination of
August 31, 2004, since Pegasus will not be able to provide, beyond August 31,
2004, any DBS services, which represent a substantial portion of its business
and operations if such terminations were effective. For this reason and because
of the increased marketing by Pegasus' competitors, Pegasus' DBS assets may,
absent judicial relief, quickly decrease in value. Under these circumstances,
the Parties have concluded that the best and the most expedient way for
creditors and other parties in interest to maximize their recoveries is through
a prompt settlement with DIRECTV and NRTC involving a transfer of the DBS assets
to DIRECTV, including any rights and interests Pegasus may have in the
subscriber information and subscriber lists, for the consideration set forth in
the Asset Purchase Agreement and this Agreement.
R. DIRECTV has asserted that it possesses certain rights in Pegasus'
subscriber information (including the subscriber lists), which, if enforced,
would substantially limit or even eliminate Pegasus' ability either to sell such
information and lists, which are its primary asset, to a third party, or
maximize recoveries from such sale. Pegasus disputes DIRECTV's assertion and
maintains that Pegasus has the power and authority to transfer its subscriber
information.
S. In the Adversary Proceeding, Pegasus has asserted against DIRECTV
and NRTC various claims, all of which have been disputed by DIRECTV and NRTC. In
connection with the Injunction Denial Order, the Bankruptcy Court found that the
Pegasus Debtors had not demonstrated a probability of success on the merits of
certain of the causes of action asserted in the Adversary Proceeding.
5
T. As part of the global settlement provided for by this Agreement, the
DTV Parties, the DTVG Parties and NRTC require that the Other Pegasus Debtors
and the Pegasus Non-Debtors give to DIRECTV and NRTC the releases provided in
Sections 3.a and 3.c, which the Other Pegasus Debtors and the Pegasus
Non-Debtors are willing to do but only if they receive from the Pegasus Debtors
and the Releasing Members the releases provided in Section 3.e.
U. To maximize recoveries at all levels for all parties in interest and
to avoid any further litigation, the Parties have entered into this Agreement
and the Asset Purchase Agreement and Cooperation Agreement referred to below, as
mutually dependent agreements constituting a single integrated settlement.
V. As an integral part of, and subject to the effectiveness of, this
Agreement, the Parties have also agreed to the following:
a. The Selling Pegasus Debtors will sell, transfer and assign
to DIRECTV, and DIRECTV will acquire and assume from the
Pegasus Debtors, pursuant to sections 105, 363 and 365 of the
Bankruptcy Code, the assets and assume those liabilities,
specified in that certain Asset Purchase Agreement by and
among the Selling Pegasus Debtors and DIRECTV, dated as of the
date hereof (inclusive of accompanying schedules and exhibits
and as amended, modified or supplemented from time to time,
the "Asset Purchase Agreement"); and
b. Contemporaneously with this Agreement, the Pegasus Debtors
and DIRECTV have entered into a cooperation agreement, dated
as of the date hereof (as amended, modified or supplemented
from time to time, the "Cooperation Agreement"), setting forth
the terms of the relationship between the Pegasus Debtors and
DIRECTV with respect to the DBS services prior, and
subsequent, to the closing under the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the Parties hereby agree as follows:
AGREEMENT
---------
1. DISMISSAL OF ALL LITIGATION.
---------------------------
a. On or no later than five (5) days after the Effective Date
(as defined in Section 5.a. below): (i) the Adversary Proceeding and the
pre-Commencement Date actions set forth on Schedule 1 hereto (the "Actions"),
(ii) all pending appeals related thereto, and (iii) all motions, contested
matters and adversary proceedings involving the DTV Parties, the DTVG Parties or
any NRTC Released Parties (as defined in Section 3.j below) pending in the
6
Chapter 11 Case, shall, in each case, be promptly dismissed with prejudice as to
all parties in each such proceeding, action, appeal, motion or contested matter,
and without costs to any party thereto; provided, however, that such dismissal
shall not affect or impair the rights of the Parties arising under this
Agreement, the Asset Purchase Agreement, the Cooperation Agreement, and the
Confidentiality Agreement (as defined in the Asset Purchase Agreement)
(collectively, the "Agreements"); and provided further that this Section 1.a
shall not apply to the Approval Motion or the Approval Order (as such terms are
defined in Section 5.b below), or to any other motion, matter or proceeding in
the Chapter 11 Case that is either: (x) brought by any Party to enforce its
rights under any of the Agreements, (y) not related to a Claim (as defined in
Section 3.j) covered by the releases contained in Section 3, or (z) brought by a
third party except to the extent any Party is also a movant or plaintiff or is
otherwise directly or indirectly assisting or inducing such party in initiating,
prosecuting or otherwise supporting such third party with respect to the same.
b. From and after the Signing Date and until the earlier of
(i) the Effective Date, or (ii) the termination of the Asset Purchase Agreement:
(i) the Adversary Proceeding, the Actions, all pending appeals related thereto,
and all motions, contested matters and adversary proceedings pending in the
Chapter 11 Case and relating to the subject matter of, or the transactions
contemplated by, the Agreements or that adversely affect the rights of the DTV
Parties, the DTVG Parties or any NRTC Released Parties under any of the
Agreements, shall, in each case, be stayed; and (ii) no new litigation
(including, without limitation, motions, contested matters, and adversary
proceedings): (x) relating to any Claims covered by the releases contained in
Section 3 or that is inconsistent with the Approval Order, or (y) that would
adversely affect the implementation of any of the Agreements in accordance with
their respective terms, shall be commenced by any Party in any court; provided,
however, that this Section 1.b shall not apply to the Approval Motion or the
Approval Order, or to any other motion, matter or proceeding in the Chapter 11
Case that is either: (x) brought by any Party to enforce its rights under any of
the Agreements, (y) not related to a Claim covered by the releases contained in
Section 3, or (z) brought by a third party except to the extent any Party is
also a movant or plaintiff, except to the extent any Party is also a movant or
plaintiff or is otherwise directly or indirectly assisting or inducing such
party in initiating, prosecuting or otherwise supporting such third party with
respect to the same.
2. FACILITATION OF SALE OF PEGASUS' DBS ASSETS.
-------------------------------------------
a. Subject to the occurrence of the Effective Date, in
consideration of (i) the releases set forth in Section 3 below, (ii) DIRECTV's
offer to purchase the assets, and assume those liabilities, specified in the
Asset Purchase Agreement, and (iii) NRTC's agreement in respect of the treatment
and transfer of Pegasus' Patronage Certificates as described in Section 4 below,
and notwithstanding the asserted rights of DIRECTV and NRTC under the DIRECTV
Agreements and the applicable provisions of the Bankruptcy Code, DIRECTV and
NRTC hereby consent (to the extent such consent is required) to the sale of the
assets set forth in the Asset Purchase Agreement on the terms and conditions set
forth therein.
7
b. Subject to the occurrence of the Effective Date, all
amounts owing by the Pegasus Debtors to (i) NRTC under the Member Agreements and
(ii) DIRECTV under the Seamless Agreement and in respect of the judgment entered
in favor of DIRECTV in the Action entitled DIRECTV, Inc. v. Pegasus Satellite
Television, Inc., Case No. CV 01-6220 LGB (C.D. Cal.), shall be applied as
adjustments to the Purchase Price (as defined in the Asset Purchase Agreement)
as, and to the extent, provided in Section 3.2 of the Asset Purchase Agreement.
Pegasus, NRTC and DIRECTV severally, but not jointly, acknowledge and agree that
(i) all Net Service Obligations (as defined in the Asset Purchase Agreement) for
all periods prior to July 14, 2004 are set forth on Schedule 1.1(d) of the Asset
Purchase Agreement, and (ii) all amounts accruing thereafter shall be determined
in a manner consistent with practices in effect on January 1, 2004, and in a
manner consistent with the amounts billed and the invoices referenced in such
Schedule 1.1(d), as provided in the Asset Purchase Agreement.
c. Promptly after the Signing Date, NRTC shall deliver to
DIRECTV all outstanding letters of credit for the benefit of NRTC in respect of
obligations of the Pegasus Debtors consisting of those letters of credit listed
on Schedule 2 hereto and any extensions, replacements, or amendments of same
(the "NRTC Letters of Credit"). From and after the Signing Date and through the
Effective Date, neither DIRECTV nor NRTC shall make any drawing under the NRTC
Letters of Credit, except that if NRTC receives notice of non-renewal of any
NRTC Letters of Credit from its issuer, DIRECTV shall re-deliver such NRTC
Letter(s) of Credit to NRTC, which shall be permitted to draw upon same and
deposit the proceeds thereof in escrow, such escrow to be on terms and
conditions mutually satisfactory to NRTC, DIRECTV, Pegasus and the Committee.
Upon the occurrence of the Effective Date, DIRECTV shall surrender the NRTC
Letters of Credit to their issuer, and NRTC shall cooperate with the Pegasus
Debtors to effect the return to the Pegasus Debtors of the cash collateral
securing the Pegasus Debtors' reimbursement obligations in respect of the NRTC
Letters of Credit.
3. MUTUAL RELEASES.
---------------
a. Selling Pegasus Debtor Releasing Parties' General Release
of DTV/NRTC Released Parties (General Release). Subject to the occurrence of the
Effective Date, the Selling Pegasus Debtors, for themselves and each of their
respective direct and indirect assigns, heirs, executors, administrators,
successors, legal representatives, subsidiaries (excluding the Other Pegasus
Debtors) and divisions, including, without limitation, the Selling Pegasus
Debtors' predecessors in interest listed in Part I of Exhibit B hereto, any
chapter 11 or 7 trustee that may be appointed or elected for the Selling Pegasus
Debtors and the Pegasus Successor (as defined in Section 4.b.1 below), and all
Persons (as defined in the Asset Purchase Agreement) claiming by, through or
under them (collectively, the "Selling Pegasus Debtor Releasing Parties"),
hereby release the DTV Parties, the DTVG Parties, and NRTC and each of their
respective direct and indirect assigns, heirs, executors, administrators,
successors, legal representatives, subsidiaries and divisions and each and all
of their present and former directors, officers, members, servants, employees,
agents and representatives, solely in their capacities as such (including,
without limitation, the individual defendants named in the Adversary Proceeding)
8
(collectively, the "DTV/NRTC Released Parties (General Release)"), from and with
respect to, and covenant not to xxx the DTV/NRTC Released Parties (General
Release) with respect to, any and all Claims (whether such Claims are or could
have been part of the assets of the Selling Pegasus Debtor Releasing Parties or
their estates and whether such Claims are or could have been assertable by the
Selling Pegasus Debtor Releasing Parties in their own right or on behalf of the
holder of any Claim against, or equity interest in, the Selling Pegasus Debtor
Releasing Parties or any other Person claiming by, through or under them), which
the Selling Pegasus Debtor Releasing Parties or any of them now have, ever had
or may ever have against the DTV/NRTC Released Parties (General Release) or any
of them, singly or in any combination, on account of, arising out of, or in
connection with, any thing, cause, matter, transaction, act or omission of any
nature whatsoever occurring from the beginning of the world to the Effective
Date, including, without limitation: (1) any Claim that was asserted in or that
arises out of the facts and transactions giving rise to the Adversary Proceeding
and/or the Actions, (2) any Claim based on or arising out of the termination of
the DIRECTV Agreements, (3) any Claim arising out of or related to the DIRECTV
Agreements or that is based on or arises out of the Class Action Settlement,
(4) any Claim (even if it accrues after the Effective Date) arising from rights
to or concerning NRTC patronage or patronage activities, (5) any Claim (even if
it accrues after the Effective Date) that NRTC must pay or distribute any amount
relating to patronage, (6) any Claim (even if it accrues after the Effective
Date) in respect of any past, present or future payments received by the NRTC
Released Parties from DIRECTV or DTVG, including, without limitation, any
amounts (i) that NRTC has or will receive in connection with the transactions
pursuant to which the DIRECTV Agreements were terminated, or (ii) that are
required to be classified or reclassified as patronage-sourced income or
otherwise required to be paid or allocated by NRTC to the Selling Pegasus Debtor
Releasing Parties, (7) any Claim (including, without limitation, for fraud) with
respect to or in connection with any Legacy Issues, (8) any Claim concerning
marketing, providing services, billing, and collecting payments by DIRECTV and
its agents, representatives, contractors and affiliates with respect to new
subscribers and existing Subscribers of the Selling Pegasus Debtors in their
territories, including, without limitation, through the use of the Basic
Services Information and the DIRECTV Seamless Services Information, and (9) any
Claim on account of, relating to, arising out of or in connection with the
Chapter 11 Case; provided, however, that the release in this Section 3.a shall
not apply to the Retained Claims.
b. DTV/NRTC Releasing Parties' General Release of Selling
Pegasus Debtor Released Parties. Subject to the occurrence of the Effective
Date, the DTV Parties, DTVG Parties and NRTC, for themselves and each of their
respective direct and indirect assigns, heirs, executors, administrators,
successors, legal representatives, subsidiaries and divisions, and all Persons
claiming by, through or under them (collectively, the "DTV/NRTC Releasing
Parties"), hereby release the Selling Pegasus Debtors and each of their
respective direct and indirect assigns, heirs, executors, administrators,
successors, legal representatives, subsidiaries (excluding the Other Pegasus
Debtors) and divisions, including, without limitation, the Selling Pegasus
Debtors' predecessors in interest listed in Part I of Exhibit B hereto, any
chapter 11 or 7 trustee that may be appointed or elected for the Selling Pegasus
Debtors and the Pegasus Successor, and each and all of their present and former
directors, officers, members, servants, employees, agents and representatives,
9
solely in their capacities as such (collectively, the "Selling Pegasus Debtor
Released Parties") from and with respect to, and covenant not to xxx the Selling
Pegasus Debtor Released Parties with respect to, any and all Claims (whether
such Claims are or could have been part of the assets of the DTV/NRTC Releasing
Parties and whether such Claims are or could have been assertable by the
DTV/NRTC Releasing Parties in their own right or on behalf of the holder of any
Claim against, or equity interest in, the DTV/NRTC Releasing Parties or any
other Person claiming by, through or under them), which the DTV/NRTC Releasing
Parties or any of them now have, ever had or may ever have against the Selling
Pegasus Debtor Released Parties or any of them, singly or in any combination, on
account of, arising out of, or in connection with, any thing, cause, matter,
transaction, act or omission of any nature whatsoever occurring, from the
beginning of the world to the Effective Date; provided, however, that the
release in this Section 3.b shall not apply to the Retained Claims.
c. Other Pegasus Releasing Parties' Special Release of
DTV/NRTC Released Parties (Special Release). Subject to the occurrence of the
Effective Date, the Other Pegasus Debtors and the Pegasus Non-Debtors, for
themselves and each of their respective direct and indirect assigns, heirs,
executors, administrators, successors, legal representatives, subsidiaries and
divisions, and all Persons claiming by, through or under them, including,
without limitation, the Other Pegasus Debtors' predecessors in interest listed
in Part II of Exhibit B hereto, any chapter 11 or 7 trustee that may be
appointed or elected for the Other Pegasus Debtors and the Pegasus Successor
(collectively, the "Other Pegasus Releasing Parties"), hereby release the DTV
Parties, the DTVG Parties, and NRTC and each of their respective direct and
indirect assigns, predecessors, heirs, executors, administrators, successors,
legal representatives, parents, subsidiaries, divisions, affiliates, partners
and shareholders and each and all of their present and former directors,
officers, members, servants, employees, agents and representatives, solely in
their capacities as such (including, without limitation, the individual
defendants named in the Adversary Proceeding) (collectively, the "DTV/NRTC
Released Parties (Special Release)"), from and with respect to, and covenant not
to xxx the DTV/NRTC Released Parties (Special Release) with respect to, any and
all Claims (whether such Claims are or could have been part of the assets of the
Other Pegasus Releasing Parties and, as applicable, their estates and whether
such Claims are or could have been assertable by the Other Pegasus Releasing
Parties in their own right or on behalf of the holder of any Claim against, or
equity interest in, the Other Pegasus Releasing Parties or any other Person
claiming by, through or under them), which the Other Pegasus Releasing Parties
or any of them now have, ever had or may ever have against the DTV/NRTC Released
Parties (Special Release) or any of them, singly or in any combination, on
account of, arising out of, or in connection with, any thing, cause, matter,
transaction, act or omission of any nature whatsoever occurring from the
beginning of the world to the Effective Date on account of, relating to, arising
out of or in connection with: (i) any of the DIRECTV Agreements or their
termination or that is based on or arises out of the Class Action Xxxxxxxxxx,
00
(ii) any and all of the Claims and causes of action asserted in the Adversary
Proceeding and/or the Actions and any and all Claims arising out of the facts
and transactions giving rise to the Adversary Proceeding and/or the Actions,
(iii) marketing, providing services, billing, and collecting payments by DIRECTV
and its agents, representatives, contractors and affiliates with respect to new
subscribers and existing Subscribers of the Selling Pegasus Debtors in their
territories, including, without limitation, through the use of the Basic
Services Information and the DIRECTV Seamless Services Information, (iv) the
relationship between NRTC and Pegasus, (v) the relationship between DIRECTV and
Pegasus, (vi) the relationship between DIRECTV and NRTC, (vii) any Claim (even
if it accrues after the Effective Date) arising from rights to or concerning
NRTC patronage or patronage activities, (viii) any Claim (even if it accrues
after the Effective Date) that NRTC must pay or distribute any amount relating
to patronage, (ix) any Claim (even if it accrues after the Effective Date) in
respect of any past, present or future payments received by the NRTC Released
Parties from DIRECTV or DTVG, including, without limitation, any amounts (1)
that NRTC has or will receive in connection with the transactions pursuant to
which the DIRECTV Agreements were terminated, or (2) that are required to be
classified or reclassified as patronage-sourced income or otherwise required to
be paid or allocated by NRTC to the Selling Pegasus Debtor Releasing Parties,
(x) any Claim (including, without limitation, for fraud) with respect to or in
connection with any Legacy Issues, and (xi) the Chapter 11 Case; provided,
however, that the release in this Section 3.c shall not apply to the Retained
Claims.
d. DTV/NRTC Releasing Parties' Special Release of Other
Pegasus Released Parties. Subject to the occurrence of the Effective Date, the
DTV Parties, DTVG Parties and NRTC, for themselves and each of their respective
direct and indirect assigns, heirs, executors, administrators, successors, legal
representatives, subsidiaries and divisions, and all Persons claiming by,
through or under them, hereby release the Other Pegasus Debtors and the Pegasus
Non-Debtors and each of their respective direct and indirect, assigns,
predecessors, heirs, executors, administrators, successors, legal
representatives, parents, subsidiaries, divisions, affiliates, partners and
shareholders, including, without limitation, the Other Pegasus Debtors'
predecessors in interest listed in Part II of Exhibit B hereto, any chapter 11
or 7 trustee that may be appointed or elected for the Other Pegasus Debtors and
the Pegasus Successor, and each and all of their present and former directors,
officers, members, servants, employees, agents and representatives, solely in
their capacities as such (collectively, the "Other Pegasus Released Parties"),
from and with respect to, and covenant not to xxx the Other Pegasus Released
Parties with respect to, any and all Claims (whether such Claims are or could
have been part of the assets of the DTV/NRTC Releasing Parties and whether such
Claims are or could have been assertable by the DTV/NRTC Releasing Parties in
their own right or on behalf of the holder of any Claim against, or equity
interest in, the DTV/NRTC Releasing Parties or any other Person claiming by,
through or under them), which the DTV/NRTC Releasing Parties or any of them now
have, ever had or may ever have against the Other Pegasus Released Parties or
any of them, singly or in any combination, on account of, arising out of, or in
connection with, any thing, cause, matter, transaction, act or omission of any
nature whatsoever occurring, from the beginning of the world to the Effective
Date on account of, relating to, arising out of or in connection with: (i) any
of the DIRECTV Agreements or their termination or that is based on or arises out
of the Class Action Settlement, (ii) any and all of the Claims and causes of
action asserted in the Adversary Proceeding and/or the Actions and any and all
Claims arising out of the facts and transactions giving rise to the Adversary
Proceeding and/or the Actions, (iii) marketing and selling DIRECTV services, and
servicing, billing and collecting revenues from customers of DIRECTV services,
(iv) the relationship between NRTC and Pegasus, (v) the relationship between
DIRECTV and Pegasus, (vi) the relationship between DIRECTV and NRTC, (vii) any
Claim (even if it accrues after the Effective Date) arising from rights to or
concerning NRTC patronage or patronage activities and (viii) the Chapter 11
Case; provided, however, that the release in this Section 3.d shall not apply to
the Retained Claims.
11
e. Pegasus Debtors' General Release of Pegasus Non-Debtors.
Subject to the occurrence of the Effective Date, the Pegasus Debtors, for
themselves and their legal representatives, successors and assigns and all
Persons claiming by, through or under them, including, without limitation, any
chapter 11 or 7 trustee that may be appointed or elected for the Pegasus Debtors
and the Pegasus Successor (collectively, the "Pegasus Debtor Releasing
Parties"), hereby release the Pegasus Non-Debtors and their legal
representatives, successors and assigns, the respective present and former
directors and officers of the Pegasus Debtors and the Pegasus Non-Debtors, the
respective present and former members, partners, trustees, shareholders,
employees, agents, representatives and advisors of the Pegasus Non-Debtors and
the respective heirs, executors, administrators, legal representatives,
successors and assigns of each of the foregoing, solely in their capacities as
such (collectively, the "Pegasus Non-Debtor Released Parties"), from and with
respect to, and covenant not to xxx the Pegasus Non-Debtor Released Parties with
respect to, any and all Claims (whether such Claims are or could have been part
of the assets of the Pegasus Debtor Releasing Parties or their estates and
whether such Claim is or could have been assertable by the Pegasus Debtor
Releasing Parties in their own right or on behalf of the holder of any Claim
against, or equity interest in, the Pegasus Debtor Releasing Parties or any
other Person claiming by, through or under them), which the Pegasus Debtor
Releasing Parties or any of them now have, ever had or may ever have against the
Pegasus Non-Debtor Released Parties or any of them, singly or in any
combination, on account of, arising out of, or in connection with, any thing,
cause, matter, transaction, act or omission of any nature whatsoever occurring
from the beginning of the world to the Effective Date; provided, however, that
the release in this Section 3.e shall not apply to the Retained Claims.
f. Releasing Members' Special Release of Pegasus Non-Debtors.
Subject to the occurrence of the Effective Date, the Releasing Members, for
themselves and their legal representatives, successors and assigns and all
Persons claiming by, through or under them (the "Releasing Member Releasing
Parties"), hereby release the Pegasus Non-Debtor Released Parties from and with
respect to, and covenant not to xxx the Pegasus Non-Debtor Released Parties with
respect to, any and all Claims (whether such Claims are or could have been part
of the assets of the Releasing Member Releasing Parties and whether such Claims
are or could have been assertable by the Releasing Member Releasing Parties in
their own right or on behalf of the holder of any Claim against, or equity
interest in, the Releasing Member Releasing Parties or any other Person), which
the Releasing Member Releasing Parties or any of them now have, ever had or may
ever have against the Pegasus Non-Debtor Released Parties or any of them, singly
or in any combination, on account of, arising out of, or in connection with, any
thing, cause, matter, transaction, act or omission of any nature whatsoever
occurring from the beginning of the world to the Effective Date on account of,
relating to, arising out of or in connection with: (i) any of the Pegasus
Debtors, the DTV Parties, the DTVG Parties or NRTC, (ii) the negotiation and
preparation of any of the Agreements, or (iii) the Chapter 11 Case; provided,
however, that the release in this Section 3.f shall not apply to the Retained
Claims.
12
g. Pegasus Non-Debtors' General Release of Pegasus Debtors.
Subject to the occurrence of the Effective Date, the Pegasus Non-Debtors, for
themselves and their legal representatives, successors and assigns and all
Persons claiming by, through or under them (collectively, the "Pegasus
Non-Debtor Releasing Parties"), hereby release the Pegasus Debtors and their
legal representatives, successors and assigns, the respective present and former
members, partners, trustees, shareholders, directors, officers, employees,
agents, representatives and advisors of the Pegasus Debtors and the respective
heirs, executors, administrators, legal representatives, successors and assigns
of each of the foregoing, solely in their capacities as such including, without
limitation, any chapter 11 or 7 trustee that may be appointed or elected for the
Pegasus Debtors and the Pegasus Successor (collectively, the "Pegasus Debtor
Released Parties"), from and with respect to, and covenant not to xxx the
Pegasus Debtor Released Parties with respect to, any and all Claims (whether
such Claims are or could have been part of the assets of the Pegasus Non-Debtor
Releasing Parties and whether such Claims are or could have been assertable by
the Pegasus Non-Debtor Releasing Parties in their own right or on behalf of the
holder of any Claim against, or equity interest in, the Pegasus Non-Debtor
Releasing Parties or any other Person claiming by, through or under them), which
the Pegasus Non-Debtor Releasing Parties or any of them now have, ever had or
may ever have against the Pegasus Non-Debtor Released Parties or any of them,
singly or in any combination, on account of, arising out of, or in connection
with, any thing, cause, matter, transaction, act or omission of any nature
whatsoever occurring from the beginning of the world to the Effective Date;
provided, however, that the release in this Section 3.g shall not apply to the
Retained Claims.
h. Release of Unknown Claims. Each Party granting the releases
pursuant to Sections 3.a, 3.b, 3.c, 3.d, 3.e, 3.f and 3.g above (each, a
"Releasing Party") represents that it has not assigned, and agrees it will not
assign, to any other Person any Claim covered by any release granted by such
Releasing Party pursuant to this Section 3 other than the Retained Claims. In
addition, the Pegasus Debtors represent and warrant to the DTV Parties and the
DTVG Parties that the Pegasus Debtors have not acquired any of the Claims which
have been asserted by the plaintiffs in the IP Litigation (as defined in Section
3.i(5) below). Each Releasing Party acknowledges that it may hereafter discover
Claims or facts in addition to or different than those which it now knows or
believes to exist with respect to the subject matter of this Agreement and
which, if known or suspected at the time of entering into this Agreement, may
have materially affected this Agreement and its decision to enter into it.
NEVERTHELESS, EACH RELEASING PARTY HEREBY (I) WAIVES ANY CLAIM THAT IS RELEASED
BY SUCH RELEASING PARTY PURSUANT TO SECTION 3.A, 3.B, 3.C, 3.D, 3.E, 3.F OR 3.G,
AS APPLICABLE, BUT WHICH SUCH RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST
ON THE SIGNING DATE AND HEREAFTER BECOMES KNOWN, AND (II) EXPRESSLY WAIVES ANY
AND ALL RIGHTS AND BENEFITS CONFIRMED UPON IT BY THE PROVISIONS OF CALIFORNIA
CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
13
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE GENERAL RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
BEING AWARE OF SUCH PROVISIONS OF LAW, EACH RELEASING PARTY
AGREES TO EXPRESSLY WAIVE AND RELINQUISH ANY AND ALL RIGHTS AND BENEFITS IT MAY
HAVE THEREUNDER, AS WELL AS UNDER ANY SIMILAR LAW OR COMMON LAW PRINCIPLE OF
SIMILAR EFFECT OF ANY STATE OR TERRITORY OF THE UNITED STATES WITH RESPECT TO
THE CLAIMS RELEASED HEREBY.
i. Retained Claims.
(1) The term "Retained Claims" means (i) any and all
Claims, rights, and obligations which are specified as Retained Claims in this
Section 3.i and (ii) any and all Claims arising under this Agreement and any
amendment to, modification of, or supplement to, this Agreement.
(2) In addition, for the purposes of Section 3.a. and
3.b only, the term "Retained Claims" also includes (i) any and all Claims
arising under the Asset Purchase Agreement (including, without limitation, all
adjustments to the Purchase Price and the closing adjustments set forth in the
Asset Purchase Agreement), and (ii) any and all Claims arising under the
Cooperation Agreement.
(3) In addition, for the purposes of Sections 3.a and
3.b only, the term "Retained Claims" also includes any and all Claims, but
solely to the extent set forth in and subject to the provisions of Section 4, in
respect of the right of the Selling Pegasus Debtors or Pegasus Successor (and
its permitted transferees pursuant to Section 4.c) or DIRECTV, as appropriate,
to receive from NRTC the Patronage Amount (as defined in and as provided for in
the Asset Purchase Agreement) in the aggregate amount of $10,841,802.59, as and
when paid by NRTC in accordance with its normal practices for the payment of
cash amounts related to patronage (including in accordance with Section 4
below), which right to receive such Patronage Amount will be assigned to DIRECTV
pursuant to the Asset Purchase Agreement.
14
(4) In addition, for the purposes of Sections 3.a,
3.b, 3.c and 3.d only, the term "Retained Claims" also includes any and all
Claims, but solely to the extent set forth in and subject to the provisions of
Section 4, in respect of the right of the Pegasus Successor (and its permitted
transferees pursuant to Section 4.c) against NRTC, and solely against NRTC, to
hold (i) $81,152,621.94 of patronage capital certificates of NRTC issued or
issuable to the Pegasus Debtors (for all periods through December 31, 2003), and
(ii) an additional $7,440,452.68 of patronage capital certificates, or
instruments with substantially equivalent rights, reflecting 70% of the agreed
contributed amount of Pegasus' patronage activities with NRTC for the period
from January 1, 2004 through June 1, 2004 (collectively, the "Patronage
Certificates"), and to receive payments in respect thereof solely to the extent
set forth in Section 4.b.1 below.
(5) For the purposes only of Sections 3.c and 3.d,
the term "Retained Claims" also includes any and all Claims and defenses which
have been pled by the Pegasus Non-Debtors and the DTV Parties in the action
captioned Pegasus Dev. Corp. and Personalized Media Comm., LLC v. DIRECTV, Inc.,
et al., Case No. Civ. A. 00-1020-GMS (D. Del.) (the "IP Litigation"), and any
and all Claims and defenses which may be pled in the IP Litigation by such
parties that (a) relate to their respective intellectual property, including,
without limitation, patents, copyrights, trade marks, trade dress, service
marks, or trade secrets and (b) are not Claims released pursuant to clause (i),
(ii) or (iii) of Section 3.c or Section 3.d.
(6) For the purposes of Section 3.e only, the term
"Retained Claims" also includes any and all Claims of the Pegasus Debtors
arising under the Support Services Agreement effective as of May 1, 2004 among
Pegasus Communications Management Company and each of the Pegasus Debtors and
Pegasus Non-Debtors listed on the signature pages thereto (the "Support Services
Agreement"). It is understood that the releases granted by the Pegasus Debtors
in Section 3.e and the releases granted by the Releasing Members in Section 3.f
shall not affect the rights of Committee expressly provided in the order of the
Bankruptcy Court dated July 22, 2004 approving the Support Services Agreement,
as such rights have been modified by Section 5.d.
(7) For the purposes of Section 3.f only, the term
"Retained Claims" also includes any and all Claims arising after the filing of
the Petitions, including but not limited to, Claims arising under the Support
Services Agreement.
(8) For purposes of Section 3.a and 3.b only, (i) the
releases granted thereunder by any Releasing Party for any of its direct and
indirect assigns, heirs, executors, administrators or successors (in the case of
any Pegasus Debtor, including, without limitation, any chapter 11 or 7 trustee
that may be appointed or elected for the Pegasus Debtors and the Pegasus
Successor) (each, a "Releasing Successor") is granted for such Releasing
Successor solely in its capacity as an assign, heir, executor, administrator or
successor of such Releasing Party and (ii) the releases granted thereunder by
any Releasing Party for itself or any other Person to any direct or indirect,
assign, heir, executor, administrator or successors of any Party (in the case of
any Pegasus Debtor, including, without limitation, any chapter 11 or 7 trustee
that may be appointed or elected for the Pegasus Debtors and the Pegasus
Successor) (each, a "Released Successor") is granted to such Released Successor
solely in its capacity as an assign, heir, executor, administrator or successor
of such Party.
15
(9) The fact that the Committee and the Releasing
Members are Parties shall not affect any rights of the Releasing Members, as
creditors of the Pegasus Debtors, or any other creditor of the Pegasus Debtors
to receive distributions (i) under any plan of reorganization confirmed in the
Chapter 11 Case or (ii) otherwise.
j. Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"Basic Services" means those DBS services which the Selling
Pegasus Debtors obtain from NRTC under the Member Agreements for resale to the
Subscribers.
"Basic Services Information" means certain historical and
current account information collected and maintained in the DIRECTV/NRTC joint
billing system with respect to the Basic Services.
"Claim" means any and all claims, suits, controversies,
actions, cross-claims, counterclaims, third-party claims, setoffs, defenses,
causes of action, complaints, petitions, appeals, assertions of rights, demands
for relief or for remedies, rights, damages, costs, losses, expenses, attorneys'
fees, compensation, liabilities, indemnities, and obligations, of any kind,
nature or description, whether in contract or in tort; whether in law or in
equity or otherwise; whether known or unknown; whether suspected or unsuspected;
whether accrued or unaccrued; and whether alleged or unclaimed, including,
without limitation, (a) for any alleged breach of contract, breach of fiduciary
duty, fraud, bad faith, willful or intentional conduct or wrongdoing, unfair or
deceptive business practices, interference with contract or advantageous or
other relationships, conspiracy, or violation of any regulation or statute, (b)
any judgment regarding or relating to any of the foregoing for (i) damages
(including actual, compensatory, consequential, incidental, multiple, punitive
or exemplary damages), (ii) injunctive, specific performance or other equitable
remedies or relief, (iii) fines, penalties, forfeitures or regulatory orders, or
(iv) any other legal, equitable or other relief; and (c) any settlement or
compromise with respect to any of the foregoing (and including any interim or
preliminary legal, equitable or other relief or remedy that is ordered with
respect to any of the foregoing or any compromise with respect to such relief).
"Class Action Settlement" means the Complete Restatement of
Amended Term Sheet between NRTC and DIRECTV, et al., effective as of August 5,
2003, and the transactions contemplated by and relating to that agreement and
the settlement effected pursuant to that agreement.
16
"DIRECTV Seamless Services" means those additional DBS
services which the Subscribers, who, in most cases, purchase Basic Services,
purchase from DIRECTV, such as Non Select Services (as defined in the Member
Agreements), and premium programming, local channel programming, foreign
language programming, high definition programming, and sports programming made
available to the Selling Pegasus Debtors pursuant to the Seamless Agreement.
"DIRECTV Seamless Services Information" means certain
historical and current account information with respect to the DIRECTV Seamless
Services maintained in DIRECTV's billing system.
"Legacy Issues" means any Claim that, in substance, NRTC: (a)
charged or collected excessive or inappropriate amounts, including for margin;
(b) inappropriately made use of any net savings, margin or patronage capital,
including investing, spending or committing to spend any such net savings,
margin or patronage for uses or on ventures other than NRTC's DIRECTV services
business; (c) failed to collect or to pay over any amounts for so-called "launch
fees," "marketing support," or "advertising revenues"; (d) incorrectly or
inappropriately calculated, or failed to distribute, any patronage income or
capital, or is required to distribute any patronage income or capital; (e)
inappropriately or incorrectly allocated or calculated patronage and
non-patronage sourced income; (f) inappropriately or incorrectly calculated, or
failed to distribute to its patrons, its net savings; (g) interfered with or
failed to protect any alleged territory rights, subscriber or subscriber
information rights, or any revenues or profits lost thereby; or (h) breached or
violated any alleged rights of, or duties owed to, the Selling Pegasus Debtors
under the Member Agreements or as a member or affiliate of NRTC, including,
without limitation, by entering into or consummating the Class Action
Settlement.
"NRTC Released Parties" means NRTC and each of its respective
direct and indirect, present and former assigns, heirs, executors,
administrators, predecessors, legal representatives, successors, subsidiaries,
divisions, and each and all of their present and former directors, officers,
members, servants, employees, agents and representatives (including, without
limitation, the individual defendants named in the Adversary Proceeding), solely
in their capacities as such (collectively, the "NRTC Released Parties").
"Subscribers" has the meaning set forth in the Asset Purchase
Agreement.
4. PATRONAGE CERTIFICATES AND DISTRIBUTIONS; STATUS AS ASSOCIATE.
a. Subject to the occurrence of the Effective Date, and in
consideration for the releases set forth in Section 3 above and the other
promises made in this Agreement, NRTC hereby agrees that it will not deem the
Patronage Certificates or any rights under them to have been forfeited under
Article II, Section 5 of its bylaws or any applicable law (and the Parties agree
17
that NRTC will not and shall not be required to exercise its redemption option
set forth in Article II, Section 5 of NRTC's bylaws), notwithstanding the
termination of the Member Agreements and any termination of the status of any of
the Pegasus Debtors as an Associate of NRTC. All Parties agree that the
Patronage Certificates shall remain in full force and effect after August 31,
2004 and until full payment is made thereunder, but in all other respects
subject to NRTC's bylaws, applicable law and actions of NRTC's Board of
Directors, including restrictions on transferability. NRTC shall provide prompt
written notice to the record holders of the Patronage Certificates of any
distributions, redemptions or other payments made with respect to any patronage
certificates.
b. Subject to the occurrence of the Effective Date, and in
consideration for the releases set forth in Section 3 above and the other
promises made in this Agreement, NRTC further consents to the following:
(1) The Parties agree that the holder of the rights
to receive any distribution under or with respect to the Patronage Certificates
shall be (i) either (a) the Pegasus Debtors, or (b) a liquidating trust or
similar vehicle established for the benefit of the Pegasus Debtors' creditors
(the "Liquidating Trust" and, collectively with the Pegasus Debtors, the
"Pegasus Successor"), all as may be provided for in an order of the Bankruptcy
Court and/or a plan confirmed in the Chapter 11 Case, which shall provide that
if the Pegasus Debtors do not continue as the holders of the Patronage
Certificates, they shall assign the Patronage Certificates to the applicable
Pegasus Successor, or (ii) any other permitted transferee pursuant to Section
4.c below. NRTC agrees that the Pegasus Successor (and any permitted transferee
pursuant to Section 4.c below) shall have the right to hold the Patronage
Certificates and receive any distributions relating to the Patronage
Certificates that may be made in connection with any Trigger Event (as defined
below). Any Pegasus Successor (and any permitted transferee pursuant to Section
4.c below) agrees that notwithstanding anything to the contrary in this
Agreement or applicable law, it shall have no right to receive any distribution
relating to the Patronage Certificates other than in connection with a Trigger
Event. A "Trigger Event" is, and shall be limited to, any distribution (i) that
NRTC's Board of Directors, in its sole discretion, may authorize, pursuant to
NRTC's bylaws, in connection with the retirement, repayment or rotation
generally of patronage capital certificates of the same class as the Patronage
Certificates, or (ii) that results from the actual dissolution of NRTC
(individually, a "Trigger Event" and, collectively, the "Trigger Events").
Notwithstanding anything to the contrary in this Agreement or applicable law,
the Pegasus Successor (and any permitted transferee pursuant to Section 4.c
below) shall have no right to receive any distribution relating to the Patronage
Certificates other than in connection with a Trigger Event.
18
c. Any transfer of the Patronage Certificates by the Pegasus
Debtors to any entity other than to the Pegasus Successor shall be subject to
the prior written approval of NRTC or its Board of Directors, except where such
transfer is made upon or following the dissolution of the Liquidating Trust, in
which event the trustee for the Liquidating Trust may transfer the Patronage
Certificates to: (i) DIRECTV or another entity acting as holder for the
beneficiaries of the Liquidating Trust, or, in the alternative, (ii) not more
than 15 (fifteen) record holders in the aggregate, none of whom shall be,
directly or indirectly, a competitor of NRTC or DIRECTV. In any event, any
transfer of the Patronage Certificates will be subject to the terms and
conditions of this Agreement (including, without limitation, Sections 4.b and
4.d) and, except as set forth in this Agreement, of NRTC's Articles of
Incorporation and bylaws. Prior to and as a condition to any transfer of any
Patronage Certificates as permitted by this Agreement, the transferee shall
deliver to NRTC the original Patronage Certificates being transferred, together
with a Certificate and Assumption Agreement in the form annexed hereto as
Exhibit C, obligating itself to hold the Patronage Certificates, subject to the
terms and conditions of this Agreement (including, without limitation, Sections
4.b and 4.d) and, except as set forth in this Agreement, of NRTC's Articles of
Incorporation and bylaws. NRTC may rely on the executed Certificate and
Assumption Agreement furnished to NRTC pursuant to this Section 4.c without
inquiry or investigation, and without any duty to undertake same. NRTC shall
place a legend, in the form of Exhibit D hereto, on (i) the Patronage
Certificates, and (ii) any future Patronage Certificates of NRTC that may be
issued and assigned to or recorded in the name of the Pegasus Successor or any
subsequent transferee pursuant to this Agreement, reflecting, in each case, that
all of such Patronage Certificates are subject to the terms and conditions of
this Agreement (including, without limitation, Sections 4.b and 4.d) and, except
as set forth in this Agreement, of NRTC's Articles of Incorporation and bylaws.
On or before the Effective Date, the Pegasus Debtors shall deliver the Patronage
Certificates to NRTC to enable NRTC to place such a legend on them. On the
Effective Date, NRTC shall deliver to the Pegasus Debtors: (i) all previously
unissued Patronage Certificates for 2003, and (ii) interim certificates for the
period from January 1, 2004 through June 1, 2004, and NRTC shall replace such
interim certificates with Patronage Certificates for 2004 when NRTC makes its
normal distribution of patronage certificates for 2004 to all of its patrons.
NRTC shall place a legend on each category of the certificates described in the
preceding sentence in accordance with this Section 4.c.
d. The Pegasus Debtors, the Committee, DIRECTV and any Pegasus
Successor (or permitted transferee pursuant to Section 4.c above) hereby agree
that the patronage capital amounts reflected in the Patronage Certificates shall
be deemed accurate and complete and that, with the exception of the rights with
respect to the Patronage Certificates, as provided in Section 4.b(1) and the
rights to the distribution referred to in Section 4.e below, all other Claims or
rights relating to the amount or payment of patronage distributions or capital
are hereby assigned to NRTC and are subject to the releases in Section 3. The
Pegasus Debtors, the Committee, DIRECTV and any Pegasus Successor (or permitted
transferee pursuant to Section 4.c above) further agree that the patronage
19
amounts reflected in the Patronage Certificates are not required to be paid
unless and until a Trigger Event occurs. The Pegasus Debtors, the Committee,
DIRECTV and any Pegasus Successor (or permitted transferee pursuant to Section
4.c above) also hereby agree, acknowledge and confirm that they have no right to
require or insist upon NRTC Board action with respect to the timing or
occurrence of any Trigger Events. Subject to the occurrence of the Effective
Date, the Pegasus Debtors, the Committee, DIRECTV and any Pegasus Successor (or
permitted transferee pursuant to Section 4.c above) hereby agree, acknowledge
and confirm that (i) none of the Trigger Events have occurred, and (ii) rights
to receive distributions in respect of the Patronage Certificates shall solely
be governed by this Section 4 of this Agreement and NRTC's Articles of
Incorporation and bylaws, and the Pegasus Debtors, the Committee, DIRECTV and
any Pegasus Successor (or permitted transferee pursuant to Section 4.c above)
hereby covenant not to demand, assert, or xxx for any distributions in respect
of the Patronage Certificates, except only in the case of: (a) NRTC's failure to
make a distribution on account thereof following the occurrence of a Trigger
Event, and (b) the distribution referred to in Section 4.e below.
e. Subject to the occurrence of the Effective Date, a total of
$10,841,802.59 in respect of certain patronage or equivalent cash distributions
shall be applied as an adjustment to the Purchase Price as provided in Section
3.2 of the Asset Purchase Agreement (the "Patronage Cash Distributions"). In
addition, the Pegasus Debtors shall receive, as an adjustment to the Purchase
Price as provided in Section 3.2 of the Asset Purchase Agreement, an additional
sum of $6 million in lieu of any claim relating to NRTC patronage for any period
after June 1, 2004. The Parties hereby agree and consent to the amount, and the
means of payment, of the Patronage Cash Distributions pursuant to the Asset
Purchase Agreement. Subject to the occurrence of the Closing Date, the Pegasus
Debtors hereby assign their rights to the Patronage Cash Distributions to
DIRECTV, and NRTC hereby consents to such assignment and shall make the
distributions to DIRECTV, as the assignee of the Pegasus Debtors, on account of
the Patronage Cash Distributions, as and when such distributions would
ordinarily be due to the Pegasus Debtors. The Parties hereby agree that if the
Effective Date does not occur prior to September 15, 2004, NRTC will pay to the
Pegasus Debtors the portion of the Patronage Cash Distribution attributable to
2003, which portion is in the aggregate amount of $7,653,037.12. To the extent
so paid prior to the Closing (as defined in the Asset Purchase Agreement), the
Patronage Amount (as defined in the Asset Purchase Agreement) in the amount of
$10,841,802.59 shall be reduced by the amount so paid.
f. As of the Effective Date, the applicable Pegasus Debtors
shall be deemed to have withdrawn as, and shall no longer have the status or any
rights of, associate members of NRTC, irrespective of the termination of the
Member Agreements; provided, however, that such withdrawal shall not affect the
rights of the applicable Pegasus Debtors (including the Pegasus Successor and
permitted transferees pursuant to Section 4.c. above) and NRTC under this
Agreement.
g. In accordance with the provisions of this Agreement, NRTC
agrees, and it shall be the sole responsibility of NRTC, that all Patronage
Certificates shall remain in full force and effect after August 31, 2004, shall
in all other respects be treated in the same manner as any and all other
patronage capital certificates of NRTC of the same year or years as the
Patronage Certificates, and shall not be subject to discriminatory treatment,
20
subordination or distribution rights which are in any way inferior to such other
patronage capital certificates, including by means of amendment to NRTC's
Articles of Incorporation or bylaws. In addition, and except in order to make,
but only to the extent of, any payment to any holder of the Patronage
Certificates or as otherwise may be required by applicable law or regulation to
preserve NRTC's current tax status, NRTC agrees that it will not, including by
amendment to its Articles of Incorporation or bylaws, issue any patronage
capital certificates entitled to priority in payment (including by reason of
retirement, redemption, rotation or upon an actual dissolution of NRTC) to the
Patronage Certificates, nor repay or redeem any patronage capital certificates
issued for any year after 2004 (and for the period from July 1, 2004 through
December 31, 2004) in a manner that is less favorable to the Patronage
Certificates than would result from a distribution on a pro rata basis with
respect to all then-existing patronage capital certificates (including the
Patronage Certificates). In the event of any distribution by NRTC in breach, or
as a result of any breach, of this Section 4.g, the holder of the Patronage
Certificates shall be entitled, as its sole remedy, to receive, or to recover in
any proceeding to enforce such a breach, the amounts it would have been entitled
to receive on account of the Patronage Certificates held by it absent such a
breach plus interest thereon and the costs and expenses (but not including
attorneys' fees) otherwise allowable under the governing law, of enforcing its
rights hereunder.
5. EFFECTIVENESS; IMPLEMENTATION.
-----------------------------
a. Effective Date. This Agreement shall automatically become
effective on the Closing Date (as defined in the Asset Purchase Agreement) (the
"Effective Date"); provided, however, that Sections 1.b, 2.c, 5 and 6 of this
Agreement shall become effective on the Signing Date.
b. Court Approval. In accordance with the Asset Purchase
Agreement, the Pegasus Debtors shall file a motion (in form and substance
satisfactory to DIRECTV, Pegasus, PCC and the Committee and to be provided to
each of them for approval prior to filing) (the "Approval Motion") seeking entry
of an order (in form and substance satisfactory to DIRECTV, Pegasus, PCC and the
Committee) (the "Approval Order") approving: (i) the Cooperation Agreement (to
the extent necessary), (ii) this Agreement, and (iii) the Asset Purchase
Agreement. The Pegasus Debtors, the Pegasus Non-Debtors, the Committee, and the
Releasing Members shall support the Approval Motion, and shall not withdraw, or
modify in any manner adverse to each other, the Approval Motion or Approval
Order.
c. Closing of the Asset Purchase Agreement. The Pegasus
Debtors and DIRECTV agree for the benefit of the Pegasus Non-Debtors, that the
Closing (as defined in Asset Purchase Agreement) shall not occur unless the
Approval Order shall have been entered and the Approval Order and this Agreement
shall be in full force and effect and without any modification or amendment
adverse to the Pegasus Non-Debtors made without the prior written approval of
PCC.
21
d. Support Services Agreement. The Committee and the Releasing
Members party to this Section 5.d shall not (i) object to the allocation to, and
payment by, the Pegasus Debtors, in a manner consistent with the Support
Services Agreement, of expenses incurred pursuant to the Cooperation Agreement
and paid or payable by the Pegasus Non-Debtors or (ii) seek reconsideration of
the order of the Bankruptcy Court dated July 22, 2004 approving the Support
Services Agreement so long as the Pegasus Debtors are providing services
required under the Cooperation Agreement in accordance therewith.
6. OTHER PROVISIONS.
----------------
a. Termination. This Agreement shall terminate upon a
termination of the Asset Purchase Agreement for any reason.
b. No Admission. If the compromise and settlement does not
become effective, this Agreement and any action taken or statements made by or
behalf of any Party hereto in connection with seeking the approval of this
Agreement and the compromise and settlement shall be of no force and effect and
shall be deemed null and void and shall not be referred to by any Party for any
purpose whatsoever in any proceeding, except for the purpose of enforcing the
provisions of this Section 6.b.
c. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns and, additionally with respect to the Pegasus Debtors, shall
be binding upon the Pegasus Successor, any transferee of the Patronage
Certificates, any chapter 11 or 7 trustee appointed or elected for any of the
Pegasus Debtors and shall not be discharged by any plan of reorganization or
liquidation that may be confirmed in the Chapter 11 Case, the conversion of such
case to Chapter 7, or the dismissal of any such case. The Parties hereby agree
that the terms of any plan submitted by any of them to the Bankruptcy Court for
confirmation shall not be in conflict with, supersede, abrogate, nullify, modify
or restrict the terms of this Agreement and the rights of the other Parties
hereunder. Nothing in this Agreement shall create or be deemed to create any
third-party beneficiary rights in any person not a party to this Agreement other
than any Person that is released from Claims under Section 3 to the extent
provided in such section. No assignment of this Agreement or of any rights or
obligations hereunder may be made by any Party (by operation of law or
otherwise) without the prior written consent of the other Parties and any
attempted assignment without the required consents shall be void. No assignment
of any obligations hereunder shall relieve the Parties of any such obligations.
d. Submission to Jurisdiction.
(1) Without limiting any party's right to appeal any
order of the Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive
jurisdiction to enforce the terms of this Agreement and to decide any claims or
disputes which may arise or result from, or be connected with, this Agreement,
22
any breach or default hereunder, or the transactions contemplated hereby, and
(ii) any and all proceedings related to the foregoing shall be filed and
maintained only in the Bankruptcy Court, and the Parties hereby consent to and
submit to the jurisdiction and venue of the Bankruptcy Court and shall receive
notices at such locations as indicated in Section 6.i. below; provided, however,
that if the Chapter 11 Case is closed or if the Bankruptcy Court elects to not
exercise its jurisdiction, the Parties agree to unconditionally and irrevocably
submit to the exclusive jurisdiction of the United States District Court for the
Southern District of New York sitting in New York County or the Commercial
Division, Civil Branch of the Supreme Court of the State of New York sitting in
New York County, for the resolution of any such claim or dispute. The Parties
hereby irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the location of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the Parties agrees that a judgment in any
such dispute may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(2) Each of the Parties hereby consents to process
being served by any party to this Agreement in any suit, action or proceeding by
delivery of a copy thereof in accordance with the provisions of Section 6.i
below.
e. Waiver of Right to Trial by Jury. Each Party waives any
right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.
f. Entire Agreement; Amendments and Waivers. This Agreement
(including the Schedules), the Cooperation Agreement, and the Asset Purchase
Agreement represent the entire agreement among the Parties with respect to the
subject matter hereof. This Agreement can be amended, supplemented or changed,
and any provision hereof can be waived, only by written instrument making
specific reference to this Agreement signed by each of the Parties, other than
the Releasing Members, and if such amendment, supplement, change or waiver
relates to a Section of this Agreement to which a Releasing Member is a Party,
such Releasing Member. No action taken pursuant to this Agreement shall be
deemed to constitute a waiver by the Party taking such action of compliance with
any representation, warranty, covenant or agreement contained herein. The waiver
by any Party of a breach of any provision of this Agreement shall not operate or
be construed as a further or continuing waiver of such breach or as a waiver of
any other or subsequent breach. No failure on the part of any Party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of such right,
power or remedy by such party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
g. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State, irrespective of and without regard
for its conflicts of law principles, as to all matters, including matters of
validity, construction, effect, enforceability, performance and remedies.
23
h. Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which will be deemed to be an original
copy of this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
i. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally by hand (with written confirmation of receipt), (ii) when sent by
facsimile (with written confirmation of transmission) or (iii) one Business Day
following the day sent by overnight courier (with written confirmation of
receipt), in each case at the following addresses and facsimile numbers (or to
such other address or facsimile number as a Party may have specified by notice
given to the other Party pursuant to this provision):
If to Pegasus Debtors: Copy to: Sidley Xxxxxx Xxxxx & Xxxx LLP
Ten South Dearborn Street
Pegasus Satellite Communications, Inc. Xxxxxxx, XX 00000
000 Xxxx Xxxx Xxxxxx Facsimile: (000) 000-0000
Xxxx Xxxxxx, XX 00000 Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Attn: Xxx X. Lodge
President and Chief Operating Officer
If to Pegasus Non-Debtors: Copy to: Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Pegasus Communications Corporation Xxx Xxxx, XX 00000
000 Xxxx Xxxx Xxxxxx Facsimile: (000) 000-0000
Xxxx Xxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
If to DTV Parties: Copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
DIRECTV, Inc. Xxx Xxxx, XX 00000
0000 Xxxx Xxxxxxxx Xxxxxxx Facsimile: (000) 000-0000
Xx Xxxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Attn: Xxx Xxxxxxx Xxxxxxxx & Xxxxx LLP
Executive Vice President, General Counsel and 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
24
If to DTVG Parties: Copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
The DIRECTV Group, Inc. Xxx Xxxx, XX 00000
0000 Xxxx Xxxxxxxx Xxxxxxx Facsimile: (000) 000-0000
Xx Xxxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx Xxxxxxxx & Xxxxx LLP
Executive Vice President, General Counsel and 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
If to NRTC: Copy to: Manatt, Xxxxxx & Xxxxxxxx, LLP
0000 X. Xxxxxx X.X., Xxxxx 000
National Rural Telecommunications Cooperative Xxxxxxxxxx, XX 00000
0000 Xxxxxxxxxxx Xxx, Xxxxx 000 Facsimile: (000) 000-0000
Xxxxxxx, XX 00000 Attn: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Attn: B.R. Xxxxxxxx, III, President Xxxxxxxxx Xxxxxxxxxx & Xxxx LLP
The Prudential Tower
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, P.C.
Xxxxxx Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Xxx Xxxxxxxxxx, Esq.
If to Committee or any Releasing Member:
Akin Gump Xxxxxxx Xxxxx Xxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000)000-0000
Attn: Xxxxxx Xxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
[SIGNATURE PAGES FOLLOW]
25
Pegasus Satellite Communications, Inc. DIRECTV, Inc.
(on its own behalf and on behalf of its direct and (on its own behalf and on behalf of its direct and
indirect debtor subsidiaries) indirect subsidiaries)
By: /s/ Xxx X. Lodge By: /s/ Xxxxxxx X. Xxxxxxxx
------------------ --------------------------
Name: Xxx X. Lodge Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Operating Officer Title: Executive Vice President & Chief Financial
Officer
Pegasus Communications Corporation The DIRECTV Group, Inc.
(on its own behalf and on behalf of its direct and (on its own behalf and on behalf of its direct and
indirect non-debtor subsidiaries) indirect subsidiaries other than DIRECTV, Inc. and its
direct and indirect subsidiaries)
By: /s/ Xxx X. Lodge By: /s/ Xxxxx X. Xxxxxx
------------------ --------------------------
Name: Xxx X. Lodge Name: Xxxxx X. Xxxxxx
Title: President and Chief Operating Officer Title: Executive Vice President & General Counsel
National Rural Telecommunications Cooperative The Statutory Committee of Unsecured Creditors duly
appointed in the Chapter 11 Case of Pegasus Satellite
Communications, Inc. and its affiliates and subsidiaries
By: /s/ Wachovia Bank NA, solely in its capacity as
Committee Chairperson and not in its individual
By: /s/ B.R. Xxxxxxxx III capacity
------------------------- -----------------------------------------------
Name: B.R. Xxxxxxxx III Name: Xxxxx X. Xxxxxx
Title: President and CEO Title: Vice President
Singer Children Management Trust and affiliates, as to LC Capital Master Fund, as to Sections 3.f, 3.h, 3.i.,
Sections 3.f, 3.h, 3.i., 5.a, 5.b, 5.d and 6 5.a, 5.b, 5.d and 6
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
---------------- ------------------
Name: Xxxx Xxxxxx Name: Xxxxxx Xxxxx
Title: Investment Advisor Title: Managing Member
Silver Point Capital, as to Sections 3.f, 3.h, 3.i.,
5.a (excluding the proviso thereto), and 5.b
By: Xxxxxxxx Consulting LLC
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title:
26
Exhibits
--------
A: Pegasus Debtors
B. Pegasus Debtors' Predecessors in Interest
C. Form of Certification and Assumption Agreement
D: Form of Legend for Patronage Certificates
Schedules
---------
1: List of Actions
2: List of Letters of Credit Obtained by Pegasus for the Benefit of NRTC
27
EXHIBIT A
---------
PEGASUS DEBTORS
---------------
Part I: Selling Pegasus Debtors
-------------------------------
PEGASUS SATELLITE TELEVISION, INC.
PEGASUS SATELLITE TELEVISION OF ILLINOIS, INC.
GOLDEN SKY SYSTEMS, INC.
GOLDEN SKY DBS, INC.
GOLDEN SKY HOLDINGS, INC.
ARGOS SUPPORT SERVICES COMPANY
XXXX RURAL TV, INC.
DBS TELE-VENTURE, INC.
DIGITAL TELEVISION SERVICES OF INDIANA, LLC
DTS MANAGEMENT, LLC
XXXXX COUNTY MRTV, INC.
PRIMEWATCH, INC.
PST HOLDINGS, INC.
SOUTH PLAINS DBS LP
Part II: Other Pegasus Debtors
------------------------------
BRIDE COMMUNICATIONS, INC.
B.T. SATELLITE, INC.
HMW, INC.
PEGASUS BROADCAST ASSOCIATES, L.P.
PEGASUS BROADCAST TELEVISION, INC.
PEGASUS BROADCAST TOWER, INC.
PEGASUS MEDIA & COMMUNICATIONS, INC.
PEGASUS SATELLITE COMMUNICATIONS, INC.
PORTLAND BROADCASTING, INC.
TELECAST OF FLORIDA, INC.
WDSI LICENSE CORP.
WILF, INC.
WOLF LICENSE CORP.
WTLH LICENSE CORP.
28
EXHIBIT B
---------
PEGASUS DEBTORS' PREDECESSORS IN INTEREST
-----------------------------------------
Part I: Selling Pegasus Debtors' Predecessors in Interest
---------------------------------------------------------
Digital Television of Kansas, LP
Digital Television Services of California
Digital Television Services of CO, LP
Digital Television Services of Colorado
Digital Television Services of Georgia, LLC
Digital Television Services of Kansas
Digital Television Services of Kansas, LP
Digital Television Services of Kentucky
Digital Television Services of KY, LLC
Digital Television Services of New Mexico
Digital Television Services of New York
Digital Television Services of New York I LP
Digital Television Services of NM, LP
Digital Television Services of NY II, LP
Digital Television Services of SC
Digital Television Services of SC I, LP
Digital Television Services of SC II, LP
Digital Television Services of South Carolina I
Digital Television Services of South Carolina II
Digital Television Services of Vermont, LLC
Digital TV Services of Georgia, LLC
Digital TV Services of Vermont, LLC
Golden Sky Systems - Vail*
Pegasus Multistate Satellite TV
Pegasus Satellite of Florida
Pegasus Satellite Television of Michigan, Inc
Pegasus Satellite Television of Ohio, Inc.
Pegasus Satellite Television of Texas Inc.
Pegasus Satellite TV of Arkansas
Pegasus Satellite TV of Georgia
Pegasus Satellite TV of Indiana
Pegasus Satellite TV of Minnesota
Pegasus Satellite TV of Mississippi
Pegasus Satellite TV of Texas, Inc.
Pegasus Satellite TV of Virginia
Spacenet**
* = DBA.
** = Dissolved
Part II: Other Pegasus Debtors' Predecessors in Interest
--------------------------------------------------------
Pegasus Satellite Holdings, Inc.
29
EXHIBIT C
---------
CERTIFICATE AND ASSUMPTION AGREEMENT
------------------------------------
The undersigned, in order to induce National Rural Telecommunications
Cooperative ("NRTC") to permit the transfer to the undersigned of certain of
NRTC's Patronage Certificates listed on Scheduled I hereto and to issue
replacement certificates in the name of the undersigned (the "Replacement
Patronage Certificates"), hereby certifies and represents to, and agrees with,
NRTC as follows:
(i) It is engaged primarily in the business of _________;
(ii) Neither it nor any of its direct on indirect parents or
subsidiaries, nor any other entity that is under common control with it or any
such parent or subsidiary, is a competitor of NRTC or DIRECTV, Inc.;
(iii) This Agreement has been authorized by all necessary action of the
undersigned and is valid and binding on the undersigned and enforceable against
the undersigned in accordance with its terms; and
(iv) It will receive and hold the Replacement Patronage Certificates on
and subject to, and agrees to be bound by (a) all the terms and conditions
relating to Patronage Certificates as defined and set forth in a Global
Settlement Agreement dated as of July 30, 2004 by and among Pegasus Satellite
Communications, Inc., Pegasus Communications Corporation, DIRECTV, Inc., The
DIRECTV Group, Inc., NRTC and certain other parties (a copy of which is attached
hereto) (the "Settlement Agreement"), including, without limitation, Sections
4.b and 4.d thereof, and (b) except as set forth in the Settlement Agreement,
the terms and conditions of NRTC's Articles of Incorporation and by-laws. The
Replacement Patronage Certificates shall be "Patronage Certificates" for all
purposes of the Settlement Agreement and the other agreements entered into in
connection therewith that use the term "Patronage Certificates."
The undersigned further acknowledges and agrees that NRTC is and will
be relying on the certifications and representations of the undersigned set
forth in this Agreement in consenting to the transfer of the Patronage
Certificates listed on Schedule I hereto and in issuing Replacement Patronage
Certificates in the name of the undersigned, and accordingly all of the
undersigned's interest in, and rights to act as a holder of, the Replacement
Patronage Certificates or to receive any payments or distributions in respect
thereof, as provided in the Settlement Agreement, are subject to such
certifications and warranties being true and correct on and as of the date
hereof.
30
Executed and delivered to NRTC on this _____ day _____,
____________________________
By: ________________________
Address: ___________________
Received on _______, ______
National Rural Telecommunications Cooperative
By:______________________]
31
EXHIBIT D
---------
FORM OF LEGEND FOR PATRONAGE CERTIFICATES
-----------------------------------------
This Certificate and the rights of the holder hereunder are subject to the
provisions of (i) a Global Settlement Agreement dated as of July 30, 2004 by and
among Pegasus Satellite Communications, Inc., Pegasus Communications
Corporation, DIRECTV, Inc., The DIRECTV Group, Inc., NRTC and certain other
parties (the "Settlement Agreement"), and (ii) except as set forth in the
Settlement Agreement, the Articles of Incorporation and bylaws of NRTC. This
certificate is non-redeemable and is non-transferable, except as expressly set
forth in the Settlement Agreement. By acceptance of this Certificate the holder
hereof acknowledges its understanding of and assents to the foregoing
restrictions and agrees to be bound thereby.
32
