CONFORMED COPY
ASSET PURCHASE AGREEMENT
AMONG
INTELSAT, LTD.,
INTELSAT (BERMUDA), LTD.,
LORAL SPACE & COMMUNICATIONS CORPORATION,
AS DEBTOR AND DEBTOR IN POSSESSION
LORAL SPACECOM CORPORATION,
AS DEBTOR AND DEBTOR IN POSSESSION
AND
LORAL SATELLITE, INC.
AS DEBTOR AND DEBTOR IN POSSESSION
DATED AS OF JULY 15, 2003
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions........................................................................... 2
Section 1.2 Other Definitional Provisions.................................................................. 15
ARTICLE II
PURCHASE AND SALE OF THE PURCHASED ASSETS
Section 2.1 Purchase and Sale of Purchased Assets.......................................................... 15
Section 2.2 Excluded Assets................................................................................ 16
Section 2.3 Assumed Liabilities............................................................................ 16
Section 2.4 Excluded Liabilities........................................................................... 16
Section 2.5 Purchase Price................................................................................. 17
Section 2.6 Closing........................................................................................ 21
Section 2.7 Deliveries by Purchaser........................................................................ 22
Section 2.8 Deliveries by Sellers.......................................................................... 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 3.1 Organization and Qualification................................................................. 23
Section 3.2 Purchased Assets............................................................................... 23
Section 3.3 Corporate Authorization........................................................................ 24
Section 3.4 Consents and Approvals......................................................................... 24
Section 3.5 Non-Contravention.............................................................................. 24
Section 3.6 Binding Effect................................................................................. 24
Section 3.7 Litigation and Claims.......................................................................... 25
Section 3.8 Property, Equipment and Other Purchased Assets................................................. 25
Section 3.9 Intellectual Property.......................................................................... 26
Section 3.10 Certain Contracts.............................................................................. 27
Section 3.11 Government Contracts........................................................................... 29
Section 3.12 Taxes.......................................................................................... 31
Section 3.13 Compliance with Laws........................................................................... 31
Section 3.14 SEC Reports.................................................................................... 31
Section 3.15 Governmental Authorizations.................................................................... 32
Section 3.16 Orbital Locations, etc......................................................................... 33
Section 3.17 Intersystem Coordination....................................................................... 33
Section 3.18 Collective Bargaining Agreements............................................................... 34
Section 3.19 Absence of Change.............................................................................. 34
Section 3.20 Insurance...................................................................................... 34
Section 3.21 Related Party Transactions..................................................................... 35
Section 3.22 Accuracy of Copies............................................................................. 35
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Section 3.23 Financial and Business Information............................................................. 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Section 4.1 Organization and Qualification................................................................. 36
Section 4.2 Corporate Authorization........................................................................ 36
Section 4.3 Consents and Approvals......................................................................... 36
Section 4.4 Non-Contravention.............................................................................. 37
Section 4.5 Binding Effect................................................................................. 37
Section 4.6 Certificate of Incorporation, Memorandum of Association and Bye-Laws........................... 37
ARTICLE V
COVENANTS AND AGREEMENTS REGARDING BANKRUPTCY
Section 5.1 Bankruptcy Actions............................................................................. 37
ARTICLE VI
CERTAIN COVENANTS
Section 6.1 Access......................................................................................... 39
Section 6.2 Conduct of Business............................................................................ 40
Section 6.3 Books and Records.............................................................................. 44
Section 6.4 Best Reasonable Efforts........................................................................ 45
Section 6.5 Certain Filings; Consents...................................................................... 45
Section 6.6 Insurance...................................................................................... 47
Section 6.7 Financial Statements and Access................................................................ 48
Section 6.8 Compliance with Property Transfer Laws; State and Local Governmental Authorizations............ 49
Section 6.9 Further Assurances............................................................................. 50
Section 6.10 Certain Matters Involving the Transferred Intellectual Property and
Licensed Intellectual Property................................................................. 50
Section 6.11 Obligation to Update........................................................................... 50
Section 6.12 Additional Intellectual Property Matters....................................................... 51
Section 6.13 Limitations on Solicitation, etc............................................................... 51
Section 6.14 ITU Matters.................................................................................... 52
Section 6.15 PANGTEL Matters................................................................................ 52
Section 6.16 Orbital Incentive Payments..................................................................... 53
Section 6.17 Lease Contract................................................................................. 53
ARTICLE VII
PURCHASER'S AND PARENT'S COVENANTS
Section 7.1 Best Reasonable Efforts........................................................................ 54
Section 7.2 Shareholder Approval........................................................................... 54
Section 7.3 Further Assurances............................................................................. 54
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Section 7.4 Compliance with Property Transfer Laws; Governmental Authorizations............................ 54
Section 7.5 Obligation to Update........................................................................... 55
Section 7.6 Collection of Accounts Receivable.............................................................. 55
ARTICLE VIII
EMPLOYEE AND TAX MATTERS
Section 8.1 Tax Matters.................................................................................... 55
Section 8.2 Employees and Employee Benefits................................................................ 56
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Conditions to the Obligations of Parent and Purchaser.......................................... 58
Section 9.2 Conditions to the Obligations of the Sellers................................................... 63
ARTICLE X
INTENTIONALLY OMITTED
ARTICLE XI
TERMINATION
Section 11.1 Termination.................................................................................... 65
Section 11.2 Effect of Termination.......................................................................... 67
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices........................................................................................ 68
Section 12.2 Amendment; Waiver.............................................................................. 69
Section 12.3 Assignment..................................................................................... 69
Section 12.4 Entire Agreement; Severability................................................................. 70
Section 12.5 Fulfillment of Obligations..................................................................... 70
Section 12.6 Parties in Interest............................................................................ 70
Section 12.7 Guaranty....................................................................................... 70
Section 12.8 Public Disclosure.............................................................................. 70
Section 12.9 Return of Information.......................................................................... 71
Section 12.10 Expenses....................................................................................... 71
Section 12.11 Governing Law; Submission To Jurisdiction; Selection Of Forum.................................. 71
Section 12.12 Counterparts................................................................................... 72
Section 12.13 Headings....................................................................................... 72
Section 12.14 Time is of the Essence......................................................................... 72
Section 12.15 Mutual Drafting................................................................................ 72
Section 12.16 No Survival.................................................................................... 72
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ANNEXES
Annex A Purchased Assets
Annex B Excluded Assets
Annex C Form of Intellectual Property Agreement
Annex D Form of Noncompetition Agreement
Annex E-1 Business Transition Services Agreement
Annex E-2 TT&C Transition Services Agreement
Annex F Sale Procedures Order and Sale Order
Annex G SS/L Agreement
Annex H Terms of Revised Procurement Agreements
Annex I Terms of New Procurement Agreement
Annex J Terms of Deposit and Security Agreement
SCHEDULES
Schedule 1.1(a) Persons with Knowledge of Sellers
Schedule 1.1(b) Persons with Knowledge of Parent or Purchaser
Schedule 1.1(c) Other Filing Entities
Schedule 2.3 Additional Assumed Liabilities
Schedule 2.5 Certain Purchase Price Adjustments
Schedule 3.2 Certain Assets for the Conduct of the Transferred Business
Schedule 3.4 Governmental Approvals
Schedule 3.5 Non-Contravention
Schedule 3.7 Litigation and Claims
Schedule 3.8 Property, Equipment and Other Purchased Assets
Schedule 3.9 Intellectual Property
Schedule 3.10 Certain Contracts
Schedule 3.11 Government Contracts
Schedule 3.13 Compliance with Laws
Schedule 3.15 Governmental Authorizations
Schedule 3.16 Orbital Locations
Schedule 3.17 Intersystem Coordination
Schedule 3.18 Collective Bargaining Agreements
Schedule 3.19 Absence of Change
Schedule 3.20 Insurance Policies
Schedule 3.21 Related Party Transactions
Schedule 4.3 Consents and Approvals
Schedule 4.4 Non-Contravention
Schedule 4.5 Binding Effect
Schedule 5.1(f) Certain Additional Agreements
Schedule 6.2 Conduct of Business
Schedule 6.6 Insurance Renewal
Schedule 8.2 Severance and WARN Act Obligations
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Schedule 9.1(j) Governmental and Other Approvals
Schedule 9.1(o) Backlog Amount
Schedule 9.1(p) Recurring Revenues
Schedule 9.1(q) Certain Customer Service Contracts
Schedule 9.1(s) Form of Legal Opinion of Sellers' FCC Counsel
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ASSET PURCHASE AGREEMENT, dated as of July 15, 2003 (the
"Agreement"), among Intelsat, Ltd., a Bermuda company ("Parent"), Intelsat
(Bermuda), Ltd., a Bermuda company ("Purchaser"), Loral Space & Communications
Corporation, a Delaware corporation, as debtor and debtor in possession ("Loral
Space"), Loral SpaceCom Corporation, a Delaware corporation, as debtor and
debtor in possession ("Loral SpaceCom"), and Loral Satellite, Inc., a Delaware
corporation, as debtor and debtor in possession (together with Loral Space and
Loral SpaceCom, the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers, among other things, own and operate
geostationary earth orbit satellites ("GEO Satellites") on which transponder
capacity is leased or sold to customers for various applications;
WHEREAS, each of the Sellers and the Other Filing Entities (as
defined herein) has filed with the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") a voluntary petition (the
"Chapter 11 Cases") for relief under Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code");
WHEREAS, the Sellers have advised Parent and Purchaser that
the Sellers intend to dispose of certain of their assets and liabilities
(including the Purchased Assets referred to in Section 2.1) through a sale or
sales to be effected under the supervision of the Bankruptcy Court in the
Chapter 11 Cases under the Bankruptcy Code;
WHEREAS, the parties hereto desire that, on the terms and
subject to the conditions set forth herein, the Sellers sell to Purchaser, and
Purchaser purchase from the Sellers, certain of such GEO Satellites, which are
referred to as Telstar 4, Telstar 5, Telstar 6 and Telstar 7, as well as those
GEO Satellites, which are referred to as Telstar 8 and Telstar 13 (to the extent
of the Sellers' ownership of Telstar 13, as set forth in Section 3.8(c)), which
are currently under construction (collectively, the "Purchased Satellites"),
together with the Purchased Assets referred to in Section 2.1, each of which
assets is used or useful in the operation of that portion of Sellers' Skynet
satellite services business Related to the Purchased Satellites;
WHEREAS, simultaneously herewith, the Sellers shall cause
Space Systems/Loral, Inc. ("SS/L") to enter into an agreement with Parent and
Purchaser relating to certain obligations of SS/L relating to the transactions
contemplated under this Agreement in the form of Annex G hereto (the "SS/L
Agreement");
WHEREAS, simultaneously with the Closing, the Sellers shall
cause SS/L to enter into amendments to the procurement agreements related to
Telstar 8 and Telstar 13 on the terms set forth in Annex H hereto (the "Revised
Procurement Agreements") and the Sellers shall cause SS/L to enter into the New
Procurement Agreement (as defined below);
WHEREAS, simultaneously with Closing hereunder, Intelsat LLC,
an Affiliate of Purchaser ("Intelsat LLC"), shall place an order with respect to
one new GEO Satellite, on the terms set forth on Annex I hereto (the "New
Procurement Agreement"); and
WHEREAS, simultaneously with Closing hereunder, SS/L and
Intelsat LLC will enter into a security agreement on the terms set forth in
Annex J hereto (the "Deposit and Security Agreement", and together with the
Revised Procurement Agreements and the New Procurement Agreement, the "Related
Agreements");
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or as referenced below:
"Affiliates" shall mean, with respect to any Person, any Persons directly or
indirectly controlling, controlled by, or under common control with,
such other Person as of the date on which, or at any time during the
period for which, the determination of affiliation is being made. The
term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect
to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" shall mean this Agreement, including the schedules and annexes
hereto, as the same may be amended or supplemented, from time to time,
in accordance with the terms hereof.
"Ancillary Agreements" shall mean: (i) the Intellectual Property Agreement; (ii)
the Noncompetition Agreement; (iii) the Transition Services Agreement;
(iv) the SS/L Agreement; (v) the Related Agreements; and (vi) any other
agreement or any certificate, license or other document required to be
delivered pursuant to the terms of this Agreement (other than
agreements, certificates, licenses or other documents to which a Person
other than one or more parties hereto, SS/L or Loral Parent or their
Affiliates, is a party).
"Assumed Contract" shall mean the following to the extent in existence on the
Closing Date: (a) all Contracts identified on Schedule 3.10(a), without
giving effect to the cross-reference to Schedule 3.20, provided, that
the Satellite Agreement, dated as of December 16, 1996 with PANGTEL
shall constitute an Assumed Contract only
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in the circumstances set forth in Section 9.1(n); (b) all Customer
Service Contracts entered into after the date hereof in accordance with
Section 6.2 (but without giving effect to Section 6.2(b)); (c)
insurance policies identified on Annex A hereto as Purchased Assets;
(d) non-disclosure agreements identified on Schedule 3.10(a) Related to
the Purchased Assets that the Purchaser elects in writing to assume
within thirty (30) days of the date hereof; (e) the Revised Procurement
Agreements, (f) a legally binding underwriting commitment meeting the
requirement of Section 2.5(c) and (g) any other Contract the
Purchaser elects to assume within seven (7) Business Days after
receiving a written notice from the Sellers (which Sellers may or may
not send in their sole discretion) identifying such Contract (and
providing a copy thereof if not previously provided to the Purchaser)
and requesting Purchaser's election whether to assume such Contract.
"Backlog"shall mean the aggregate amount of Revenues that Sellers are entitled
to recognize in accordance with GAAP and consistent with past practice
for services to be rendered under the terms of each Customer Service
Contract during the period commencing as of a specified date and
continuing until the remainder of the then current term of such
Contract, but excluding any accounts receivable outstanding as of such
specified date. As used herein with respect to a specified date, the
term "Backlog" does not include any revenues that are not attributable
to Contracts that would have been Assumed Contracts if the Closing had
occurred on such date.
"Best Reasonable Efforts" shall mean the diligent, good faith efforts that a
reasonably prudent Person desirous of achieving a result in an
economically reasonable manner would use in similar circumstances to
achieve the desired result. The obligation of a Person under this
Agreement to use Best Reasonable Efforts to achieve a result that
benefits another party to this Agreement requires such Person to use
the same resources that such Person would have reasonably used in
achieving a similar result that would have benefited such Person. The
fact that a result is not actually achieved shall not create a
presumption that the obligated party did not in fact utilize its Best
Reasonable Efforts in attempting to accomplish the result.
"Books and Records" shall mean originals or copies of all books, ledgers, files,
reports, plans and operating records (including electronic files, data,
spreadsheets, etc.) related to the Transferred Business or the
Purchased Assets, as the case may be, containing information that is or
would be needed by a Person purchasing or owning the Transferred
Business or the Purchased Assets.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York City are authorized or obligated by law or
executive order to close.
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"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications Act" shall mean the Communications Act of 1934, as amended.
"Contracts" shall mean the agreements, contracts, leases, purchase orders,
service orders, arrangements, commitments and non-governmental
licenses, whether written or oral, that are Related to the Transferred
Business or the Purchased Satellites (including the Customer Service
Contracts and any agreement referred to in Schedule 9.1(j)(ii)) except
to the extent included in the Excluded Assets or Excluded Liabilities.
"Customer Service Contracts" shall mean Contracts to provide services to
customers of the Transferred Business, other than Portability-In
Contracts.
"Deposit Collateral" shall mean the collateral described in Annex J.
"Encumbrances" shall mean liens, charges, encumbrances, security interests,
options, rights of way, written agreements, mortgages or deeds of
trust, rights of first refusal, easements, restrictive covenants,
encroachments, survey defects or any other restrictions or third party
rights.
"Environmental Law" shall mean any Laws relating to the protection of the
environment (including air, water, soil and natural resources) or the
use, storage, handling, release or disposal of any hazardous or toxic
substance or pollutant or protection of human health as it relates to
the environment.
"Environmental Permits" shall mean all Governmental Authorizations issued under
or pursuant, or relating, to any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any entity which is considered one employer with a
Seller under Section 4001 of ERISA or Section 414 of the Code.
"Excluded Liabilities" shall mean the Liabilities that are not "Assumed
Liabilities" referred to in Section 2.3, and shall include without
limitation the "Excluded Liabilities" expressly listed in Section 2.4.
"Excluded Payments" shall mean all prepayments received in respect of (a) the
transponders sold by AT&T prior to Seller's acquisition of Skynet, (b)
the contract between one or more Sellers and The Church of Xxxxx Xxxxxx
of Latter
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Day Saints, dated August 17, 1999, and (c) the option termination fee
paid by CBS under the Contract, dated February 1, 2002, which for
accounting purposes is being amortized over the remaining life of the
contract.
"Exon-Xxxxxx" shall mean Section 721 of Title VII of the Defense Production Act
of 1950, as amended by the Omnibus Trade and Competitiveness Act of
1988.
"FCC" shall mean the Federal Communications Commission and any successor
thereto.
"FCC Authorizations" shall mean Governmental Authorizations of the FCC.
"Federal Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy Procedure
and all rules, regulations and relevant interpretations issued under
the Bankruptcy Code.
"Final Date" shall mean April 12, 2004.
"GAAP" shall mean United States generally accepted accounting principles, as
consistently applied by Sellers during the relevant period.
"Government Contracts" shall mean those Contracts Related to the Purchased
Assets between a Seller and the U.S. federal government or any agency
thereof or a Seller and another party which is party to a contract with
the U.S. federal government or any agency thereof under which such
Seller acts as subcontractor to such other party and is obligated
pursuant to any contractual flow-down provisions to abide by any
government contracting regulations, including the Federal Acquisition
Regulations, that are applicable to the principal contractor.
"Governmental Approval" shall mean any license, permit, certificate, consent,
validation or other authorization, approval or action of any
Governmental Authority required in connection with the transfer or
assignment of the Purchased Assets or otherwise in connection with the
execution, delivery or performance by any Seller of this Agreement or
any of the Ancillary Agreements.
"Governmental Authority" shall mean any domestic or foreign supranational,
national, federal, state or local judicial, legislative, executive or
regulatory authority.
"Governmental Authorization" shall mean any license, permit, certificate,
consent, validation, frequency registration or other authorization,
approval or action of any Governmental Authority required to own and
operate the Purchased Assets as currently operated by the Sellers under
applicable Laws prior to the Closing.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
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"Intellectual Property" shall mean intellectual property rights including:
trademarks, service marks, brand names, certification marks, trade
dress, assumed names, trade names and other indications of origin, the
goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application and any intent to use applications with
respect to the foregoing; patents, applications for patents (including,
without limitation, divisions, continuations, continuations in-part,
provisional applications and reissue applications), and any renewals,
extensions or reissues thereof, in any jurisdiction; computer software
(including software, data, source code and related documentation) other
than software that is generally available on non-discriminatory pricing
terms, software programs that purport to bind the purchaser of such
programs such as shrink-wrap and click-wrap, commercial off-the-shelf
software and software that is distributed as free software, open source
software or under similar licensing or distribution model; inventions,
discoveries and ideas, whether patentable or not in any jurisdiction,
trade secrets, know-how (including, without limitation, research and
development, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings and product
and equipment specifications) and confidential information and rights
in any jurisdiction to limit the use or disclosure thereof by any
Person; writings, data bases, compilations and other works, whether
copyrightable or not in any jurisdiction; registrations or applications
for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or proprietary
rights; any and all exclusive licenses to use any of the foregoing; and
any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
"Intellectual Property Agreement" shall mean the intellectual property agreement
to be entered into between Loral SpaceCom and Purchaser on or prior to
the Closing Date substantially in the form of Annex C hereto.
"ITU" shall mean the International Telecommunication Union.
"ITU Authorizations" shall mean Governmental Authorizations of the ITU.
"Knowledge" of a Seller as to a matter that is the subject of a representation,
warranty or condition shall mean (a) the actual knowledge as to any
such matter of any of the Persons listed in Schedule 1.1(a) (or any
successor with similar authority and responsibilities) and (b) the
actual knowledge that a prudent business person in such position would
reasonably be expected to have in light of such Person's title and
responsibilities, and after reasonable inquiry of subordinates.
"Law" shall include any law, statute, ordinance, rule, regulation, permit,
license, authorization, order, judgment, injunction or decree of any
Governmental
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Authority and, without limiting the generality of the foregoing, any
Governmental Authorization.
"Liability" shall mean any debt, liability, guarantee, commitment or other
obligation (contingent or otherwise), known or unknown, matured or
unmatured, due or to become due, accrued or unaccrued.
"Licensed Intellectual Property" shall mean the Intellectual Property listed as
such on Schedule 3.9.
"Loral Parent" shall mean Loral Space & Communications Ltd., a Bermuda company.
"Material Adverse Change" shall mean an event that has had, or is reasonably
likely to have, a Material Adverse Effect.
"Material Adverse Effect" shall mean an effect that is materially adverse to the
value of the Transferred Business or the Purchased Assets, taken as a
whole, or materially adverse to the business, financial condition or
results of operations of the Transferred Business, taken as a whole;
provided that the following shall be excluded from any determination as
to whether a Material Adverse Effect has occurred: (a) any changes or
effects attributable to the expiration or non-renewal of any Customer
Service Contracts in accordance with the respective terms of such
contracts (other than an expiration resulting from a party's exercise
of an early termination or buy-out right); (b) any changes or effects
attributable to general economic or political conditions (but only if
the Transferred Business and the Purchased Assets are not
disproportionately affected); and (c) any changes or effects that are
generally applicable to Persons engaged in the satellite communications
operator business (but only if the Transferred Business and the
Purchased Assets are not disproportionately affected). In addition,
solely for purposes of determining whether there has been a Material
Adverse Change under Section 3.19, there shall be excluded from such
determination any changes or effects that are directly attributable to
the filing of the Chapter 11 Cases. The filing of the Chapter 11 Cases
shall not, taken alone, be deemed to represent a Material Adverse
Effect.
"Noncompetition Agreement" shall mean the noncompetition agreement to be entered
into among Parent, Purchaser, Sellers and the Affiliates of Sellers
specified therein, on or prior to the Closing Date substantially in the
form of Annex D hereto.
"Non-Disclosure Agreement" shall mean the Non-Disclosure Agreement, dated
January 27, 2002, between Parent and Loral Parent, as amended.
"Other Filing Entities" shall include entities referred to in Schedule 1.1(c)
hereto.
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"Out-of-Pocket Expenses" shall mean payments by a Person to a third party and
shall not include compensation paid to such Person's employees.
"Person" shall mean an individual, a company, a corporation, a partnership, an
association, a trust or other entity or organization or any
Governmental Authority.
"Pro Rata Fraction" shall mean a fraction of which (a) the denominator is the
total cancellation payment divided by the monthly rate specified in the
contract and (b) the numerator is the denominator minus the number of
months from the cancellation date to the Closing.
"Purchased Satellite Procurement Contracts" or "Purchased Satellite Procurement
Agreements" shall mean the following:
(a) Telstar 4: Contract, dated August 2, 1989,
between Loral SpaceCom (as successor to AT&T) and Lockheed
Xxxxxx (as successor to General Electric Company);
(b) Telstar 5, Telstar 6 and Telstar 7:
Contract, dated March 17, 1995 between Loral SpaceCom (as
successor to AT&T) and SS/L, as amended by Amendment No. 1,
dated June 25, 1996, Amendment No. 2, dated August 1, 1997,
and Amendment No. 3, dated September 1, 1998;
(c) Telstar 8: Contract, dated June 24, 1998,
between Loral SpaceCom and SS/L, as amended by Contract
Amendment No. 1, effective as of February 12, 2001 and
Contract Amendment No. 2, effective as of March 15, 2002 and
as amended in accordance with the terms of Annex H; and
(d) Telstar 13: Agreement, dated February 22,
2000, between Echostar Orbital Corporation and Loral SpaceCom,
the Amended and Restated Echostar 9 Agreement, effective as of
November 16, 2001, between Loral SpaceCom and SS/L, as amended
in accordance with the terms of Annex H, and the Contract,
dated February 22, 2000, between Loral SpaceCom and Echostar
Orbital Corporation.
"Recurring Revenues" shall mean Revenues earned in the ordinary course of the
Transferred Business, consistent with past practice, but shall exclude
the portion of each termination fee payable by a customer upon early
termination of its contract commitment equal to the Pro Rata Fraction
multiplied by the aggregate of such termination fees, any fees related
to termination of options or any similar non-recurring Revenue items;
provided that the Revenues from occasional, month-to-month and
part-time use shall be deemed to be Recurring Revenues.
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"Regulatory Requirements" means all applicable requirements of the Federal
Communications Act of 1934, as amended, and the published policies,
rules, decisions and regulations of the FCC as amended from time to
time.
"Related to" shall mean primarily related to, or used or intended to be used or
held for use primarily in connection with.
"Related to the Purchased Assets" shall mean primarily related to, or used or
intended to be used or held prior to the Closing for use primarily in
connection with, the Purchased Assets.
"Revenues" shall mean the revenues recognized by Sellers in accordance with
GAAP, consistently applied, for services rendered under the Customer
Service Contracts (including any Customer Service Contracts with Loral
Skynet Network Services, Inc.) and Portability-In Contracts (but only
to the extent attributable to Purchased Satellites) and including
revenues derived from the transponders sold by AT&T prior to Sellers'
acquisition of Skynet to the extent consistent with past practices. As
used herein with respect to a specified date, the term "Revenues" does
not include any revenues that are not attributable to Contracts that
would have been Assumed Contracts if the Closing had occurred on the
date such revenues accrued.
"Subsidiary" shall mean any Person 50% or more of the equity interests in which
are beneficially owned directly or indirectly by a Seller.
"Successor" or "successor" shall mean the legal successor to any Person in
connection with any amalgamation, merger, reorganization or equivalent
thereof and shall include, without limitation, the purchaser of all or
substantially all of the assets of such Person; provided that Purchaser
will not be Successor to the Sellers.
"Taxes" shall mean taxes, fees, duties or other charges imposed by any
Governmental Authority, including, but not limited to income,
franchise, gross receipts, gains, capital, value added, ad valorem,
respective severance, property, production, sales, use, transfer,
stamp, documentary, recording, registration, license, excise,
employment, occupation, pension plan, withholding, payroll, minimum
taxes, windfall profit taxes or similar taxes, fees, duty or other
charges together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.
"Total Loss" shall mean, with respect to any Purchased Satellite, any of the
following: (a) the complete loss, destruction or permanent failure of
the satellite; (b) the satellite suffers or is expected to suffer
Transponder Failure(s) resulting in an accumulated loss of more than
fifty (50) percent of its Remaining Transponder Years from the date the
failure occurs through the Remaining Mission Life; or (c) the
revocation, non-renewal or other loss of the applicable ITU
Authorization or FCC Authorization required in order to operate such
satellite at its intended orbital
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location. In addition, solely with respect to Telstar 13, the term
"Total Loss" shall also include any event or condition that would
constitute a "Total Loss" as defined in Section 4B of the Amended and
Restated Echostar 9 Contract between Loral Skynet and SS/L, effective
as Novemeber 16, 2001, as amended through June 30, 2003.
As used in the foregoing definition, the terms:
"Remaining Transponder Years" shall mean the product of (i)
the number of transponders operating for one year in a manner
that is not a Transponder Failure and (ii) the number of years
included in the satellite's Remaining Mission Life. As of
August 1, 2003, the Remaining Transponder Years for each
Purchased Satellite are as follows:
(a) Telstar 4: (24 C-band + 24 Ku-band) x 2.148
years = 103.104 years
(b) Telstar 5: (24 C-band + 28 Ku-band) x 5.816
years = (-35.2 years due to partial
transponder loss) = 267.232 years
(c) Telstar 6: (24 C-band + 28 Ku-band) x 7.548
years = 392.496 years
(d) Telstar 7: (24 C-band + 24 Ku-band) x 8.156
years = 391.488 years
"Remaining Mission Life" shall mean the time period in years
until the satellite reaches its completion of orbital design
life. As of August 1, 2003, the Remaining Mission Life for
each operational Purchased Satellite is as follows:
(a) Telstar 4: 2.148 years
(b) Telstar 5: 5.816 years
(c) Telstar 6: 7.548 years
(d) Telstar 7: 8.156 years
"Satellite Performance Specifications" shall mean the relevant
Performance Specifications set forth in the Purchased
Satellite Procurement Agreements for each of Xxxxxxx 0,
Xxxxxxx 0, Xxxxxxx 0, Xxxxxxx 0 and Telstar 13.
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"Transponder Failure" shall mean that the transponder
permanently (including permanently intermittently) fails to
operate in accordance with the Satellite Performance
Specifications or will fail to operate in accordance with the
Satellite Performance Specifications throughout all periods
including eclipse, loss of on-board propellant or available
power resulting in the reduction in the Remaining Mission
Life.
"Transferred Business" shall mean the portion of Sellers' Skynet satellite
services business operations Relating to and conducted with the
Purchased Satellites, excluding Sellers' Network Services Business of
providing end-to-end data solutions on networks comprised of earth
terminals, space segment, and where appropriate, networking hubs and
Sellers' Professional Services Business of providing (a) technical
support and monitoring in the construction and launch of satellites,
(b) telemetry, tracking and control services and (c) technical and
operational support in the design, implementation and operation of data
networks over satellites.
"Transferred Intellectual Property" shall mean Intellectual Property that is
listed as such on Schedule 3.9.
"Transition Services Agreement" shall mean, collectively, the Business
Transition Services Agreement and the TT&C Transition Services
Agreement entered into among Sellers and Purchaser on the date hereof
and attached hereto as Annex E-1 and E-2, respectively.
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Each of the following terms is defined in the section of this
Agreement set forth opposite such term:
Term Section
---- -------
363/365 Orders 5.1(b)
Accounting Requirements 6.7(a)
Adjustments 2.5(b)
Agreement Preamble
Alternate Transaction 5.1(c)
Applicable Employees 8.2(d)
Arbiter 2.5(g)
Arbiter Report 2.5(g)
Assumed Liabilities 2.3
Average Transponder Price 9.1(q)
Backlog Threshold 2.5(b)
Bankruptcy Code Recitals
Bankruptcy Court Recitals
Base Price 2.5(a)
Benefit Plans 8.2(e)
Break-Up Fee 5.1(c)
Chapter 11 Cases Recitals
Chosen Courts 12.11
Closing Date 2.6
Commingled Books and Records 6.3
Consideration 8.1(a)
Contracts With Warranty 3.10(j)
D&T 6.7(a)
Deposit 2.7(a)(v)
Deposit and Security Agreement Recitals
DOJ 6.5(c)
Echostar 9.1(l)
Employees 8.2(b)
Entitlement Party 2.1(a)
Estimated Adjustment Report 2.5(b)
Excluded Assets 2.2
Expense Reimbursement 5.1(c)
Final Report 2.5(e)
FTC 6.5(c)
GEO Satellites Recitals
Intelsat LLC Recitals
Lease Agreement 6.17 (b)
Lease Notice 6.17(a)
Listed Employees 8.2(b)
Loral Space Preamble
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Term Section
---- -------
Loral SpaceCom Preamble
New Lease 6.17(a)
New Procurement Agreement Recitals
Objection Notice 2.5(f)
Open Source 3.9(e)
Other Employees 8.2(b)
Other Intellectual Property 3.9(a)
Parent Preamble
Parent Shareholder Approval 4.2
Parent Shareholder Approval Date 11.1(b)
Parent Shareholders Meeting 7.2
PNG Agreement 6.15
Portability-In Contract 3.10(g)
Portability-Out Contract 3.10(g)
Postponement Notice 2.6
Proposal 6.13
Purchase Price 2.5(a)
Purchased Assets 2.1(a)
Purchased Satellites Recitals
Purchaser Preamble
Purchaser Obligations 12.7
Receiving Party 2.1(a)
Related Agreements Recitals
Restricted Persons 6.13
Retained Accountants 6.7(a)
Revenue Threshold 2.5(b)
Revised Procurement Agreements Recitals
Sale Order 5.1(b)
Sale Procedures Order 5.1(b)
Sales and Marketing Employees 8.2(b)
SEC 3.14(a)
Sellers Preamble
Sellers' FCC Application 6.5(a)
Selling Activities 6.13
Solicit 8.2(g)
SS/L Recitals
SS/L Agreement Recitals
Superior Proposal 6.13
Three-Month Period 2.5(b)(iv)(A)
Transaction 6.13
Transfer Taxes 8.1(b)
Upgrade Software Annex A
WARN Act 2.4(j)
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Term Section
---- -------
Warranty Claims 2.3
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Section 1.2 Other Definitional Provisions.
(a) The words "hereof", "herein" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE II
PURCHASE AND SALE OF THE PURCHASED ASSETS
Section 2.1 Purchase and Sale of Purchased Assets.
(a) On the terms and subject to the conditions set forth
herein, at the Closing, the Sellers agree to sell, convey, transfer,
assign and deliver, or cause to be sold, conveyed, transferred,
assigned or delivered, to Purchaser, and Purchaser agrees to purchase
from the Sellers, good title to all right, title and interest of the
Sellers in and to the assets set forth on Annex A hereto, whether
tangible or intangible, except for the Excluded Assets, free and clear
of any Encumbrances (other than Encumbrances that constitute Assumed
Liabilities) to which Purchaser would be subject following the Closing
Date (the "Purchased Assets"). In the event it is determined following
the Closing that any asset that is uniquely related to a Purchased
Satellite should have been transferred to Purchaser in order for the
representations and warranties of Sellers in Section 3.2 to be true but
were not, such assets shall also constitute Purchased Assets and shall
be transferred, without charge, to Purchaser. Subject to the provisions
of Section 7.6, if after the Closing Date, Sellers, on the one hand, or
Purchaser and Parent, on the other hand (the "Receiving Party") ,
receive any funds which, pursuant to the terms of this Agreement,
belong to the other party (the "Entitlement Party"), the Receiving
Party shall hold such funds in trust for, and immediately pay over such
funds to, the Entitlement Party.
(b) On the Closing Date, Sellers shall (i) cure, at
Sellers' sole expense, any and all defaults existing under each Assumed
Contract to the extent required for Sellers to assume such Assumed
Contract in the Chapter 11 Cases, (ii) pay, or to the extent permitted
by the Sale Order segregate funds sufficient to pay, any and all cure
amounts due with respect to each Assumed Contract, (iii) assume each
Assumed Contract in the Chapter 11 Cases, and (iv) subject to Purchaser
providing adequate assurance of performance to the counterparty thereto
to the extent required by the Bankruptcy Court, assign such Assumed
Contract to Purchaser pursuant to an order of the Bankruptcy Court
(which may be the Sale Order or one or more other orders that are no
less favorable to Parent and Purchaser than the provisions of the Sale
Order). Effective upon and concurrently
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with such assignment, Purchaser shall assume each Assumed Contract
assigned to it pursuant to this Section 2.1.
Section 2.2 Excluded Assets. Notwithstanding any provision
herein to the contrary, the Purchased Assets shall exclude all assets and
properties of the Sellers and any Affiliate of the Sellers other than those
assets and properties included in the definition of Purchased Assets (all such
assets herein referred to as the "Excluded Assets"), including, without
limitation, the assets listed on Annex B hereto.
Section 2.3 Assumed Liabilities. On the terms and subject to
the conditions set forth herein, on the Closing Date, Purchaser or its
designated Affiliate (whose performance has been guaranteed as provided in
Section 12.7) shall deliver to the Sellers an instrument of assumption in form
and substance reasonably satisfactory to Sellers pursuant to which Purchaser or
such designated Affiliate shall assume and agree to discharge (a) all
Liabilities under the Assumed Contracts that arise and become due with respect
to periods on or after the Closing Date in accordance with the respective terms
and subject to the respective conditions thereof; (b) Liability for any claims
first made on or after the Closing Date with respect to warranty or similar
claims under Assumed Contracts that are Contracts With Warranty to the extent
that the claim relates to performance problems after the Closing regardless of
whether the underlying event or condition giving rise to the warranty or similar
claim existed or arose on, prior, or after Closing ("Warranty Claims"); (c)
Liabilities set forth on Schedule 2.3; and (d) any Liability arising on or after
the Closing Date in connection with the operation of the Transferred Business or
ownership of the Purchased Assets by Purchaser or its Affiliates on or after the
Closing Date (the "Assumed Liabilities").
Section 2.4 Excluded Liabilities. The only Liabilities which
Purchaser shall assume and to which the Purchased Assets shall be subject are
the Assumed Liabilities and all other Liabilities shall be retained by the
Sellers. For the avoidance of doubt, the Liabilities listed below are excluded
and shall not be assumed or discharged by Parent or its Affiliates and instead
shall be retained by the Sellers:
(a) All Liabilities arising out of or relating to the
Excluded Assets;
(b) All Liabilities for Transfer Taxes imposed or
assessed as a result of the transactions effected pursuant to this
Agreement;
(c) All Liabilities of the Sellers with respect to any
indebtedness for borrowed money;
(d) All Liabilities relating to claims for overcharges
made or billed prior to the Closing;
(e) Any Liabilities or obligations of any Seller under
any Contract related to breaches by a Seller of its obligations
thereunder occurring prior to the Closing Date;
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(f) Any payment obligations of any Seller for goods
delivered or services rendered prior to the Closing (other than (i)
Warranty Claims, and (ii) "orbital payments" and similar payments
arising out of the operation of the Purchased Satellites, including
those to become due pursuant to the terms of the Purchased Satellite
Procurement Contracts, Revised Procurement Contract and New Procurement
Contract);
(g) Any Liabilities, obligations or responsibilities
whatsoever relating to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) maintained by any Seller, any ERISA Affiliate,
any Subsidiary or any Affiliate of any Seller whether or not relating
to employees associated with the Purchased Assets, including any
multiemployer plan, maintained by or contributed to by any Seller or
any ERISA Affiliate, or as to which any Seller, Subsidiary, ERISA
Affiliate or Affiliate of any Seller is obligated to contribute to, at
any time, including any such Liability (i) to the Pension Benefit
Guaranty Corporation under Title IV of ERISA; (ii) relating to a
multiemployer plan; (iii) with respect to non-compliance with the
notice or benefit continuation requirements of COBRA; or (iv) with
respect to any non-compliance with ERISA or any other applicable laws;
(h) Except as provided in Section 8.2(c), all Liabilities
with respect to any Persons at any time employed by any Seller or its
Affiliates in connection with the operation or ownership of the
Transferred Business or the Purchased Assets, whether known or unknown,
fixed or contingent which arise out of events occurring prior to
employment of any of such Persons, if at all, by Purchaser;
(i) All Liabilities arising from the ownership or
operation of the Purchased Assets prior to the Closing;
(j) Except as provided in Section 8.2(c), any Liabilities
arising under the Worker Adjustment and Retraining Notification Act
(the "WARN Act") in connection with the Sellers' termination of any
employees; and
(k) All Liabilities assessed by the FCC for violations of
statutes, rules and policies with respect to Sellers' operation of the
Purchased Assets and the Transferred Business prior to the Closing.
Section 2.5 Purchase Price. (a) On the terms and subject to
the conditions set forth herein, at the Closing, Purchaser agrees to pay to the
Sellers $1.0 billion (the "Base Price"), subject to increase or decrease
pursuant to Sections 2.5(b), (c) and (d) (the Base Price, as so adjusted, the
"Purchase Price").
(b) The Base Price shall be adjusted by the amounts set
forth in clauses (i) through (v) below (the "Adjustments"). At least
three (3) Business Days prior to the Closing, Sellers shall deliver to
Purchaser a report (the "Estimated Adjustment Report") certified as to
completeness and accuracy by the chief financial officer of each
Seller, which shall set forth a reasonable good faith
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estimate (together with reasonable supporting detail) of the
Adjustments set forth in clauses (i), (ii), (iii) and (v) below.
(i) The Base Price shall be decreased by the sum
of all amounts received by the Sellers prior to the Closing
with respect to customer deposits, prepayments and accounts
receivable generated by the Transferred Business to the extent
related to the period after the Closing Date (other than (A)
the Excluded Payments and (B) the remaining balance of the
amounts prepaid as of the date hereof under the Contracts set
forth on Schedule 2.5(b)(i)).
(ii) The Base Price shall be decreased by an
amount equal to the Pro Rata Fraction multiplied by each
cancellation payment received by Sellers with respect to
periods prior to the Closing with respect to Customer Service
Contracts which would not have terminated prior to Closing but
for the cancellation occurring after the date of this
Agreement and which would have been Assumed Contracts if they
had not been terminated.
(iii) The Base Price shall be decreased by any
insurance payments received by Sellers, net of any payments by
Sellers to parties under Contracts With Warranty with respect
to the insured loss, prior to the Closing in respect of (i) a
loss suffered by the Transferred Business or the Purchased
Assets (or assets that would have been Purchased Assets but
for such loss) subsequent to the date hereof and prior to the
Closing Date, or (ii) a new proof of loss first filed after
the date hereof other than with respect to matters described
on Schedule 3.20(b).
(iv) There shall be a Final Report as of a
month-end no more than sixty (60) days prior to the Closing.
The Base Price shall be decreased by the greater of the
following decreases:
(A) if Recurring Revenues for
the three (3) calendar month period (the
"Three-Month Period") in the Final Report
are below the revenue threshold set forth in
Schedule 2.5(b)(iv)(A) (the "Revenue
Threshold"), then the Base Price shall be
decreased $10 for every $1 that such
Recurring Revenues are below the Revenue
Threshold, but not more than a $100 million
decrease in the aggregate under this Section
2.5(b)(iv)(A).
(B) if Backlog, as set forth
in the Final Report, is less than the
backlog threshold set forth on Schedule
2.5(b)(iv)(B) (the "Backlog Threshold"),
then the Base Price shall be decreased by
the difference between the Backlog Threshold
and such Backlog amount, but not more
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than a $25 million decrease in the aggregate
under this Section 2.5(b)(iv)(B).
(v) The Base Price shall be increased by the sum of: (A)
all security and similar deposits paid by any Seller to the
Contract counterparty under any of the Assumed Contracts (but
only to the extent of the economic benefit that Purchaser
receives from such deposits), (B) pre-paid expenses that are
Purchased Assets (provided that no Adjustment shall be made
with respect to launch risk management insurance for Telstar 8
and Telstar 13) and (C) to the extent related to the Purchased
Assets, personal property taxes and FCC regulatory fees, in
each case under clauses (A), (B) and (C) to the extent that
they relate to the Transferred Business for any period
following the Closing. The Base Price shall be decreased by
the amount of any FCC regulatory fees that will be payable by
Purchaser (or its designated Affiliate) following the Closing
with respect to the Purchased Assets, to the extent such fees
relate to the Transferred Business for any period prior to the
Closing.
(c) The Base Price shall be decreased by $25 million if
at Closing Sellers or SS/L have not delivered to Purchaser under the
terms of the Telstar 8 Procurement Contract a legally binding
underwriting commitment to Purchaser as the named insured or the valid
assignment of Sellers' or SS/L's rights as the named insured to such a
commitment for launch risk management insurance with coverage limits of
$250 million (which policy coverage limits may be decreased as provided
in the Revised Procurement Agreement related to Telstar 8) and on the
terms set forth in Schedule 2.5(c).
(d) If on or prior to the Closing Date, Sellers, in
compliance with Section 6.17, shall have entered into a New Lease and
Purchaser shall have elected under Section 6.17(c) for the New Lease to
be the Lease Agreement for purposes of this Section 2.5(d), and the
Lease Agreement is a valid and binding Contract (which is an Assumed
Contract, all rights under which are legally and validly assigned to
Purchaser at Closing) then: (A) the Base Price shall be increased by
$100 million and (B) provided that SS/L executes and delivers at
Closing amendments to the Purchased Satellite Procurement Agreements
eliminating all obligations to make orbital incentive payments,
Purchaser shall pay SS/L on the Closing Date $25 million, whereupon the
covenant of Sellers in Section 6.16 hereof and the closing condition in
Section 9.1(r) hereof shall cease to be effective.
(e) Commencing with November 30, 2003 (or such earlier
month-end as the parties may agree) and on and as of each subsequent
month end, Ernst & Young or, if it is unable or unwilling to serve,
another mutually acceptable accounting firm or, if the parties are
unable to agree, such a firm selected by the Bankruptcy Court (Ernst &
Young or such other firm, the "Accountants") shall perform an agreed
upon procedures review of the Backlog as of, and the Recurring Revenues
for the Three Month Period ending on such month end and shall report,
as part of such review, on their computation of such amount (the
"Monthly Report"). The Monthly Report shall also set forth a
calculation the
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Average Transponder Price for the period from the date of this
Agreement through the last day of the last full calendar month covered
by the Monthly Report. Sellers shall deliver to the Accountants
promptly after November 30, 2003 and after the end of each month
thereafter a calculation (with appropriate supporting detail) of
Recurring Revenues for the Three Month Period ending at such month end,
Average Transponder Price through such month end and Backlog as of such
month end. The Accountants shall deliver each of their Monthly Reports
to Sellers and the Parent and Purchaser as soon as practicable after
its completion. Sellers and Parent and Purchaser shall consult in good
faith with respect to each Monthly Report to reach an agreement on all
computational and other issues with a view towards minimizing the
likelihood of a dispute with respect to the Final Report referred to
below. On the Closing Date, the Base Price shall be adjusted to reflect
the Adjustment required under Section 2.5(b)(iv) solely on the basis of
the Recurring Revenues and Backlog shown on the most recent Monthly
Report delivered by the Accountants (that Monthly Report, and the
amounts set forth therein, used to establish these Adjustments is
referred to as the "Final Report"). Sellers shall provide the
Accountants their full cooperation (including executing and delivering
appropriate management representation letters and all necessary
information including, without limitation an accounts receivable aging
schedule).
(f) Within sixty (60) days after the Closing: (i)
Purchaser may, by written notice to Sellers, object to all or any
portion of the Estimated Adjustment Report, (ii) Sellers may notify
Purchaser that they believe that the actual amounts in clauses (i),
(ii), (iii) and (v) of Section 2.5(b) at Closing vary from the amounts
in the Estimated Adjustment Report and (iii) either party may object to
the computation of Recurring Revenues for the Three Month Period or
Backlog in the Final Report. Upon reasonable prior notice, Sellers
shall provide Purchaser with reasonable access during normal business
hours during such sixty (60) day period to the books and records used
in connection with the preparation of the Estimated Adjustment Report
or to any other information in any Seller's possession that relates to
the amounts in the Final Report. If any party makes an objection or
provides a notice under this Section 2.5(f), it shall within such sixty
(60) day period deliver to the other parties written notice (the
"Objection Notice") of its: (i) objection or its notice relating to the
Estimated Adjustment Report and the calculation of the Adjustments or
the computations in the Final Report, as the case may be, (ii) setting
forth the items being disputed and the reasons therefore and (iii)
specifying the party's calculation of each of the Adjustments or the
computations in the Final Report, as the case may be, and the amount
payable in accordance with this Section 2.5.
(g) For fifteen (15) days after delivery of the Objection
Notice, Purchaser and Sellers shall attempt to resolve all disputes. If
Purchaser and Sellers cannot resolve all such disputes within such
fifteen (15) day period, Purchaser or Sellers may submit the matters in
dispute for determination by a
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nationally recognized public accounting firm that is mutually
acceptable to the parties or, if the parties are unable to agree, such
a firm selected by the Bankruptcy Court (such a firm, the "Arbiter").
Promptly, but not later than thirty (30) days after the acceptance of
its appointment, the Arbiter shall determine (based solely on
presentations to the Arbiter by or on behalf of Sellers and Purchaser
and not by independent review) only those items in dispute and shall
render a report (the "Arbiter Report") as to the matters in dispute and
the resulting payment pursuant to Section 2.5. Such determination shall
be done as of the Closing or the date of the Final Report, as the case
may be. For purposes of the Arbiter's calculation, the amounts to be
included shall be the appropriate amounts from the Estimated Adjustment
Report and the Final Report as to items that are not in dispute and for
those items in dispute the amounts determined by the Arbiter. In
resolving any disputed item, the Arbiter may not assign a value to such
item greater than the greatest value for such item claimed by either
party or less than the lowest value for such item claimed by either
party. Purchaser and Sellers shall cooperate with the Arbiter in making
its determination and such determination shall be conclusive and
binding upon Purchaser and Sellers.
(h) Purchaser and Sellers shall each bear one-half of the
fees and expenses of the Accountants and the Arbiter. Sellers, Parent
and Purchaser shall enter into customary engagement letters with the
Accountants and the Arbiter.
(i) Any payment owed by a party as a result of the
Arbiter's determination shall be paid within ten (10) days after
delivery of the Arbiter Report.
(j) If there is an amount owed by Sellers to Purchaser
under Section 2.5(i) and Sellers have failed to make payment to
Purchaser of such amount on the date provided therein, Purchaser may,
in lieu of having a continuing claim against Sellers for such unpaid
amount, elect, by written notice to Sellers and SS/L, to reduce the
purchase price under the New Procurement Agreement by an amount equal
to such unpaid amount and SS/L shall have a claim only against the
Seller (and not against Purchaser) with respect to such reductions.
Section 2.6 Closing. The Closing shall take place at the
offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, X.X., 00000 at
10:00 a.m. local time, on the fifth (5th) Business Day following: the later of
(a) the receipt of the Government Approvals referred to in Section 9.1(h), (i)
and (j) (other than any Governmental Approval the receipt of which has been
waived by Purchaser and Sellers) and (b) the expiration date of any applicable
waiting period under the HSR Act. If on such fifth (5th) Business Day there are
other conditions that would not be satisfied if the Closing occurred on such
date, the Closing may be postponed by either Sellers or Purchaser to a later
date (but not later than the Final Date) by a delivery of written notice (the
"Postponement Notice") to the other party not later than the close of business
on such fifth (5th) Business Day unless (i) the party seeking such postponement
is in
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material breach of its obligations under this Agreement or (ii) the other party
has reasonably and in good faith concluded that it is unlikely that all the
conditions to its obligation to effect the Closing will be satisfied by the
Final Date and has provided written notice of such conclusion to the party
seeking postponement within five (5) Business Days of receipt of the
Postponement Notice. Purchaser may elect to defer the Closing until the last
Business Day in the calendar month in which the Closing would have otherwise
occurred pursuant to the terms of the preceding two sentences. The date on which
the Closing occurs is called the "Closing Date". The Closing shall be effective
as of 12:01 a.m. on the Closing Date.
Section 2.7 Deliveries by Purchaser.
(a) At the Closing, Purchaser shall deliver the following
to the Sellers:
(i) The Purchase Price in immediately available
funds by wire transfer to the accounts designated, in writing,
by the Sellers not less than three Business Days prior to the
Closing;
(ii) Such instruments of assumption and other
instruments or documents, in form and substance reasonably
acceptable to the Sellers, as may be necessary to effect
Purchaser's assumption of the Assumed Liabilities;
(iii) A copy of each of the applicable Ancillary
Agreements and any documents required to be delivered by such
agreements, in each case duly executed by Purchaser or such of
its Affiliates as are party thereto;
(iv) The certificates, opinions and other
documents referred to in Section 9.2 to be delivered by
Purchaser; and
(v) A deposit of $100 million with respect to
the New Procurement Agreement (the "Deposit") in immediately
available funds by wire transfer to the accounts designated,
in writing, by the Sellers not less than three (3) Business
Days prior to the Closing; provided that if Sellers are unable
to deliver a valid, perfected, first priority security
interest in the Deposit Collateral, as provided in the Deposit
and Security Agreement, the Deposit shall not be a condition
to Closing and shall only be required to be made when the
required security interest in the Deposit Collateral, together
with all appropriate documentation, is so delivered.
(b) Purchaser may designate, in a written notice
delivered to the Sellers not less than thirty (30) days prior to the
Closing Date, one or more of its Affiliates to accept title to or
assignment of any portion of the Purchased Assets and assume any
portion of the Assumed Liabilities directly from the Sellers at the
Closing; subject to Parent's compliance with Section 12.7 and such
assignment not hindering, delaying, or materially increasing the cost
of Closing; and provided
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that no such assignment shall relieve Purchaser or Parent of their
obligations hereunder.
Section 2.8 Deliveries by Sellers. At the Closing, the Sellers
shall deliver to Purchaser the following:
(a) Bills of sale, assignments and any other customary
instruments of sale and conveyance, in form and substance reasonably
acceptable to Purchaser, transferring to Purchaser all Purchased
Assets;
(b) A copy of each of the Ancillary Agreements and any
documents required to be delivered by such agreements, in each case
duly executed by Sellers or such of their Affiliates as are party
thereto; provided that if Sellers fail to deliver the documentation as
is necessary to grant to Purchaser the security interest referenced in
Section 2.7(a)(v) above, such failure shall only constitute a condition
to Purchaser extending the Deposit, and Purchaser's sole remedy under
this Agreement for the failure to deliver such documentation shall be
that it is relieved from its obligation to extend the Deposit until
such time as Sellers deliver such documentation;
(c) The Books and Records other than Commingled Books and
Records that are subject to Section 6.3;
(d) The certificates, opinions and other documents
referred to in Section 9.1 to be delivered by Sellers; and
(e) Such other instruments or documents, in form and
substance reasonably acceptable to Purchaser, as may be necessary to
effect the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller jointly and severally represents and warrants to
Parent and Purchaser as follows:
Section 3.1 Organization and Qualification. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate the Purchased Assets as currently owned and operated by it. Each
Seller is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of the
Purchased Assets by it requires such qualification except where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 3.2 Purchased Assets. Except as set forth in Schedule
3.2, the Purchased Assets together with the services to be received pursuant to
the Transition
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Services Agreement and the Licensed Intellectual Property licensed pursuant to
the Intellectual Property Agreement are sufficient to enable Purchaser
immediately following the Closing to conduct the Transferred Business in
substantially the same manner as the Transferred Business has been operated by
the Sellers in the past.
Section 3.3 Corporate Authorization. Subject to obtaining
approval by the Bankruptcy Court, each Seller has the necessary corporate power
and authority to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is a party and to perform each of its obligations
hereunder and thereunder. Except for approval by the Bankruptcy Court, the
execution, delivery and performance by each Seller of this Agreement and each of
the Ancillary Agreements to which it is a party have been duly and validly
authorized, and no additional corporate authorization or consent (including,
without limitation, any action by such Seller's shareholders) is required in
connection with the execution, delivery and performance by such Seller of this
Agreement or the Ancillary Agreements.
Section 3.4 Consents and Approvals. Except for the
Governmental Approvals listed in Schedule 3.4, and subject to obtaining approval
by the Bankruptcy Court, no Governmental Approvals are required to be obtained
by any Seller, and no notice or filing is required to be given by any Seller to,
or made by any Seller with, any Governmental Authority or other Person in
connection with the execution, delivery or performance by the Sellers of this
Agreement or any of the Ancillary Agreements.
Section 3.5 Non-Contravention. Subject to obtaining approval
by the Bankruptcy Court, the execution, delivery and performance by each Seller
of this Agreement and each of the Ancillary Agreements to which such Seller is a
party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not: (a) violate any provision of the certificate of
incorporation, by-laws or other organizational documents of such Seller, (b)
conflict with, or result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether after the
filing of notice or the lapse of time or both) of any right or obligation of
such Seller under, or to a loss of any benefit to which such Seller is entitled
under, any Contract, except as listed in Schedule 3.5, or result in the creation
of any Encumbrance upon any of the Purchased Assets that will not be discharged
in full on or prior to the Closing or (c) assuming the consents, approvals,
waivers, authorizations, notices and filings set forth in Sections 3.4 and 4.3
are obtained or given or made, violate or result in a breach of or constitute a
default under any Law.
Section 3.6 Binding Effect. This Agreement, upon approval by
the Bankruptcy Court, constitutes, and each of the Ancillary Agreements to which
a Seller is a party when executed and delivered by the parties thereto, upon
approval by the Bankruptcy Court, will constitute, a valid and legally binding
obligation of each Seller enforceable in accordance with its terms, subject in
the case of each Seller's obligation to transfer the Purchased Assets, to
obtaining, giving or making the consents, approvals, waivers, authorizations,
notices and filings set forth in Sections 3.4 and 4.3.
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Section 3.7 Litigation and Claims.
(a) Except as set forth in Schedule 3.7 hereof and except
for the Chapter 11 Cases and the matters and proceeding arising
thereunder, there is no civil, criminal or administrative action, suit,
demand, claim, hearing, arbitration proceeding, investigation, pending
or, to the Knowledge of any Seller threatened, involving any Seller or
the Purchased Assets, before any arbitration tribunal, domestic or
foreign, or before any Governmental Authority which (i) challenges, or
that would have the effect of preventing or delaying the consummation
of the transactions contemplated hereby, (ii) would have the effect of
subjecting any Seller to a material cease and desist order with respect
to the Purchased Assets or (iii) has had or would reasonably be
expected to have, a Material Adverse Effect.
(b) Except as set forth in Schedule 3.7 hereof, no Seller
has been charged with, nor to the Knowledge of the Sellers, is any
Seller under investigation with respect to, any violation of any
provision of any Law with respect to the Purchased Assets or the
conduct of the Transferred Business.
(c) Except as set forth in Schedule 3.7 hereof, none of
the Purchased Assets or (except for Governmental Authorizations and
such orders, writs, judgments, awards, injunctions and decrees as do
not, and subsequent to the Closing will not, in the aggregate have a
Material Adverse Effect) any Seller is subject to any order, writ,
judgment, award, injunction or decree of any court or Governmental
Authority of competent jurisdiction or any arbitrator or arbitrators,
other than those arising in the Chapter 11 Cases.
Section 3.8 Property, Equipment and Other Purchased Assets.
(a) Except for this Agreement or as set forth in Schedule
3.8, no Seller is obligated under or a party to, any option, right of
first refusal or other contractual right to sell, lease or dispose of
(other than pursuant to Customer Service Contracts) of the Purchased
Assets or any portion thereof or interest therein.
(b) Except as set forth in Schedule 3.8, each Seller has
good title to the Purchased Satellites and the other Purchased Assets
purported to be owned by it, which in the aggregate for the Sellers,
constitute all the Purchased Assets, free and clear of any Encumbrances
(other than Encumbrances that would constitute Assumed Liabilities) to
which Purchaser or such Purchased Assets would be subject following the
Closing Date. Subject to ordinary course wear and tear, and except as
set forth in Schedule 3.8, all material assets included in the
Purchased Assets, including, without limitation, the in-orbit Purchased
Satellites, are in good and working condition for use in the ordinary
course consistent with the Sellers' past practice, and each Seller has
performed regular maintenance on the Purchased Assets owned by it in
accordance with such Seller's past practice.
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(c) Upon transfer of title to Telstar 13 from SS/L to
Echostar, Seller will own (i) 100% of the C-band payload of Telstar 13
and (ii) as a tenant in common, 41.5% of the elements of the Telstar 13
that are common to and/or shared by the Ka-Band, Ku-Band and C-Band
payloads.
Section 3.9 Intellectual Property.
(a) Schedule 3.9 sets forth a list and description
(including the country of registration) of (i) all Transferred
Intellectual Property and all Licensed Intellectual Property and (ii)
any other intellectual property for which any Seller has paid or is
obligated to pay $100,000 or more ("Other Intellectual Property") used
in the conduct of the Transferred Business or in connection with the
Purchased Assets. Transferred Intellectual Property and Licensed
Intellectual Property include all material Intellectual Property used
in the Transferred Business, except to the extent designated as Other
Intellectual Property on Schedule 3.9.
(b) Subject to the entry of the Sale Order, no Seller is,
nor will it be as a result of the execution, delivery or performance of
this Agreement and the Ancillary Agreements to which it is a party, in
violation of any licenses, sublicenses or other agreements as to which
such Seller is a party or pursuant to which such Seller is authorized
to use any material third-party Intellectual Property and all such
material third-party Intellectual Property is assignable, to Parent and
Purchaser without causing any breach to occur, except as set forth on
Schedule 3.9; and the transfer of the Purchased Assets and the transfer
and licensing of the Transferred Intellectual Property and the Licensed
Intellectual Property to Parent and Purchaser, will not cause Parent or
Purchaser to incur any obligation to license any third party due to any
preexisting agreement between such Seller and the third party, or
otherwise, except as set forth on Schedule 3.9.
(c) No claims with respect to the Transferred
Intellectual Property or Licensed Intellectual Property owned by any
Seller are currently pending or, to the Knowledge of any Seller,
threatened by any Person which would have a Material Adverse Effect.
(d) Except as set forth on Schedule 3.9, to the actual
knowledge of the Persons listed on Schedule 1.1(a), as of the date
hereof, there are no valid grounds for any bona fide claims: (i) to the
effect that the use or operation of the Purchased Assets, infringes on
any third-party Intellectual Property rights; (ii) against the use by
such Seller of any Transferred Intellectual Property or Licensed
Intellectual Property; (iii) challenging the ownership of any of the
Transferred Intellectual Property or Licensed Intellectual Property; or
(iv) challenging any license or legally enforceable right to use the
material third-party Intellectual Property by such Seller, except in
each case as would not reasonably be expected to have a Material
Adverse Effect.
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(e) To the Knowledge of each Seller, there is no
unauthorized use, infringement or misappropriation of any of the
Transferred Intellectual Property or Licensed Intellectual Property
that does not constitute open source code or other similar software not
developed by one of the Sellers ("Open Source") by any third party,
including any employee or former employee of such Seller which would
have a Material Adverse Effect.
(f) To the Knowledge of each Seller, the ownership,
manufacture, use, operation or sale of Purchased Assets or the transfer
of such Purchased Assets to Purchaser does not infringe or violate any
Intellectual Property rights of such Seller, including patent rights,
that are not transferred or otherwise licensed to Purchaser through
this Agreement or the Ancillary Agreements. Therefore, no additional
license, including a patent license, from such Seller to Purchaser
(other than those contained in the Ancillary Agreements) is required
for Purchaser to lawfully own, use and operate any Purchased Asset with
respect to any Intellectual Property right owned or assigned to such
Seller as of the Closing.
(g) The Sellers, in the aggregate, own or are licensed or
otherwise possess legally enforceable rights to use all of the
Transferred Intellectual Property and Licensed Intellectual Property
(other than any Open Source embedded in either).
Section 3.10 Certain Contracts.
(a) Schedule 3.10 contains a list of all Contracts in
existence as of the date hereof (other than Government Contracts)
including, without limitation, the following: (i) non-competition
agreements, (ii) partnership or joint venture agreements, (iii)
distributorship, franchise, or brokerage agreements and (iv) Contracts
between any Seller and its suppliers or customers.
(b) Except as set forth in Schedule 3.10, each of the
Contracts listed in Schedule 3.10 is valid, binding and enforceable
against Sellers and, to each of the Sellers' Knowledge, the other
parties thereto in accordance with its terms, and in full force and
effect, subject, in the case of enforceability against the other
parties thereto, to bankruptcy, reorganization, insolvency, moratorium
or similar Laws relating to such other parties which affect creditors'
rights generally and by legal and equitable limitations on the
enforceability of equitable remedies as might apply to the other
parties thereto. Except as set forth in Schedule 3.10, each of the
Sellers has performed all material obligations required to be performed
by such Seller under each Contract listed on Schedule 3.10, other than
the commencement of the Chapter 11 Cases and monetary defaults that
would be cured by such Seller by payment of the "cure amount" as
provided in the Bankruptcy Code. Except as set forth in Schedule 3.10,
neither any Seller nor, to Sellers' Knowledge, any other party thereto
is in material default under any Contract listed on Schedule 3.10 (and
no event has occurred which, with due notice or lapse of time or both,
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would constitute such a lapse or default by Sellers, or to Sellers'
Knowledge, any other party thereto) and no event has occurred or failed
to occur that would adversely affect a Seller's material rights
thereunder, other than in the case of Sellers the commencement of the
Chapter 11 Cases and defaults that would be cured by Sellers by payment
of the "cure amount" as provided in the Bankruptcy Code.
(c) The Sellers have previously delivered to Parent and
Purchaser true and complete schedules of Backlog as of December 31,
2002 and as of the final day of each month during 2003, through June
30, 2003. Such schedule accurately reflects the aggregate amount of
Backlog as of each such date. Attached as Schedule 3.10 is a true and
complete Schedule of Backlog as of June 30, 2003, which accurately sets
forth the amount of Backlog attributable to each customer of the
Transferred Business as of such date. Each Customer Service Contract
reflecting such Backlog is listed on such schedule. The Backlog
represents Revenue that would be recognized under each Contract from
bona fide sales and delivery of goods, performance of services and
other business transactions, for the remaining term of the Contract,
assuming no termination thereof. Except as set forth on Schedule 3.10,
as of the date hereof, no Seller is, or has received any notice or has
any Knowledge that any other party is, in default in any material
respect under any Contract representing any material portion of the
Backlog, other than payment defaults under transponder lease agreements
which are not more than sixty (60) days past due.
(d) Schedule 3.10(d) includes a true and complete list of
amounts of deposits under Customer Service Contracts as of the date set
forth in such schedule. True and complete copies of all Contracts,
including all amendments thereto and modifications thereof, listed in
Schedule 3.10 have been provided or made available to Parent and
Purchaser.
(e) Except as set forth in Schedule 3.10, none of the
Contracts bind or purport to bind any Affiliate of a Seller or of a
party having an ownership interest in a Purchased Satellite, other than
the Sellers and their subsidiaries.
(f) Except for those Customer Service Contracts that are
indicated on Schedule 3.10, no Seller is a party to any Contract
limiting the freedom of any of the Sellers or any of their Affiliates
or of any Person having an ownership interest in a Purchased Satellite
or any of such Person's Affiliates to engage in any line of business or
to compete with any Person.
(g) Except as specifically noted on Schedule 3.10, no
Seller is a party to any agreement that permits a customer to transfer
all or a portion of their traffic from a satellite other than a
Purchased Satellite to a Purchased Satellite (a "Portability-In
Contract") or from a Purchased Satellite to a satellite other than a
Purchased Satellite (a "Portability-Out Contract").
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(h) Schedule 3.10 includes a separate list of all
"sales-type" leases, "condosat" agreements and other Contracts as of
the date hereof, pursuant to which, in the case of sales-type leases,
customers have prepaid for the services offered by the Sellers and
Related to the Purchased Assets and lists the number of transponders
that are subject to such agreements.
(i) Schedule 3.10 sets forth a complete and accurate
summary of the current status of SS/L's performance, as of the date
hereof, under the Telstar 8 spacecraft contract and the Telstar 13
satellite procurement contract, including a description of the program
status, milestone completion and deliverables, payment profile,
waivers, modifications and other deviations from specifications.
(j) Schedule 3.10 includes a separate list of Contracts
under which any Seller provides an express or implied warranty
("Contracts With Warranty"). As of the date hereof, the maximum
Liability that Sellers could have under such warranties assuming
Sellers failed to meet all applicable performance standards relating to
these warranties does not exceed $53.5 million. Except as set forth in
Schedule 3.10, no Seller has received any written notice to terminate
or any written intention to terminate any Customer Service Contract.
(k) Except as specifically noted on Schedule 3.10, there
are no orbital incentive or similar payments provided for under any
Contract related to a Purchased Satellite.
Section 3.11 Government Contracts.
(a) Schedule 3.11 contains a list of all Government
Contracts existing as of the date hereof, true, complete and correct
copies of which have been provided or made available to Parent and
Purchaser.
(b) Except as set forth in Schedule 3.11 and for the
commencement of the Chapter 11 Cases, no Seller has taken any action or
omitted to take any action required under the terms of a Government
Contract which would cause a material breach or default under such
Government Contract or cause a Seller to be subject to disqualification
or removal from any capacity which a Seller now occupies with respect
to, or as a result of the Government Contracts, either directly or as a
subcontractor, consultant or otherwise, nor has any Seller been
disqualified or removed from any such capacity.
(c) No Seller has received notice of any default under,
or notice of any violation of the terms of, any Government Contract,
other than those relating to the commencement of the Chapter 11 Cases,
that is reasonably likely to result in a Material Adverse Effect.
(d) No Seller is participating in, or to the Knowledge of
the Sellers, the subject of, any investigation by any Governmental
Authority relating to the
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Government Contracts, xxxxxxxx, claims or business practices that is
reasonably likely to lead to criminal or material civil penalties or
the cancellation of any Government Contract, and, to the Knowledge of
the Sellers, no such investigation has been threatened or is actively
being considered.
(e) No Seller is debarred or suspended under the Federal
Acquisition Regulations or other similar applicable federal or state
laws or regulations by any Governmental Authority from bidding for, or
obtaining any Government Contract for services provided by, Sellers,
and to the Knowledge of Sellers, no such proceeding is pending or
threatened.
(f) To the Knowledge of Sellers, each Seller has complied
in all material respects with all applicable requirements, if any,
under the Federal Truth in Negotiations Act (codified at 10 U.S.C.
Sections 2306 and 2306a; 41 U.S.C. Section 254b) with respect to
Government Contracts for services provided by Sellers. No Government
Contract is subject to the U.S. Government Cost Accounting Standards,
as set forth in 48 C.F.R. Part 30. No Seller has engaged in any
fraudulent act, bribery or other act of dishonesty or made any
misrepresentation of material fact in connection with soliciting,
negotiating, obtaining or maintaining any Government Contract which
could serve as the basis of the termination of any such Government
Contract or otherwise have a Material Adverse Effect.
(g) Except as would not have a Material Adverse Effect:
(i) the operation of the Purchased Assets has conformed, and is
expected to conform, with the delivery schedule requirements of each
Government Contract except as otherwise agreed by the applicable
Governmental Authority; (ii) there has not been, nor is there expected
to be, any cost overrun Liability or spending in excess of any
limitation of cost and fund provisions under any cost reimbursement
type Government Contracts; and (iii) no Governmental Authority has, in
writing or, to the Knowledge of a Seller, orally communicated, asserted
or filed any actual or potential material price reduction, adverse
contract adjustment, disallowance of costs or claims in respect of any
Government Contract.
(h) As of the date hereof, no Seller has received, with
respect to any Government Contract, notice of: (i) any cure notice
pursuant to applicable contract default provisions or notice of
default, however termed; (ii) any contract termination, whether for
default, convenience, cancellation or a lack of funding or other
reasons; (iii) any final decision or unilateral modification assessing
a price reduction, penalty or claim for damages or other remedy,
however termed; (iv) any claim, based on assertions of defective
pricing or asserted violations of government cost accounting standards
or cost principles; (v) any claim for indemnification by any
Governmental Authority; (vi) other than in the ordinary course of
business and in amounts less than $50,000, an equitable adjustment of
or claim concerning such Government Contract submitted by or brought by
any
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Seller or brought by any subcontractors or suppliers against a Seller;
or (vii) any disallowance of costs (direct or indirect) or related
claims, in each case referred to in one of the preceding clauses of
this Section 3.11, except as in each case is not reasonably likely to
have a Material Adverse Effect.
Section 3.12 Taxes. There are no agreements or arrangements
with any taxing authority with respect to the taxation of the Purchased Assets
or the income from the Purchased Assets.
Section 3.13 Compliance with Laws.
(a) The Purchased Assets have been at all relevant times,
and are being, operated in compliance in all material respects with all
applicable Laws, except where the failure to be in compliance would
not, individually or in the aggregate, result in a Material Adverse
Change to the Transferred Business following the Closing Date. Without
limiting the generality of the foregoing, each of the Sellers has been
and currently is in compliance in all material respects with the U.S.
Export Administration Act of 1979, as amended, and all regulations
promulgated thereunder with respect to the Transferred Business, except
where the failure to be in compliance would not, individually or in the
aggregate, result in a Material Adverse Change.
(b) Except as set forth in Schedule 3.13, each of the
Sellers has complied in all material respects with all Regulatory
Requirements applicable to, and with the terms and conditions of, the
Governmental Authorizations.
(c) Except as set forth on Schedule 3.13, the Purchased
Satellites have been designed and constructed to comply with, and are
in all material respects in full compliance with, all obligations
required under the FCC Authorizations and the Regulatory Requirements
and, in the case of Telstar 8 and Telstar 13, all construction
milestone requirements set forth in the authorizations applicable
thereto.
Section 3.14 SEC Reports.
(a) As of the date of filing, the Annual Report on Form
10-K of Loral Parent for the year ended December 31, 2002 and the
Quarterly Report on Form 10-Q of Loral Parent for the fiscal quarter
ended March 31, 2003 filed with the Securities and Exchange Commission
(the "SEC") did not contain any untrue statement of a material fact or
omit to state any material fact --- required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. The foregoing
representation shall not apply to any assets of, or aspects of, the
business of Loral Parent and its subsidiaries that is not included in
the Transferred Business or the Purchased Assets. In addition, the
materiality of any fact shall be determined
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with respect to the business and assets of Loral Parent and its
subsidiaries, taken as a whole.
(b) The financial statements contained in the filings set
forth in clause (a) above (including the related notes, where
applicable) fairly present in all material respects the consolidated
financial position of Loral Parent and its consolidated Subsidiaries
for the respective fiscal periods or as of the respective dates therein
set forth (subject, in the case of unaudited statements, to recurring
audit adjustments normal in nature and amount) and the results of the
consolidated operations and changes in shareholders' equity and
consolidated cash flows of Loral Parent and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where
applicable), comply in all material respects with the Accounting
Requirements (as applicable at the date of the filing); and each of
such statements (including the related notes, where applicable) has
been prepared in all material respects in accordance with GAAP,
consistently applied during the periods involved, except, in each case,
as indicated in such statements or in the notes thereto.
(c) Each Seller maintains accurate books and records
reflecting the Purchased Assets and Assumed Liabilities and maintains
proper and adequate internal accounting controls which provide
assurance that: (i) transactions are executed with management's
authorization, (ii) transactions are recorded as necessary to permit
the preparation of the financial statements and to maintain
accountability for the assets, (iii) access to their assets is
permitted only in accordance with management's authorization and (iv)
accounts receivables are recorded accurately and properly and adequate
procedures are implemented to effect the collection thereof on a
current and timely basis.
(d) The chief executive officer and the chief financial
officer of Loral Parent have signed and Loral Parent has furnished to
the SEC all certifications required by Section 906 of the
Xxxxxxxx-Xxxxx Act of 2002; such certifications comply with the
requirements thereof and have not been modified or withdrawn; and
neither Loral Parent nor any of its officers has received any notice
from any Governmental Authority questioning or challenging the
accuracy, completeness or form of such certifications.
Section 3.15 Governmental Authorizations. Schedule 3.15 to
this Agreement lists all material Governmental Authorizations (including,
without limitation, all FCC Authorizations, ITU Authorizations and Environmental
Permits) Related to the Purchased Assets or to the current use of the Purchased
Assets that any Seller has obtained from any Governmental Authority. Except as
set forth in Schedule 3.15, all such material Governmental Authorizations are
validly existing authorizations, each Seller has all Governmental Authorizations
necessary for the lawful operation of the Transferred Business and the Purchased
Assets as currently operated and there is no
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action pending, nor to the Sellers' Knowledge, threatened, before any
Governmental Authority to revoke, refuse to renew, suspend or modify any of the
Governmental Authorizations, or any action which is reasonably likely to result
in the denial of any pending applications of any Seller. Except as set forth on
Schedule 3.15, the Sellers have not received notice from any Governmental
Authority to the effect that any additional Governmental Authorizations are
required for such operation, and no Governmental Authorizations are required but
which have not been obtained. Except as set forth in Schedule 3.15, by reason of
the consummation of the transactions contemplated by this Agreement, subject to
the receipt of Governmental Approvals and entry of the Sale Order: (a) none of
the rights of the Sellers under such Governmental Authorizations will be
impaired and (b) all of the rights of the Sellers under such Governmental
Authorizations will be enforceable by Parent or Purchaser without the consent or
agreement of any party other than those obtained by the Sellers prior to the
Closing. No Seller provides common carrier services to its customers under the
Contracts as regulated under Title II of the Communications Act.
Section 3.16 Orbital Locations, etc. Schedule 3.16 hereto sets
forth complete and accurate copies of: (a) a list, as of the date of this
Agreement, by orbital location, of each Purchased Satellite, including the
proposed orbital locations of Telstar 8 and Telstar 13, (b) a satellite loading
chart, dated as of the date set forth in Schedule 3.16, listing each transponder
on each Purchased Satellite (other than Telstar 8 and Telstar 13), together with
the customer or group of related customers that have purchased services
utilizing capacity on such transponder and the amount of capacity allocated to
such customer(s) and (c) a list as of the date of this Agreement of the most
recent health status report for each Purchased Satellite (other than Telstar 8
and Telstar 13), which report summarizes all spacecraft related incidents and
anomalies of which any Seller has Knowledge as of the date of the report, and
the current status of the subsystems on the Purchased Satellites as of the date
of the report. As of the date hereof, Sellers have no Knowledge of any
spacecraft related incidents or anomalies that are not disclosed in the reports
in the list referred to in clause (c) of the immediately preceding sentence.
Section 3.17 Intersystem Coordination.
(a) Schedule 3.17 contains a complete and accurate
description of the current status, as of the date of this Agreement, of
the frequency registration at the ITU for each Purchased Satellite
operating at its current orbital location, and in the case of Telstar
4, Telstar 8 and Telstar 13, as they are proposed to be operated at
77(degree) W, 89(degree) W and 121(degree) W, respectively, by the
Sellers. Schedule 3.17 includes the ITU coordination request reference
numbers and publication dates (or equivalent information for advance
publication whenever coordination requests are still unpublished),
identity of the filing administration, frequency bands covered and
geographical coverage area. Schedule 3.17 also includes the ITU
required dates for bringing the satellite network into use, submission
of due diligence information to the ITU and ITU filing notification.
Schedule 3.17 also details the relative priority of the filing
administration's rights under applicable
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ITU regulations to use the frequency assignments described in its ITU
filings at each such orbital location vis-a-vis any other foreign
administration's rights to use the frequency assignments described in
its ITU filings at and adjacent to each such orbital location.
(b) Schedule 3.17 contains a list, as of the date of this
Agreement, of all satellite intersystem coordination agreements to
which any Seller is a party with respect to the Purchased Satellites.
Schedule 3.17 also contains a detailed description, as of the date of
this Agreement, by orbital location, of the status of all remaining
intersystem coordination required by the ITU for notification of the
respective ITU filings, indicating the administrations with which
coordination needs to be achieved and their relevant ITU filings.
(c) Except as disclosed on Schedule 3.17, as of the date
of this Agreement no Person or entity has priority rights in accordance
with the ITU regulations, or has, to the Knowledge of the Sellers,
asserted that it has rights to operate a spacecraft in a manner that
would result in interference to any Purchased Satellite now operated by
a Seller or proposed to be operated by a Seller as per any FCC
Authorization or any application for an FCC Authorization.
Section 3.18 Collective Bargaining Agreements. Except as
disclosed on Schedule 3.18, no Seller is a party to or bound by any labor
agreement or collective bargaining agreement respecting its employees, and there
is not any pending, or, to the Knowledge of the Sellers, threatened, strike,
walkout or other work stoppage or any union organizing effort by or respecting
its employees.
Section 3.19 Absence of Change. Except as set forth in
Schedule 3.19 and to the extent arising out of or relating to the transactions
contemplated by this Agreement, since December 31, 2002, the Purchased Assets
have been operated in the ordinary course in a manner consistent with past
practice and there has not been any Material Adverse Change.
Section 3.20 Insurance.
(a) Schedule 3.20 sets forth a list of all insurance
policies or binders, which list shall contain a general description of
the coverage, deductible and term of each policy or binder, which are
currently in effect insuring the Purchased Satellites, and true and
complete copies thereof have been delivered to Parent and Purchaser.
(b) With respect to policies listed in Schedule 3.20, (i)
the Sellers have paid all premiums due and have not received any notice
of cancellation, and (ii) as of the date hereof: (A) except as set
forth in Schedule 3.20, there are no pending or asserted claims against
such insurance by any Seller and (B) no Seller has received any notice
of any pending or threatened termination of any of such
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policies or any premium increases for the current policy period with
respect to any of such policies.
Section 3.21 Related Party Transactions. Schedule 3.21 sets
forth all transactions Related to the Purchased Assets between or among any
Seller on the one hand and any Affiliate of any Seller on the other hand since
January 1, 2002 or that remain in place as of the date hereof.
Section 3.22 Accuracy of Copies. The copies of documents
delivered or made available by any of the Sellers to Parent and Purchaser
pursuant to the terms of this Agreement are complete and accurate in all
material respects.
Section 3.23 Financial and Business Information.
(a) The Sellers have previously delivered to Parent and
Purchaser the following schedules, each of which is true and complete
as of the relevant dates indicated:
(i) Schedule of prepaid commitments as of April
30, 2003, which includes the option termination fee paid by
CBS and schedule of off-balance sheet warranty liabilities as
of April 30, 2003;
(ii) Statements for the years ended December 31,
2001 and 2002 and for the six-month period ending June 30,
2003, of Revenues reported in each case by satellite;
(iii) Non-satellite capital expense schedule of
the entire fixed satellite services business, dated June 6,
2003, of Loral Parent;
(iv) The accounts receivable aging schedule of
the Transferred Business, dated June 29, 2003 (which schedule
includes the accounts receivables arising out of Loral
SpaceCom's San Francisco International Gateway business in
amounts that do not exceed $100,000 per month); and
(v) Loral Skynet 2002 cost and expense schedule
of Loral Parent's entire fixed satellite services business,
dated June 19, 2003.
(vi) A schedule of xxxxxxxx by customer for the
five months ended May 31, 2003.
(b) Each of the schedules referenced in (i), (ii) and
(iv) above: (i) is expressed in U.S. dollars and, except as otherwise
expressly described in Schedule 3.23 hereto, has been prepared in
accordance with GAAP; (ii) has been prepared on the basis of the books
and records of Sellers in accordance with
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accounting principles consistently applied and maintained throughout
the periods indicated; and (iii) accurately reflects the books, records
and accounts of Sellers.
(c) The appraisals of the Purchased Satellites, dated
April 2003, with respect to Telstar 4 and Telstar 5 and May 2003 with
respect to Xxxxxxx 0, Xxxxxxx 0, Xxxxxxx 0 and Telstar 13, are the most
current appraisals available.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and
warrant to the Sellers as follows:
Section 4.1 Organization and Qualification. Each of Parent and
Purchaser is a company duly incorporated and existing under the laws of Bermuda
in good standing (meaning solely that it has not failed to make any filing with
any Bermuda governmental authority or to pay any Bermuda government fees or tax,
which would make it liable to be struck off the Registry of Companies in Bermuda
and thereby cease to exist under the laws of Bermuda) and has all requisite
power and authority to own and operate and to carry on its business as currently
conducted.
Section 4.2 Corporate Authorization. Each of Purchaser and,
subject to the receipt of approval of this Agreement and the transactions
contemplated hereby by holders of sixty (60) percent or more of its total issued
and outstanding ordinary shares ("Parent Shareholder Approval"), Parent, has the
necessary corporate power and authority to execute and deliver this Agreement
and each of the Ancillary Agreements to which it is a party, and to perform each
of its obligations hereunder and thereunder. Except for obtaining Parent
Shareholder Approval, the execution, delivery and performance by Parent and
Purchaser of this Agreement and each of the Ancillary Agreements to which it is
a party have been duly and validly authorized, and no additional corporate
authorization or consent is required in connection with the execution, delivery
and performance by Parent or Purchaser of this Agreement or the Ancillary
Agreements. The board of directors of Parent (at a meeting duly called and held
or otherwise in accordance with applicable Law and Parent's bye-laws) has: (a)
approved the execution, delivery and performance by Parent of this Agreement and
the transactions contemplated hereby, (b) subject to their fiduciary duties
under applicable Law, authorized the solicitation of Parent's shareholders'
approval of this Agreement and the transactions contemplated hereby, and (c)
directed that this Agreement and the transactions contemplated hereby be
submitted to Parent's shareholders for consideration and approval at the Parent
Shareholder Meeting.
Section 4.3 Consents and Approvals. Except as set forth in
Schedule 4.3 and except for such Governmental Approvals where the failure to
obtain such Governmental Approval or to provide such notice to or make such
filing with a Governmental Authority would not, individually or in the
aggregate, have a material adverse effect on Parent and Purchaser's ability to
consummate the transactions
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contemplated hereby, no Governmental Approval is required to be obtained by
Parent or Purchaser to, or made by Parent from, and no notice or filing is
required to be given by Parent or Purchaser to, or made by Parent, Purchaser
with, any Governmental Authority or other Person in connection with the
execution, delivery or performance by Parent or Purchaser of this Agreement or
any of the Ancillary Agreements.
Section 4.4 Non-Contravention. Except as set forth in Schedule
4.4, the execution, delivery and performance by Parent and Purchaser of this
Agreement and each of the Ancillary Agreements to which it is a party, and the
consummation of the transactions contemplated hereby and thereby do not and will
not (a) violate any provision of the bye-laws, certificate of incorporation or
memorandum of association of Parent or Purchaser, respectively or (b) assuming
the consents, approvals, waivers, authorizations, notices and filings set forth
in Sections 3.4 and 4.3 are obtained or given or made, violate or result in a
breach of or constitute a default under any Law or any contract, arrangement or
agreement to which Parent or Purchaser is subject, except for such violations,
conflicts and breaches as in the aggregate will not have a material adverse
effect on Parent's and Purchaser's ability to close the transactions
contemplated hereby.
Section 4.5 Binding Effect. Except as set forth in Schedule
4.5, this Agreement constitutes, and each of the Ancillary Agreements (to the
extent either Parent or Purchaser is a party thereto) when executed and
delivered by the parties thereto will constitute, valid and binding obligations
of Parent and Purchaser enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, liquidation, amalgamation, fraudulent
transfer, reorganization, moratorium and similar Laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 4.6 Certificate of Incorporation, Memorandum of
Association and Bye-Laws. True and correct copies of the certificate of
incorporation, memorandum of association and bye-laws of Parent and Purchaser
have previously been made available to the Sellers.
ARTICLE V
COVENANTS AND AGREEMENTS REGARDING BANKRUPTCY
Section 5.1 Bankruptcy Actions.
(a) Chapter 11 Filing. Each of the Sellers and the Other
Filing Entities has filed the Chapter 11 Cases with the Bankruptcy
Court and true and complete copies of the petitions have been delivered
by Sellers to Purchaser.
(b) Cooperation; Efforts. Each of the Sellers and Parent
and Purchaser shall use its Best Reasonable Efforts to cooperate,
assist and consult with each other to procure the entry of a sales
procedures order (the "Sale Procedures Order") promptly following
receipt of the Parent Shareholder Approval and a sale
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order (the "Sale Order" and together with the Sale Procedures Order,
the "363/365 Orders") as promptly thereafter as practicable, in each
case in the form attached hereto as Annex F. Without limiting the
generality of the foregoing, the Sellers shall (i) each comply with all
requirements under the Bankruptcy Code and Federal Bankruptcy Rules in
connection with obtaining the 363/365 Orders, (ii) agree to proceed
with their Chapter 11 Cases pursuant to and in accordance with the
terms and provisions contemplated by the 363/365 Orders, in each case
after the order has been entered by the Bankruptcy Court and (iii)
comply or cause the compliance with the notice requirements of the
363/365 Orders, in each case after the order has been entered by the
Bankruptcy Court, and any other applicable order of the Bankruptcy
Court as they relate to the Chapter 11 Cases, the Federal Bankruptcy
Rules (including, without limitation, Rules 2002, 6004, 6006 and 9014
of the Federal Rules of Bankruptcy Procedure) and any applicable rules
of the Bankruptcy Court with respect to the transactions contemplated
by this Agreement. In the event that the 363/365 Orders or any other
orders of the Bankruptcy Court relating to this Agreement shall be
appealed by any party (or a petition for certiorari or motion for
reconsideration, amendment, clarification, modification, vacation,
stay, rehearing or reargument shall be filed with respect to any such
order), each of the Sellers and Parent and Purchaser will cooperate in
taking such steps diligently to defend against such appeal, petition or
motion and each of the Sellers and Parent and Purchaser shall use its
Best Reasonable Efforts to obtain an expedited resolution of any such
appeal, petition or motion. Neither Parent, Purchaser nor any of the
Sellers shall make any filing in the Bankruptcy Court with respect to
the 363/365 Orders (or otherwise take any position in the Bankruptcy
Court proceedings with respect thereto) without the express written
consent of the other party, which may not be unreasonably withheld,
conditioned or delayed, or otherwise that would be reasonably likely to
result in the failure of the transactions contemplated hereby.
Notwithstanding anything to the contrary herein, however, nothing shall
be deemed to prohibit or otherwise restrain either Parent or Purchaser
from making any filing in the Bankruptcy Court to challenge or object
to the entry of an order by the Bankruptcy Court approving the entry by
one or more Sellers into an Alternate Transaction. To the extent that
it is necessary for any Other Filing Entity to take actions comparable
to those required of Sellers under this Section 5.1 in order for the
transactions contemplated hereby to be consummated, Sellers shall cause
the Other Filing Entities to take such action or, if Sellers are unable
to cause an Other Filing Entity to do so, Sellers shall be deemed to be
in breach of this Section 5.1.
(c) Break-Up Fee. Each of the Sellers hereby agrees, in
the event that a Bankruptcy Court enters an order that becomes final
and non-appealable approving a Transaction with a party other than
Parent and Purchaser (an "Alternate Transaction"), Sellers shall pay to
Purchaser a break-up fee (the "Break-Up Fee") in the amount of $20
million together with an amount equal to all of the Out-of-Pocket
expenses, up to a total of $8 million, incurred by Parent and Purchaser
in connection with the transactions contemplated by this
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Agreement (the "Expense Reimbursement"). These amounts are intended to
compensate Parent and Purchaser for the time and expense dedicated to
this transaction and the value added by Parent and Purchaser in (i)
establishing a bid standard or minimum for other bidders, (ii) placing
the Sellers' estate property in a sales configuration mode attracting
other bidders to the auction and (iii) for serving, by its name and its
expressed interest, as a catalyst for other potential or actual
bidders. The Break-Up Fee and Expense Reimbursement shall constitute an
administrative priority claim against the Sellers' estates under
Sections 503(b) and 507(a)(1) of the Bankruptcy Code and shall be paid
immediately, without further order of the Bankruptcy Court, at such
time as the order of the Bankruptcy Court approving an Alternate
Transaction becomes final and non-appealable.
(d) Notification. Sellers shall keep Purchaser informed
on a current basis of all proposals or offers from any Person for a
possible transaction involving the Transferred Business, some or all of
the Purchased Assets, or the stock of Sellers or any other Person that
owns, directly or indirectly, any interest in the Purchased Assets.
Sellers shall provide Purchaser with written copies of any such
proposals or offers (including all material terms and the identity of
the proponent of such proposal or offer) within one (1) Business Day
after receipt thereof.
(e) Assignment of Rights. If, in connection with the
auction or sale referred to in the Sale Procedures Order, any of the
Sellers or any of their Affiliates enter into confidentiality or
similar agreements with any Person, such Sellers shall assign all
rights under those agreements to the extent relating to the Transferred
Business to Purchaser at the Closing.
(f) Certain Contracts. Sellers shall cause: (i) SS/L to
assume, under Section 365 of the Bankruptcy Code, in connection with
the Chapter 11 Cases the Revised Procurement Agreements, the remaining
Purchased Satellite Procurement Contracts, the Contract, dated as of
February 22, 2000, with EchoStar Orbital Corporation and the additional
agreements set forth on Schedule 5.1(f), as amended and (ii) Loral
Cyberstar Inc. to enter into with Loral SpaceCom, and assume, under
Section 365 of the Bankruptcy Code, in connection with the Chapter 11
Cases, that certain Master Service Agreement in the form previously
delivered to Purchaser (and included in the Section 2.3.4.m file of the
data room). Nothing contained in any Chapter 11 plan confirmed in
Sellers' bankruptcy cases or in the confirmation order confirming any
such plan shall conflict with, derogate from or reject any provisions
of this Agreement.
ARTICLE VI
CERTAIN COVENANTS
Section 6.1 Access. Prior to the Closing, the Sellers shall
permit Parent and Purchaser and their representatives to have reasonable access,
during regular business
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hours and upon reasonable advance notice, to the Purchased Assets and personnel
who work with the Purchased Assets, and shall furnish, or cause to be furnished,
to Parent and Purchaser, any data and other information that is reasonably
available with respect to the Purchased Assets as Parent and Purchaser shall
from time to time reasonably request. The Sellers shall instruct their
accountants and advisers to cooperate with Parent and Purchaser and to provide
Parent and Purchaser with reasonable access to such accountants (including their
work papers, subject to Parent and Purchaser complying with any confidentiality,
limitation of liability, and other requirements of the accountants with respect
to access to their work papers) and advisers. Sellers shall use Best Reasonable
Efforts to facilitate meetings among Parent, Purchaser and customers of Seller
designated by Purchaser. All information obtained by Purchaser or Parent with
respect to Sellers or the Purchased Assets shall be subject to the terms of the
Non-Disclosure Agreement.
Section 6.2 Conduct of Business.
(a) During the period from the date hereof to the
Closing, except as otherwise contemplated by this Agreement or as
Purchaser shall otherwise agree in writing in advance, each Seller
shall use its Best Reasonable Efforts to conduct the Transferred
Business and operate the Purchased Assets in the ordinary and usual
course, to preserve intact all business and relationships with third
parties Related to the Transferred Business and keep available their
present employees whose primary responsibilities are Related to the
Transferred Business. During the period from the date hereof to the
Closing, except as set forth on Schedule 6.2, as otherwise provided for
in this Agreement or as Purchaser shall otherwise consent, each Seller
covenants and agrees that, with respect to the operation of the
Purchased Assets, it shall use its Best Reasonable Efforts to:
(i) maintain the Purchased Assets in accordance
with such Seller's past practice and not remove any equipment
included in the Purchased Assets, except for replacements,
modifications or maintenance in the ordinary course of
business;
(ii) operate the Purchased Assets in accordance
with applicable Law, including applicable Regulatory
Requirements;
(iii) deliver to Purchaser, promptly after filing,
copies of any reports, applications or responses to the FCC or
any communications from the FCC or any other party directed to
the FCC Related to the Purchased Assets which are filed
between the date of this Agreement and the Closing Date;
(iv) furnish to Purchaser (x) within twenty (20)
days after the end of each month ending between the date of
this Agreement and the Closing Date: (A) a statement setting
forth the Revenues of the Transferred Business (by customer
and by satellite) for the month just ended and the Backlog of
the Transferred Business as of the last day of
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such month, (B) cost and expense schedule for Loral SpaceCom's
entire "Skynet" business for the month just ended, (C) copies
of any new or amended Customer Service Contracts (provided
that a Seller shall also notify Purchaser promptly after
entering into such Customer Service Contracts) and report of
any Customer Service Contract terminations for the month just
ended, (D) progress reports on the construction of Telstar 8
and Telstar 13 for the month just ended and (E) a report
summarizing all spacecraft related anomalies during such month
of which Sellers have Knowledge and (y) within twenty (20)
days after the end of each calendar quarter health status
reports for each satellite as of the last day of such quarter,
summarizing all spacecraft related incidents and anomalies
known to the Seller and the status of the subsystems on the
satellites;
(v) keep Purchaser informed as to any necessary
or relevant information related to its satellite intersystem
coordination efforts insofar as they relate to the Transferred
Business, and Seller shall not enter into any new or modify
any existing intersystem coordination agreement that relates
to the Transferred Business without Purchaser's prior written
consent, which shall not be unreasonably withheld or delayed;
provided that the foregoing shall not relate to informal
satellite loading arrangements for periods prior to the
Closing Date or other agreements that, in each case, are not
binding on Purchaser following the Closing Date;
(vi) at least ten (10) days prior to Closing,
deliver to Purchaser complete and accurate copies, as of a
date within thirty (30) days of the Closing Date, of (A) a
list, by orbital location, of each Purchased Satellite (which,
in the case of Telstar 8 and Telstar 13 shall be the proposed
orbital locations), (B) a satellite loading chart listing each
transponder on the Purchased Satellite, together with the
customer or group of related customers that have purchased
services utilizing capacity on such transponder and the amount
of capacity allocated to such customer(s) and (C) the most
recent health status report for each satellite, summarizing
all spacecraft related incidents and anomalies known to the
Seller and the current status of the subsystems on the
satellites as of the date of such report;
(vii) promptly and fully cure all violations of
Law and Regulatory Requirements that relate to the Transferred
Business and shall pay any fines which may be assessed by any
Governmental Authority for any such violation when such fines
are ultimately due, which if not cured or paid would have an
adverse effect on the Transferred Business following the
Closing;
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(viii) perform on a timely basis all obligations
required to be performed by them under all Contracts according
to their respective terms and provide prior notice of renewal
or a decision not to renew such agreement;
(ix) pay to SS/L all remaining milestone payments
that are set forth in the milestone payment schedules
contained in the Purchased Satellite Procurement Contracts as
well as any other payments that are or may subsequently become
due under such contracts, other than the payments due under
the Telstar 8 Contract, dated June 24, 1998, between Loral
SpaceCom and SS/L, in an amount not to exceed $130 million;
(x) cause SS/L to perform in a timely manner all
of its obligations under the Purchased Satellite Procurement
Contracts (other than Purchased Satellite Procurement Contract
with respect to Telstar 4) in accordance with the terms and
conditions thereof, including, without limitation, the
completion of all work associated with the remaining
milestones under the Purchased Satellite Procurement Contracts
related to the construction and launch of Telstar 8 and
Telstar 13; provided, however, that at the Purchaser's request
Loral SpaceCom shall exercise the ground storage option under
Article 33 of the Telstar 8 Procurement Agreement and pay all
amounts associated with exercising such option;
(xi) cause SS/L to allow the Purchaser (and
employees and contractors of its Affiliates) reasonable access
to all work and work-in-progress performed under the Purchased
Satellite Procurement Agreements related to the construction
and launch of Telstar 8 and Telstar 13, all data and
information related thereto (including the design and test
data), and all facilities therefor, for purposes of
observation, inspection, examination and evaluation at any
reasonable time prior to final acceptance of the satellite(s)
thereunder and thereafter to the extent Purchaser or its
Affiliates are customarily provided such access in connection
with their satellite procurement contracts with SS/L, subject,
however, to the condition that the Purchaser or its
Affiliate(s), as the case may be, shall provide SS/L with
reasonable advance notice of its intent to obtain such access
and that access to data shall be subject to the limitations
and restrictions contained in the U.S. Federal International
Traffic in Arms Regulations;
(xii) continue pricing, marketing and sales
practices consistent with past practices and applicable market
conditions; and
(xiii) comply with all applicable requirements of
the WARN Act;
and it shall not with respect to the Purchased Assets:
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(xiv) other than as provided in Section 6.17,
enter into, or become obligated under: (A) any service
agreement or commitment, except for customer service
commitments at usual and customary rates with the
consideration to be paid solely in cash, that are entered into
in the ordinary and regular course of business and consistent
with past business practice, or (B) without Purchaser's
consent not to be unreasonably withheld or delayed, any
transponder lease or service contract that will be an Assumed
Contract and that provides for aggregate payments to Sellers
in excess of $15 million in net present value (determined
using a six (6) percent per annum discount rate);
(xv) other than with respect to Telstar 8 in
accordance with the terms of its procurement agreement,
approve or incur any Liability for any new capital
expenditures except pursuant to existing obligations set forth
in Schedule 6.2;
(xvi) dispose of or incur, create or assume any
Encumbrance that will not be discharged on or prior to the
Closing Date (other than pursuant to rights of first refusal
or renewal options on satellite capacity, in each case as that
are in existence on the date hereof) on, any Purchased Assets;
(xvii) enter into any "condosat" arrangements,
"sales-type" leases or other prepaid lease agreements;
(xviii) divert or migrate any existing customer
traffic on the Purchased Satellites to other satellites of the
Sellers or their Affiliates that are not included in the
Purchased Satellites except pursuant to the Portability-Out
Contracts;
(xix) amend any procurement contract relating to
Purchased Satellites in any manner that would adversely affect
Purchaser's performance of and rights under such agreements
following the Closing;
(xx) incur any indebtedness for money borrowed
which would be an Assumed Liability;
(xxi) take any action or enter into any
transaction that would adversely affect in any material
respect Purchaser's ability to operate the Purchased Assets as
presently operated;
(xxii) enter into any material transaction Related
to the Purchased Assets, except in the ordinary course of
business consistent with the past practice of the Transferred
Business;
(xxiii) modify, terminate, amend or grant any waiver
in respect of any Contract in any material respect;
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(xxiv) take any action that would cause any of the
representations and warranties made by any Seller in this
Agreement not to be true and correct; provided that the
failure to cure a breach of representation or warranty not
caused by Sellers shall not be deemed to be a breach of this
Section 6.2(a)(xxiv);
(xxv) grant to any Person any interests or rights
in any Transferred Intellectual Property except in the
ordinary course of business consistent with past practice;
(xxvi) permit any transactions between the
Purchased Assets and any other operations of any Seller or any
Affiliate of a Seller except transactions that (A) are, or
have been, entered into in the ordinary course of business
consistent with past practice and (B) are on terms no less
favorable to the Transferred Business than those that could be
obtained in a comparable arm's-length transaction between two
entities that are not Affiliates;
(xxvii) enter into any new intercompany agreements
that would be assumed by the Purchaser at Closing;
(xxviii) enter into any Contract that contains (A) a
restriction on any of the Sellers' ability to assign or
otherwise transfer such agreement to Parent or Purchaser or
any of their Affiliates and (B) any provision that provides
for a change in any material term as a result of the
assignment or other transfer of such agreement by any of the
Sellers to Parent or Purchaser or any of their Affiliates; or
(xxix) agree, in writing or otherwise, to do any of
the foregoing.
(b) Without limiting the effect of the condition to
Closing set forth in Section 9.1(b) or the termination right set forth
in Section 11.1(d), no Seller shall be deemed to have breached (other
than for purposes of Sections 9.1(b) and 11.1(d)) any covenant set
forth in Section 6.2(a) above if it takes or fails to take any action
in order to comply with an order of the Bankruptcy Court. Any action or
failure to take action which would have been a breach but for the prior
sentence shall be deemed to be a breach of a covenant for purposes of
Section 9.1(b) or 11.1(d).
Section 6.3 Books and Records. The Sellers shall provide
Purchaser with access to any commingled books and records that relate to the
Purchased Assets which are not delivered to Purchaser on the Closing Date
("Commingled Books and Records") at any time and from time to time upon
reasonable notice by Purchaser to the Sellers and Purchaser agreeing to keep all
information included in the Commingled Books and Records relating to matters
other than Purchased Assets confidential, and Sellers shall, at Purchaser's
request, extract therefrom and deliver to Purchaser in electronic format a
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copy of all electronic files, data and spreadsheets that constitute Books and
Records. Purchaser shall reimburse Sellers for one-half of the cost of such
extraction. If any of the Sellers desires at any time to destroy any Commingled
Books and Records, it shall first notify Purchaser and offer to Purchaser the
right for thirty (30) Business Days to receive copies of the portions of such
Commingled Books and Records that are related to Purchased Assets, at
Purchaser's sole expense. If Purchaser does not elect to receive copies of such
portions of Commingled Books and Records, Sellers shall be free to destroy such
books and records.
Section 6.4 Best Reasonable Efforts. During the period from
the date hereof to the Closing, the Sellers shall cooperate with Purchaser and
Parent and use their Best Reasonable Efforts to satisfy, or cause to be
satisfied, the conditions precedent to Purchaser's or Parent's obligations
hereunder. Without limiting the generality of the foregoing, each Seller shall
cooperate with Purchaser and Parent and use its Best Reasonable Efforts (a) to
obtain the Governmental Approvals, and to give or make the notices and filings,
set forth in Schedules 3.4 and 4.3, (b) to obtain the approvals and consents and
give the notices required in respect of the Contracts designated in Schedule
3.10 as requiring such action (except to the extent such approvals and consents
are not required because of the effect of the Sale Order) and (c) to obtain
approval for a novation from a Seller to Purchaser of any Government Contracts
listed in Schedule 3.11 if such novation is required, notwithstanding the Sale
Order.
Section 6.5 Certain Filings; Consents.
(a) During the period from the date hereof to the
Closing, the Sellers, Parent and Purchaser shall use their Best
Reasonable Efforts to assist in obtaining the approval of the FCC for
the assignment of the FCC Authorizations listed on Schedule 3.15 to
Purchaser or its designated Affiliate and any other action or
transaction contemplated by this Agreement for which such approval is
required and, specifically and without limitation, Sellers shall
prepare, sign and file with the FCC the assignor's and licensee's
portions of the assignment applications. Within five (5) Business Days
after the execution of this Agreement, the Sellers shall deliver to
Purchaser their respective portions of the assignment application
("Sellers' FCC Application") and Purchaser shall make such filings as
promptly as practicable. During the period from the date hereof to the
Closing, Purchaser and the Sellers shall diligently comply with any
request from the FCC for additional information, documents, or other
materials. During the period from the date hereof to the Closing,
Purchaser and the Sellers shall diligently take, or cooperate in the
taking of, all steps that are necessary, proper or desirable to
expedite the prosecution of the assignment applications to a favorable
conclusion. During the period from the date hereof to the Closing, if
any administrative or judicial action or proceeding is initiated (or
threatened to be initiated) challenging the transactions contemplated
hereby as violative of Law, Purchaser and the Sellers shall contest and
resist any such action, and use their Best Reasonable Efforts to have
vacated, lifted, reversed or overturned any decree, judgment,
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injunction, ruling, decision, finding or other order (whether
temporary, preliminary or permanent) until such time as a final,
non-appealable order has been entered. During the period from the date
hereof to the Closing, the Sellers shall cooperate in good faith with
Purchaser in Purchaser's efforts to contest such action or proceeding
referenced in the preceding sentence.
(b) During the period from the date hereof to the
Closing, the Sellers, Parent and Purchaser shall cooperate with one
another (i) in determining whether any action by or in respect of, or
filing with, any Governmental Authority (other than approval of the
assignment applications by the FCC and the HSR Act notification) is
required, and (ii) subject to the terms and conditions of this
Agreement, in taking any such actions and making any such filings,
furnishing information required in connection therewith and seeking
timely to complete any such actions, consents, approvals or waivers.
(c) During the period from the date hereof to the
Closing, the Sellers, Parent and Purchaser and their respective
Affiliates promptly shall make the filings required under the HSR Act
and any other antitrust Laws. During the period from the date hereof to
the Closing, the Sellers, Parent and Purchaser shall request early
termination of the waiting period under the HSR Act. During the period
from the date hereof to the Closing, the Sellers, Parent and Purchaser
shall also substantially comply at the earliest practicable date with
any request for additional information, documents, or other materials,
or investigative interviews or depositions, received from the Federal
Trade Commission ("FTC") or the Antitrust Division of the Department of
Justice ("DOJ") or any other Governmental Authority, including other
national or supra-national competition authorities. During the period
from the date hereof to the Closing, Parent, Purchaser and the Sellers
shall use their Best Reasonable Efforts to resolve objections, if any,
which may be asserted by any Governmental Authority with respect to the
transactions contemplated hereby under any antitrust Laws. During the
period from the date hereof to the Closing, each of Parent, Purchaser
and the Sellers shall furnish to the other such necessary information
and reasonable assistance as the other may request in connection with
its preparation of any filing or submission which is necessary under
the HSR Act. During the period from the date hereof to the Closing,
Parent, Purchaser and the Sellers shall keep each other apprised of the
status of any communications with, and inquiries or requests for
additional information from, any Governmental Authority, including the
FTC or the DOJ. During the period from the date hereof to the Closing,
Parent, Purchaser and the Sellers shall use their Best Reasonable
Efforts to obtain any clearance required under the HSR Act for the
purchase and sale of the Purchased Assets in accordance with the terms
and conditions hereof. Nothing contained in this Agreement will (i)
require or obligate Parent, Purchaser, any of the Sellers or any of
their respective Affiliates to initiate, pursue or defend any
litigation to which any Governmental Authority (including the FTC or
the DOJ) is a party or (ii) require or obligate Parent, Purchaser or
their Affiliates to (A) agree to
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otherwise become subject to any limitations on their respective rights
effectively to acquire, control or operate the Purchased Assets, or to
exercise full rights of ownership of the Transferred Business and all
or any portion of the Purchased Assets (excluding any immaterial
limitations) or (B) agree or otherwise be required to sell or otherwise
dispose of, hold separate (through the establishment of a trust or
otherwise), or divest itself of all or any portion of the Purchased
Assets or any assets of its own or its Affiliates. The parties agree
that (x) no representation, warranty or covenant of Parent or Purchaser
contained in this Agreement shall be breached or deemed breached as a
result of the failure by any party hereto or any of its Affiliates to
take any of the actions specified in the preceding sentence and (y) no
representation, warranty or covenant of any Seller contained in this
Agreement shall be breached or deemed breached as a result of the
failure by any party hereto or any of its Affiliates to take any of the
actions specified in clause (i) of the preceding sentence.
(d) During the period from the date hereof to the
Closing, Purchaser and Sellers shall cooperate and promptly make all
voluntary filings and other disclosures in respect of the transactions
contemplated hereby with the Committee on Foreign Investment in the
United States under Exon-Xxxxxx, if Purchaser provides written notice
to Sellers within one hundred and twenty (120) days of this Agreement
of its intention to make such voluntary filing.
(e) Purchaser and Sellers shall share equally the cost of
all filing fees associated with the Parties' filings with Governmental
Authorities (except for any filings required under the HSR Act, which
filing fees shall be paid by the party responsible for such filing
fees, in accordance with the HSR Act).
(f) In any circumstance in which Loral Parent must make,
initiate or participate in the process of seeking, requesting or making
any of the applications, approvals or filings (including without
limitation HSR Act filings) referred to in this Section 6.5, Sellers
shall cause Loral Parent to take all necessary actions, but subject to
the limitations in the last two sentences of Section 6.5(c).
Section 6.6 Insurance.
(a) Each Seller shall, until the Closing, maintain
insurance coverage with respect to the Purchased Assets at the coverage
levels set forth on Schedule 6.6, including continuing an in-orbit
policy for Telstar 4 for a one (1) year period following the expiration
of the current policy.
(b) With respect to property insurance, during the period
from the date hereof through the Closing, each Seller will promptly
file and diligently prosecute all claims relating to any loss suffered
by the Transferred Business or the Purchased Assets, after the date of
this Agreement and prior to the Closing Date, that is covered by such
insurance. At Closing, each Seller shall either (i) to the extent
permissible under the terms of such insurance policies, the Assumed
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Contracts and applicable Law, cause Purchaser to be the named
beneficiary under such insurance policies or (ii) assign to Purchaser
its rights as the named insured under such insurance policies pursuant
to the Sale Order.
(c) On or prior to Closing, the Sellers shall, to the
extent not otherwise effected pursuant to the Sale Order, make
appropriate arrangements with all present loss payees who are not
counterparties to the Assumed Contracts to effect the foregoing
provisions and eliminate such parties as loss payees.
Section 6.7 Financial Statements and Access.
(a) Sellers shall prepare, and (subject to Purchaser
executing and delivering a customary engagement letter) retain Deloitte
& Touche LLP ("D&T") or another nationally recognized public accounting
firm that is acceptable to Parent and Purchaser (D&T or such other
firm, the "Retained Accountants") to audit, balance sheets for the
Transferred Business as at December 31, 2001, December 31, 2002 and
each December 31 thereafter occurring on or prior to the Closing Date,
together with statements of operations and cash flows and notes thereto
in accordance with GAAP, Articles 3-01 and 3-02 of Regulation S-X as
well as any other applicable rules and regulations of the SEC
(together, the "Accounting Requirements") for the year then ended.
Sellers shall cause the Retained Accountants promptly to provide to
Purchaser such information (including copies of all work papers,
subject to Parent and Purchaser complying with any confidentiality,
limitation of liability and other requirements of the accountants with
respect to access to their work papers) related to such balance sheets
and statements as may be reasonably requested by Purchaser. Each of the
Sellers shall use its Best Reasonable Efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable to prepare and to assist and otherwise
cause the Retained Accountants to complete the audit of the financial
statements and deliver to Purchaser such financial statements and the
Retained Accountants' audit report relating thereto (i) for the
financial statements as at and for the year ended December 31, 2001 and
December 31, 2002, as promptly as reasonably practicable, but in no
event later than September 1, 2003 and (ii) for the financial
statements as at and for the year ended on any December 31 thereafter
occurring prior to the Closing Date, no later than seventy-four (74)
days after such year end (regardless of whether the Closing has
occurred prior to such date).
(b) Each of the Sellers shall use its Best Reasonable
Efforts to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable to prepare, and
to assist and otherwise cause the Retained Accountants to conduct a SAS
71 or a similar type of review or audit of, the unaudited balance
sheets as of the dates set forth below and statements of operations and
cash flows and notes thereto for the periods set forth below in
accordance with the Accounting Requirements:
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(i) as at June 30, 2003 and for the three (3)
and six (6) months ended June 30, 2002 and June 30, 2003;
(ii) as at September 30, 2003 and for the three
(3) and nine (9) months ended September 30, 2002 and September
30, 2003;
(iii) as at the end of each fiscal quarter (other
than the fourth fiscal quarter) thereafter and prior to the
Closing Date and for the three (3) months ended on each such
date and for the elapsed portion of the fiscal year ended on
such date, and for the corresponding periods of the prior
fiscal year.
The financial statements for the foregoing periods, and the report of
the Retained Accountants with respect to its SAS 71 or a similar type
of review or its audit report, as the case may be, shall be delivered
to Purchaser, in accordance with the first sentence of this clause (b),
(A) for the financial statements required by clause (i), as promptly as
reasonably practicable, but in no event later than September 1, 2003,
(B) for the financial statements required by clause (ii) and clause
(iii), ending no later than the fifty-fifth (55th) day after the end of
the relevant fiscal quarter (regardless of whether the Closing has
occurred prior to such date).
(c) Purchaser shall reimburse Sellers for Sellers'
Out-of-Pocket Expenses for the Retained Accountants for auditing or
reviewing, as the case may be, the financial statements and for any
additional accounting firm or personnel retained to assist in the
preparation of such financial statements.
(d) Commencing on the date hereof and for a period of
three (3) years from the Closing Date, each Seller shall provide Parent
and Purchaser with reasonable access to its personnel and independent
accountants and advisors, and to the data and work papers (subject to
Parent and Purchaser complying with any confidentiality, limitation of
liability and other requirements of the accountants with respect to
access to their work papers) that are Related to the Purchased Assets,
but are not otherwise available to Purchaser, which are reasonably
required to enable Purchaser to comply with any applicable Laws.
Purchaser or Parent shall reimburse each Seller for all Out-of-Pocket
Expenses it incurs in connection with the fulfillment of its
obligations under this Section 6.7(d).
Section 6.8 Compliance with Property Transfer Laws; State and
Local Governmental Authorizations.
(a) During the period from the date hereof to the
Closing, the Sellers shall use their Best Reasonable Efforts to comply
with all requirements of applicable property transfer Laws to the
extent not superseded by the Sale Order in order to consummate the
transactions contemplated by this Agreement. During the period from the
date hereof to the Closing, each Seller agrees to provide Parent and
Purchaser with any documents to be submitted to the relevant
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Governmental Authorities prior to submission, and no Seller shall take
any action to comply with such Laws without Parent's and Purchaser's
prior consent, which consent shall not be unreasonably withheld or
delayed.
(b) During the period from the date hereof to the
Closing, each Seller shall cooperate with Purchaser and shall assist
Purchaser with identifying the state and local Governmental
Authorizations, if any, required by Purchaser to operate the Purchased
Assets from and after the Closing Date (other than Governmental
Approvals).
Section 6.9 Further Assurances. At any time after the Closing
Date, each Seller shall promptly execute, acknowledge and deliver any other
assurances or documents reasonably requested by Purchaser or Parent necessary to
evidence the transfer of the Purchased Assets or the other transactions
contemplated hereby.
Section 6.10 Certain Matters Involving the Transferred
Intellectual Property and Licensed Intellectual Property. On or promptly after
the Closing Date, each Seller shall use Best Reasonable Efforts to assist
Purchaser with all necessary steps to record with the appropriate Governmental
Authorities, including any discretionary filings requested by Purchaser, the
transfer from, or license by, such Seller to Purchaser of all Transferred
Intellectual Property and Licensed Intellectual Property previously registered
or patented in or outside the United States; provided that Purchaser shall
reimburse such Seller for such Seller's Out-of-Pocket Expenses incurred by
Seller in such recordings.
Section 6.11 Obligation to Update. Between the date of this
Agreement and the Closing Date, each Seller shall notify Purchaser and Parent in
writing within a reasonable period of time if any Person listed in Schedule
1.1(a) or any successor with similar authority and responsibilities gains actual
knowledge of any fact or condition that causes or constitutes a breach of any of
such Seller's representations and warranties as of the date of this Agreement,
or if any Person listed in Schedule 1.1(a) or any successor with similar
authority and responsibilities gains actual knowledge of the occurrence after
the date of this Agreement of any fact or condition that could reasonably be
expected to cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Within three (3) Business Days prior to the
Closing Date, Sellers shall provide Purchaser with a list of any changes that
would be required to Schedule 3.10 if such Schedule were being prepared in
response to Section 3.10(a) as of the third Business Day prior to the Closing.
Any breach of this Section 6.11 shall for purposes of Article IX be deemed to be
a breach of a representation or warranty and not a breach of a covenant. The
providing of notice under this Section shall not relieve Sellers of any
responsibility for a breach of the relevant representation or warranty nor shall
such notice be deemed to update any Schedule to this Agreement.
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Section 6.12 Additional Intellectual Property Matters.
(a) Except in connection with a breach of the
Intellectual Property Agreement, the terms of which shall be unaffected
by this provision, no Seller shall bring any claim, litigation or
proceeding against Purchaser or its Affiliates (including any of
Purchaser's Successors or assigns to any significant portion of the
Purchased Assets) for infringement of any Intellectual Property rights,
including patents and trademarks, owned by or assigned to a Seller as
of the Closing, based on the operation of the Purchased Assets, the
existence of which would have been or was a breach of any
representation or warranty under this Agreement.
(b) At any time within six (6) months of the Closing, if
it is determined that a license of any additional Intellectual Property
rights of any Seller (excluding Other Intellectual Property), including
patent rights which were omitted from the list of Licensed Intellectual
Properties on Schedule 3.9 but are not specifically listed as Excluded
Assets, is necessary for Purchaser (including any of Purchaser's
Successors or assigns to any significant portion of the Purchased
Assets) to use, operate, sell, offer for sale or import any Purchased
Asset lawfully or operate the Purchased Assets lawfully, such Seller
(including its Successors and assigns to such rights) shall provide
such license without any additional charge to, or royalty, from
Purchaser (other than Global Alliance Information Network (GAIN)) and,
in each case, pursuant to the terms of the Intellectual Property
Agreement.
Section 6.13 Limitations on Solicitation, etc. Except as
provided in the Sale Procedures Order with respect to the period prior to the
entry of the Sale Order, neither Sellers nor their Affiliates, officers,
directors, employees, agents or representatives (including attorneys, investment
bankers, brokers and accountants) ("Restricted Persons") shall, directly or
indirectly, (a) solicit, initiate, encourage or entertain the submission of
proposals or offers from any Person (other than Purchaser) for, or enter into
any agreement or arrangement (whether or not binding) relating to, any possible
transaction involving the Transferred Business, some or all of the assets that
will constitute Purchased Assets (other than such assets that are disposed of in
the ordinary course of business in compliance with Section 6.2 hereof), or the
stock of any of the Sellers or any other Person that owns, directly or
indirectly, a greater than five (5) percent interest in the Sellers or the
Purchased Assets (a "Transaction") or (b) participate in any substantive
discussions or negotiations or provide any confidential information regarding,
or furnish to any other Person any information with respect to or in
contemplation of, a possible Transaction. Sellers shall notify Purchaser in
writing as soon as possible, but in any event within one (1) Business Day, of
the receipt of any inquiry or proposal (including all material terms and the
identity of the proponent of the inquiry or proposal) covered by this Section
6.13. Notwithstanding the foregoing, at any time prior to the entry of the Sale
Procedures Order, the Restricted Persons may furnish information to, and
negotiate or otherwise engage in substantive discussions with, any Person who
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delivers a bona fide written proposal (a "Proposal") for a Transaction which was
not solicited or encouraged by a Restricted Person after the date of this
Agreement, if and so long as the Board of Directors (or a duly authorized
committee thereof) of each Seller determines in good faith by resolutions duly
adopted, after consultation with its outside counsel, that the failure to
provide such information or engage in such negotiations or discussions is or
would be a breach of the directors' fiduciary duties under applicable law and
determines in good faith that such a Proposal is a Superior Proposal. Sellers
shall notify Purchaser in writing within one (1) Business Day of such inquiries,
proposals or offers received by, or any such discussions or negotiations sought
to be initiated or continued with, any of the Restricted Persons, indicating the
name of such Person and providing to Purchaser a copy of such written proposal
or offer for an Alternative Transaction. Prior to providing any information or
data to, or engaging in any discussions with, any Person in connection with a
Proposal, Sellers shall notify Purchaser in writing if Sellers or the Restricted
Persons intend to engage in any such activities with any such Person other than
providing written notice to such Person that an auction of the Purchased Assets
is expected to occur under the Sale Procedures Order and that Sellers will
provide the Person with a copy of the Sale Procedures Order when it has been
entered by the Court ("Selling Activities"). Sellers shall keep Purchaser
advised of the status of any Selling Activities and, without limiting Parent's
and Purchaser's rights under this Agreement or the 363/365 Orders, provide
Purchaser a reasonable opportunity to submit its own proposal in response to any
proposals or offers received by Sellers. "Superior Proposal" means a Proposal
made by a Person other than Purchaser, and which is on terms which Sellers'
Boards of Directors determine in good faith would result in a Transaction that
is materially more favorable (a) to Sellers than the transaction contemplated by
this Agreement (after consultation with a nationally recognized investment
banking firm) taking into account all the terms and conditions of such proposal
and this Agreement and the transactions contemplated hereby, and (b) is
reasonably capable of being completed on the terms proposed, taking into account
all financial, regulatory, legal and other aspects of such Proposal; provided,
however, that no Proposal shall be deemed to be a Superior Proposal if the
Proposal is subject to a financing contingency.
Section 6.14 ITU Matters. Sellers will request the FCC to make
available to Purchaser copies of the intersystem coordination agreements that
the FCC entered into with Argentina and Brazil related to their ITU filings at
the 77(degree) W and 77.5(degree) W orbital locations, respectively. Sellers
will not take any actions that are inconsistent with the draft intersystem
coordination agreement with Brazil related to its ITU filing at the 90(degree) W
orbital location (which draft agreement has been previously delivered by Sellers
to Purchaser).
Section 6.15 PANGTEL Matters. During the period from the date
hereof to the Closing, Sellers shall use their Best Reasonable Efforts to cause
PANGTEL to enter into on behalf of the Independent State of Papua New Guinea an
amended and restated satellite agreement in the form previously delivered to
Purchaser (the "PNG Agreement"), and to cause
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PANGTEL to acknowledge the assignment of the rights and obligations of Loral
Parent under the PNG Agreement to a Seller and to the partial assignment by such
Seller to Purchaser of the rights and obligations of Loral Parent (or of a
Seller as the valid assignee of Loral Parent) under such agreement related to
the use of the 121(Degree) W orbital position, subject to Purchaser agreeing to
make the annual payment owed under such agreement in connection with the use of
the 121(Degree) W orbital position, and to seek PANGTEL's consent to the
novation thereof to the effect that any breach by Sellers or their Affiliates
under the PANGTEL agreement following the Closing shall not be deemed a breach
by the Purchaser under its separate agreement with PANGTEL.
Section 6.16 Orbital Incentive Payments. Sellers shall cause
SS/L to amend the Purchased Satellite Procurement Agreements as provided in the
SS/L Agreement.
Section 6.17 Lease Contract.
(a) Notwithstanding anything contained in Section 6.2 to
the contrary, at any time prior to the Closing Date, Sellers may enter
into an agreement with a single lessee (which may include such lessee's
Affiliates) providing for the lease of a substantial number of
transponders on one or more of the Purchased Satellites (the "New
Lease"); provided that prior to entering into the New Lease and not
less than thirty (30) days prior to the Closing Date, such Seller shall
have provided written notice to Purchaser of its intention to enter
into the Lease together with copy of the proposed New Lease requesting
Purchaser to designate the New Lease as the Lease Agreement for
purposes of Section 2.5(d) (the "Lease Notice"). Purchaser may in its
sole and absolute discretion decide whether to designate the New Lease
as the Lease Agreement for purposes of Section 2.5(d).
(b) If on or within seven (7) days of receipt of the
Lease Notice, Purchase fails to make an election or elects that the New
Lease shall not be a "Lease Agreement," the New Lease (i) shall be
deemed an Excluded Asset for all purposes under this Agreement (and,
for avoidance of doubt, any revenues recognized by Sellers from the New
Lease shall not constitute Revenue for any purpose under this
Agreement) and (ii) the counterparty to the New Lease shall be required
to acknowledge in the New Lease or in a writing contemporaneous with
the execution of the New Lease, that the transponder capacity leased
thereunder shall not be provided on a Purchased Satellite for periods
subsequent to the Closing Date.
(c) If on or within seven (7) days of receipt of the
Lease Notice, Purchaser shall provide written notice to Sellers that it
elects to designate the New Lease as the "Lease Agreement" and the
applicable Seller and the counterparty thereto shall enter into the New
Lease on valid and binding terms, in the form provided in the Lease
Notice, the New Lease (i) shall constitute the Lease Agreement for
purposes of Section 2.5(d) and (ii) shall be deemed an Assumed
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Contract for all purposes of this Agreement (and, for avoidance of
doubt, any revenues recognized by Sellers from the Lease Agreement
shall constitute Revenue for all purposes under this Agreement).
(d) Sellers may only exercise their right under this
Section 6.17 once.
ARTICLE VII
PURCHASER'S AND PARENT'S COVENANTS
Section 7.1 Best Reasonable Efforts. During the period from
the date hereof to the Closing, Purchaser and Parent shall cooperate with the
Sellers and use their Best Reasonable Efforts to satisfy, or cause to be
satisfied, the conditions precedent to Purchaser's and Parent's obligations
hereunder. Without limiting the generality of the foregoing, during the period
from the date hereof to the Closing, Purchaser shall cooperate with the Sellers
and use its Best Reasonable Efforts (a) to obtain the Governmental Approvals and
to give or make the notices or filings set forth in Schedules 3.4 and 4.3, and
(b) to the extent required notwithstanding the Sale Order, to obtain approval
for the novation from the Sellers to Purchaser of the PANGTEL agreement as
provided in Section 6.15 and of the Government Contracts listed in Schedule 3.11
(including entering into customary agreements necessary to obtain the
assignments or novations contemplated by Section 9.1(e) and having one or more
employees with a "secret" security clearance).
Section 7.2 Shareholder Approval. Parent will take, in
accordance with applicable Law and its bye-laws, all action necessary to convene
a meeting of the holders of its ordinary shares ("Parent Shareholders Meeting")
on or before September 8, 2003 to consider and vote upon the approval of this
Agreement and the transactions contemplated hereby. Subject to their fiduciary
duties under applicable Law, Parent's board of directors shall use Best
Reasonable Efforts to solicit such approval.
Section 7.3 Further Assurances. At any time after the Closing
Date, each of Purchaser and Parent shall promptly execute, acknowledge and
deliver any other assurances or documents reasonably requested by any Seller
necessary to evidence the transfer of the Purchased Assets, the assumption of
the Assumed Liabilities and the other transactions contemplated hereby.
Section 7.4 Compliance with Property Transfer Laws;
Governmental Authorizations. During the period from the date hereof to the
Closing, Parent and Purchaser shall use their Best Reasonable Efforts to comply
with all requirements of applicable property transfer Laws to the extent not
superseded by the Sale Order in order to consummate the transactions
contemplated by this Agreement. During the period from the date hereof to the
Closing, Parent and Purchaser agree to provide Sellers with copies of any
documents submitted to the relevant Governmental Authorities in connection with
such compliance, and neither Parent nor Purchaser shall take any action to
comply with such Laws without Sellers' consent which shall not be unreasonably
withheld.
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Section 7.5 Obligation to Update. During the period from the
date hereof to the Closing, each of Parent or Purchaser, as applicable, shall
notify Sellers in writing within a reasonable period of time if any Person
listed in Schedule 1.1(b) or any successor with similar authority and
responsibilities gains actual knowledge of any fact or condition that causes or
constitutes a breach of any of Parent's or Purchaser's representations and
warranties as of the date of this Agreement, or if any Person listed in Schedule
1.1(b) or any successor with similar authority and responsibilities gains actual
knowledge (in the ordinary course of performing his or her duties) of the
occurrence after the date of this Agreement of any fact or condition that would
reasonably be expected to cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. The providing of
notice under this Section 7.5 shall not relieve Parent or Purchaser of any
responsibility for a breach of the relevant representation or warranty.
Section 7.6 Collection of Accounts Receivable. All accounts
receivable arising in connection with the operation of the Transferred Business
prior to the Closing Date shall remain the property of Sellers. Purchaser agrees
to use Best Reasonable Efforts to assist Sellers in collection of such accounts
receivable in the normal and ordinary course of business for a period of ninety
(90) days following the Closing. Purchaser shall apply all collections to the
debtor's oldest account receivable first (except that any such accounts
collected by Purchaser from persons who are also indebted to Purchaser may be
applied to Purchaser's account where such account debtor specifies that a
payment is to be applied to Purchaser's account), and shall remit all amounts
collected on Sellers' behalf during any month within the first ten (10) Business
Days of the following month. Purchaser's obligation and authority shall not
extend to the institution of litigation, employment of counsel or a collection
agency or any other extraordinary means of collection. At the end of the ninety
(90) day collection period, any remaining accounts receivable shall be returned
to Sellers for collection, and all obligations of Purchaser with respect thereto
shall cease.
ARTICLE VIII
EMPLOYEE AND TAX MATTERS
Section 8.1 Tax Matters.
(a) Determination and Allocation of Consideration.
Purchaser shall initially propose the amount and allocation of the
total consideration (the "Consideration") for the Purchased Assets.
Within one hundred and twenty (120) days after the Closing Date,
Purchaser shall provide the Sellers with one or more schedules setting
out its proposal. If the Sellers disagree with any items reflected on
the schedules so provided, Sellers may notify Purchaser of such
disagreement and their reasons for so disagreeing, in which case the
Sellers and Purchaser shall attempt to resolve the disagreement. If
Purchaser and Sellers are unable to resolve their disagreement, the
matter or matters in dispute shall be submitted for
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resolution to a mutually acceptable appraisal firm. The parties shall
equally bear the costs of such appraisal firm. Any determination and
allocation of the Consideration pursuant to this subsection shall be
binding on the Sellers and Purchaser for all tax reporting purposes.
(b) Transfer Taxes. All excise, sales, use, transfer
(including real property transfer), stamp, registration, documentary,
filing, recordation and other similar Taxes which may be imposed or
assessed as a result of the transactions effected pursuant to this
Agreement (the "Transfer Taxes"), together with any interest, additions
or penalties with respect thereto and any interest in respect of such
additions or penalties shall be borne by the Sellers, and each Seller
shall indemnify Purchaser for any Liabilities for such Transfer Taxes;
provided that Sellers shall use Best Reasonable Efforts to have all
Transfer Taxes exempted pursuant to the Sale Order. Any returns or
reports with respect to Transfer Taxes that are required to be filed
shall be prepared and, to the extent a Seller is permitted by law or
administrative practice, filed by such Seller when due.
Section 8.2 Employees and Employee Benefits.
(a) Purchaser shall have no requirement to offer
employment to any of the employees of the Sellers. Any offer Purchaser
determines to make shall be for employment at-will by Purchaser as new
employees of Purchaser (subject to any applicable probation period not
prohibited by Law) to occupy positions designated by Purchaser and
pursuant to the terms and conditions determined by Purchaser in its
sole discretion, unless Purchaser otherwise agrees in writing with any
such employee.
(b) Within thirty (30) days from the date hereof, the
Sellers shall deliver to Purchaser a true and complete list of the
names and positions of those of Sellers' then current employees who
work in positions Related to the Transferred Business and whose primary
job responsibilities are Related to sales or marketing ("Sales and
Marketing Employees") or other functions Related to the Transferred
Business ("Other Employees" and, together with the Sales and Marketing
Employees, the "Employees"). At Purchaser's request, the Sellers shall
deliver, with respect to any Employee designated by the Purchaser, the
following compensation information for fiscal year 2002 and as of the
date of Purchaser's request: (i) annual base salary; (ii) annual bonus;
(iii) commissions; (iv) perquisites; (v) benefits; (vi) severance; and
(vii) all other material items of compensation. Purchaser shall have
the right to hire any Sales and Marketing Employees in compliance with
this Section 8.2(b). Not later than one hundred and twenty (120) days
from the date hereof, Purchaser shall provide the Sellers with a list
identifying each of the Sales and Marketing Employees to whom Purchaser
may wish to make offers of employment at the Closing ("Listed
Employees"). Not later than ninety (90) days from the date hereof,
Purchaser may notify Sellers of any then current Other Employees to
whom it wishes to
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offer employment. Sellers will have the right, in their sole
discretion, to determine whether Purchaser will be permitted to offer
employment to such Other Employee prior to the Closing. Purchaser may
employ any Other Employee who requests employment with Purchaser
without any prior solicitation, if the Employee, once hired by
Purchaser, represents that he was not solicited by Purchaser and agrees
not to solicit any other Employees during the period and to the extent
Purchaser is prohibited from soliciting Employees under Section 8.2(c).
Not later than sixty (60) days prior to the anticipated Closing Date,
Purchaser shall notify Seller of all Employees to which it has made, as
of such date, offers of employment and a good faith estimate of those
additional Employees to whom it may make offers of employment.
(c) Notwithstanding the provisions of Section 8.2(b),
Purchaser agrees that during the twelve (12) month period following the
Closing Date it will not solicit any Employee, other than an Applicable
Employee (as defined below), unless Purchaser has first obtained the
written consent of the Sellers. If, during the twelve (12) month period
following the Closing, Purchaser hires any Employee other than an
Applicable Employee and other than with the consent of Sellers,
Purchaser shall certify to Sellers that such Employee was not solicited
by Purchaser and shall cause such former Employee to make a similar
representation and to agree with Sellers that such former Employee will
not solicit any other Employee, other than an Applicable Employee,
during the twelve (12) month period following the Closing. In addition,
in the event that Purchaser hires any Employee other than an Applicable
Employee during such twelve (12) month period, the Purchaser shall
reimburse the Sellers for any severance payments made in accordance
with Seller's applicable severance policy, including any payments under
the WARN Act, made to any such Employee as a result of such employee's
termination of employment with the Sellers. Seller's severance and WARN
Act obligation are set forth on Schedule 8.2.
(d) The Sellers shall make available to Purchaser, to the
fullest extent permitted by Law, all information and materials
reasonably requested by Purchaser from the personnel files of each of
the Employees who, with the consent of the Sellers if required, shall
have elected to accept employment with Purchaser ("Applicable
Employees").
(e) Each Seller shall remain responsible for the payment
of all benefits that accrue under each of such Seller's or its
Affiliates' compensation plans, "employee benefit plans" (as defined in
Section 3(3) of ERISA) and stock plans (collectively "Benefit Plans").
Purchaser shall not at any time assume any Liability under any of the
Sellers' Benefit Plans for the payment of any benefits to any active or
any terminated, vested or retired participants (or any of their
beneficiaries) in any of the Benefit Plans. Purchaser assumes no
obligation to continue or assume any Benefit Plans or Liabilities of
the Sellers under any Benefit Plans.
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(f) With respect to any Applicable Employee (and any
dependent or beneficiary of any such Applicable Employee), the Sellers
shall retain all liabilities and obligations arising under any group
life, accident, medical, dental or disability plan or similar
arrangement (whether or not insured) and any other "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) maintained for the
benefit of the Sellers' employees and their dependents and other
beneficiaries under each such plan or similar arrangement, and such
liabilities and obligations shall constitute Excluded Liabilities.
Purchaser shall be responsible only for liabilities and obligations
with respect to claims incurred by any Applicable Employee (and any
dependent or beneficiary of any such Applicable Employee) on or after
the Closing Date which are covered under any life, accident, medical,
dental or disability plan or similar arrangement (whether or not
insured) established or made available by Purchaser for the benefit of
Applicable Employees and their dependents and beneficiaries after the
Closing Date. For this purpose claims under any medical, dental,
vision, or prescription drug plan, a claim generally will be deemed to
be incurred on the date that the service giving rise to such claim is
performed and not when such claim is made.
(g) For purposes of this Section 8.2, the term "solicit"
means a communication with an Employee in which Purchaser, or an agent
acting on its behalf, invites, advises, encourages or requests an
Employee to accept employment with Purchaser. "Solicit" does not
include: (i) the publication (in any form of media) of a general
advertisement or employment listing, or (ii) a circumstance in which an
Employee initiates contact with Purchaser without any previous
solicitation by Purchaser.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Conditions to the Obligations of Parent and
Purchaser. The obligation of Parent and Purchaser to effect the Closing is
subject to the satisfaction (or waiver) on or prior to the Closing of the
following conditions:
(a) Representations and Warranties True When Made. The
representations and warranties of the Sellers contained herein shall
have been true and correct when made, except where the failure of such
representations and warranties to be true and correct would not
constitute a Material Adverse Change. Each of Parent and Purchaser
shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of each Seller. For purposes
of this Section 9.1(a), the representations and warranties of the
Sellers shall be read without giving effect to the terms "material",
"Material Adverse Change", "Material Adverse Effect" or words with a
similar meaning, except for the representations and warranties of the
Sellers set forth in Section 3.19.
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(b) Covenants. The covenants and agreements of each
Seller to be performed on or prior to the Closing shall have been duly
performed in all material respects, and Parent and Purchaser shall have
received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of each Seller; provided that if
Sellers have failed to comply with Section 6.2 because complying
therewith would constitute a violation of an order of the Bankruptcy
Court and such noncompliance has no effect on the Transferred Business,
the Purchased Assets, Parent or Purchaser, other than a de minimis
effect, such noncompliance shall not represent the failure of this
Closing condition.
(c) Shareholder Approval. Parent shall have received the
Parent Shareholder Approval.
(d) Representations and Warranties True as of Closing.
The representations and warranties of each Seller contained herein
shall be true and correct as of the Closing Date and shall be deemed to
be remade by Sellers on that date (except that representations made as
of a specific date need be only true and correct as of such date),
except where the failure of such representations and warranties to be
true and correct would not constitute a Material Adverse Change. Each
of Parent and Purchaser shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized officer
of each Seller. For the purposes of this Section 9.1(d), the
representations and warranties of the Sellers, except for the
representations and warranties of the Sellers set forth in Section
3.19, shall be read without giving effect to the terms "material",
"Material Adverse Change", "Material Adverse Effect" or words with a
similar meaning.
(e) Assignments and Novations. Purchaser shall have
received an assignment or novation (including any necessary third-party
consents and approvals) reasonably satisfactory to Purchaser to each of
the Contracts listed in Schedule 3.10, except where the Sale Order
makes such assignment or novation unnecessary or where the failure to
obtain such assignment or novation would not, in the aggregate and
after taking into consideration any alternative measures used
effectively to transfer the economic benefit of any such Contract to
Purchaser, be reasonably likely to have a Material Adverse Effect
subsequent to the Closing.
(f) No Injunctions or Proceedings. No temporary
restraining order, preliminary or permanent injunction or other order
of any court of competent jurisdiction or other legal restraint or
prohibition preventing, restricting or conditioning the consummation of
the transactions contemplated by this Agreement shall be in effect. No
litigation, investigation or administrative proceeding, in each case
brought or initiated by a U.S. Governmental Authority, shall be pending
or threatened that would enjoin, restrain, condition or prohibit
consummation of the transactions contemplated by this Agreement. No
Governmental Authority of competent jurisdiction shall have enacted,
issued,
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promulgated, enforced or entered any statute, rule, regulation,
sanction, judgment, decree, injunction or other order which would be
reasonably likely to have a Material Adverse Effect prior or subsequent
to the Closing.
(g) Antitrust Compliance. (i) Any applicable waiting
period under the HSR Act shall have expired or been terminated, (ii) to
the extent requested by Parent pursuant to, and within the time period
specified in Section 6.5, all notices and reports under Exon-Xxxxxx
shall have been made, (iii) any requests for information or documents
made by the European Commission shall have been fulfilled and (iv) no
Governmental Authority shall have instituted, or announced an intention
to institute, any proceeding against Parent, Purchaser or any Seller
arising out of or based upon an antitrust, competition or similar Law
applicable to such party or to the Transferred Business or the
Purchased Assets.
(h) FCC Approval. The FCC or relevant FCC staff official
pursuant to delegated authority shall have granted the assignment
applications referred to in Section 6.5(a), without the imposition of
any condition that would constitute a Material Adverse Change (provided
that Purchaser shall be deemed to have waived this condition with
respect to any condition in the grant of the assignment application, if
Purchaser shall not have objected to such condition by the tenth (10th)
day after Sellers deliver a written copy of the grant of the assignment
application to Purchaser and ask the Purchaser whether or not it
objects to any condition in the grant), there shall be no outstanding
petition for reconsideration, application for review or judicial appeal
of such consent which is reasonably likely to result in a reversal of
such consent or the imposition of a condition that would constitute a
Material Adverse Change and the time for filing any such petition,
application or appeal shall have expired; provided that the expiration
of the time for such filing will not be a condition to Parent's and
Purchaser's obligations to effect the Closing if no petition to deny or
objection was filed at the FCC against the FCC applications prior to
the granting of such applications by the FCC or relevant FCC staff
official pursuant to delegated authority.
(i) Sale Order. The Bankruptcy Court shall have entered
the Sale Order substantially in the forms attached hereto as Annex F
(together with any related findings of fact or conclusions of Law)
without modification or the imposition of any conditions or limitations
with respect thereto, except for such immaterial modifications,
conditions or limitations which do not individually or in the aggregate
adversely affect Parent and Purchaser and the Sale Order shall not have
been violated, vacated, withdrawn, overruled, resolved or stayed,
amended, reversed and/or modified and shall have become final and
nonappealable.
(j) Other Approvals. The other Governmental Approvals,
notices and filings set forth in Schedule 9.1(j)(i) shall have been
obtained, given or made and shall not contain any condition or
provision that would constitute a Material
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Adverse Change. The condition described in Schedule 9.1(j)(ii) shall
have been satisfied.
(k) Other FCC Actions. The FCC or relevant FCC staff
official pursuant to delegated authority shall have granted: (i) Loral
SpaceCom's March 15, 2002 Petition for Declaratory Ruling to add the
Telstar 13 C-band payload to FCC's Permitted Space Station List without
the imposition of any condition(s) (other than standard FCC conditions,
which the Parties acknowledge for purposes of this Agreement do not
include any condition requiring Loral SpaceCom (or its successor) to
give any form of notice to customers) that could materially adversely
affect Purchaser's commercial operation of the C-band capacity on
Telstar 13 at the 121(degree)W orbital location following the Closing
(provided that Purchaser shall be deemed to have waived this condition
with respect to any condition in the FCC declaratory ruling, if
Purchaser shall not have objected to such condition within ten (10)
days after Sellers deliver a written copy of the Petition to Purchaser
and requested Purchaser's consent), and there shall be no outstanding
petition for reconsideration, application for review or judicial appeal
of such grant which is reasonably likely to result in a reversal of
such grant or the imposition of a condition that would materially
adversely affect Purchaser's commercial operation of the C-band
capacity on Telstar 13 at the 121(degree)W orbital location following
the Closing, and the time for filing any such petition, application or
appeal shall have expired; provided, that the expiration of the time
for such filing will not be a condition to Parent's and Purchaser's
obligations to effect the Closing if no petition to deny or objection
was filed at the FCC against the FCC applications prior to the granting
of such applications by the FCC or relevant FCC staff official pursuant
to delegated authority, and (ii) Loral SpaceCom's May 1, 2003
application to the FCC to extend the construction completion and launch
milestones for Telstar 8 to the second and third quarters,
respectively, of 2004 as well as granting authority to use the South
American beam notwithstanding any failure to provide full frequency
reuse and there shall be no outstanding petition for reconsideration,
application for review or judicial appeal of such grant which is
reasonably likely to result in a reversal of such consent or the
imposition of a condition that would constitute a Material Adverse
Change and the time for filing any such petition, application or appeal
shall have expired; provided that the expiration of the time for such
filing will not be a condition to Parent's and Purchaser's obligations
to effect the Closing if no petition to deny or objection was filed at
the FCC against the FCC applications prior to the granting of such
applications by the FCC or relevant FCC staff official pursuant to
delegated authority.
(l) Telstar 13. Unless the launch of Telstar 13 is
delayed solely as a result of technical malfunction of either the
launch vehicle or the spacecraft, and such delay is not attributable to
any other cause, and the Purchaser, in its sole discretion, believes
that such delay will not exceed the period of six (6) months, Telstar
13 shall have been successfully launched and shall be operating at the
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121(degree)W orbital location without a Total Loss having occurred, and
Loral SpaceCom shall own title to the C-band payload on the Telstar 13
satellite, as contemplated by that certain agreement, dated February
22, 2000, between Loral SpaceCom and Echostar Orbital Corporation
("Echostar") and the Amended and Restated Agreement, as of November 16,
2001, between Loral Skynet and SS/L, shall be valid and in full force
and effect without any outstanding default thereunder by either party.
(m) Total Loss. No Total Loss shall have occurred with
respect to any of Telstar 5, Telstar 6 or Telstar 7, or with respect to
Telstar 4 (unless, in the case of Telstar 4, Sellers were in compliance
with their obligations under Section 6.6 hereof as they related to
Telstar 4 at the time of the Total Loss). The provisions of this
Section 9.1(m) are not intended to create an implication, one way or
the other, as to whether (i) less than Total Losses with respect to the
Purchased Satellites would not constitute a Material Adverse Change or
(ii) a Total Loss (other than in the circumstances described in the
parenthetical clause in the prior sentence) or less than Total Loss(es)
with respect to Telstar 4 would constitute a Material Adverse Change.
(n) PNG Agreement. PANGTEL, on behalf of the Independent
State of Papua, New Guinea, shall have entered into an amended and
restated PNG Agreement, substantially in the form previously delivered
to Purchaser. The rights and obligations of Loral Parent under the PNG
Agreement shall have been validly and effectively assigned to Purchaser
(either directly by Loral Parent or by a Seller as the valid assignee
of Loral Parent), including all applicable approvals of the Bankruptcy
Court. PANGTEL shall have (i) acknowledged in writing the assignment to
Purchaser of the rights and obligations of Loral Parent, or such
Seller, as the case may be, under such agreement or (ii) consented to
the partial assignment to Purchaser of the rights and obligations of
Loral Parent under such agreement related to the use of the
121(degree)W orbital position, subject to Purchaser agreeing to make
the annual payments due after the Closing required under such agreement
with respect to such orbital slot; provided that if PANGTEL has not
consented to the novation in favor of the Purchaser of such partially
assigned rights and obligations under the agreement, Purchaser may
elect to assume all rights and obligations under the agreement.
(o) Backlog. Backlog as set forth in the Final Report
shall not be less than the amount set forth in Schedule 9.1(o).
(p) Recurring Revenues. Recurring Revenues for the Three
Month Period set forth in the Final Report shall not be less than the
amount set forth in Schedule 9.1(p).
(q) Customer Service Contracts. Unless Purchaser shall
have otherwise consented in writing, except as set forth as Schedule
9.l (q), the average
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annual price per transponder unit (36MHz equivalent) charged by Sellers
under new Contracts that are Assumed Contracts (including any renewal
of an existing Contract that is an Assumed Contract) that are entered
into or renewals that take place after the date hereof ("Average
Transponder Price") and prior to the Closing for transponders on the
Purchased Satellites shall not be less than the amount set forth on
Schedule 9.1(q).
(r) Orbital Incentive Payments. SS/L shall have amended
the Purchased Satellite Procurement Agreements as provided in Section
6.16 hereof.
(s) Legal Opinions. Parent and Purchaser shall have
received the opinion of Sellers' FCC counsel, dated as of the Closing
Date, addressed to Parent and Purchaser substantially in the form
attached as Schedule 9.1(s), and the opinion of Sellers' Bermuda
counsel, dated as of the Closing Date, addressed to Parent and
Purchaser in the form to be mutually agreed upon by the parties, each
of which opinions shall expressly permit lenders to Parent or Purchaser
to rely thereon.
(t) Ancillary Agreements. The Ancillary Agreements shall
be in full force and effect and all actions thereunder which are
contemplated to occur simultaneously with the Closing shall so occur.
(u) Certain Contracts. (i) SS/L shall have assumed under
Section 365 of the Bankruptcy Code, in connection with the Chapter 11
Cases, the Revised Procurement Agreements and the remaining Purchased
Satellite Procurement Contracts, and the Contract, dated as of February
22, 2000, with EchoStar Orbital Corporation (and there shall have been
no material default thereunder by SS/L) and the contract listed on
Schedule 5.1(f) and (ii) Loral Skynet Network Services Inc. shall have
entered into with Loral SpaceCom, and shall have assumed under Section
365 of the Bankruptcy Code, in connection with the Chapter 11 Cases,
that certain Master Service Agreement in the form previously delivered
to the Purchaser (and included in the Section 2.3.4.m file of the data
room).
(v) Transition Services Agreement. Each Seller shall have
performed in all material respect its obligations under the Transition
Services Agreement.
(w) Delivery of Other Closing Documents. Each Seller
shall have executed and delivered all of the documents required to be
delivered pursuant to Section 2.8.
Section 9.2 Conditions to the Obligations of the Sellers. The
obligation of the Sellers to effect the Closing is subject to the satisfaction
(or waiver) on or prior to the Closing of the following conditions:
(a) Representations and Warranties True When Made. The
representations and warranties of Parent and Purchaser contained herein
shall
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have been true and correct when made except where the failure of such
representations and warranties to be true and correct would not
constitute a material adverse effect on Parent's and Purchaser's
performance of their obligations hereunder. The Sellers shall have
received a certificate to such effect dated the Closing Date and
executed by duly authorized officers of Parent and Purchaser. For
purposes of this Section 9.2(a), the representations and warranties of
Purchaser and Parent shall be read without giving effect to the terms
"material", "material adverse change", "material adverse effect" or
words with a similar meaning.
(b) Covenants. The covenants and agreements of Parent and
Purchaser to be performed on or prior to the Closing shall have been
duly performed in all material respects and the Sellers shall have
received a certificate to such effect dated the Closing Date and
executed by duly authorized officers of Parent and Purchaser.
(c) Shareholder Approval. Parent shall have received the
Parent Shareholder Approval.
(d) Representations and Warranties True as of Closing.
The representations and warranties of Parent and Purchaser contained
herein shall be true and correct as of the Closing Date and shall be
deemed to be remade by Parent and Purchaser on that date (except that
representations and warranties that are made as of a specific date need
be true only as of such date), except where the failure of such
representations and warranties to be true and correct would not
constitute a material adverse effect on Parent's and Purchaser's
performance of their obligations hereunder. The Sellers shall have
received a certificate to such effect dated the Closing Date and
executed by duly authorized officers of Parent and Purchaser. For
purposes of this Section 9.2(d), the representations and warranties of
Purchaser and Parent shall be read without giving effect to the terms
"material", "material adverse change", "material adverse effect" or
words with a similar meaning.
(e) No Injunctions or Proceedings. No temporary
restraining order, preliminary or permanent injunction or other order
of any court of competent jurisdiction or other legal restraint or
prohibition preventing, restricting or conditioning the consummation of
the transactions contemplated by this Agreement shall be in effect. No
litigation, investigation or administrative proceeding, in each case
brought or initiated by a U.S. Governmental Authority, shall be pending
or threatened that would enjoin, restrain, condition or prohibit
consummation of the transactions contemplated by this Agreement.
(f) Antitrust Compliance. (i) Any applicable waiting
period under the HSR Act shall have expired or been terminated, (ii)
all notices and reports under Exon-Xxxxxx shall have been made, (iii)
any requests for information or documents
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made by the European Commission shall have been fulfilled and (iv) no
Governmental Authority shall have instituted, or announced an intention
to institute, any proceeding against Parent, Purchaser or any Seller
arising out of or based upon an antitrust, competition or similar Law
applicable to such party or to the Transferred Business or the
Purchased Assets.
(g) FCC Approval. The FCC shall have granted the
assignment applications referred to in Section 6.5(a).
(h) Bankruptcy Court Approval. The Bankruptcy Court shall
have entered the Sale Order substantially in the form attached hereto
as Annex F, without modification or the imposition of conditions or
limitations with respect thereto, except for such immaterial
modifications, conditions or limitations which do not, individually or
in the aggregate, adversely affect Sellers, and the Sale Order shall
not have been vacated, stayed, amended, reversed or modified.
(i) Other Approvals. The other Governmental Approvals,
notices and filings set forth in Schedule 9.1(j)(i) shall have been
obtained, given or made.
(j) Legal Opinions. The Sellers shall have received the
opinion of Parent's and Purchaser's Bermuda counsel, dated as of the
Closing Date, addressed to the Sellers in the form to be mutually
agreed upon by the parties.
(k) Ancillary Agreements. The Ancillary Agreements shall
be in full force and effect and all actions thereunder that are
contemplated to occur simultaneously with the Closing shall so occur.
(l) Business Transition Services Agreement. Parent and
Purchaser shall have paid all amounts due and owing prior to the
Closing Date under the Business Transition Services Agreement.
(m) Delivery of Other Closing Documents. Parent and
Purchaser shall have executed and delivered all of the documents
required to be delivered pursuant to Section 2.7.
ARTICLE X
INTENTIONALLY OMITTED
ARTICLE XI
TERMINATION
Section 11.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) By agreement of the parties hereto.
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(b) By Parent and Purchaser if the Sale Procedures Order
shall not have been entered by the Bankruptcy Court in substantially
the form attached hereto as Annex F without modification or the
imposition of any conditions or limitations with respect thereto
(except for such immaterial modifications, conditions or limitations
which do not individually or in the aggregate adversely affect Parent
and Purchaser) on or prior to the later of (i) the fifth (5th) Business
Day after date on which Parent Shareholder Approval is obtained
("Parent Shareholder Approval Date") and (ii) the twenty-fifth (25th)
day after written notice from Parent that the Parent Shareholder
Meeting has been scheduled; provided that this right must be exercised
not later than the thirtieth (30th) Business Day after the later of the
two periods referred to in this Section 11.1(b).
(c) By Parent and Purchaser if the Sale Order shall not
have been entered by the Bankruptcy Court in substantially the form
attached hereto as Annex F approving this Agreement and the
transactions contemplated hereby without modification or the imposition
of any conditions or limitations with respect thereto (except for such
immaterial modifications, conditions or limitations which do not
individually or in the aggregate adversely affect Parent and Purchaser)
on or prior to the forty-fifth (45th) calendar day after the entry of
the Sale Procedures Order; provided that this right must be exercised
not later than the thirtieth (30th) day after the expiration of such
forty-five (45) day period.
(d) By Parent or Purchaser upon written notice to the
Sellers, if (i) any Seller is in breach or default of its covenants,
agreements or other obligations herein, or if any of its
representations and warranties herein are not true and accurate in all
material respects when made or when otherwise required by this
Agreement to be true and accurate, (ii) such breach, default, untruth
or inaccuracy is incapable of being cured, or if such breach, default,
untruth or inaccuracy is capable of being cured, it is not cured within
thirty (30) days of receipt of notice that such breach, default or
failure exists or has occurred (for purposes of this clause (ii) and
without limiting its applicability to any other breach, a breach of
Section 6.13 (other than the notice provisions) shall be deemed to be
not curable) and (iii) such breach, default, untruth or inaccuracy
would constitute a failure to satisfy a Closing condition hereunder if
the Closing were to occur at the time Parent or Purchaser seeks to
terminate this Agreement under this Section 11.1(d).
(e) By Parent and Purchaser, by giving written notice of
such termination to the Sellers, if the Closing shall not have occurred
on or prior to the Final Date; provided that neither Parent nor
Purchaser is in material breach of its obligations under this
Agreement.
(f) By Sellers upon written notice to the Parent and
Purchaser, if (i) either Parent and Purchaser is in material breach or
default of its covenants, agreements, or other obligations herein, or
if any of its representations and warranties herein were not true and
accurate in all material respects when made or
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when otherwise required by this Agreement to be true and accurate, (ii)
such breach, default, untruth or inaccuracy is incapable of being
cured, or if such breach, default, untruth or inaccuracy is capable of
being cured, it is not cured within thirty (30) days of receipt of
notice that such breach, default, untruth or inaccuracy exists or has
occurred and (iii) such breach, default, untruth or inaccuracy would
constitute a failure to satisfy a Closing condition hereunder if the
Closing were to occur at the time Sellers seek to terminate this
Agreement under this Section 11.1(f).
(g) By Sellers, by giving written notice of such
termination to Purchaser, if the Closing shall not have occurred on or
prior to the Final Date; provided that no Seller is in material breach
of its obligations under this Agreement.
(h) By Parent and Purchaser or by Sellers if Parent
Shareholder Approval has not been obtained by September 8, 2003;
provided that this right must be exercised by Parent and Purchaser or
by Sellers not later than October 8, 2003; and provided, further, that
Parent and Purchaser may not terminate this Agreement under this
Section 11.1(h) if they are in material breach of their obligations
under Section 7.2.
(i) By Parent and Purchaser if the Sellers have not
delivered the financial statements referred to in Sections 6.7(a)(i) or
6.7(b)(i) on or prior to September 1, 2003; provided that such right
may only be exercised on or prior to the later of (A) the date such
financial statements are delivered or (B) five (5) days after Sellers
provide notice that such financial statements will be available for
delivery.
(j) By Parent, Purchaser or Sellers if the Bankruptcy
Court shall have approved a Transaction with a Person other than Parent
or Purchaser; provided that this right may be exercised by Parent or
Purchaser upon such approval (and without any requirement to wait for
such approval to become final and non-appealable).
(k) By Parent or Purchaser if Sellers do not deliver
Sellers' FCC Application to Purchaser or do not make the HSR
notification filing contemplated by Section 6.5(c), in each case by the
fifteenth (15th) Business Day after the date hereof; provided that this
right must be exercised not later than the forty-fifth (45th) Business
Day after the date hereof.
Any notice given pursuant to clause (d) or (f) shall specify the condition or
conditions that constitute the breach, default, untruth or inaccuracy.
Section 11.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 11.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any Liability to any other
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party hereto or their respective Affiliates, directors, officers or employees,
except that (i) the parties shall perform their obligations contained in this
Section 11.2 and in the last sentence of Section 6.1 and Sections 12.3, 12.5,
12.6, 12.8, 12.9, 12.10, 12.11 and 12.13; provided that nothing in this Article
XI shall relieve any party of its Liability for a breach of its obligations
under this Agreement, (ii) Purchaser's right to the Break-Up Fee and Expense
Reimbursement under Section 5.1(c) shall remain in effect notwithstanding a
termination of this Agreement under Section 11.1(j); and (iii) if the Break-Up
Fee and Expense Reimbursement are paid pursuant to, and under the circumstances
contemplated by, Section 5.1(c), such amount shall be in lieu of and full
satisfaction for any claims of Parent or Purchaser based upon the Sellers'
breach of this Agreement or failure to consummate the transactions contemplated
hereby.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made upon receipt if made
in writing and if (a) served by personal delivery upon the party for whom it is
intended, (b) delivered by a national courier service or (c) sent by telecopier,
provided that the telecopy is promptly confirmed by telephone confirmation
thereof, to the person at the address set forth below, or such other address as
may be designated in writing hereafter, in the same manner, by such person.
To Parent or Purchaser:
Intelsat (Bermuda), Ltd.
Xxxxxxxxx Xxxxx
00 Xxxxxxxxx Xxxxxx West, Suite 201
Xxxxxxxx XX 09, Bermuda
Telecopy: x000-000-0000
Attention: President
with a copy (which shall not constitute notice) to:
Intelsat Global Service Corporation
0000 Xxxxxxxxxxxxx Xxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: General Counsel and Senior Vice President
for Regulatory Affairs
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
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Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
To Sellers:
Loral Space & Communication Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Section 12.2 Amendment; Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the parties hereto, or,
in the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.
Section 12.3 Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the prior written
consent of the other parties hereto; provided that (a) Parent and Purchaser may:
(i) assign their rights hereunder to any direct or indirect wholly-owned
Subsidiary, and (ii) assign, pledge and grant a security interest in their
right, title and interest, in, to and under this Agreement and their rights
thereunder as collateral security for any present or future indebtedness, which
assignment, in either case, shall not relieve Parent or Purchaser of any
obligations hereunder, (b) Sellers may assign their right to receive the
Purchase Price to lenders under a debtor-in-possession financing agreement,
which assignment shall be subject to the provisions of Section 2.5 and shall not
relieve Sellers of any obligation hereunder and (c) Parent, Purchaser and
Sellers may assign their rights and obligations to a person who acquires all or
substantially all of that party's assets (or, in the case of Parent and
Purchaser, after the Closing, all or substantially all of the assets acquired by
them under
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this Agreement) and assumes all of such Party's obligations hereunder. Any
attempted assignment in contravention hereof shall be null and void.
Section 12.4 Entire Agreement; Severability. This Agreement,
the Non-Disclosure Agreement and the Ancillary Agreements contain the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters. If any provision of this Agreement is held to be
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement that is held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.
Section 12.5 Fulfillment of Obligations. Any obligation of any
party to any other party under this Agreement or any of the Ancillary
Agreements, which obligation is performed, satisfied or fulfilled by an
Affiliate of such party, shall be deemed to have been performed, satisfied or
fulfilled by such party.
Section 12.6 Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
Successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than the parties hereto or their
Successors and permitted assigns any rights or remedies under or by reason of
this Agreement.
Section 12.7 Guaranty. Parent hereby irrevocably and
unconditionally guarantees to the Sellers the agreements to be performed
hereunder by Purchaser or by any designated Affiliate of Purchaser that has
assumed and agreed to discharge any Liability under any Assumed Contract
pursuant to Section 2.3 hereof ("Purchaser Obligations"). Except as provided
below, the guaranty provided hereby is a guaranty of payment and performance,
not merely of collection. If Purchaser shall fail timely to perform or pay any
Purchaser Obligation hereunder, Parent shall pay or perform such Purchaser
Obligation as and when due. Except as provided below, Parent hereby waives (a)
promptness, diligence, notice, disclosure, demand for, presentment, protest and
dishonor and (b) any right to force any Seller to proceed first, concurrently or
jointly against Purchaser, any other guarantor, surety or other co-obligor.
Sellers hereby agree that prior to enforcing their rights of payment and
performance against Parent pursuant to this Section 12.7 with respect to any
Purchaser Obligation, Sellers shall have (i) made demand on Purchaser to perform
such Purchaser Obligation, (ii) given Purchaser a reasonable opportunity to
comply with such Purchaser Obligation and (iii) determined in its reasonable
discretion that Purchaser has not or will not comply with such Purchaser
Obligation.
Section 12.8 Public Disclosure. Notwithstanding anything
herein to the contrary, each of the parties to this Agreement hereby agrees with
the other parties hereto that, except as may be required to comply with the
requirements of any applicable Laws,
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and the rules and regulations of each stock exchange upon which the securities
of one of the parties is listed, no press release or similar public announcement
or communication shall ever, whether prior to or subsequent to the Closing, be
made or caused to be made concerning the execution or performance of this
Agreement unless specifically approved in advance by the parties hereto (which
approval shall not be unreasonably withheld or delayed).
Section 12.9 Return of Information. If for any reason
whatsoever the transactions contemplated by this Agreement are not consummated,
Parent and Purchaser shall promptly return to Sellers all Books and Records
furnished by Sellers or any of their respective agents, employees, or
representatives (including all copies, if any, thereof).
Section 12.10 Expenses. Except as otherwise expressly provided
in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
party incurring such expenses.
Section 12.11 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO AGREES
THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED
BY THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY,
EXCLUSIVELY (A) IN THE BANKRUPTCY COURT TO THE EXTENT THAT THE BANKRUPTCY COURT
HAS JURISDICTION OVER SUCH ACTION OR PROCEEDING, AND (B) IN ALL OTHER CASES IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (THE
"CHOSEN COURTS") AND (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE CHOSEN COURTS, (II) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION
OR PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN
COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY
HERETO, (IV) AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION
OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION
12.1 OF THIS AGREEMENT AND (V) ACKNOWLEDGES THAT THE OTHER PARTIES WOULD BE
IRREPARABLY DAMAGED IF ANY OF THE PROVISIONS OF THIS AGREEMENT ARE NOT PERFORMED
IN ACCORDANCE WITH THEIR SPECIFIC TERMS AND THAT ANY BREACH OF THIS AGREEMENT
COULD NOT BE ADEQUATELY COMPENSATED IN ALL CASES BY MONETARY DAMAGES ALONE AND
THAT, IN ADDITION TO ANY OTHER RIGHT OR REMEDY TO WHICH A PARTY MAY BE ENTITLED,
AT LAW OR IN EQUITY, IT SHALL
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BE ENTITLED TO ENFORCE ANY PROVISION OF THIS AGREEMENT BY A DECREE OF SPECIFIC
PERFORMANCE AND TO TEMPORARY, PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF TO
PREVENT BREACHES OR THREATENED BREACHES OF ANY OF THE PROVISIONS OF THIS
AGREEMENT, WITHOUT POSTING ANY BOND OR OTHER UNDERTAKING.
Section 12.12 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.
Section 12.13 Headings. The heading references herein and the
table of contents hereto are for convenience purposes only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
Section 12.14 Time is of the Essence. With regard to all dates
and time periods set forth or referred to in Section 2.6, 11.1(b), 11.1(c),
11.1(e), 11.1(g), 11.1(h), 11.1.(i) and 11.1(k), time is of the essence.
Section 12.15 Mutual Drafting. This Agreement is the product
of joint drafting and negotiation among the parties and no provision hereof
shall be construed for or against any party based upon such party having been
responsible or primarily responsible for the drafting thereof.
Section 12.16 No Survival. The representations and warranties
of the parties hereto, and the covenants in Articles VI and VII which by their
terms are to be fully performed on or prior to the Closing Date (in case of the
representations and warranties, after being made on the Closing Date) shall not
survive, and shall terminate immediately following, the Closing. The provisions
of this Section 12.16 shall not apply to any cause of action based on fraud.
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
LORAL SPACE & COMMUNICATIONS
CORPORATION,
as debtor and debtor in possession
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
LORAL SPACECOM CORPORATION,
as debtor and debtor in possession
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
LORAL SATELLITE INC.,
as debtor and debtor in possession
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
INTELSAT, LTD.
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
INTELSAT (BERMUDA), LTD.
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
Title: President
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ANNEX A
PURCHASED ASSETS
1. Xxxxxxx 0, Xxxxxxx 0, Xxxxxxx 0, Xxxxxxx 0 and all of Sellers' right,
title and interest in Telstar 8 and Telstar 13;
2. All right, title and interest of Sellers in the Revised Procurement
Agreements, together with all works-in-progress and other deliverables
thereunder;
3. All handbooks, manuals, design review materials, ground test data and
documentation (including, to the extent available, Non-Conformance
Reports and Waivers), payload data (antenna patterns and repeater data)
(in electronic format to the extent available), command and telemetry
database (in electronic format, to the extent available), historical
telemetry data of in-orbit Purchased Satellites (in electronic format
to the extent available), engineering and technical drawings,
processes, methodologies and technology, reports, analyses,
specifications, plans, procedures and other documentation Related to
the operation of the Purchased Satellites;
4. Four (4) RCA 3P ground encryption units (operating the KI-23 algorithm
and to be used with Telstar 4, Telstar 5, Telstar 6, and Telstar 7),
one (1) Mykotronix ground encryption unit (operating the Caribou
algorithm and to be used with Telstar 8), three (3) Command Encryption
Units to be used with Telstar 13 (purchased from SS/L pursuant to
letter 2001-ECHO-0322LZ dated August 21, 2001)], three (3) dynamic
simulators for Telstar 4, Telstar 6 and Telstar 8, and all other
deliverables, including encryption keys (that are able to be
transferred to Purchaser's key Custodian) received by Sellers (or their
predecessors in interest) from SS/L or Lockheed Xxxxxx (or their
predecessors in interest) pursuant to the Purchased Satellite
Procurement Contracts and in existence as of the date of the Agreement;
5. Software updates and upgrades to the satellite resident (i.e.,
on-board) code of the Purchased Satellites written and delivered by the
satellite manufacturer for normal on-orbit delivery and operations (T&C
Database) subsequent to initiation of service for the purpose of
resolving anomalies or to improve satellite performance on the
Purchased Satellites (the "Upgrade Software"), including to the extent
available all associated data, source code, if any, and design
documentation, upload and operational procedures, updated command and
telemetry database (in electronic format, to the extent available) and
other documentation, and all agreements related thereto (which are set
forth on Schedule 3.10 hereto);
6. One (1) Lockheed Xxxxxx supplied ground control system for Telstar 4 in
"as-is" condition (which consists of one (1) primary ground-control
system including two (2) DEC 4300 mini Vax computers with realtime
software, six (6) DEC Vax
A-1
Station 4000-90 workstation computers with DSS and GloC software, one
(1) Lockheed DSS rack, one (1) CRT rack, and two (2) DEC 3900 mini Vax
computers with realtime software, six (6) DEC Vax Station 3100
workstation computers, and three (3) racks of CRT spare parts).
7. Copies of all satellite restoration plans for the Purchased Satellites;
8. All Assumed Contracts, together with all (a) prepaid expenses under
Assumed Contracts that are the subject of an Adjustment under Section
2.5(b)(v), (b) customer deposits and collateral Related thereto under
Customer Service Contracts to the extent not subject to an Adjustment
under Section 2.5(b)(v), in the case of (a) and (b) to the extent the
Base Price is increased with respect thereto and (c) accounts
receivable under Assumed Contracts generated by the Transferred
Business to the extent related to the period on or after the Closing
Date;
9. The five (5) promissory notes issued by ABC under the Amended and
Restated Agreement, dated September 1, 1997.
10. All vendor advances, to the extent subject to an Adjustment under
Section 2.5(b)(v), performance bonds and similar assets Related to the
Purchased Assets;
11. All of Seller's rights, claims, credits, causes of action or rights of
set-off against other persons or entities that relate to the Purchased
Assets, including, without limitation, rights under manufacturers' and
vendors' warranties;
12. (a) All launch and in-orbit insurance policies related to the Purchased
Satellites, and (b) all rights and claims of Seller thereunder
(including cash proceeds received on or after the Closing Date);
13. Subject to the prior consent of FCC, all FCC Authorizations and to the
extent legally assignable, all other Governmental Authorizations
related to the Purchased Satellites, and all rights related to use of
satellite orbital arc locations as set forth in Schedule 3.16 hereto;
and
14. All Books and Records relating to the Purchased Assets, including,
without limitation, inventory, maintenance and asset history records,
customer and supplier lists and records related thereto, customer
meeting minutes, pricing and cost information, billing and accounts
receivable data and history reports, customer credit evaluation and
scoring reports, bad debt reserve analyses and analysis histories,
business and marketing plans and proposals, data files, archive files
and other data processing information and records except, subject to
section 6.3, in each case for such Books and Records that are
commingled with other data regarding assets that are excluded from the
sale as Excluded Assets.
A-2
ANNEX B
EXCLUDED ASSETS
1. SS/L's interest in Telstar 8 and Telstar 13 and in the Revised
Procurement Agreements;
2. All satellites that are not Purchased Satellites;
3. Trademarks, service marks, logos and other rights to the names
"Cyberstar," "Loral", "Skynet," "Skyreach," and "Telstar";
4. The communication simulators for Telstar 4, Telstar 5, Telstar 6,
Telstar 7, and Telstar 8 and Telstar 13 (provided that Purchaser shall
be entitled to use the communication simulator for Telstar 13 in the
event of an emergency, and then only at Sellers' premises and upon
notice that is reasonable under the circumstances);
5. The following shall constitute Excluded Assets only with respect to
Purchased Assets listed in paragraphs 8, 10 and 11:
(a) All network infrastructure and ground segment facilities,
including TT&C and satellite operations facilities, network
operations control facilities, teleports, gateways, points of
presence and fiber optic cable transmission facilities;
(b) Loral SpaceCom's Skynet Network Services business of providing
end-to-end data solutions on networks comprised of earth
terminals, space segment and where appropriate, networking
hubs;
(c) Loral SpaceCom's Skynet Professional Services business of
providing (i) technical support and monitoring in the
construction and launch of satellites, (ii) telemetry,
tracking and control services and (iii) technical operational
support in the design, implementation and operation of data
networks over satellites;
(d) All computer systems, facilities and software that are not
expressly listed as Purchased Assets; and
(e) All hardware, software and intellectual property rights
associated with satellites that are not Purchased Satellites;
6. All business and operational processes and know-how related to the
Transferred Business, and all Licensed Intellectual Property and Other
Intellectual Property;
B-1
7. Lease agreement with Satmex for the lease of two (2) Ku-band
transponders on Satmex 5;
8. All cash and cash equivalents of Sellers (including for this purpose
all collected funds and items in the process of collection received in
bank accounts of Sellers through 11:59 p.m. local time on the day prior
to the Closing Date);
9. Accounts receivable generated by the Transferred Business to the extent
(a) related to the period prior to the Closing Date or (b) the Base
Price was reduced pursuant to Section 2.5(b)(i) with respect thereto;
10. All Excluded Payments and customer prepayments under Contracts listed
on Schedule 2.5(b)(i);
11. Any proceeds received by Seller pursuant to claims under launch and
in-orbit insurance policies related to losses (a) either (i) for which
a proof of claim was filed prior to the date of this Agreement or (ii)
described on Schedule 3.20(b) or (b) with respect to which the Base
Price was reduced pursuant to Section 2.5(b)(iii);
12. Sellers' investments in SatMex, XTAR and Europe*Star;
13. Assets related to any employee benefit plan;
14. All rights to receive refunds or credits with respect to the Taxes of
any Seller, except for refunds with respect to Taxes with respect to
which the Purchase Price was increased pursuant to Section 2.5(b)(v);
15. Cancellation payments with respect to periods prior to the Closing; and
16. The New Lease to the extent provided in Section 6.17(b).
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