Exhibit 99.5
EXECUTION VERSION
PEGASUS OFFER AGREEMENT
June 2, 2004
DEAR DBS PARTICIPANT:
DIRECTV, Inc. ("DIRECTV"), with the consent of the National Rural
Telecommunications Cooperative ("NRTC"), is pleased to offer Pegasus Satellite
Television, Inc. and its subsidiaries or affiliates that have rights under
existing Member Agreements (as defined below) (including, without limitation,
Golden Sky Systems, Inc. and all other affiliated entities) (collectively, "you"
or "Pegasus") the options described below (the "Offer") in this Pegasus Offer
Agreement (including the applicable Annexes and Exhibits hereto and incorporated
herein, this "Agreement") with respect to your provision of DIRECTV services and
your current DIRECTV subscribers.
As you know, (i) DIRECTV (as successor to Xxxxxx Communication Galaxy,
Inc.) and NRTC are parties to that certain DBS Distribution Agreement, dated as
of April 10, 1992, as amended to the date hereof including without limitation on
February 14, 1994 and pursuant to the Complete Restatement of Amended Term
Sheet, effective August 5, 2003 (the "Settlement"), entered into by NRTC,
DIRECTV and the representatives of the Class (as defined therein), and approved
by the United States District Court for the Central District of California (such
agreement, as so amended, is referred to herein as the "DBS Distribution
Agreement"); (ii) you or a predecessor in interest entered into one or more
NRTC/Member Agreement for Marketing and Distribution of DBS Services (as
amended, including in 1994) with NRTC, which permitted you to distribute DIRECTV
services; and (iii) you have acquired certain other NRTC Agreements originally
entered into between NRTC and other of its members or affiliates pursuant to one
or more agreements with such members and/or affiliates of NRTC (all such NRTC
Agreements entered into or acquired by you, under which you have rights to
distribute DIRECTV services, the "Member Agreements").
As described in the notices previously sent to you by NRTC and DIRECTV,
the DBS Distribution Agreement has been terminated effective as of June 1, 2004
and all of the Member Agreements have been terminated effective as of the
earlier of August 31, 2004 or the Closing Date (defeated below), regardless of
whether or not you accept the Offer set forth in this Agreement. Although not
legally required to make this Offer, DIRECTV is providing you with the following
options to provide Pegasus with compensation in exchange for certain commitments
by Pegasus as set forth herein.
THIS OFFER SHALL EXPIRE AT 5:00 P.M. (PACIFIC) ON AUGUST 31, 2004 (THE
"EXPIRATION DATE"). IF DIRECTV HAS NOT RECEIVED YOUR OPTION SELECTION BY THE
EXPIRATION DATE, THIS OFFER SHALL BE VOID AND DIRECTV SHALL HAVE NO FURTHER
OBLIGATIONS IN CONNECTION HEREWITH.
WE ENCOURAGE YOU TO RESPOND TO THIS OFFER PROMPTLY, AS YOU WILL RECEIVE
THE MAXIMUM PAYMENT IF THIS OFFER IS CLOSED ON JUNE 30, 2004.
Please note that the following definitions apply to each of the options
described below:
(a) "Transferred Subscriber" means any Subscriber account of Pegasus as
of the Closing Date (i) with a level of service at least equivalent to
Core Programming, which account is not more than forty-five (45) days
past due, and which, with respect to a Subscriber acquired within three
months prior to the Closing Date, continues as a DIRECTV Subscriber
account in good standing with Core Programming or a higher level of
service for no less than ninety (90) days after the Closing Date or
(ii) which, as of June 2, 2004, is in a "suspend" status for not more
than 180 days and with an account balance which is not $0.
Notwithstanding the foregoing, the number of "suspend" status
Subscribers that are counted as Transferred Subscribers shall be capped
at the actual number thereof as of June 2, 2004.
(b) "Core Programming" means any of the Total Choice Packages or Select
Choice, Economy Choice, DIRECTV Limited, NFL Sunday Ticket or premium
services distributed under the Pegasus/DIRECTV Revised Seamless
Consumer Program or their equivalents; and
(c) "Subscriber" means a paying subscriber of any DIRECTV service in an
active status with active services.
1. Options.
You may only select one (1) of the following Options. Please indicate
your selection by checking the appropriate box below.
PLEASE READ THIS ENTIRE AGREEMENT (INCLUDING THE ANNEXES ATTACHED HERETO)
CAREFULLY BEFORE COMPLETING ANY BOX BELOW.
|_| Option A: Buyout Lump-Sum Payment.
By selecting this Option A, Pegasus hereby acknowledges that it shall
receive from DIRECTV an amount equal to $675.00 per Transferred
Subscriber payable in a single lump sum on the third business day after
the Closing Date; provided, however, that such payment amount is based
on the assumption that the Closing Date occurs by June 30, 2004. In the
event that the Closing Date occurs after June 30, 2004, the applicable
lump-sum payment shall be adjusted downward pro rata based on the
number of weeks elapsed past June 30, 2004 (with a reduction of $2.88
per week per Transferred Subscriber for each week elapsed).
Appropriate adjustments to the lump sum payment shall be made for (i)
accounts receivable from Transferred Subscribers to Pegasus in
existence as of the Closing Date, (ii) any accounts receivable pursuant
to the Pegasus/DIRECTV Revised Seamless Consumer Program, (iii)
payments owing from Pegasus to NRTC as of the Closing Date pursuant to
the Member Agreements, (iv) any amounts payable to DIRECTV pursuant to
the judgment in the Seamless Marketing case and (v) the total amount of
any other claims (principal plus interest, costs and expenses, as
applicable) against Pegasus or any of its affiliates that are held by
DIRECTV as of the Closing Date. For purposes of clarity, no subscriber
transfer payment or other amount shall be owed to Pegasus after payment
of the final Buyout Lump-Sum Payment.
In addition to the other acknowledgments and agreements herein, by
accepting this Option A, Pegasus hereby (i) acknowledges that each of
the Member Agreements have been terminated as of the Closing Date and
(ii) acknowledges that it shall no longer possess an exclusive
territory.
If you select this Option A, please complete the payment instructions
attached as Annex A hereto.
|_| Option B: Buyout Monthly Payment through June 30, 2008.
By selecting this Option B-1, Pegasus hereby acknowledges that it shall
receive from DIRECTV payments equal to $800 in the aggregate (i.e.,
$675 plus interest) per Transferred Subscriber (as defined below)
payable in monthly payments of $16.67 (including interest) per
Transferred Subscriber per month (as adjusted on a straight-line basis
for any payment period of less than a month), commencing thirty (30)
days following the Closing Date and ending June 30, 2008; provided,
however, that such payment amount is based on the assumption that the
Closing Date occurs on June 30, 2004. In the event that the Closing
Date occurs after June 30, 2004, the aggregate amount that DIRECTV
shall pay and Pegasus shall receive will be reduced based on the number
of weeks elapsed past June 30, 2004 (with a reduction of $2.88 per
Transferred Subscriber per week for each week elapsed).
Appropriate adjustments to monthly payments shall be made for (i)
accounts receivable from Transferred Subscribers to Pegasus in
existence as of the Closing Date, (ii) any accounts receivable pursuant
to the Pegasus/DIRECTV Revised Seamless Consumer Program, (iii)
payments owing from Pegasus to NRTC as of the Closing Date pursuant to
the Member Agreements, (iv) any amounts payable to DIRECTV pursuant to
the judgment in the Seamless Marketing case and (v) the total amount of
any other claims (principal plus interest, costs and expenses, as
applicable) against Pegasus or any of its affiliates that are held by
DIRECTV as of the Closing Date, with all such amounts being deducted
from the first payments until all such amounts are paid. For purposes
of clarity, no subscriber transfer payment or other amount shall be
owed to Pegasus after payment of the final Buyout Monthly Payment.
In addition to the other acknowledgments and agreements herein, by
accepting this Option B, Pegasus hereby (i) acknowledges that each of
the Member Agreements have been terminated as of the Closing Date and
(ii) acknowledges that it shall no longer possess an exclusive
territory.
If you select this Option B, please complete the payment instructions
attached as Annex B hereto.
2. Closing Date. DIRECTV will notify Pegasus in writing of the date
on which DIRECTV is prepared to close; it being understood and
agreed that DIRECTV will make a good faith effort to be prepared
to close ten (10) business days after the date this Agreement is
executed by you and timely received by DIRECTV on or prior to the
Expiration Date. The closing date (the "Closing Date") upon which
the transactions described in this Agreement (the "Transactions")
shall become effective shall be the date that is the later to
occur of (i) the date which DIRECTV notifies Pegasus in writing
that DIRECTV is prepared to close as described in the foregoing
sentence and (ii) if necessary, promptly (and in any event within
10 business days) after all regulatory approvals required with
respect to the Transactions have been received by Pegasus and
DIRECTV; provided, that this Agreement has been executed by you
and timely received by DIRECTV on or prior to the Expiration
Date.
IF THE CLOSING DATE IS AFTER JUNE 30, 2004, THE APPLICABLE PAYMENT AMOUNT WILL
BE ADJUSTED DOWNWARD, AS APPROPRIATE, AS DESCRIBED IN SECTION 1 ABOVE.
3. Representations, Warranties and Covenants.
(a) Authority. DIRECTV and Pegasus each represent and warrant to the other
that it has all requisite power and authority (i) to execute, deliver
and perform this Agreement (including the relevant Annexes and
Exhibits attached to this Agreement and incorporated herein) and all
agreements, documents and instruments executed and delivered by each
in connection with this Agreement; (ii) to own, lease or operate its
property and assets; and (iii) to carry on its business as presently
conducted. Pegasus represents and warrants to DIRECTV that the parties
signatory to this Agreement (other than DIRECTV and NRTC) constitute
all of the Pegasus entities, subsidiaries and affiliates that are
party to or entitled to any rights and benefits under any existing
Member Agreement.
(b) Litigation. DIRECTV and Pegasus each represent and warrant to the other
that, to the best of its knowledge, there is no outstanding or
threatened judgment, threatened or pending litigation or proceeding,
involving or affecting the transactions provided for in, or
contemplated by, this Agreement, except as has been previously
disclosed in writing by either party to the other.
(c) Laws. DIRECTV and Pegasus each shall comply with all FCC and other
governmental (whether international, federal, state, municipal or
otherwise) statutes, laws, rules, regulations, ordinances, codes,
directives and orders of any such governmental agency, body or court
applicable to it regarding the provision of DBS Services.
(d) HSR. Pegasus hereby acknowledges that if the value of Option A or
Option B, as applicable, selected by Pegasus exceeds certain dollar
thresholds, then Pegasus and DIRECTV could have notification
obligations under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx"). For Pegasus' convenience, Exhibit I attached
hereto provides a summary of the Federal Trade Commission's guide for
determining whether reporting is required under the HSR Act, including
the minimum transaction value threshold of $50 million. Pegasus
represents that, unless it has informed DIRECTV in writing to the
contrary, Pegasus is not in a direct or indirect control relationship
with any other member or affiliate of NRTC, the effect of which could
be to require Pegasus and DIRECTV to file HSR Act notifications as
described in Exhibit I.
(e) All Necessary Parties. Pegasus hereby represents and warrants to
DIRECTV that the Pegasus entities who are signatories hereto are the
only parties necessary to execute this Agreement for and on behalf of
Pegasus and thereby create a valid and binding agreement enforceable
against Pegasus in accordance with its terms.
4. Payment Instructions. Please complete the applicable payment
instructions attached as Annex A and Annex B in connection with,
respectively, Option A and Option B.
5. Delivery. This Agreement shall not be considered to have been delivered
by you until DIRECTV has actually received an original executed copy
thereof at the following delivery address:
DIRECTV, Inc.
Building R8, Mail Station X000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Legal Department
Delivery by facsimile will be considered to have been made upon
transmission if the recipient has acknowledged receipt thereof and
actually receives an original executed copy within three (3) business
days thereafter. We recommend that you use a nationally-recognized
overnight courier service (e.g., FedEx, UPS) to deliver each of the
agreements.
6. Notices. All notices and other communications from either party to the
other hereunder shall be in writing and shall be deemed received upon
actual receipt when personally delivered, upon acknowledgment of
receipt if sent by facsimile, or (other than for the delivery of
executed agreements hereunder) upon the expiration of the third
business day after being deposited in the United States mails, postage
prepaid, certified or registered mail, addressed to the other party as
follows:
DIRECTV: DIRECTV, Inc.
Xxxxxxxx X0, Xxxx Xxxxxxx X000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Legal Department
NRTC: National Rural Telecommunications Cooperative
0000 Xxxxxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
PEGASUS: At the address(es) set forth on the signature page hereto.
Each party hereto may change its addresses or payment instructions by
giving the other party notice thereof in conformity with this Section
6.
7. General Release.
(a) Pegasus, on behalf of itself and its predecessors, successors,
assigns, subsidiaries, divisions, affiliates, directors, officers and
any person or entity claiming by, through, under it or on its behalf,
or which is acting in concert with it (collectively, the "Pegasus
Releases"), hereby releases and forever discharges (the "General
Release"), as of the Closing Date, each of (i) DIRECTV and its
subsidiaries and affiliates and all present and former directors,
officers, agents, representatives, employees, successors and assigns
of DIRECTV and its affiliates and DIRECTV's direct or indirect owners
and (ii) NRTC and its subsidiaries and affiliates and all present and
former directors, officers, agents, representatives, employees,
successors and assigns of NRTC and its affiliates and NRTC's members
(collectively, the "Released Parties"), from any and all claims,
suits, controversies, actions, causes of action, cross-claims,
counter-claims, demands, debts, compensatory damages, liquidated
damages, punitive or exemplary damages, other damages, claims for
costs and attorneys' fees, or liabilities of any nature whatsoever in
law and in equity, both past and present (through the date this
General Release becomes effective and enforceable) and whether known
or unknown, suspected, or claimed against DIRECTV, NRTC and/or any of
the Released Parties which Pegasus or any of its successors or assigns
may have, including without limitation, which arise from either the
Member Agreements, from the termination thereof in connection with the
Offer or relating to dealings between NRTC and Pegasus (in each case,
including, but not limited to, any allegation, claim or violation,
arising under any local, state, or federal law, regulation or
ordinance; or under any public policy, contract or tort, or under
common law; or arising under any policies, practices or procedures of
the Released Parties; or any claim for breach of contract (both
express and implied), breach of a covenant of good faith and fair
dealing (both express and implied), negligent or intentional
misrepresentation, negligent or intentional interference with contract
or prospective economic advantage; or any claim for costs, fees, or
other expenses, including attorneys' fees incurred in these matters)
(all of the foregoing collectively referred to herein as the
"Claims").
(b) Pegasus hereby acknowledges that (i) any payments or benefits paid or
granted to it pursuant to the Offer represent, in part, consideration
for making this General Release and (ii) it will not receive any
payments or benefits pursuant to the terms of the Offer unless its
makes this General Release.
(c) Pegasus hereby represents that it has not made any assignment or
transfer of any right, claim, demand, cause of action, or other matter
covered by Section 7(a) above.
(d) In making this General Release, Pegasus acknowledges and intends that
it shall be effective as a bar to each and every one of the Claims
hereinabove mentioned or implied. Pegasus expressly consents that this
General Release shall be given full force and effect according to each
and all of its express terms and provisions, including those relating
to unknown and unsuspected Claims (notwithstanding any state statute
that expressly limits the effectiveness of a general release of
unknown, unsuspected and unanticipated Claims), if any, as well as
those relating to any other Claims hereinabove mentioned or implied.
Pegasus acknowledges and agrees that this waiver is an essential and
material term of this General Release. Pegasus further agrees that in
the event it should bring a Claim seeking damages against any of the
Released Parties, this General Release shall serve as a complete
defense to such Claims. Pegasus further agrees that it is not aware of
any pending charge or complaint of the type described in Section 7(a)
as of the execution of this General Release.
(e) Pegasus represents that it is not aware of any claim by it other than
the Claims that are released by this General Release. Pegasus
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 General Release and
which, if known or suspected at the time of entering into this General
Release, may have materially affected this General Release and its
decision to enter into it. Nevertheless, Pegasus hereby waives any
right, Claim or cause of action that might arise as a result of such
different or additional Claims or facts and hereby expressly waives
any and all rights and benefits confirmed upon it by the provisions of
California Civil Code Section 1542, which provides as follows:
"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, Pegasus agrees to
expressly waive and relinquish any and ail 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.
(f) Pegasus agrees that neither this General Release, nor the furnishing of
the consideration for this General Release, shall be deemed or
construed at any time to be an admission by DIRECTV, NRTC, any Released
Party or Pegasus of any improper or unlawful conduct.
(g) Whenever possible, each provision of this General Release shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this General Release is held to
be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provision or any other
jurisdiction, but this General Release shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
8. Assignment. Pegasus hereby assigns to DIRECTV all its present and
future right, title and interest in, under and with respect to all of
its tangible and intangible rights and assets under the Member
Agreements (including, without limitation, ownership and propriety
interests in all subscribers to DIRECTV services and all lists of such
subscribers).
9. Non-Competition. Pegasus hereby agrees that, until June 30, 2010, it
shall not (a) share or sell its list of former and/or current DBS
subscribers (or any portion thereof) to a multi-channel video provider
other than DIRECTV, (b) market or solicit sales for direct-to-home
satellite multi-channel video services or the related receiving
equipment (other than (i) DIRECTV services, (ii) WildBlue Services and
associated equipment and (iii) C-Band services and related equipment),
or (c) share or sell its subscriber list related to non-DBS businesses
to any multi-channel video distributor, unless all former and current
DBS subscribers are excised from such list (i.e., no then-current or
former (within the prior two-year period) DBS subscriber shall be
included in a list sold to a multi-channel video distributor, even if
such customer is or was a customer to a non-DBS business as well). It
is expressly agreed and understood that the marketing or sale solely
of WildBlue broadband internet services shall not be considered a
violation of the non-competition provisions in this Section 9.
10. Post-Closing Adjustments. Pegasus hereby agrees that it is obligated to
refund to DIRECTV all amounts received by Pegasus in respect of
subscribers that no longer meet the Transferred Subscriber requirements
ninety (90) days after the Closing Date.
11. Binding Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing contained in this Agreement
shall be deemed to confer upon anyone other than the parties hereto
(and their permitted successors and assigns) any legal right or
equitable right, remedy or claim under or by reason of this Agreement.
12. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all counterparts
together shall constitute but one and the same documents.
13. Governing Law. The existence, validity, construction, operation and
effect of this Agreement shall be determined in accordance with and be
governed by the laws of the State of California.
14. Entire Agreement; Amendment. This Agreement (including the applicable
Annexes and Schedules attached hereto and incorporated by reference
herein) constitutes the entire agreement among the parties and
supersedes all previous understandings, commitments and representations
concerning the subject matter. This Agreement may not be amended or
modified in any way, except (i) as provided in the Agreement or (ii) by
a writing signed by an authorized officer of the party against whom the
amendment, modification or waiver is sought to be enforced.
15. Severability. Nothing contained in this Agreement shall be construed to
require the commission of any act contrary to law. Wherever there is
any conflict between any provision of this Agreement and any law, the
law shall prevail and this Agreement shall be limited only to the
extent necessary to permit compliance with the minimum legal
requirements. No other provisions of this Agreement shall be affected
and all other provisions shall continue in full force and effect.
16. Third-Party Beneficiary. The provisions of this Agreement are solely
for the benefit of the parties hereto and are not intended to confer
upon any person except the parties hereto any rights to enforce,
benefit from or have any other rights or remedies hereunder, and there
are no third-party beneficiaries of this Agreement and this Agreement
shall not provide any third party with any remedy, claim, liability,
reimbursement, cause of action, claim of action or other right in
excess of those existing without reference to this Agreement.
Notwithstanding anything in the foregoing to the contrary, it is
expressly agreed and understood that NRTC (solely for the purposes of
receiving and enforcing the General Release) and any other person or
entity described generally in Section 7(a)(ii) above is an intended
third party beneficiary of Section 7. Except as provided in the
preceding sentence, no other persons or parties are intended as
beneficiaries of this Agreement and none shall have rights to enforce
or benefit from the provisions of this Agreement. DIRECTV and Pegasus
acknowledge and agree that NRTC is not a party to this Agreement and
is not bound by or liable to DIRECTV or Pegasus under the provisions
of this Agreement.
17. NRTC Consent to Offer. NRTC consents to this Offer to Pegasus by
DIRECTV, and to the right of Pegasus to enter into this Agreement with
DIRECTV, notwithstanding NRTC's rights under and with respect to the
Member Agreements prior to their termination. NRTC executes this Offer
and the Agreement for the purpose, inter alia, of obtaining the General
Release set forth above and the promise of Pegasus to pay amounts that
may be due to NRTC under the Member Agreements or otherwise.
WITNESS HEREOF, each of the undersigned hereby acknowledges that it has
selected the Option indicated above and that it agrees to be bound by the terms
of this Agreement, including the provisions of the applicable Annex incorporated
by reference.
PEGASUS SATELLITE TELEVISION, INC.
Address (for notices):
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Fax:
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Phone:
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e-mail:
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Date:
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Signed By:
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Name:
Title:
GOLDEN SKY SYSTEMS, INC.
Address (for notices):
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Fax:
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Phone:
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e-mail:
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Date:
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Signed By:
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Name:
Title:
PEGASUS COMMUNICATIONS CORPORATION
Address (for notices):
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Fax:
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Phone:
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e-mail:
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Date:
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Signed By:
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Name:
Title:
Instructions: Any other Pegasus entity, subsidiary or affiliate not listed on
the prior signature page that is a party to or entitled to any rights and
benefits under any existing Member Agreement must sign. Please attach additional
signature pages, as needed.
IN WITNESS HEREOF, each of the undersigned hereby acknowledges that it has
selected the Option indicated above and that it agrees to be bound by the terms
of this Agreement, including the provisions of the applicable Annex incorporated
by reference.
Insert name of Pegasus entity signatory hereto:
Address (for notices):
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Fax:
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Phone:
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e-mail:
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Date:
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Signed By:
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Name:
Title:
Insert name of Pegasus entity signatory hereto:
Address (for notices):
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Fax:
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Phone:
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e-mail:
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Date:
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Signed By:
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Name:
Title:
ACCEPTED AND AGREED:
DIRECTV, INC.
By:
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Xxxxxxx X. Xxxxxxxx
Executive Vice President and
Chief Financial Officer
CONSENTED TO:
NATIONAL RURAL
TELECOMMUNICATIONS COOPERATIVE
By:
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B.R. Xxxxxxxx III
President and Chief Executive Officer
Annex A
PEGASUS PAYMENT INSTRUCTIONS
1. Option A. Pegasus has selected Option A as described in the Agreement.
2. Payment Instructions. The lump-sum payment described m the Agreement
shall be paid on the third business day after the Closing Date by wire
transfer to the following bank account of Pegasus.
Member:
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Bank:
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ABA #:
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Acct. #:
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Account Name:
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Account Representative Contact Name:
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Account Representative Contact Phone:
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Name of Member (as it appears on Existing Member
Agreement):
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By:
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Name:
Title:
(For Use by DIRECTV Only)
1. Number of Transferred Subscribers (as of the Closing Date):
2. Calculation of Lump-Sum Payment (subject to downward adjustment).
$675.001 x = $
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(total Transferred (Base Lump-Sum Amount)
Subscribers)
3. Less adjustment for Accounts Receivable
$ - $ = $
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(Base Lump-Sum Payment) (A/R) (Lump-Sum Payment)
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1 This assumes a Closing Date of June 30, 2004.
Annex B
PEGASUS PAYMENT INSTRUCTIONS
1. Option B. Pegasus has selected Option B as described in the Agreement.
2. Payment Instructions. The monthly payments specified in the Agreement
shall be paid, commencing thirty (30) days after the Closing Date, by
wire transfer to the following bank account of Pegasus.
Member:
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Bank:
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ABA #:
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Acct. #:
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Account Name:
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Account Representative Contact Name:
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Account Representative Contact Phone:
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Name of Member (as it appears on Existing Member
Agreement):
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By:
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Name:
Title:
(For Use by DIRECTV Only)
l. Number of Transferred Subscribers (as of the Closing Date):
2. Calculation of Monthly Payment (subject to downward adjustment).
$16.67 x = $
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(total Transferred (Monthly Payment)
Subscribers)
3. Less adjustment to initial Option B-1 Monthly Payment for Accounts Receivable
$ - $ = $
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(Monthly Payment) (A/R) (initial Monthly Payment)
EXHIBIT I TO PEGASUS OFFER AGREEMENT
DETERMINING XXXX-XXXXX XXXXXX REPORTABILITY
As a general matter, the Act and the Rules require both acquiring and acquired
persons to file notifications under the Program if all of the following
conditions are met:
a. One person has sales or assets of at least $100 million;
b. The other person has sales or assets of at least $10 million;
and
c. As a result of the transaction, the acquiring person will hold
an aggregate amount of stock and assets of the acquired person
valued at more than $50 million; or
d. As a result of the transaction, the acquiring person will hold
an aggregate amount of stock and assets of the acquired person
valued at more than $200 million, regardless of the sales or
assets of the acquiring and acquired persons.2
A. Acquiring and Acquired Persons/Acquired Entity
The first step in determining reportability is to identify who the "acquiring
person" and "acquired person" are. "Person" is defined in Rule 801.1(a)(1) and
is the "ultimate parent entity" or "UPE" of the buyer or seller. That is, it is
the entity that ultimately controls the buyer or seller.3 The "acquired entity"
is the specific entity whose assets or voting securities are being acquired. The
acquired entity may also be its own UPS or it may be an entity within the
acquired person.
Thus, in an asset acquisition, the acquiring person is the UPE of the buyer, and
the acquired person is the UPE of the seller. The acquired entity is the entity
whose assets are being acquired.
B. Size-of-Person Test
Once you have determined who the acquiring and acquired persons are, you must
determine whether the size of each person meets the Act's minimum size criteria.
This "size of person" test generally measures a company based on the person's
last regularly prepared annual statement of
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1 Excepts from the Federal Trade Commission's "Introductory Guide II to the
Premerger Notification Program - To File Or Not To File - When You Must File a
Premerger Notification Report Form." The full document and additional
information is available at
xxxx://xxx.xxx.xxx/xx/xxx/xxxxxxxxxxx/xxxxxxxxxxx.xxx.
2 See ss. 7A (a)(3) of the Act.
3 See "control" under 801.1(b).
income and expenses and its last regularly prepared balance sheet.4 The size of
a person includes not only the entity that is making the acquisition or whose
assets or securities are being acquired, but also the UPE and any other entities
the UPE controls.5
C. Size-of-Transaction Test
The next step is to determine what voting securities, assets, or combination of
voting securities and assets are being transferred in the proposed transaction.
Then you must determine the value of the voting securities and/or assets as well
as the percentage of voting securities that will be "held as a result of the
transaction." Calculating what will be held as a result of the transaction
(referred to as the "size of the transaction") is complicated and requires the
application of several rules, including Rules 801.10, 801.12, 801.13, 801.14 and
801.15. Assets held as a result of the transaction include those that will be
transferred in the proposed transaction as well as certain assets of the
acquired person that the acquiring person has purchased within the time limits
outlined in Rule 801.13.
Once it has been determined that a particular transaction is reportable, each
party must submit its notification to the FTC and the DOJ. In addition, each
acquiring person must pay a filing fee to the FTC for each transaction that it
reports.
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4 See Rule 801.11.
5 See Rule 801.1(a)(1).
