Exhibit 99.2
EXECUTION COPY
PRODUCT PURCHASE AGREEMENT
This Product Purchase Agreement (this "Agreement") is made as of
September 14, 2001, by and among Liberty Satellite & Technology, Inc., a
Delaware corporation, On Command Corporation, a Delaware corporation
(collectively, "Purchasers"), TSAT Technologies, Inc., a Colorado corporation
("Seller"), and Asvan Technology, LLC, a Colorado limited liability company
("Parent").
RECITALS
WHEREAS, Seller contemplates creating and selling Products (as defined
below) based upon the Transceiver Technology and/or the Service Module
Technology (each as defined below); and
WHEREAS, in the event that Seller does create such Products, Seller
desires to sell Products to each of the Purchasers, Liberty Media Corporation
and any consolidated subsidiary of the foregoing pursuant to the terms and
conditions contained herein.
NOW THEREFORE, in consideration of these premises and the mutual
promises set forth herein and in the other Transaction Agreements (as defined
below), and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be bound, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms have the following
meanings respectively:
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such first Person. For this
purpose "control" means the possession, directly or indirectly, of the power to
influence the management of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"ASSETS" shall have the meaning set forth in the Stock Purchase
Agreement.
"CLOSING" means the date specified as the "Closing" in the Asset
Purchase Agreement.
"GOVERNMENTAL AUTHORITY" means any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or other entity and any court or other
tribunal).
"IMPROVEMENTS" means any and all modifications, enhancements, deletions
from, changes or additions to the Intellectual Property contained in the Assets.
"INTELLECTUAL PROPERTY" means the following interests and rights:
(a) all patents and patent rights including, without limitation, all utility
models, applications, continuations, divisions, provisionals,
continuations-in-part, reissues, and any reexamined patents; (b) all
patentable subject matter including, without limitation, any and all
inventions, information, proprietary processes and formulae, designs,
schematics, parts lists, manufacturing diagrams, devices, source code
(human-readable versions of software, including both printed listings of
software and machine-readable copies from which a computer can produce
printed listings, and any data files necessary to support the operation of
such code), object code (machine-executable versions of software),
algorithms, architecture, structure, display screens, layouts, processes,
development tools, and the like that may contain subject matter that is
eligible to be protected through patent protection, whether or not fixed in a
tangible medium and whether or not reduced to practice; (c) all Trademarks
(defined below); (d) all copyrights and copyright applications including,
without limitation, all original works of authorship fixed in a tangible
medium, whether registered or unregistered; (e) all trade secrets; (f) all
Know-How (defined below); (g) all confidential information including, without
limitation, all data, information, compilations, disclosures, documentation,
source code commentary and media constituting, describing or relating to the
above, and the like; and (h) all other world-wide intellectual property
rights, whether currently vested, perfected, registered, or available only
through the common law. "Know-How" means valuable and proprietary business
information, whether or not protected by patent, trademark, copyright or
trade secret law, including methods, systems, technologies, ideas, processes,
operational procedures, employee training methods, protocols, techniques,
specifications, business, marketing or other plans, proposals, instructional
and informational literature, computerized and electronic technologies,
website development and operation methods, designs and layouts, research, any
and all business, pricing, technical, marketing, financial, customer and
supplier data and customer and supplier lists. "Trademarks" means all rights
in registered, unregistered, intent-to-use, and/or common law trademarks,
service marks, trade names, icons, logos, slogans, trade dress, and any other
indicia of source or sponsorship of goods and services, including all
associated and appurtenant goodwill throughout the world.
"LAW" means the common law and any statute, ordinance, code or other
law, rule or regulation, order, judgment, decree, injunction, franchise,
determination, approval, permit, license, authorization or other requirement
of a Governmental Authority.
"LIENS" means with respect to any security or any other property or
asset, any and all claims, charges, adverse interests, pledges, security
interests, liens and encumbrances of any nature whatsoever, whether existing
or arising pursuant to any Law or agreement or otherwise.
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization, including a Governmental Authority.
"PRODUCTS" means any hardware, software or combination thereof
developed using or based upon the Service Module Technology or the Tansceiver
Technology, unless the Service Module Technology or Transceiver Technology
constitute an immaterial part of such Product.
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An item shall not be a Product if it does not use or is not based upon the
Service Module Technology or the Transceiver Technology.
"SERVICE MODULE TECHNOLOGY" means a Ka-band IRD service module for
commercial premises and multiple dwelling units ("MDUs") for the delivery of
voice, video and data to individual rooms in hotels or other commercial
premises or individual apartments in a MDU that is intended to provide
virtually unlimited channel capacity using most of the existing coaxial
wiring, and better utilization of set top assets at lower cost, including a
centralized bandwith-efficient system and means to achieve this with a
centralized POP delivery to multiple hotels/MDUs, using or based upon the
Assets or any Improvements thereon.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated
as of the date hereof by and between Liberty Satellite & Technology, Inc. and
Parent.
"TRANSACTION AGREEMENTS" means this Agreement, the Waiver and
Release Agreement, dated as of September 14, 2001, executed by Xxxxxx
Xxxxxxxxxxx, the Waiver and Release Agreement, dated as of September 14,
2001, executed by Xxxxxxxxxxx Xxxxxxxxxxx, the Termination Agreement, dated
as of September 14, 2001, by and among Seller, Liberty Satellite &
Technology, Inc. and TSAT, the Termination and Release Agreement, dated as of
September 14, 2001 (including the exhibits thereto), by and between Xxxxxx
Xxxxxxxxxxx and TSAT, the Release, dated as of September 14, 2001, executed
by Xxxxxxxxxxx Xxxxxxxxxxx, and the Stock Purchase Agreement.
"TRANSCEIVER TECHNOLOGY" means all proprietary technologies
utilizing yttrium-iron-garnet compounds (known as YIG compounds) in the
design of a remotely tunable receiver and transmitter intended to be
extremely stable, with low phase noise, very low cost, and high reliability
integration characteristics, including without limitation any proprietary
transceiver design architectures relating to, arising out of or used or
useful in connection with such technologies, using or based upon the Assets
or any Improvements thereon.
ARTICLE II.
AGREEMENTS
SECTION 2.1 AGREEMENT TO SELL PRODUCTS.
(a) Seller agrees to sell any Products to Purchasers,
Liberty Media Corporation and any of their respective consolidated
subsidiaries (collectively, the "Eligible Customers") at the lesser of (i)
Seller's lowest published rates for such Products (based on the quantity of
such Products purchased) or (ii) a price per unit with regard to order size
(as determined separately with respect to Products based on the Transceiver
Technology and Products based on the Service Module Technology) which is no
greater than the lowest price per unit at which Seller sells Products to any
Person (the "Best Price").
(b) Seller further agrees to sell any Products to any
Purchaser at a cost not to exceed a Gross Profit of 10%, until the Gross
Profit forgone by Seller (based upon the amount by
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which the Best Price exceeds a Gross Profit of 10%) equals $1,000,000 in the
aggregate. For purposes hereof "Gross Profit" shall mean the amount by which
sales of Products exceed the direct cost of making the Products (I.E.,
material, labor and overhead) all as determined in accordance with Generally
Accepted Accounting Principles in the United States. For the avoidance of
doubt, Gross Profit shall not include costs attributable to research and
development of the Products. Seller shall promptly notify Purchasers when the
$1,000,000 threshold described in the immediately preceding sentence is
reached and shall provide along with such notice detailed calculations
supporting such notice. Seller and Purchaser shall cooperate in good faith to
resolve any disputes with respect to Seller's notice and calculations
contemplated by the immediately preceding sentence. If Seller and Purchasers
are unable to resolve any such disputes, the parties shall submit the dispute
to a nationally recognized independent accounting firm (the "Independent
Accounting Firm") for resolution. If the parties cannot agree upon an
Independent Accounting Firm, such firm shall be selected by KPMG LLP. The
decision of such Independent Accounting Firm shall be binding upon the
parties, and each of the Seller and the Purchasers shall pay 50% of the costs
of such Independent Accounting Firm.
(c) Nothing in this Agreement shall be construed as an
agreement or commitment by Seller to develop any Products for sale to
Purchasers.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF PARTIES.
(a) DUE INCORPORATION AND CORPORATE AUTHORITY. Each party
represents and warrants to the other party that it is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation; has full power
and authority to carry on its business as currently conducted and to own, lease,
use and operate its assets and properties at the places currently located and in
the manner currently used and operated.
(b) AUTHORIZATION OF TRANSACTIONS; AGREEMENT BINDING. Each
party represents and warrants to the other party that: (i) such party has all
requisite power and authority to enter into, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby; and
(ii) this Agreement has been duly executed and delivered by such party and
constitutes a legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms, except that (A) such
enforceability may be subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (B) the remedy of specific performance or
injunction and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) CONSENTS AND APPROVALS; NO VIOLATIONS. Each party
represents and warrants to the other party that neither the execution and
delivery of this Agreement by such party nor the performance of this
Agreement:
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(i) has resulted or will result (with notice,
lapse of time or otherwise) in a breach or violation of the terms or
conditions of, or a default or event of default under, any agreement,
instrument, undertaking, order, writ, decree, injunction or judgment of, or
any stipulation entered into in connection with any action or proceeding
before, any court, arbitrator or administrative or regulatory authority to
which such party, such party's properties or assets are subject, bound or
affected;
(ii) has resulted or will result (with notice,
lapse of time or otherwise) in the incurrence, creation or maturity (by
acceleration or otherwise) of any debt or liability of such party;
(iii) has resulted or will result (with notice,
lapse of time or otherwise) in the creation, imposition or foreclosure of any
Lien of any nature whatsoever upon or in any of such party's assets or
properties;
(iv) does or will violate the rights of any of
such party's creditors; or
(v) does or will create or result in the right
to exercise any remedies or claims of creditors of such party under any
insolvency, bankruptcy or other law for the protection of creditors or the
relief of debtors.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF SELLER. Upon the sale
of Products by Seller to Eligible Customers, Seller shall be deemed to make
the following representations and warranties:
(a) Seller is the owner of all, or has the license or right
to use, sell and license all of, the Intellectual Property with respect to
the Products. None of the Intellectual Property with respect to the Products
is subject to any outstanding order, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand is pending or, to
the knowledge of Seller, threatened, which challenges the validity,
enforceability, use or ownership of the Intellectual Property with respect to
the Products.
(b) Seller has substantially performed all obligations
imposed upon it under any licenses, sublicenses, distributor agreements and
other agreements with respect to the Intellectual Property with respect to
the Products, and is not, nor, to the knowledge of Seller, is any other party
thereto, in breach of or default thereunder in any respect, nor is there any
event which with notice or lapse of time or both would constitute a default
thereunder. All licenses of Intellectual Property with respect to the
Products are valid, enforceable and in full force and effect, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(c) To the knowledge of Seller, none of the Intellectual
Property with respect to the Products infringes upon or otherwise violates
any intellectual property rights of others.
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(d) No litigation is pending and no claim has been made
against Seller or, to the knowledge of Seller, is threatened, contesting the
right of Seller to sell or license to any Person or use the Intellectual
Property with respect to the Products presently sold or licensed to such
Person or used by Seller.
ARTICLE IV.
COVENANTS
SECTION 4.1 FUNDING OF CERTAIN COSTS PERTAINING TO ASSETS. Each
Purchaser agrees to pay Seller $10,000 (which for the avoidance of doubt will
equal $20,000 in the aggregate) upon execution of this Agreement, which
amount Seller agrees to use in connection with costs associated with patent
filings with respect to the Assets.
SECTION 4.2 NO IMPAIRMENT. Seller shall not and Parent shall not
permit Seller to enter into any transaction or take, or omit to take, any
action that would have the effect of preventing, delaying or disabling Seller
from complying with the terms of this Agreement or selling Products to the
Eligible Customers as contemplated by this Agreement. To the extent there is
any conflict between Section 2.1(c) and the immediately preceding sentence,
Section 2.1(c) shall control. Seller shall not sell, assign, pledge or
otherwise transfer its rights in the Products, Service Module Technology,
Transceiver Technology or Intellectual Property with respect to the Products,
unless any such transferee agrees to sell Products to Eligible Customers
pursuant to the terms contained in this Agreement. Parent shall use its best
efforts to cause Seller to comply with the terms of this Agreement.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1 NO SURVIVAL OF PROVISIONS. The respective
representations and warranties of the parties made herein shall not survive
the "Closing" (except for the representations and warranties of Seller
contained in Section and 3.2 which shall survive such date).
SECTION 5.2 FURTHER ASSURANCES. From and after the date hereof,
each party shall cooperate and take such actions as may be reasonably
requested by the other party in order to carry out the provisions and
purposes of this Agreement.
SECTION 5.3 NOTICES. All notices and other communications provided
for hereunder shall be in writing (including by facsimile transmission) and
shall be effective when actually delivered, or in the case of telex notice,
when sent, answerback received, or in the case of facsimile transmission,
when received and telephonically confirmed, to a party at the address or
facsimile number of such party last specified in writing to the sender.
Notices and communications shall initially be sent as follows:
Liberty Satellite & Technology, Inc.:
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Liberty Satellite & Technology, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Facsimile: (000) 000-0000
On Command Corporation:
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
TSAT Technologies, Inc. and Asvan Technology, LLC:
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxxx
SECTION 5.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
SECTION 5.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with reference to the subject matter set forth
herein and supersedes any prior understandings, negotiations, agreements, or
representations by or among the parties, written or oral, to the extent they
relate to such subject matter.
SECTION 5.6 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. Purchasers may assign their
respective rights under this Agreement. Seller may not assign its obligations
under this Agreement except pursuant to a merger, consolidation, or
acquisition of all of the capital stock of Seller or the acquisition of all
or substantially all of the assets and business of Seller.
SECTION 5.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to constitute one and the same agreement. In
addition to any other lawful means of execution or delivery, this Agreement
may be executed by facsimile signatures and may be delivered by the exchange
of counterparts of signature pages by means of facsimile transmission.
SECTION 5.8 AMENDMENTS, WAIVERS, TERMINATION. No amendment of any
provision of this Agreement shall be valid unless the same shall be in
writing and signed by the parties. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
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default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or
subsequent occurrence. No waiver shall be effective hereunder unless
contained in a writing signed by the party sought to be charged with such
waiver. This Agreement may not be terminated except by a writing executed by
all the parties.
SECTION 5.9 HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall not affect the interpretation of any of
the provisions hereof.
SECTION 5.10 EXPENSES. Each party shall pay its own expenses
(including legal fees) incurred in the preparation, execution, and delivery
of this Agreement and shall not look to the other party for reimbursement of
such costs.
SECTION 5.11 INVALIDITY OF PARTICULAR PROVISIONS. If any provision
of this Agreement is invalid or unenforceable by reason of any rule of law,
administrative order or judicial decision, all other provisions of this
Agreement shall remain in full force and effect, and a new legal, valid and
enforceable provision shall be added automatically as part of this Agreement
which is as similar to the invalid or unenforceable provision as may be
possible.
SECTION 5.12 CONSTRUCTION. This Agreement has been negotiated by the
parties and their respective counsel and will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against any party.
SECTION 5.13 THIRD PARTY BENEFICIARIES. Each Eligible Customer and
their successors and assigns shall be third party beneficiaries under this
Agreement, and shall be entitled to enforce the provisions hereof, provided
that this Section shall not prohibit or otherwise adversely affect the
ability of the parties to amend or terminate this Agreement pursuant to
Section 5.8.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
LIBERTY SATELLITE & TECHNOLOGY, INC.
By: ________________________________
Name:
Title:
ON COMMAND CORPORATION
By: ________________________________
Name:
Title:
TSAT TECHNOLOGIES, INC.
By: ________________________________
Name:
Title:
ASVAN TECHNOLOGY, LLC
By: ________________________________
Name:
Title:
