Exhibit 10.1
AMENDMENT NO. 1 dated as of January 28, 2005 (this "Amendment") to the
Contribution and membership interest purchase agreement dated as of December 3,
2004 (the "Original Agreement"), among THE DIRECTV GROUP, INC., a Delaware
corporation (the "Parent"); XXXXXX NETWORK SYSTEMS, INC., a Delaware
corporation ("HNS"); SKYTERRA COMMUNICATIONS, INC., a Delaware corporation (the
"Investor"); and XXXXXX NETWORK SYSTEMS, LLC, a Delaware limited liability
company (the "Newco").
By executing and by delivering this Amendment, the undersigned hereby
agree as set forth below.
1.1 Defined Terms.
Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Original Agreement.
1.2 Amendments.
(a) Section 3.1(b) of the Original Agreement is hereby amended by
deleting the first sentence of Section 3.1(b) and replacing it with the
following:
"The parties hereto shall as promptly as practicable and in any event
within fifteen (15) business days after the date hereof, and HNS shall cause
its Affiliates to, file the necessary Communications Applications at the FCC,
make the other filings, if any, required under the Communications Act, and on
or before January 14, 2005, shall make the filings required under any other
Communications Laws."
(b) Section 3.5(a) of the Original Agreement is hereby amended by
deleting the last sentence of Section 3.5(a) and replacing it with the
following:
"Parent and HNS shall assist and cooperate with the potential sources
of Financing, which assistance and cooperation shall include using their
respective commercially reasonable efforts to cause (i) HNS or its legal
counsel to provide customary legal opinions to the extent requested by the
Persons providing the Financing, (ii) HNS's auditors to (x) cooperate generally
with the Investor and, to the extent provided by auditors under applicable
accounting practices, to provide "cold comfort" letters to the extent requested
by Persons providing the Financing and (y) subject to Section 3.10(a), consent
to the inclusion of HNS's Business audit reports in any offering or private
placement memorandum and (iii) HNS's senior management employees to participate
in the marketing of any debt or equity securities, including going on a "road
show.""
(c) Section 3.10(a) of the Original Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
"Promptly following the date hereof, HNS shall use commercially
reasonable efforts to retain Deloitte & Touche to (i) conduct an audit of the
balance sheet for the Business at and as of December 31, 2004, December 31 2003
and December 31, 2002, together with statements of operations and cash flows
and notes thereto (the "Annual Statements") and which audit report for the
year-ended December 31, 2003 shall also address the supplemental combining
balance sheets of the VSAT Business and Spaceway Business as of December 31,
2003 and related combining statements of operations and cash flows for the year
then ended (the "Annual Combining Information") and (ii) conduct a Statement of
Auditing Standards 100 ("SAS 100") review of the unaudited balance sheet for
the Business at and as of June 30, 2004, together with statements of operations
and cash flows and notes thereto for the six-month period ended June 30, 2004
(the "Interim Statements") and which review shall also address the supplemental
combining balance sheets of the VSAT Business and Spaceway Business as of June
30, 2004 and related combining statements of operations and cash flows for the
six-month period then ended (the "Interim Combining Information"). The Interim
Statements and the Annual Statements shall be prepared by HNS in accordance
with GAAP and in conformity with Articles 3-01 and 3-02 of Regulation S-X as
well as any other applicable Securities Laws (together, the "Relevant
Accounting Rules"). The parties hereto agree that the Interim Combining
Information and Annual Combining Information is being prepared solely for
purposes of determining whether the condition set forth in Section 8.2(f) has
been satisfied and that the proposed engagement letter with Deloitte & Touche
states that the Interim Combining Information and Annual Combining Information
shall not be included in the financial information filed by Parent or the
Investor with the SEC or used by the parties in connection with the Financing.
HNS shall use commercially reasonable efforts to assist Deloitte & Touche in
connection with its review of the Interim Combining Information and the Annual
Combining Information, and its SAS 100 review of the Interim Statements and its
audit of the Annual Statements, including providing Deloitte & Touche with such
information and assistance as it may reasonably request in connection with the
completion of the audit and SAS 100 review, subject to compliance with
applicable Law and the terms and conditions of the engagement letter with
Deloitte & Touche, if any. HNS shall deliver to the Investor the Annual
Combining Information and the Annual Statements together with Deloitte &
Touche's audit reports relating thereto as soon as reasonably practical, but in
no event later than March 15, 2005. HNS shall deliver to the Investor the
Interim Statements and the Interim Combining Information together with Deloitte
& Touche's SAS 100 review reports relating thereto as soon as reasonably
practical, but in no event later than March 22, 2005. Similarly, if necessary
to consummate the Financing, HNS shall use commercially reasonable efforts to
engage Deloitte & Touche to conduct a SAS 100 review of the unaudited balance
sheet of the Business at and as of March 31, 2005 and March 31, 2004, together
with the related statements of operations and cash flows and notes thereto for
the quarter then ended, and HNS shall prepare such financial statements in
accordance with the Relevant Accounting Rules. HNS shall deliver to the
Investor the applicable unaudited financial statements and the review report of
Deloitte & Touche with respect to its SAS 100 review, subject to compliance
with applicable Law, as soon as reasonably practical. Within 30 days after the
end of each full calendar month between the date hereof and Closing, HNS shall
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deliver to the Investor the balance sheet of the Business as of the end of each
such month, along with the statement of operations for such month, which
financial statements shall be of the type prepared by HNS in the Ordinary
Course of Business (and which will not be in accordance with GAAP); provided
that with respect to the calendar month ended December 31, 2004, HNS shall
deliver the required balance sheet and the statement of operations to the
Investor within 45 days after the end of the month."
(d) Section 3.10(c) of the Original Agreement is hereby amended by
deleting it in its entirety.
(e) Section 8.2(f) of the Original Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
"Forty-five (45) days shall have elapsed since the date that HNS
delivered to the Investor the Interim Statements, the Interim Combining
Information, the Annual Combining Information and the Annual Statements
required by Section 3.10, and the Interim Combining Information and Annual
Combining Information shall evidence financial or economic performance of the
VSAT Business similar to or better than, in all material respects, the
financial or economic performance of the VSAT Business evidenced by the
Financial Statements for the same periods, and no more than two of the
following fourteen individual balance sheet, statement of operations or cash
flow items in the Interim Combining Information and Annual Combining
Information shall differ by more than the corresponding percentages (or dollar
amounts in the case of (iii) below) set forth below from the comparable items
in the Financial Statements for the same periods (after making adjustments to
specific items on the Financial Statements, if any, necessary to reflect any
reclassifications resulting from the audit of the Annual Statements or SAS 100
review of the Interim Statements, without regard to any movements between the
specific periods to which such items relate):
(i) 10% for (A) a decline in total assets less cash and cash
equivalents, (B) an increase in short-term borrowings and current portion of
long-term debt plus long-term debt, (C) a decline in revenues and (D) an
increase in total operating costs and expenses (exclusive of depreciation and
amortization expenses);
(ii) 15% for (A) a decline in revenues less cost of products sold and
(B) an increase in expenditures for property; and
(iii) (A) $10 million decline for net cash provided by (used in)
operating activities with respect to the Interim Combining Information and (B)
$20 million decline for net cash provided by (used in) operating activities
with respect to the Annual Combining Information; provided that to the extent
that there are any items of the Spaceway Business on the Financial Statements,
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items of such type will be deemed to be included in the Interim Combining
Information and Annual Combining Information in a consistent manner for this
purpose; and"
(f) Exhibit E of the Original Agreement is hereby amended by deleting
it in its entirety and replacing it with the document attached to Annex I
hereto.
(g) Exhibit F of the Original Agreement contains two provisions in
Section 7.5 (Major Decisions) in brackets (Sections 7.5.7 and 7.5.11) and a
footnote to each bracketed provision that provides that the parties will work
in good faith to finalize their agreement on these major decisions prior to
Closing. The parties have finalized their agreement on these major decisions as
follows: the language contained in brackets in Sections 7.5.7 and 7.5.11 is
agreed and shall be the language in the final execution copy to be entered into
at Closing. Therefore, at Closing, HNS and the Investor (or its designated
Subsidiary) will enter into the Amended and Restated Limited Liability Company
Agreement of Newco in the substantially the form attached to the Original
Agreement as Exhibit F (and shall remove the brackets from Sections 7.5.7 and
7.5.11 and the accompanying footnotes from the copy executed and delivered at
Closing).
1.3 No other Amendments or Waivers.
Except as modified by this Amendment, the Original Agreement shall
remain in full force and effect, enforceable in accordance with its terms. This
Amendment is not a consent to any waiver or modification of any other terms or
conditions of the Agreement or any of the instruments or documents referred to
in the Agreement and shall not prejudice any right or rights which the parties
thereto may now or hereafter have under or in connection with the Agreement or
any of the instruments or documents referred to therein.
1.4 Counterparts and Facsimile Execution.
To facilitate execution, this Amendment may be executed in as many
counterparts as may be required. It shall not be necessary that the signatures
of, or on behalf of, each party, or that the signatures of all Persons required
to bind any party, appear on each counterpart; but it shall be sufficient that
the signature of, or on behalf of, each party, or that the signatures of the
Persons required to bind any party, appear on one or more of the counterparts.
All counterparts shall collectively constitute a single agreement. It shall not
be necessary in making proof of this Amendment to produce or account for more
than a number of counterparts containing the respective signatures of, or on
behalf of, all of the parties hereto. This Amendment may be executed through
delivery of duly executed signature pages by facsimile or electronic mail.
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IN WITNESS WHEREOF, the parties have duly executed this Amendment
No. 1 to the Contribution and Membership Interest Purchase Agreement as of the
date first above written.
HNS:
XXXXXX NETWORK SYSTEMS, INC.
By: /s/Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
Title: VP & General Counsel
PARENT:
THE DIRECTV GROUP, INC.
By: /s/ J. Xxxxxxx Xxxxxx
-----------------------------
Name: J. Xxxxxxx Xxxxxx
Title: Vice President
INVESTOR:
SKYTERRA COMMUNICATIONS, INC.
By: /s/Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
NEWCO:
XXXXXX NETWORK SYSTEMS, LLC
By: /s/ J. Xxxxxxx Xxxxxx
-----------------------------
Name: J. Xxxxxxx Xxxxxx
Title: President
