EXECUTION COPY
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ASSET PURCHASE AGREEMENT
among
PRIMESTAR INC.,
PRIMESTAR PARTNERS L.P.,
PRIMESTAR MDU, INC.
THE STOCKHOLDERS OF PRIMESTAR, INC. LISTED HEREIN
and
XXXXXX ELECTRONICS CORPORATION
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TABLE OF CONTENTS
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Page
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ARTICLE I
CERTAIN DEFINITIONS........................................................ 1
ARTICLE II
ASSETS TO BE ACQUIRED...................................................... 17
Section 2.1. Sale and Purchase of Transferred Assets...................... 17
ARTICLE III
ASSUMPTION OF ASSUMED LIABILITIES.......................................... 22
Section 3.1. Assumption of Assumed Liabilities............................ 22
Section 3.2. Excluded Liabilities......................................... 22
ARTICLE IV
PURCHASE PRICE............................................................. 24
Section 4.1. Purchase Price............................................... 24
Section 4.2. Adjustment of Purchase Price................................. 24
Section 4.3. Allocation of Purchase Price................................. 26
ARTICLE V
CLOSING.................................................................... 28
Section 5.1. Closing...................................................... 28
Section 5.2. Closing Deliveries of Seller................................. 28
Section 5.3. Closing Deliveries of Buyer.................................. 28
Section 5.4. Transfer Taxes............................................... 28
Section 5.5. Property Taxes............................................... 28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS ................................. 29
Section 6.1. Due Organization............................................. 29
Section 6.2. Capitalization of Sellers and their Subsidiaries............. 29
Section 6.3. Authority.................................................... 31
Section 6.4. Title to Assets; Owned Real Property......................... 31
Section 6.5. Financial Statements......................................... 31
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Section 6.6. Noncontravention............................................. 32
Section 6.7. Primestar Inventory; Accounts Receivable..................... 32
Section 6.8. Taxes........................................................ 33
Section 6.9. No Undisclosed Liabilities; Absence of Changes............... 34
Section 6.10. Employee Plans............................................... 35
Section 6.11. Material Contracts........................................... 36
Section 6.12. Litigation................................................... 37
Section 6.13. Governmental Authorization................................... 38
Section 6.14. Compliance With Applicable Law............................... 38
Section 6.15. Labor and Employment Matters................................. 39
Section 6.16. FCC Matters.................................................. 39
Section 6.17. Intellectual Property........................................ 40
Section 6.18. Insurance.................................................... 40
Section 6.19. Restrictive Covenants........................................ 40
Section 6.20. Brokers...................................................... 40
Section 6.21. Indebtedness................................................. 40
Section 6.22. Liens........................................................ 41
Section 6.23. Leases....................................................... 41
Section 6.24. Tangible Property............................................ 41
Section 6.25. Programming Arrangements..................................... 42
Section 6.26. Subscribers.................................................. 43
Section 6.27. Private Placement............................................ 44
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS............................. 44
Section 7.1. Authority.................................................... 44
Section 7.2. Noncontravention............................................. 44
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BUYER.................................... 45
Section 8.1. Organization and Standing.................................... 45
Section 8.2. Authority Relative to this Agreement......................... 45
Section 8.3. Noncontravention............................................. 46
Section 8.4. Governmental Authorization................................... 46
Section 8.5. Litigation................................................... 47
Section 8.6. Brokers...................................................... 47
ARTICLE IX
COVENANTS.................................................................. 47
Section 9.1. Conduct of Business of the Company........................... 47
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Section 9.2. No Solicitation.............................................. 51
Section 9.3. Representations and Warranties............................... 51
Section 9.4. Access to Information........................................ 51
Section 9.5. Notices and Consents......................................... 53
Section 9.6. Notification of Certain Matters.............................. 54
Section 9.7. Public Announcements......................................... 54
Section 9.8. Employee Matters............................................. 54
Section 9.9. Tax Matters.................................................. 57
Section 9.10. Commercially Reasonable Efforts; Further Assurances.......... 58
Section 9.11. Billing and Customer Management Systems...................... 58
Section 9.12. Bulk Transfer Laws........................................... 58
Section 9.13. Subscriber List, Etc......................................... 58
Section 9.14. Shutdown..................................................... 59
Section 9.15. Transfer Restrictions........................................ 59
Section 9.16. Power of Attorney with Respect to Assets..................... 60
Section 9.17. ResNet Communications, LLC and Global Interactive
Communications Corporation.................................. 61
ARTICLE X
CONDITIONS TO TRANSFER OF TRANSFERRED ASSETS............................... 61
Section 10.1. Conditions to Each Party's Obligations...................... 61
Section 10.2. Conditions to Obligations of Buyer.......................... 62
Section 10.3. Conditions to Obligations of Sellers........................ 64
ARTICLE XI
TERMINATION................................................................ 65
Section 11.1. Termination................................................. 65
Section 11.2. Effect of Termination....................................... 67
ARTICLE XII
SURVIVAL................................................................... 67
Section 12.1. Survival.................................................... 67
ARTICLE XIII
INDEMNIFICATION............................................................ 68
Section 13.1. Indemnification by Seller and the Stockholders.............. 68
Section 13.2. Indemnification by Buyer.................................... 69
Section 13.3. Procedures for Indemnification.............................. 70
Section 13.4. Termination of Indemnification Obligations.................. 72
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Section 13.5. Certain Limitations......................................... 72
ARTICLE XIV
GENERAL PROVISIONS......................................................... 73
Section 14.1. Assignment.................................................. 73
Section 14.2. Parties in Interest......................................... 74
Section 14.3. Amendment................................................... 74
Section 14.4. Waiver; Remedies............................................ 74
Section 14.5. Effect of Investigation..................................... 74
Section 14.6. Fees and Expenses........................................... 74
Section 14.7. Notices..................................................... 75
Section 14.8. Captions; Currency.......................................... 78
Section 14.9. Entire Agreement............................................ 79
Section 14.10. Severability................................................ 79
Section 14.11. Dispute Resolution.......................................... 79
Section 14.12. Exhibits and Schedules; Disclosure.......................... 80
Section 14.13. Governing Law............................................... 80
Section 14.14. Counterparts................................................ 81
Section 14.15. Interpretation.............................................. 81
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of January 22, 1999 by and among Xxxxxx
Electronics Corporation, a Delaware corporation ("Buyer"), Primestar, Inc., a
Delaware corporation ("Primestar"), Primestar MDU, Inc., a wholly owned
subsidiary of Primestar ("MDU"), Primestar Partners L.P., a Delaware limited
partnership ("PLP," and, together with Primestar and MDU, the "Sellers") and,
with respect to certain provisions hereof, those stockholders of Primestar
identified on the signature pages hereof (the "Stockholders").
W I T N E S S E T H:
WHEREAS, Sellers are engaged in the Business (as defined herein);
and
WHEREAS, Sellers desire to sell, assign and transfer, and Buyer
desires to purchase and acquire from Sellers, all of the Sellers' right, title
and interest in and to all of the assets, properties and rights used in or
necessary to the operation of the Business except for the Excluded Assets (as
defined herein), all pursuant to the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter contained, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):
"AAA Rules" shall have the meaning set forth in Section 14.11.
"Action" means any action, suit or proceeding at law or in equity,
arbitration, inquiry, investigation or governmental, administrative, regulatory
or other proceeding by or before any Governmental Entity.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For purposes of the immediately preceding sentence, the term
"control" (including, with correlative meanings, the terms "controlling",
"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 ownership of voting securities, by contract or otherwise.
"Agreement" means this Asset Purchase Agreement, as the same may be
amended, modified or supplemented from time to time in accordance with its
terms.
"Antitrust Division" shall have the meaning set forth in Section
9.5.
"Arbiter" shall have the meaning set forth in Section 4.2(a)(iii).
"Asset Acquisition Statement" shall have the meaning set forth in
Section 4.3(a).
"Assumed Liabilities" shall have the meaning set forth in Section
3.1.
"Benefit Plans" shall have the meaning set forth in Section 6.10(b).
"Business" means the business of distributing the "PRIMESTAR"
programming service or signal which includes any proposed or ongoing uses of
communications satellites to provide video and associated audio programming
services using FSS/BSS frequencies via satellite master antenna television
system configuration or direct-to-home service (including single family homes,
hotels, motels, bars, restaurants, multiple dwelling units and other similar
uses) through other reception equipment of customers or Subscribers of such
business activity, or to multiple dwelling units comprising such customers or
Subscribers.
"Business Day" means a day that is not a Saturday, a Sunday or a day
on which banking institutions in New York, New York are not required to be open.
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"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Buyer Group" shall have the meaning set forth in Section 13.1 .
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended to the date hereof.
"Closing" shall have the meaning set forth in Section 5.1.
"Closing Date" shall have the meaning set forth in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Communications Act" means the Federal Communications Act of
1934, as amended.
"Confidentiality Agreement" means that certain confidentiality
agreement, dated as of October 7, 1998, between Primestar and DIRECTV
Enterprises, Inc., a wholly owned Subsidiary of Buyer. Buyer hereby agrees to be
bound by the Confidentiality Agreement on the same terms as DIRECTV Enterprises,
Inc. and the Sellers other than Primestar hereby agree to be bound by such
agreement on the same terms as Primestar.
"Consents" means consents, waivers, approvals, allowances,
novations, authorizations, permits, filings, orders, registrations and
notifications.
"Contracts" means all Intellectual Property and other license
agreements, manufacturing agreements, supply agreements, programming agreements,
subscriber agreements, marketing agreements, customer service agreements,
purchase orders, sales orders, distributor agreements, sales representation
agreements, warranty agreements, indemnity agreements, service agreements,
insurance policies and arrangements, guarantee agreements, credit agreements,
notes, mortgages, security agreements, financing leases, comfort letters,
foreign currency forward exchange contracts, confidentiality agreements, joint
venture agreements, partnership agreements, leases (other than Leases), open
bids, powers of attorney and all other agreements and contracts and binding
memoranda of understanding, letters of intent and commitments including, in each
case, all amendments, modifications and
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supplements thereto and waivers and consents thereunder, but in no event shall
Contracts include employment and consulting agreements.
"Customer Premises Equipment" means equipment and drop-materials
(other than IRDs, LNBs, Dishes and Primefinder Remotes), used in the reception
of the "PRIMESTAR" programming service and either located at an office facility
Related to the Business or installed in the home or place of business of any
Primestar Subscriber or disconnected Primestar Subscriber.
"Damages" means any and all losses, Liabilities, claims, damages,
deficiencies, obligations, fines, payments, Taxes, Liens, costs and expenses,
matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, known or unknown, whenever arising and whether or not resulting
from Third Party Claims (including the costs and expenses of any and all Actions
or other legal matters; all amounts paid in connection with any demands,
assessments, judgments, settlements and compromises relating thereto; interest
and penalties recovered by a third party with respect thereto; out-of-pocket
expenses and reasonable attorneys', accountants' and other experts' fees and
expenses reasonably incurred in investigating, preparing or defending against
any such Actions or other legal matters or in asserting, preserving or enforcing
an Indemnitee's rights hereunder; and any losses that may result from the
granting of injunctive relief as a result of any such Actions or other legal
matters).
"DBS" means Direct Broadcast Satellite.
"Debt Tender Condition" means the condition that holders of the
Senior Subordinated Notes and the Senior Subordinated Discount Notes and the
lenders under the Interim Credit Facility consent to modifications to the terms
of such debt in accordance with Section 10.3(e) and Schedule 11.2.
"Demand" shall have the meaning set forth in Section 14.11.
"Dish" means a satellite dish, including mount and assembly, for
reception of the "PRIMESTAR" programming service.
"Disputes" shall have the meaning set forth in Section 14.11.
"Distributors" means any of those Persons that are authorized by
Sellers or its agents to distribute or sell Primestar's satellite programming
service,
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including, master sales agents, sales agents, Full Service Providers,
telemarketing agents, any buying groups and consumer retail outlets such as
Radio Shack and Nobody Beats the Wiz.
"Environmental Laws" means any and all applicable Laws and Licenses
issued, promulgated or entered into by any Governmental Entity relating to the
environment, the protection or preservation of human health or safety, including
the health and safety of employees, the preservation or reclamation of natural
resources, or the management, Release or threatened Release of Hazardous
Materials, in each case as in effect on the date hereof and as may be amended
from time to time.
"ERISA" shall have the meaning set forth in Section 6.10(b).
"Estimated Net Working Capital Amount" shall have the meaning set
forth in Section 4.2(a)(i).
"Estimated Working Capital Certificate" shall have the meaning set
forth in Section 4.2(a).
"Exchange Act" shall have the meaning set forth in Section 6.5.
"Excluded Assets" means (i) all bank accounts of Sellers and their
Subsidiaries and the cash contained therein and cash equivalents, certificates
of deposit and similar short-term investments held by Sellers or their
Subsidiaries at the Closing Date, (ii) all rights of Sellers and their
Subsidiaries under or pursuant to the Excluded Contracts, (iii) all rights to
receive Tax refunds and similar Tax benefits and utilize net operating losses
with respect to the Business, in each case, for periods ending on or prior to
the Closing Date, (iv) other than the equity of ResNet Communications, LLC or
Global Interactive Communications Corporation owned by MDU, all of the
outstanding equity securities of the Subsidiaries of Primestar and the other
Sellers, including the equity interests of PLP, (v) the business radio license
used by Sellers in connection with the operation of their business locations in
Philadelphia, (vi) Field Assets located at any Primestar facilities the leases
for which constitute Excluded Contracts or are listed on Schedule 1.1(a)(iii);
provided, that Buyer has the right to use the Field Assets located at the
facilities located on Schedule 1.1(a)(iii) for the period Buyer has the right to
occupy such premises and (vii) any account receivable owed by Tempo to Primestar
or any of its Subsidiaries relating to the Reimbursement Obligation (as defined
in the High Power Agreement).
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"Excluded Contracts" means any rights under the Capacity Option (as
defined in the High Power Agreement), the Tempo Agreement, all indemnification
letters, "glue" letters and similar reimbursement Contracts of Sellers, all
Benefit Plans, all employment and consulting contracts and similar service
contracts of Sellers (including those set forth on Schedule 6.10(b)), all
Facility Leases other than the Lease for the premises located at 0000 X. Xxxxxxx
Xxxxxx and those other Facility Leases identified by Buyer to Primestar, those
other Contracts and Leases set forth on Schedule 1.1(a)(iii), those excluded
pursuant to Section 2.1(d) and the following agreements executed by Primestar,
PLP, the Stockholders and certain other parties in connection with the
restructuring transaction (which was completed on April 1, 1998): the
Stockholders Agreement, the Registration Rights Agreement, the Reimbursement
Agreements, the Transition Services Agreement, the US West Guarantee, the
Restructuring Agreement and the TSAT Stockholders Agreement (each, as defined in
the Restructuring Agreement).
"Excluded Liabilities" shall have the meaning set forth in Section
3.2.
"Facility Leases" means all Leases pursuant to which Sellers or
their Subsidiaries rent space in connection with the Business.
"FCC" means the Federal Communications Commission and any
successor agency thereto.
"Field Assets" means the office equipment, including computer
equipment and communications equipment, furniture, tools and vehicles located at
Primestar's office facilities and used to support the Business.
"Final Working Capital Certificate" shall have the meaning in
Section 4.2(a)(ii).
"Former Business" means any corporation, partnership, entity,
division, business unit, business, assets, plant, product line, operations or
contract (including any assets and Liabilities comprising the same) that has
been sold, conveyed, assigned, transferred or otherwise disposed of or divested
by Sellers or any of their respective Subsidiaries (or any of their
predecessors) or the operations, activities or production of which has been
discontinued, abandoned, completed or otherwise terminated by Sellers or any of
their respective Subsidiaries (or any of their predecessors), in each of the
foregoing cases, as of the Closing Date.
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"FTC" means the Federal Trade Commission.
"Full Service Providers" means those Persons identified on Schedule
6.11(d).
"GAAP" means generally accepted accounting principles in the United
States of America, as in effect on the date of this Agreement.
"GE Americom" means GE American Communications, Inc., a
Delaware corporation.
"GE Transponder Lease" means that certain amended and restated
memorandum of agreement dated as of October 18, 1996, as modified by Amendment
No. 1 thereto dated February 19, 1997, between GE Americom and PLP.
"GI Contract" means Digicipher System License Agreement, dated July
1, 1996, by and between General Instrument Corporation of Delaware and PLP which
provides for, among other things the purchase of IRDs.
"GM" means General Motors Corporation, a Delaware corporation.
"Governmental Entity" means any federal, state or local government
or any court, arbitral tribunal, administrative or regulatory agency or
commission or other governmental authority or agency, domestic, foreign or
international.
"Hazardous Materials" means those materials, substances or wastes
that are regulated by, or form the basis of liability under, any Environmental
Law, including PCBs, pollutants, solid wastes, explosive or regulated
radioactive materials or substances, hazardous or toxic materials, substances,
wastes or chemicals, petroleum (including crude oil or any fraction thereof) or
petroleum distillates, asbestos or asbestos containing materials, materials
listed in 49 C.F.R. Section 172.101 and materials defined as hazardous
substances pursuant to Section 101(14) of CERCLA.
"High Power Agreement" means the Asset Purchase Agreement dated as
of the date hereof among Primestar, PLP, Tempo and Buyer.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, including the rules and regulations promulgated thereunder.
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"Indemnifying Party" shall have the meaning set forth in Section
13.3(a).
"Indemnitee" means any member of the Buyer Group or the Seller Group
which may seek indemnification under this Agreement.
"Intellectual Property" means (1) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents (including utility and design patents, industrial
designs and utility models), patent applications, and patent and invention
disclosures, and all other rights of inventorship, worldwide, together with all
reissuances, continuations, continuations-in-part, divisions, revisions,
supplementary protection certificates, extensions and re-examinations thereof;
(2) all trademarks, service marks, trade names, trade dress, logos, business and
product names and slogans, worldwide, and registrations and applications for
registration thereof; (3) all copyrights in copyrightable works, and all other
rights of authorship, worldwide, and all applications, registrations and
renewals in connection therewith; (4) all mask works and semiconductor chip
rights, worldwide, and all applications, registrations and renewals in
connection therewith; (5) all trade secrets and confidential business and
technical information (including ideas, research and development, know-how,
formulas, technology, compositions, manufacturing and production processes and
techniques, technical data, engineering, production and other designs, drawings,
engineering notebooks, industrial models, software and specifications); (6) all
computer and electronic data processing programs and software, both source code
and object code (including data and related documentation, flow charts,
diagrams, descriptive texts and programs, computer printouts, underlying tapes,
computer databases and similar items), computer applications and operating
programs; (7) all rights to xxx for and remedies against past, present and
future infringements of any or all of the foregoing and rights of priority and
protection of interests therein under the Laws of any jurisdiction worldwide;
(8) all copies and tangible embodiments of any or all of the foregoing (in
whatever form or medium, including electronic media); and (9) all other
proprietary, intellectual property and other rights relating to any or all of
the foregoing.
"Interim Credit Facility" means that certain Senior Subordinated
Credit Agreement, dated April 1, 1998, among Primestar and certain financial
institutions with respect to a $350 million unsecured senior subordinated
interim loan.
"IRD" means an Integrated Receiver Decoder.
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"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable inquiry and
investigation.
"Laws" means all laws, statutes, constitutions, treaties, rules,
regulations, ordinances, codes, judgments, rulings, orders, writs, decrees,
stipulations, injunctions, restraining orders and binding determinations of all
Governmental Entities.
"Leases" means all leases, subleases and other arrangements with
respect to real property, including, in each case, all amendments, modifications
and supplements thereto and waivers and consents thereunder.
"Liability" means any and all debts, liabilities, obligations and
commitments, whether known or unknown, asserted or unasserted, fixed, absolute
or contingent, matured or unmatured, accrued or unaccrued, liquidated or
unliquidated, due or to become due, whenever or however arising (including
whether arising out of any Contract or Lease or tort based on negligence, strict
liability or otherwise) and whether or not the same would be required by GAAP to
be reflected as a liability in financial statements or disclosed in the notes
thereto.
"Licenses" means all licenses, permits, authorizations, consents,
certificates, registrations, variances, exemptions, waivers, franchises and
other approvals from any Governmental Entity, including environmental Licenses.
"Liens" means, with respect to any property or assets, any mortgage,
deed of trust, pledge, hypothecation, assignment, security interest, lien,
charge, easement, encumbrance, preference, priority or other security agreement
or preferential arrangement of any kind or nature with respect to such property
or assets (including any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Loral" means Space Systems/Loral, Inc., a Delaware corporation.
"Loral Contract" means TPO 1 290 BSS Construction Agreement, dated
as of February 22, 1990, between Tempo and Loral, as amended to the date hereof.
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"LNB" means a Low Noise Block Converter.
"Material Adverse Change" means any event, change or development
which has had or could reasonably be expected to have a material adverse effect
on the business, condition (financial or otherwise), operations, results of
operations, assets or liabilities of Sellers or the Transferred Assets;
provided, that (i) any promotional or marketing activity taken by another
multichannel video programming distributor or (ii) any commercially reasonable
response to the action described in clause (i) hereof that is taken by Primestar
to retain existing Subscribers, to retain distribution channels or to obtain new
Subscribers, shall not constitute a Material Adverse Change.
"Material Adverse Effect" means, with respect to any party, a
material adverse effect on, or any effect that results in a material adverse
change in, (a) the business, condition (financial or otherwise), operations,
results of operations, assets or liabilities of such party or (b) the ability of
such party to consummate the transactions contemplated by this Agreement.
"Material Contracts" shall have the meaning set forth in Section
6.11(a).
"MDU" shall have the meaning set forth in the preamble to this
Agreement.
"Net Book Value" shall equal original cost less accumulated
depreciation computed in accordance with GAAP on a basis consistent with
Sellers' accounting policies in existence as of September 30, 1998.
"Net Working Capital" means the amount determined by subtracting
Working Capital Liabilities from Working Capital Assets.
"Newco" shall have the meaning set forth in Section 2.1(a).
"Option" shall have the meaning set forth in Section 9.17.
"Option Agreement" means the Option Agreement, dated as of February
8, 1990, between Tempo and PLP, pursuant to which Tempo granted to PLP an option
to purchase or lease 100% of the DBS system capacity on the Ground Satellite and
the In-Orbit Satellite (each as defined in the High Power Agreement).
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"Ordinary Course of Business" means the ordinary course of business
of Primestar consistent with past custom and practice (including with respect to
quantity and frequency).
"Panel" shall have the meaning set forth in Section 14.11.
"Parent Securities" means 4,871,448 shares of Class H Common Stock
of GM.
"Parent Security Documents" means those Contracts to be executed and
delivered by Buyer and Primestar in connection with the issuance of the Parent
Securities hereunder which will include a purchase agreement, registration
rights agreement and any related agreements or certificates customarily executed
in connection with the private placement of equity securities and the granting
of registration rights relating thereto, in each case, in such form and on such
terms and conditions as Buyer and Primestar shall mutually agree (but subject
to, among other things, the restrictions with respect thereto relating to such
issuance and registration as set forth in Section 9.15).
"Partnership Credit Facility" means that certain bank credit
facility obtained by PLP to finance advances to Tempo for payments due in
respect of the Loral Contract and which is, in turn, supported by letters of
credit arranged for by certain of the Stockholders or Affiliates thereof, and by
certain Affiliates of TeleCommunications, Inc.
"Permitted Liens" means Liens for (1) Taxes, assessments and other
governmental charges, if such Taxes, assessments or charges shall not be due and
payable; (2) workmen's, repairmen's or other similar Liens (inchoate or
otherwise) arising or incurred in the Ordinary Course of Business in respect of
obligations which are not overdue; and (3) Liens for minor title defects,
recorded easements or Liens affecting real property, which defects, easements or
Liens do not, individually or in the aggregate, impair the continued use,
occupancy, value or marketability of title of the real property to which they
relate, assuming that the property is used on substantially the same basis as
such property is currently being used in the Business; provided, however, that
Liens described in clauses (1) and (2) above shall only constitute Permitted
Liens with respect to periods prior to (but not including) the Closing.
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"Person" means any individual, partnership, joint venture, trust,
corporation, limited liability entity, unincorporated organization or other
entity (including a Governmental Entity).
"PLP" shall have the meaning set forth in the preamble to this
Agreement.
"Potential Transferred Employee" shall have the meaning set forth in
Section 9.8(a).
"Potential Transition Employee" shall have the meaning set forth in
Section 9.8(b).
"Pre-Closing Period" shall have the meaning set forth in Section
5.5.
"Preliminary Working Capital Certificate" shall have the meaning set
forth in Section 4.2(a).
"Primefinder Remote" means a remote control device for selection of
channels of the "PRIMESTAR" programming service by program category.
"Primestar" shall have the meaning set forth in the preamble to this
Agreement.
"Primestar Debt" means all Contracts relating to indebtedness for
borrowed money which Sellers or any of their Subsidiaries may be liable for,
including the Senior Credit Facility, the Senior Subordinated Discount Notes,
the Senior Subordinated Notes, the indentures governing the Senior Subordinated
Notes and the Senior Subordinated Discount Notes, the Partnership Credit
Facility and the Interim Credit Facility.
"Primestar Inventory" means all IRDs, LNBs, Dishes and Primefinder
Remotes owned by Primestar and held for use (wherever located, whether in
warehouses or in transit) in the Business; provided, that "Primestar Inventory"
shall not include (i) IRDs, LNBs, Dishes or Primefinder Remotes installed in the
home or place of business of any Subscriber or (ii) Unrecovered Inventory.
"Purchase Price" shall have the meaning set forth in Section 4.1.
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"Records" means all Subscriber lists, billing records, Subscriber
and supplier correspondence (in any form or medium), Distributor information,
and information regarding prospective Subscribers used or held for use in the
Business, including any credit information obtained regarding Subscribers.
"Related to the Business" means related primarily to, used primarily
in, arising primarily from, or held primarily for use in, the Business, or
otherwise necessary for the operation of the Business.
"Release" shall have the meaning set forth in Section 101(22) of
CERCLA.
"Restructuring Agreement" means the Merger and Contribution
Agreement among Primestar, PLP, the Stockholders and certain other parties,
dated as of February 6, 1998, as amended by a letter agreement dated as of March
30, 1998.
"Revised Statements" shall have the meaning set forth in Section
4.3(a).
"SEC" means the Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 6.5.
"Securities Act" shall have the meaning set forth in Section 6.5.
"Seller Affiliated Group" shall have the meaning set forth in
Section 6.8(a).
"Seller Group" shall have the meaning set forth in Section 13.2.
"Seller Securities" shall have the meaning set forth in Section
6.2(a).
"Sellers" shall have the meaning set forth in the preamble to this
Agreement.
"Senior Credit Facility" means Primestar's senior secured credit
facility, as amended.
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"Senior Subordinated Discount Notes" means Primestar's 12-1/4%
Senior Subordinated Discount Notes due 2007 in aggregate principal amount at
maturity of $275 million.
"Senior Subordinated Notes" means Primestar's 10-7/8% Senior
Subordinated Notes due 2007 in aggregate principal amount of $200 million.
"Shares" shall have the meaning set forth in Section 9.17.
"Shutdown Date" means the exact date for termination of the
medium-power service as indicated by Buyer in accordance with Section 9.14.
"Shutdown Liabilities" means:
(i) all Liabilities (including any Termination Fee) under the
Contracts and Leases assumed by Buyer hereunder with respect to any period
following the Shutdown Date;
(ii) all Liabilities based upon, arising out of, or otherwise
incurred in connection with, the termination of the Business on the Shutdown
Date, which Liabilities would not have occurred but for such termination, except
as otherwise expressly set forth herein;
(iii) (A) all severance costs for employees of Seller or its
Subsidiaries and (B) all severance costs for any former employees of Seller or
its Subsidiaries who become employees of Buyer or its Subsidiaries at the time
of the Closing and who are employed in connection with the Business if, in the
case of this clause (B), his or her employment is terminated prior to the first
anniversary of the Closing Date; and
(iv) all Liabilities to refund or repay launch support payments
under those programming Contracts that contain launch support provisions.
"Stay Bonus" means a bonus payable to any full-time employee of
Sellers in order to give such employee an incentive to become an employee of
Buyer after the Closing Date.
"Stockholders" shall have the meaning set forth in the preamble to
this Agreement.
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"Subscriber" means a Person that at any time subscribes to any
satellite programming service (whether audio, video or both), directly or
indirectly, from Sellers.
"Subscriber List" means any Record containing the names and
addresses of the Subscribers and all other information known by Sellers
regarding the identification of the Subscribers or the ability to identify
Subscribers.
"Subsidiary" of a specified Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are directly or indirectly owned by such Person.
"Taxes" means all taxes, charges, duties, fees, levies or other
assessments, including income, excise, property, sales, use, gross receipts,
recording, insurance, value added, profits, license, withholding, payroll,
employment, net worth, capital gains, transfer, stamp, social security,
environmental, occupation and franchise taxes, imposed by any Governmental
Entity, and including any interest, penalties and additions attributable thereto
and any Liability in respect of any of the foregoing amounts as a transferee or
as an indemnitor, guarantor or surety or in a similar capacity under any
Contract, arrangement, agreement, understanding or commitment (whether oral or
written).
"Tempo" means Tempo Satellite, Inc., an Oklahoma corporation and a
wholly owned subsidiary of TSAT.
"Tempo Agreement" means the TSAT Tempo Agreement, dated as of
February 6, 1998, between Primestar and TSAT, as amended from time to time.
"Termination Fee" means any amount payable or owing under or in
respect of any Contract or Lease as a result of, or as consideration or
inducement for, the termination of such Contract or Lease prior to the
termination date provided for in such Contract or Lease.
"Third Party Claim" shall have the meaning set forth in Section
13.3.
"Threshold" shall have the meaning set forth in Section 13.5(a).
"Transferred Assets" shall have the meaning set forth in Section
2.1(a).
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"Transferred Employee" shall have the meaning set forth in Section
9.8(a).
"Transfer Taxes" shall have the meaning set forth in Section 5.4.
"Transition Employees" shall have the meaning set forth in Section
9.8(b).
"Transition Period" shall have the meaning set forth in Section
9.8(b).
"TSAT" means TCI Satellite Entertainment, Inc., a Delaware
corporation.
"Unrecovered Inventory" means all IRDs, LNBs, Dishes and Primefinder
Remotes installed in the home or place of business of any disconnected
Subscriber.
"Wind-Up Date" shall have the meaning set forth in Section 9.8(b).
"Working Capital Assets" shall mean the following: credits, prepaid
expenses, deposits and retentions held by third parties plus accounts receivable
(less an allowance for doubtful accounts), as such items would be reflected on a
consolidated balance sheet of Primestar prepared in accordance with GAAP as
presented and applied on a basis consistent with the balance sheet included in
Primestar's Form 10-Q filed with the SEC for the quarter ended September 30,
1998, but without giving effect to any purchase accounting adjustments as a
result of the acquisition of the Transferred Assets or the assumption of the
Assumed Liabilities and excluding prepaid Taxes for Tax periods beginning prior
to the Closing Date. Additionally, Working Capital Assets shall include
Primestar Inventory to the extent designed for use in a medium power DBS system.
The Net Book Value of Primestar Inventory which may be included in the Working
Capital Assets as of the Closing Date may not exceed $40 million.
Notwithstanding the foregoing, (i) the amount of any ad valorem property taxes
paid by Seller prior to the Closing Date that is attributable to the portion of
the period covered by such Tax payment which ends after the close of business on
the Closing Date (determined on a pro rata basis based on the number of days
covered by such payment which are after the Closing Date and the total number of
days covered by such payment) shall be included in Working Capital Current
Assets, and (ii) any amounts which constitute Excluded Assets shall not be
included in Working Capital Assets.
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"Working Capital Liabilities" shall mean the accounts payable and
accrued expenses of the Sellers as of the Closing Date, as such items would be
reflected on a consolidated balance sheet of Primestar prepared in accordance
with GAAP as presented and as applied on a basis consistent with the balance
sheet included in Primestar's Form 10-Q filed with the SEC for the quarter ended
September 30, 1998, but without giving effect to any purchase accounting
adjustments as a result of the acquisition of the Transferred Assets or the
assumption of the Assumed Liabilities. Additionally, Working Capital Liabilities
shall include subscriber advance payments (defined for this purpose as monies
received from Subscribers for service in respect of a service period which has
not yet commenced) and an amount equal to three (3%) of subscriber advance
payments relating to Subscriber programming as of the Closing Date.
Notwithstanding the foregoing, in no event will Working Capital Liabilities
include accrued or deferred income taxes, deferred program launch and carry fees
or any amounts which constitute Excluded Liabilities.
ARTICLE II
ASSETS TO BE ACQUIRED
Section 2.1. Sale and Purchase of Transferred Assets. (a) Subject to
the terms and conditions set forth herein, and in reliance upon the
representations and warranties contained herein, at the Closing, each Seller
agrees to sell, assign, convey, transfer and deliver to Buyer, or, at Buyer's
option, one or more direct or indirect Subsidiaries of Buyer (collectively,
"Newco") all of the right, title and interest of such Seller in, to and under
the Business and all of the assets, properties, rights, contracts, claims and
operations of such Seller of every kind and description, related to or necessary
for the ownership or operation of the Business, wherever located, whether
tangible or intangible, real, personal or mixed, whether or not appearing on the
books of such Seller as the same shall be existing on the Closing Date
(collectively and as further described below, the "Transferred Assets"), other
than the Excluded Assets, free and clear of all Liens (other than Permitted
Liens), including the following:
(i) each Subscriber to the Business and information relating to or
identifying any Subscriber to the Business (including any Subscriber whose
account is active as of the Closing Date and any Subscriber whose account has
not been disconnected as of the Closing Date), together with any subscription
Contracts,
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equipment rental Contracts or other Contracts with such Subscriber Related to
the Business;
(ii) all accounts, loans and notes receivable (whether or not
current), advances, performance and surety bonds and letters of credit or
similar instruments in favor of such Seller or its Subsidiaries to the extent
included in Net Working Capital in accordance with Section 4.2;
(iii) all Leases and Contracts Related to the Business, including
Distributor Contracts, servicer Contracts, Contracts with programming providers,
agency Contracts and Contracts with installers listed on Schedule 2.1(a)(iii)
(other than Excluded Contracts);
(iv) all Primestar Inventory;
(v) all IRDs, LNBs, Dishes and Primefinder Remotes installed in the
home or place of business of any Subscriber;
(vi) all Unrecovered Inventory;
(vii) all Customer Premises Equipment (wherever located, whether in
warehouses or in transit);
(viii) all equipment and software used in the delivery of satellite
signals;
(ix) all rights, claims and causes of action in respect of the
assets set forth in clauses (i) through (viii) above;
(x) all of the equity securities owned by MDU in ResNet
Communications, LLC or Global Interactive Communications Corporation;
(xi) all credits, prepaid expenses, deposits and retentions held by
third parties, including those held by third parties under Leases and Contracts
Related to the Business;
(xii) all lock boxes (but not the proceeds thereof or cash or cash
equivalents contained therein, in each case, through the Closing Date);
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(xiii) all Licenses issued by any Governmental Entity held or used
by such Seller in connection with the operation of the Business (to the extent
permitted by applicable Law to be transferred), including those listed on
Schedule 2.1(a)(xiii) hereto;
(xiv) all Records and other books and records Related to the
Business;
(xv) all Field Assets;
(xvi) all Intellectual Property used in the Business, including the
"PRIMESTAR" name;
(xvii) all of the benefits of coverage provided by insurance
policies of such Seller and its Subsidiaries in respect of matters occurring, or
claims made, on or prior to the Closing Date;
(xviii) all equipment and software used to support Subscriber
operations, including any distribution support, customer order processing,
authorizations, billing and customer care; and
(xix) all goodwill and going concern value of the Business.
The assets, properties and rights of each Seller to be sold,
assigned, conveyed, transferred and delivered to Buyer pursuant to this
Agreement are herein collectively referred to as the "Transferred Assets." The
term "Transferred Assets" will include all additions and replacements to any of
the items described in this Section 2.1(a) from the date of this Agreement
through the Closing Date, and will exclude, to the extent permitted by this
Agreement, all deletions, sales or other disposals of any of the foregoing from
the date of this Agreement through the Closing Date.
(b) Anything contained herein to the contrary notwithstanding, the
Transferred Assets will exclude, and the Sellers will retain, the Excluded
Assets.
(c) Anything contained herein to the contrary notwithstanding, this
Agreement will not constitute an assignment, an attempted assignment or an
agreement to assign any Contract, Lease or License if an assignment or attempted
assignment of the same without the Consent of any other party or parties thereto
would constitute a breach thereof or in any way impair the rights of Sellers or
Buyer
19
thereunder. Each Seller will use its commercially reasonable efforts (at such
Seller's expense), and Buyer will cooperate (it being understood that such
cooperation will not include any requirement to pay any consideration, agree to
any undertaking or Contract modification or offer or grant any financial
accommodation in excess of any amount payable after the Closing under existing
Contracts) in all reasonable respects with such Seller to obtain prior to the
Closing all Consents and to resolve all impracticalities of assignments or
transfers necessary to sell, assign, convey, transfer and deliver to Buyer or
Newco (if Buyer so elects) the Transferred Assets. If any such Consent is not
obtained or if an attempted assignment would be ineffective or would impair such
Sellers's, Buyer's or Newco's rights under any such Contract, Lease or License
so that Buyer or Newco (if Buyer so elects) would not receive all such rights,
then (1) such Seller will (x) ensure that the full benefits of any such
Contract, Lease or License are provided or caused to be provided to Buyer or
Newco (if Buyer so elects), and (y) pay promptly or cause to be paid promptly to
Buyer or Newco (if Buyer so elects) when received all monies and other
properties received by such Seller or any of its Affiliates with respect to any
Contract, Lease or License of which Buyer (or Newco) would have been entitled to
receive such monies and other properties if such Consent had been obtained; and
(2) in consideration of Sellers providing or causing to be provided to Buyer or
Newco (if Buyer so elects) the full benefits thereof, Buyer or Newco will
perform and discharge on behalf of such Seller all of such Seller's liabilities,
obligations or commitments thereunder which are Assumed Liabilities described in
Section 3.1 in accordance with the provisions thereof. In addition, such Seller
will take such other actions (at such Seller's expense) as may reasonably be
requested by Buyer or Newco (if Buyer so elects) in order to place Buyer,
insofar as reasonably possible, in the same position as if such Contract, Lease
or License had been transferred as contemplated hereby and so that all the
benefits relating thereto, including possession, use, potential for gain and
dominion, control and command, shall inure to Buyer or Newco (if Buyer so
elects), subject to the assumption by Buyer of all obligations and risks that
arise after the Closing Date and through the Shutdown Date with respect to such
Contract, Lease or License, including all risks of loss thereunder. For purposes
of clarity, if, despite having used commercially reasonable efforts, a program
services provider shall require that as a condition of such Consent, Buyer agree
to carry another service of such program services provider, Seller shall not be
deemed to have breached its obligations under this Section 2.1(c) regardless of
whether Buyer elects to accept or reject such requirement. Notwithstanding the
foregoing, if any such Consent is not obtained prior to the Closing, such Seller
will continue to use its commercially reasonable efforts (at such Seller's
expense) to obtain all such Consents (and, if and
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when such Consents are obtained, the transfer of the applicable Contract, Lease
or License will be effected in accordance with the terms of this Agreement).
(d) Owing to the possible applicability of confidentiality
obligations, Sellers and Buyer acknowledge that Buyer has not been afforded an
opportunity to review the Sellers' programming Contracts and the GI Contract.
Sellers covenant to use all commercially reasonable efforts to obtain as
promptly as possible all Consents that may be required to allow Buyer access to
such Contracts. For a period of thirty (30) days from the date of notice to
Buyer of the receipt of each such Consent, Buyer shall be allowed to review such
Contract so as to ascertain whether it wishes to treat such Contract as a
Transferred Asset or an Excluded Contract. Sellers will promptly advise Buyer of
the receipt of each such Consent. Buyer will advise Sellers prior to the Closing
Date which of such Contracts will be Transferred Assets, and all others will be
Excluded Contracts. These Contracts are subject to the following provisions:
(i) Notwithstanding anything herein to the contrary, if the terms or
provisions of any programming Contract would be applicable after the
Closing Date to any of the operations or service offerings of Buyer or its
Affiliates (as the assignee of such Contract) other than the medium power
DBS system acquired from Sellers pursuant hereto, such programming
Contract shall constitute an Excluded Contract unless the same is
expressly assumed by Buyer pursuant to an instrument of transfer specific
to such Contract.
(ii) If Buyer determines in accordance with this Section 2.1(d) that
the GI Contract will constitute an Excluded Contract, Sellers will
nevertheless (x) ensure that the full benefits of the GI Contract provided
to Primestar on the Closing Date, including with respect to those
provisions regarding conditional access and refurbishment, are provided or
caused to be provided to Buyer or Newco (if Buyer so elects) from and
after the Closing Date and through the Shutdown Date and (y) pay promptly
or cause to be paid promptly to Buyer or Newco (if Buyer so elects) when
received any monies and other properties received by such Seller or any of
its Affiliates with respect to the GI Contract which Buyer (or Newco)
would have been entitled to receive had the GI Contract been a Transferred
Asset.
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ARTICLE III
ASSUMPTION OF ASSUMED LIABILITIES
Section 3.1. Assumption of Assumed Liabilities. Subject to the terms
and conditions set forth herein, and in reliance upon the representations and
warranties contained herein, at the Closing, in consideration for the sale,
assignment, transfer, conveyance and delivery of the Transferred Assets to
Buyer, Buyer agrees to assume and undertake to pay, perform and discharge, in
accordance with the terms thereof, only the following Liabilities incurred in
the Ordinary Course of Business (the "Assumed Liabilities"):
(a) all contractual obligations (other than obligations relating to
Excluded Liabilities) of the Sellers and their Subsidiaries arising under Leases
and Contracts that constitute Transferred Assets other than any Liabilities (i)
which relate to any Lease or Contract as to which Sellers are in default under
such obligations on the Closing Date (or would be in default on the Closing
Date, assuming the giving of any applicable notices and the lapse of any
applicable waiting periods under the Leases or Contracts), it being intended
that the portion of any Liabilities under such Leases and Contracts as to which
Sellers are not in default shall not be excluded hereby, (ii) which are due and
payable on or before the Closing Date or (iii) which constitute Excluded
Liabilities;
(b) all Liabilities expressly assumed by Buyer pursuant to Section
9.8;
(c) all Liabilities (other than Excluded Liabilities) Related to the
Business which are not included in clause (a) and (b) of this Section 3.1, but
only to the extent and in the amounts included in Net Working Capital in
accordance with Section 4.2; and
(d) all Liabilities Related to the Business to the extent arising
from Buyer's actions from and after the Closing Date.
Buyer will assume no Liabilities whatsoever other than those identified in
clauses (a) through (d) of this Section 3.1.
Section 3.2. Excluded Liabilities. Anything contained herein to the
contrary notwithstanding, neither Buyer nor any Affiliate of Buyer will assume
or undertake to pay, perform or discharge and none thereof will be liable for,
and
22
Sellers will remain liable for and pay, perform and discharge when due, all
Liabilities of Sellers and their Subsidiaries other than the Assumed Liabilities
(collectively, the "Excluded Liabilities"), including the following such
Liabilities:
(a) all Liabilities based upon, arising out of, relating to or
otherwise in connection with the Excluded Contracts;
(b) the Shutdown Liabilities;
(c) all Liabilities arising from or relating to the employment or
termination of employment of any person with respect to the Business, including
any Liabilities arising from or relating to the Benefit Plans, any employment or
consulting agreements and any other employee compensation or benefit plans or
arrangements, except as set forth in Section 9.8(a);
(d) all Liabilities based upon, arising out of, relating to or
otherwise in connection with any actual or threatened or future Action with
respect to any events, actions, occurrences, omissions, circumstances or
conditions occurring or existing on or prior to the Closing Date, related to the
Business or the Transferred Assets, including those Actions listed on Schedule
6.12(a), other than (i) Actions based on Buyer's failure to pay, perform or
discharge any Assumed Liabilities and (ii) any Actions arising from any claims
under the Loral Contract required to be assumed by Buyer pursuant to the High
Power Agreement;
(e) all Liabilities based upon, arising out of, relating to or
otherwise in connection with Primestar Debt;
(f) all Liabilities for and relating to the guarantee of any
indebtedness or obligation of any Person;
(g) all Liabilities related to Former Businesses;
(h) all Liabilities for Transfer Taxes and income, sales, use and
other Taxes arising in connection with the consummation of the transactions
contemplated hereby;
(i) all Liabilities for any Taxes of Sellers and all Liabilities for
Taxes that relate to the Transferred Assets or the Assumed Liabilities for
periods (or portions thereof) up to and including the Closing Date; and
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(j) Liabilities for which the Sellers or any of their Affiliates are
made responsible pursuant to this Agreement.
ARTICLE IV
PURCHASE PRICE
Section 4.1. Purchase Price. Subject to the terms and conditions set
forth herein, in consideration for the sale, assignment, conveyance, transfer
and delivery of the Transferred Assets, Buyer will, at the Closing, assume the
Assumed Liabilities and deliver to Primestar the following consideration (the
"Purchase Price"):
(a) the payment, by wire transfer of immediately available funds to
a bank account designated by Primestar, of an amount equal to One Billion One
Hundred Million Dollars ($1,100,000,000), plus any amounts payable by Buyer to
Sellers pursuant to Section 4.2 or less any amount payable by Sellers to Buyer
pursuant to Section 4.2; and
(b) the Parent Securities.
Section 4.2. Adjustment of Purchase Price. (a) At least ten (10)
Business Days prior to the Closing Date, Sellers shall deliver to Buyer a
certificate (the "Preliminary Working Capital Certificate") signed by the Chief
Financial Officer of each Seller setting forth an itemized estimate of Sellers'
Net Working Capital as of the Closing Date. The Preliminary Working Capital
Certificate shall be delivered together with such supporting data as may be
reasonably necessary for Buyer to verify the information set forth in the
Preliminary Working Capital Certificate (including, in the case of Primestar
Inventory, a detailed listing by item and location). Buyer's representatives
shall be entitled to review such supporting data and shall have full access to
all books, records and other documents used in the preparation of the
Preliminary Working Capital Certificate by Seller. Between the date of delivery
of the Preliminary Working Capital Certificate and the Closing Date, Sellers
shall make such adjustments to the data set forth in the Preliminary Working
Capital Certificate as are appropriate, based on information then reasonably
available to it, to bring such data down to the Closing Date, shall keep Buyer
advised of all such adjustments proposed to be made, and two Business Days prior
to the Closing Date, Sellers shall deliver to Buyer a revised certificate (the
"Estimated Working Capital Certificate") signed by the Chief Financial Officer
of each Seller reflecting all such adjustments,
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together with supporting data. For purposes of the Closing, but without
prejudice to any party's rights under this Section 4.2(a), Net Working Capital
and the Working Capital Adjustment (as defined below) shall be calculated in
accordance with the data set forth in the Estimated Working Capital Certificate.
(i) If the Net Working Capital as specified in the Estimated Working
Capital Certificate (the "Estimated Net Working Capital Amount") is a positive
number, then Buyer shall pay to Seller on the Closing Date, in cash, the amount
of the Estimated Net Working Capital Amount, as additional consideration for the
Transferred Assets; if the Estimated Net Working Capital Amount is a negative
number, then Seller shall pay to Buyer, in cash, the absolute value of the
Estimated Net Working Capital Amount, in both cases by adjustment to the
Purchase Price as provided in Section 4.1(a).
(ii) Not later than ninety (90) days following the Closing Date,
Buyer shall deliver to Sellers a certificate (the "Final Working Capital
Certificate") signed by the Vice President, Controller of Buyer setting forth an
itemized statement of Seller's Net Working Capital as of the Closing Date. The
Final Working Capital Certificate shall be delivered together with such
supporting data as may be reasonably necessary for Sellers to verify the
information set forth in the Final Working Capital Certificate (including, in
the case of Primestar Inventory, a detailed listing by item and location).
Sellers' representatives shall be entitled to review such supporting data and
shall have full access to all books, records and other documents used in the
preparation of the Final Working Capital Certificate by Buyer.
(iii) During the 60-day period following the delivery of the Final
Working Capital Certificate, Buyer and Sellers will in good faith attempt to
agree upon such adjustments, if any, to the matters set forth in the Final
Working Capital Certificate as are necessary or appropriate to reflect all
information then available which is relevant to the calculation of Net Working
Capital as of the Closing Date. During such period, each party shall provide the
other with such additional backup information and access to relevant books,
records and documents as may reasonably be requested. If on or before the last
day of such 60-day period, Sellers notify Buyer in writing that they dispute the
accuracy of the data set forth in the Final Working Capital Certificate and that
such dispute has not been resolved (such notice to set forth in reasonable
detail Sellers' recalculation of Net Working Capital as of the Closing Date and
the amount in dispute), such dispute shall promptly be submitted for
determination to a partner in the office of one of the five largest national
accounting firms selected jointly by Buyer and Sellers who has expertise in the
multi-channel
25
video program distribution industry. The partner in the applicable firm
accepting such assignment is hereinafter referred to as the "Arbiter". In
resolving any disputed item, the Arbiter may not assign a value to any
particular item greater than the greatest value for such item claimed by either
party or less than the smallest value for such item claimed by either party, in
each case, as presented to the Arbiter. Each of Buyer and Sellers covenants and
agrees to cooperate fully with the Arbiter and to provide to the Arbiter such
information, documents and records as he or she may request. The Arbiter shall
be requested to complete his or her determination as soon as possible but in any
event within 90 days after the date of his or her engagement. All decisions of
the Arbiter shall be final and binding on the parties hereto. Any difference
between the amount of Net Working Capital presented in the Final Working Capital
Certificate, whether agreed to by the Buyer and Sellers, or determined by the
Arbiter, and the amount of Net Working Capital presented in the Estimated
Working Capital Certificate shall be settled as follows: If the Final Net
Working Capital is greater than the Estimated Net Working Capital, then Buyer
shall pay Sellers, in cash, the resulting difference; if the Final Net Working
Capital is less than the Estimated Net Working Capital, then Sellers shall pay
Buyer, in cash, the resulting difference. Any amounts owed to a party pursuant
to the preceding sentence shall be paid by the other party by wire to a United
States bank account designated by the owed party, together with interest thereon
at the prime rate or its equivalent announced by Citibank, N.A. from time to
time from the Closing Date to the date of payment.
(iv) The Arbiter shall have authority to charge either party with
the fees and costs of the Arbiter if the Arbiter finds such allocation to be
justified. In all other cases Buyer and Sellers shall each bear one-half of the
fees and costs of the Arbiter, and each party shall bear its own costs incurred
in connection with the submission of such disputes to the Arbiter.
Section 4.3. Allocation of Purchase Price. (a) Not later than 120
days after the Closing Date, Buyer shall provide to Primestar (on behalf of
Sellers) copies of Form 8594 and any required exhibits thereto (the "Asset
Acquisition Statement") with Buyer's proposed allocation of the purchase price
paid by Buyer with respect to the Transferred Assets. Within 20 days after the
receipt of such Asset Acquisition Statement, Primestar shall propose to Buyer
any changes to such Asset Acquisition Statement or shall indicate its
concurrence therewith, which concurrence shall not be unreasonably withheld.
Thereafter, Buyer shall provide to Primestar from time to time revised copies of
the Asset Acquisition Statement (the "Revised Statements") so as to report any
matters on the Asset Acquisition Statement that need updating
26
(including purchase price adjustments, if any). Within 20 days after the receipt
of any Revised Statement, Primestar shall propose to Buyer any changes to such
Revised Statement or shall indicate its concurrence therewith, which concurrence
shall not be unreasonably withheld. Primestar's failure to notify Buyer of any
objection to the Asset Acquisition Statement or a Revised Statement within 20
days after the delivery thereof shall constitute Sellers' concurrence therewith.
Subject to and in accordance with Section 4.3(b) below, Buyer and Primestar
shall endeavor in good faith to resolve any differences with respect to the
Asset Acquisition Statement or any Revised Statements within 20 days after
Buyer's receipt of notice of objections or suggested changes from Primestar. The
costs of preparing the Asset Acquisition Statement and any supporting materials
(including any appraisals) shall be borne equally by Buyer and Primestar.
(b) Subject to the provisions of the following sentence of this Section
4.3(b), the Purchase Price for the Transferred Assets shall be allocated in
accordance with the Asset Acquisition Statement or, if applicable, the last
Revised Statement, provided by Buyer to Primestar pursuant to Section 4.3(a)
above, and subject to the requirements of any applicable Tax law or election,
all Tax returns and reports filed by Buyer and Sellers shall be prepared
consistently with such allocation. If Primestar (on behalf of Sellers) shall
have withheld its consent to such allocation (which consent shall not be
unreasonably withheld) and Buyer and Primestar have acted in good faith to
resolve the differences with respect to the items on the Asset Acquisition
Statement or any Revised Statement for a period of 20 days after Buyer's receipt
of notice of objections or suggested changes from Primestar and, within such
20-day period, Buyer and Primestar are unable to resolve such differences which,
in the aggregate, are material in relation to the Purchase Price for the
Transferred Assets, (i) Buyer and Primestar shall, subject to the requirements
of any applicable Tax law or election, file all Tax returns and reports in a
manner consistent with the allocation provided in such statements and (ii) Buyer
and Primestar shall refer any issues as to which such differences exist to an
independent accounting firm mutually acceptable to Buyer and Primestar for
resolution which shall resolve such issues within 30 days of the date submitted
and whose resolution shall be final and binding on the parties hereto. The fees
and expenses of such accounting firm shall be borne equally by Buyer and
Primestar.
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ARTICLE V
CLOSING
Section 5.1. Closing. The closing of the purchase and sale of the
Transferred Assets and the assumption of the Assumed Liabilities (the "Closing")
will take place (i) at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m. New York time, on the fifth Business
Day following the expiration or termination of the applicable waiting period
under the HSR Act and the satisfaction or waiver of all other conditions set
forth in Article X, or (ii) at such other place, date and time as Primestar and
Buyer may agree. The date of the Closing is referred to herein as the "Closing
Date."
Section 5.2. Closing Deliveries of Seller. At the Closing, Sellers
will deliver to Buyer (i) such bills of sale and instruments of assignment,
conveyance and transfer as shall reasonably be requested by Buyer to effect or
evidence the sale, assignment, conveyance, transfer and delivery of the
Transferred Assets to Buyer, and (ii) all closing certificates, opinions of
counsel and other documents (including Parent Security Documents) required to be
delivered by Sellers to Buyer at the Closing pursuant to this Agreement.
Section 5.3. Closing Deliveries of Buyer. At the Closing, Buyer will
deliver to Sellers (i) the cash portion of the Purchase Price pursuant to
Section 4.1(a), (ii) the Parent Securities, (iii) such instruments of assumption
as shall reasonably be requested by Sellers to effect or evidence the assumption
by Buyer of the Assumed Liabilities and (iv) all closing certificates, opinions
of counsel and other documents (including Parent Security Documents) required to
be delivered by Buyer to Sellers at the Closing pursuant to this Agreement.
Section 5.4. Transfer Taxes. All applicable sales and transfer Taxes
(including Taxes, if any, imposed upon the transfer of personal property) and
filing, recording, registration, stamp, documentary and other Taxes and fees
("Transfer Taxes") that are payable in connection with this Agreement, the
transactions contemplated by this Agreement or the documents giving effect to
such transactions will be paid by Sellers.
Section 5.5. Property Taxes. All personal property Taxes applicable
to the Transferred Assets for a taxable period that includes but does not end on
the Closing Date that are not paid prior to the Closing Date shall be prorated
as of the
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Closing Date based on the ratio of the number of days in the portion of the
taxable period that ends on the Closing Date (the "Pre-Closing Period") and the
number of days in the entire taxable period. To the extent that personal
property Taxes applicable to the Transferred Assets attributable to the
Pre-Closing Period have not been paid on or prior to the Closing Date, such
unpaid amount shall be reflected on the Net Working Capital adjustment as set
forth in Section 4.2.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby, jointly and severally, represents and warrants
to Buyer as follows:
Section 6.1. Due Organization.
(a) Such Seller and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power and authority
would not have or constitute a Material Adverse Effect (as defined below) on
such Seller. Each Seller is duly qualified to transact business and in good
standing as a foreign corporation in each jurisdiction in which the conduct or
nature of its business as it relates to the Business or the ownership, leasing
or holding of the Transferred Assets by it makes such qualification necessary,
except where the failure to be so qualified would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) Except as set forth in Schedule 6.1(b), such Seller has no
Subsidiaries and does not own, directly or indirectly, beneficially or of
record, any shares of capital stock or other security of any other entity or any
other investment in any other entity.
Section 6.2. Capitalization of Sellers and their Subsidiaries.
(a) Except as set forth on Schedule 6.2(a), as of the date hereof,
there are outstanding (i) no shares of capital stock or other voting securities
of such
29
Seller, (ii) no securities of such Seller or its Subsidiaries convertible into
or exchangeable for shares of capital stock or voting securities of such Seller,
(iii) no options or other rights to acquire from such Seller or its
Subsidiaries, and no obligations of such Seller or its Subsidiaries to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of such Seller, and (iv) no
equity equivalents, or interests in the ownership or earnings, of such Seller or
its Subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Seller Securities"). There are no outstanding obligations of
such Seller or its Subsidiaries to repurchase, redeem or otherwise acquire any
Seller Securities. Except as set forth in on Schedule 6.2(a), there are no
shareholder agreements, voting trusts or other agreements or understandings to
which such Seller is a party or to which it is bound relating to the voting of
any shares of capital stock of such Seller.
(b) All of the outstanding capital stock of such Seller's
Subsidiaries is owned by such Seller, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
law). Except as set forth on Schedule 6.2(b), there are (i) no securities of
such Seller or its Subsidiaries convertible into or exchangeable for, (ii) no
options or other rights to acquire from such Seller or its Subsidiaries, and
(iii) no other Contract, understanding, arrangement or obligation (whether or
not contingent) providing for the issuance or sale, directly or indirectly of,
any capital stock or other ownership interests in, or any other securities of,
any Subsidiary of such Seller. There are no outstanding contractual obligations
of such Seller or its Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding shares of capital stock or other ownership interests in any
Subsidiary of such Seller.
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Section 6.3. Authority.
(a) Such Seller has all requisite power and authority, corporate or
otherwise, to execute and deliver this Agreement and to perform all of its
obligations hereunder. Such Seller has all requisite power and authority,
corporate or otherwise, to execute and deliver each instrument of transfer and
other document to be delivered by it pursuant to this Agreement and to perform
all of its obligations hereunder and thereunder. The execution and delivery by
such Seller of this Agreement and the performance by such Seller of its
obligations hereunder have been duly authorized by all necessary and proper
action, corporate or otherwise. No consent of the stockholders of such Seller,
other than consents already obtained, is required in connection with such
execution and delivery of this Agreement by such Seller and the performance by
such Seller of its obligations hereunder. All of the Stockholders have approved
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by such Seller and
constitutes the legal, valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms. Each instrument of transfer
and other document to be delivered by such Seller pursuant to this Agreement
will be duly executed and delivered by such Seller and, when so executed and
delivered, will constitute the legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms.
Section 6.4. Title to Assets; Owned Real Property.
(a) Such Seller has good and valid title to all of the Transferred
Assets to be transferred by it hereunder, free and clear of all Liens, except
for Permitted Liens and those other Liens set forth on Schedule 6.4 all of which
will be discharged on the Closing Date.
(b) The delivery to Buyer of the bills of sale and other instruments
of assignment, conveyance and transfer pursuant to this Agreement will transfer
to Buyer good and valid title to the Transferred Assets, free and clear of all
Liens, except for Permitted Liens.
(c) No Seller or any of its Subsidiaries owns any real property that
is Related to the Business.
Section 6.5. Financial Statements. Primestar has filed all reports
required to be filed with the SEC since January 1, 1998 (the "SEC Reports"),
each of
31
which has complied in all material respects with all applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), each as in
effect on the dates such form was filed. The consolidated financial statements
of Primestar included in the SEC Reports complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto and fairly present, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Primestar and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to (A)
normal year-end adjustments and (B) any other adjustments described in the SEC
Reports).
Section 6.6. Noncontravention. The execution and delivery by such
Seller of this Agreement and each instrument of transfer and other document to
be delivered by such Seller pursuant to this Agreement, the performance by such
Seller of its obligations to be performed hereunder and the consummation of the
transactions contemplated hereby and thereby will not, (A) contravene or
conflict with the certificate of incorporation, by-laws or other organizational
documents of such Seller or its Subsidiaries; (B) contravene or conflict with or
constitute a violation of any provision of any Law or License (subject to
compliance with the HSR Act and the rules and regulations promulgated
thereunder) to which such Seller or any of its properties or assets is subject;
or (C) except as set forth on Schedule 6.6, conflict with, result in a breach
of, constitute a default under, result in the acceleration of, cause such Seller
to make an offer to purchase under, create in any party the right to accelerate,
terminate, modify or cancel, require any notice or give rise to a loss of any
benefit under, any of the Transferred Assets or any Contract, Lease, Lien or
other arrangement to which such Seller is a party or by which it is bound or to
which any of the Transferred Assets is subject or result in the creation or
imposition of any Liens (other than Permitted Liens) on any of the Transferred
Assets, other than any loss of benefit, Lien or any other such event which would
not have a Material Adverse Effect or adversely affect the ability of such
Seller to consummate the transactions contemplated hereby or by any instrument
of transfer or other document to be delivered by them pursuant to this
Agreement.
Section 6.7. Primestar Inventory; Accounts Receivable. (a) The
Primestar Inventory is in good and saleable condition and available and ready
for installation in the Ordinary Course of Business. The reserves related to
Primestar
32
Inventory which will be reflected in the computation of Net Working Capital will
be calculated in a manner consistent with past practice and in accordance with
GAAP, consistently applied.
(b) To the extent included in the calculation of Net Working
Capital, the accounts receivable of such Seller have arisen from bona fide
transactions with third parties in the Ordinary Course of Business. All accounts
receivable of such Seller and allowances for doubtful accounts which will be
reflected in the computation of Net Working Capital will be calculated in a
manner consistent with past practice and in accordance with GAAP, applied on a
consistent basis. To the Knowledge of such Seller, no account debtor under any
of the accounts receivable of such Seller included in the calculation of Net
Working Capital (i) is insolvent or has filed or otherwise sought protection
under any federal or state bankruptcy or insolvency Law, (ii) is a Governmental
Entity or (iii) is entitled to assert against such Seller any right to offset or
other defense against payment of such account receivable.
Section 6.8. Taxes.
(a) Except as set forth on Schedule 6.8, all federal, state, local
and foreign Tax returns required to be filed by or on behalf of such Seller or
any consolidated, combined, affiliated or unitary group of which such Seller is
or has ever been a member (together, the "Seller Affiliated Group") have been
timely filed or requests for extensions have been timely filed and any such
extensions have been granted and have not expired and each such tax return was
complete and correct in all material respects. All Taxes with respect to taxable
periods covered by such tax returns and all other material Taxes for which such
Seller or the Seller Affiliated Group is otherwise liable that are due have been
paid in full and to the extent the liabilities for such Taxes are not due,
adequate reserves have been established in accordance with GAAP.
(b) All Taxes due with respect to any completed and settled audit,
examination or deficiency litigation with any taxing authority for which such
Seller is or might otherwise be liable have been paid in full (or will be paid
in full by the Closing Date).
(c) There is no audit, examination, deficiency or refund litigation
pending and no taxing authority has given written notice of the commencement of
any audit, examination or deficiency litigation with respect to any Taxes,
except those listed on Schedule 6.8.
33
(d) None of the Transferred Assets (i) is tax-exempt use property
within the meaning of section 168(h) of the Code, (ii) directly or indirectly
secures any debt the interest on which is exempt under the Code or (iii) is
property that is required to be treated as being owned by any Person (other than
such Seller) pursuant to the provisions of section 168(f)(8) of the Internal
Revenue Code of 1954, as amended, and in effect immediately before the enactment
of the Tax Reform Act of 1986.
(e) No Liens for Taxes exist with respect to any of the Transferred
Assets, except for Permitted Liens.
(f) No claim has been made by an authority in a jurisdiction where
such Seller or any member of the Seller Affiliated Group does not file Tax
returns that they are or may be subject to taxation by that jurisdiction.
(g) Such Seller and each member of the Seller Affiliated Group has
withheld all Taxes required to have been withheld under all applicable statutes
and regulations in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, and such
withholdings have either been paid to the appropriate governmental agencies as
and when due in accordance with Law or set aside in accounts for such purpose.
(h) No issues have been raised with a representative or employee of
such Seller or its Affiliates (and are currently pending) by the Internal
Revenue Service or any other taxing authority in connection with any of the Tax
returns referred to in Section 6.8(a) or otherwise that could affect the Tax
reporting in respect of the Transferred Assets subsequent to the Closing Date.
Section 6.9. No Undisclosed Liabilities; Absence of Changes. Except
as and to the extent disclosed by Primestar in its Form 10-Q for the quarter
ended September 30, 1998 or as disclosed on Schedule 6.9, since September 30,
1998, (a) neither Primestar nor its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
whether due or to become due or asserted or unasserted, which would,
individually or in the aggregate, have a Material Adverse Effect on Primestar,
(b) except as contemplated by this Agreement, the business of such Seller and
its Subsidiaries has been carried on in all material respects in the Ordinary
Course of Business, (c) no Seller has paid any dividend or distribution in
respect of, or redeemed or repurchased any of, its capital stock or other equity
securities, including securities directly or indirectly convertible
34
into or exercisable or exchangeable for any of its capital stock or other equity
securities, (d) no Seller has entered into or consummated any transaction with
any officer, director or Affiliate of such Seller and (e) Primestar has not
changed its methods of accounting (either for financial accounting or tax
purposes).
Section 6.10. Employee Plans.
(a) Sellers have provided Buyer with a correct and complete list of
their employees as of December 31, 1998, including their names and base salary
or hourly wage rate. Sellers shall update such list as of a date not more than
10 days prior to the Closing Date, which will include each new employee's date
of hire on record with Seller and provide Buyer with such updated list prior to
the Closing Date.
(b) Schedule 6.10(b) sets forth all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") and all other employee benefit plans or other benefit
arrangements, including all bonus and other incentive compensation, deferred
compensation, disability, severance, retention, salary continuation, stock and
stock-related award, stock option, stock purchase, collective bargaining or
workers' compensation agreements, plans, policies and arrangements which
Primestar or any of its Subsidiaries maintains, is a party to, contributed to or
has any obligation to or liability for in respect of current or former employees
and directors (each, a "Benefit Plan" and collectively, the "Benefit Plans").
None of the Benefit Plans is subject to Title IV of ERISA.
(c) True, correct and complete copies of the most recent summary
plan description for each Benefit Plan have been delivered to Buyer for review
prior to the date hereof.
(d) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on Primestar, (i) all payments required to be made by or
under any Benefit Plan, any related trusts, insurance policies or ancillary
agreements, or any collective bargaining agreement have been timely made, (ii)
Primestar and its Subsidiaries have performed all obligations required to be
performed by them under any Benefit Plan, (iii) the Benefit Plans comply in all
respects and have been maintained in compliance with their terms and the
requirements of ERISA, the Code and other applicable laws, and (iv) there are no
actions, suits, arbitrations or claims (other than routine claims for benefits)
pending or, to the Knowledge of either Seller, threatened with respect to any
Benefit Plan.
35
(e) Each Benefit Plan and its related trust which are intended to be
"qualified" within the meaning of Sections 401(a) and 501(a) of the Code,
respectively, have been determined by the Internal Revenue Service to be so
"qualified" under such Sections, as amended by the Tax Reform Act of 1986, and
neither Seller has Knowledge of any fact which would adversely affect the
qualified status of any such Benefit Plan and its related trust.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) increase any
benefits otherwise payable under any Benefit Plan, or (ii) result in the
acceleration of the time of payment or vesting of any such benefits. Except as
set forth on Schedule 6.10(f), neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in any payment becoming due, or increase the compensation due, to any
current or former employee or director of Primestar or its Subsidiaries.
Section 6.11. Material Contracts.
(a) Schedule 6.11(a) sets forth all Contracts (and all amendments,
modifications and supplements thereto and all side letters to which such Seller
is a party affecting the obligations of any party thereunder) to which such
Seller or any of its Subsidiaries is a party or by which any of its properties
or assets are bound that relate to: (i) material licensing, merchandising,
installation, servicing, production, manufacturing, retailing, sales (including
sales agency) or programming, production or distribution (including any
programming "puts"), including all such contracts and agreements containing
exclusivity or "most favored nation" provisions; (ii) a right of first refusal,
first negotiation, "tag along" or "drag along" rights applicable to any capital
stock or material assets of such Seller; (iii) a partnership or joint venture,
or cooperative development efforts; (iv) the acquisition, sale, lease or other
disposition of material properties or assets of such Seller or its Subsidiaries
or predecessors (by merger, purchase or sale of assets or stock or otherwise)
entered into since January 1, 1998; (v) agreements with any Governmental Entity;
(vi) material promotion, marketing, sponsorship or similar arrangements; (vii)
indebtedness for borrowed money, letters of credit, security agreements, lockbox
arrangements or guaranties of the foregoing; (viii) real property deeds or
leases and material equipment leases including all satellite transponder leases;
(ix) material software or Intellectual Property license or maintenance
agreements; (x) customer services (including telemarketing and billing); (xi)
the provision of any services, products or payments to or from any officer,
director, employee or other affiliate of such Seller or such officer, director
or
36
employee; (xii) all agreements relating to the retransmission of Primestar's
signal by cable systems or any other multichannel programming distributor; and
(xiii) all binding commitments and agreements to enter into any contracts or
agreements relating to any of the foregoing (collectively, together with any
such Contracts entered into in accordance with Section 9.1, the "Material
Contracts").
(b) To the knowledge of such Seller, each of the Material Contracts
is valid and enforceable in accordance with its terms, and there is no default
or alleged default under any Material Contract so listed either by such Seller
or, to the Knowledge of such Seller, by any other party thereto, and no event
has occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by such Seller or, to the Knowledge of such
Seller, any other party, in any such case in which such default or event would,
individually or in the aggregate, have a Material Adverse Effect on such Seller.
Except as set forth in Schedule 6.11(a), all Material Contracts between such
Seller and its Distributors, sales agents, dealers and retailers are terminable
by such Seller without cause on not greater than 30 days' notice, with no
material termination fee or, except for commissions or fees earned prior to the
termination date, continuing payment obligations thereunder.
(c) No party to any Material Contract has given notice to such
Seller of, or made a claim against such Seller with respect to, any breach or
default thereunder, in any such case in which such breach or default would,
individually or in the aggregate, have a Material Adverse Effect on such Seller.
Such Seller is not currently being audited, and has not received notice of an
intent to conduct any audit, under any material programming agreement.
(d) Schedule 6.11(d) identifies all of Sellers' Full Service
Providers and master sales agents.
(e) The payment terms with respect to the leasing of the GE
transponders are set forth in the GE Transponder Lease.
Section 6.12. Litigation.
(a) Except as set forth on Schedule 6.12(a), there is not in effect
any judgment, ruling, order, writ, decree, stipulation or injunction by or with
any Governmental Entity to which such Seller or any of its Affiliates is party
or by which such Seller or any of its Affiliates or any properties or assets of
any of the foregoing is bound, and which relates to or affects the Business, the
Transferred Assets, the
37
Assumed Liabilities, this Agreement or the transactions contemplated hereby, and
(ii) none of such Seller or any of its Affiliates is party to, engaged in or, to
the Knowledge of such Seller, threatened with any Action which relates to or
affects the Business, the Transferred Assets, the Assumed Liabilities, this
Agreement or the transactions contemplated hereby, and, to the Knowledge of such
Seller, no event has occurred and no condition exists which could reasonably be
expected to result in any such Action.
(b) None of such Seller or any of its Affiliates is in default under
or with respect to any judgment, ruling, order, writ, decree, stipulation or
injunction of the type described in Section 6.12(a).
(c) None of the Actions set forth on Schedule 6.12(a) could
reasonably be expected to have a Material Adverse Effect on such Seller.
Section 6.13. Governmental Authorization. The execution and delivery
by such Seller of this Agreement and each instrument of transfer or other
document to be delivered pursuant to this Agreement, the consummation of the
transactions contemplated hereby and thereby, and the performance by such Seller
of its obligations to be performed hereunder, do not require any Consent of,
with or to any Governmental Entity, except (A) for compliance with any
applicable requirements of the HSR Act and the rules and regulations thereunder,
and (B) where the failure to obtain or make such Consents would not prevent or
delay in any material respect the consummation of the transactions contemplated
hereby or thereby or otherwise prevent such Seller from performing its
obligations under this Agreement or any instrument of transfer or other document
to be delivered pursuant to this Agreement in accordance with the terms and
subject to the conditions hereof and thereof, and would not, individually or in
the aggregate, have a Material Adverse Effect on such Seller.
Section 6.14. Compliance With Applicable Law. Except as set forth on
Schedule 6.14, (i) such Seller has complied in all material respects, and the
Transferred Assets are in compliance, in all material respects, with all Laws
(including Environmental Laws), (ii) no claims or complaints from any
Governmental Entities or other Persons have been asserted or received in writing
by such Seller or its Affiliates during the past three years, or by oral notice
since April 1, 1998, related to or affecting the Business, the Transferred
Assets or the Assumed Liabilities and, to the best Knowledge of such Seller, no
claims or complaints are threatened, alleging that such Seller or its Affiliates
is in material violation of any Laws or Licenses
38
applicable to the Transferred Assets or the Assumed Liabilities, and (iii) none
of such Seller or its Affiliates has received written notice from any
Governmental Entity of any proceedings to take all or any part of the
Transferred Assets or other properties of such Seller (whether leased or owned)
related to or affecting the Business, the Transferred Assets or the Assumed
Liabilities by condemnation or right of eminent domain and, to the Knowledge of
Seller, no such proceedings are threatened, except, in each such case, for such
noncompliance, claims, complaints or proceedings which would not have,
individually or in the aggregate, a Material Adverse Effect on such Seller.
Section 6.15. Labor and Employment Matters.
(a) Except as set forth on Schedule 6.15(a), no such Seller or any
of its Subsidiaries is a party to any employment, severance compensation, labor
or collective bargaining agreement and there are no employment, severance
compensation, labor or collective bargaining agreements which pertain to
employees of such Seller or any of its Subsidiaries. No labor organization or
group of employees of such Seller or any of its Subsidiaries has made a pending
written demand for recognition or certification.
(b) The only employment agreements and severance compensation
agreements with officers of such Seller or any of its Subsidiaries are set forth
in on Schedule 6.15(b). Except as set forth on Schedule 6.15(b), no such Seller
or its Subsidiaries is a party to or bound by any severance or other agreement
with any employee or consultant pursuant to which such person would be entitled
to receive any additional compensation or an accelerated payment of compensation
as a result of the consummation of the transactions contemplated hereby.
Section 6.16. FCC Matters. Except as set forth on Schedule 6.16, no
such Seller nor any of its Subsidiaries holds any permits or other Licenses
issued by the FCC. No Consent of, or approval by, the FCC is required in
connection with the transfer of the Transferred Assets from such Seller to Buyer
or Newco pursuant to the terms hereof.
39
Section 6.17. Intellectual Property. Such Seller or one of its
Subsidiaries owns or possesses all right, title and interest in and to, or a
valid and enforceable license or other right to use all of the Intellectual
Property, and all of the right, benefits, and privileges associated therewith,
that is material to the conduct of the Business as currently conducted (and as
conducted as of the Closing Date). To the Knowledge of such Seller, no such
Seller or its Subsidiaries has infringed, misappropriated or otherwise violated
any Intellectual Property of any other Person. Schedule 6.17 identifies all
registered trademarks, service marks and patents of Sellers and all pending
applications with respect to patents, trademarks or services marks used or for
use in the Business.
Section 6.18. Insurance. Schedule 6.18 sets forth a complete list of
insurance policies and surety bonds which such Seller maintains with respect to
the Transferred Assets. All such policies are in full force and effect and shall
remain in full force and effect through the Closing Date; all premiums with
respect thereto covering all periods up to and including the date hereof have
been paid (and covering all periods up to and including the Closing Date will be
paid prior to the Closing Date); and no notice of cancellation or termination
has been received with respect to any such policy. Except as set forth on
Schedule 6.18, such Seller has not been refused any insurance with respect to
the Transferred Assets by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years.
Section 6.19. Restrictive Covenants. Except as set forth on Schedule
6.19, no such Seller or its Affiliates is a party to or bound by any covenant
not to compete or restricting the development, manufacture, marketing, sale or
distribution of, or other right with respect to, any products or services
related to the Transferred Assets.
Section 6.20. Brokers. Except for Xxxxxxx Xxxxx & Co., whose
compensation shall be paid by Sellers, Sellers represent and warrant to Buyer
that none of them nor any of their Affiliates has authorized any Person to act
as broker, finder or in any other similar capacity in connection with the
transactions contemplated by this Agreement or the High Power Agreement and the
negotiations leading thereto which will have a right of payment from or claim
against Buyer or any of its Subsidiaries or Affiliates.
Section 6.21. Indebtedness. Except as set forth in the Form 10-Q
filed with respect to the quarter ended September 30, 1998 and on Schedule 6.21,
no such
40
Seller or its Subsidiaries has any outstanding indebtedness for borrowed money
or representing the deferred purchase price of property or services or similar
Liabilities, including any guarantee in respect thereof, or is a party to any
agreement, arrangement or understanding providing for the creation, incurrence
or assumption thereof.
Section 6.22. Liens. Except as set forth on Schedule 6.22, no such
Seller or its Subsidiaries has granted, created or suffers to exist with respect
to any of its assets, any Lien of any kind or nature whatsoever (other than
Permitted Liens).
Section 6.23. Leases. (a) Schedule 6.23(a) contains a list of all
Leases.
(b) All Leases were entered into in the Ordinary Course of the
Business of such Seller or its Subsidiaries. None of the Leases requires any
payments or the performance of any obligations that could reasonably be expected
to have a Material Adverse Effect on such Seller. Except as set forth on
Schedule 6.23(b), such Seller or its Subsidiaries, and, to the Knowledge of such
Seller and its Subsidiaries, the other party or parties thereto have complied in
all material respects with the provisions of each Lease and are not in default
thereunder (and there does not exist any condition which, after notice or lapse
of time or both would constitute a default thereunder by such Seller, its
Subsidiary, or, to the Knowledge of such Seller and its Subsidiaries, the other
party or parties thereto). To the Knowledge of either Seller and their
Subsidiaries, each Lease is legal, valid, binding, enforceable and in full force
and effect. No party to any Lease has repudiated any provision thereof and
neither such Seller nor its Subsidiaries has any reason to believe that the
other party or parties to any such Lease intends to exercise any right of
cancellation, termination or non-renewal thereof. All facilities subject to
Facility Leases are supplied with utilities and other services necessary for the
operation of such facilities as presently operated.
(c) Except as set forth on Schedule 6.23(c), each Lease is
assignable to Buyer without the Consent of, with or to any third party or any
increase in any payment or change in any term provided for thereunder, and no
Lease requires the Consent of, with or to any other party thereto or any
increase in the payment or change in any term provided for thereunder in
connection with the transactions contemplated hereby.
Section 6.24. Tangible Property. With respect to the tangible
properties and assets of such Seller and its Subsidiaries (excluding real
property) that
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are material to the conduct of the Business, such Seller and its Subsidiaries
have good title to, or hold pursuant to valid and enforceable leases, all such
properties and assets. All of the assets of such Seller and its Subsidiaries
used in the Business have been maintained and repaired for their continued
operation and are in good operating condition, reasonable wear and tear
excepted, and usable in the Ordinary Course of Business, except where the
failure to be in such repair or condition or so usable would not individually or
in the aggregate, have a Material Adverse Effect on Seller.
Section 6.25. Programming Arrangements.
(a) Except as set forth on Schedule 6.25(a), there are no specific
penalties, termination fees or other similar Liabilities that would be due under
any programming Contract as a result of Buyer terminating such Contract upon the
Shutdown Date;
(b) Except as set forth on Schedule 6.25(b), there are no minimum
guarantees on either the number of Subscribers or payment amounts due under any
programming Contract, excluding penetration requirements relating to volume or
penetration based rate discounts;
(c) Except as set forth on Schedule 6.25(c), there are no monetary
commitments by Sellers to promote or market any particular programming service
or group of services in excess of Three Million Dollars ($3,000,000) in the
aggregate;
(d) Under Sellers' programming packages currently in effect, and
assuming a gradual "wind down" of the Business, there are no requirements in any
programming Contract requiring Sellers to repackage any of its current
programming packages;
(e) Except as disclosed on Schedule 6.25(e), there are no
programming Contracts to which Seller is a party which contain (i) a "change in
control" or similar provision giving any third party additional rights or
materially changing the terms of such programming Contract, including permitting
termination or renegotiation of such programming Contract or (ii) restrictions
on the assignment of such programming Contract;
(f) Except as set forth on Schedule 6.25(f), there are no
affirmative obligations on the part of Seller to provide additional services or
channels in the event Sellers' channel capacity is increased due to
technological circumstances or otherwise;
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(g) Except as set forth on Schedule 6.25(g), there are no provisions
in any programming Contract to which any Seller is a party which permits a
program services provider to choose between its current programming agreement
with such Seller and its current programming agreement with Buyer due to the
fact that after the Closing Date, the Business will be controlled by an
Affiliate of Buyer, including permitting such program services provider to take
the terms of the agreement with Buyer and substituting such agreement for its
current arrangement with Seller, or vice versa;
(h) Except as disclosed on Schedule 6.25(h), no "most favored
nation" or other material Liabilities under any programming Contract will attach
to Buyer as a result of the consummation of the transactions contemplated
hereby;
(i) Seller's arrangement with American Sky Broadcasting, LLC, for
out-of-market distribution rights to Major League Baseball games provides the
exclusive rights to distribute such programming over all medium-power and
high-power satellite distribution systems;
(j) Except as set forth in Schedule 6.25(j), none of such Seller's
programming Contracts are subject to renewal prior to December 31, 2000 (and
none have renewal options in favor of a programmer), nor will any negotiation
period relating to the renewal or extension of any programming Contract commence
prior to December 31, 2000;
(k) Schedule 6.25(k) sets forth the Contracts entered into by
Sellers pursuant to which program services providers have provided launch
support to Sellers in connection with the Business which would require Seller to
repay such obligations as of the Closing Date or the Shutdown Date and the terms
of any repayment obligation relating thereto;
(l) Except as set forth on Schedule 6.25(l), there are no
affirmative obligations under any programming (or similar) agreement to carry
any additional programming channels (or feeds thereof) above and beyond what
such Seller currently carries.
Section 6.26. Subscribers. Schedule 6.26 sets forth the approximate
total number of Subscribers with accounts not disconnected as of the date set
forth therein.
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Section 6.27. Private Placement. Primestar will acquire the Parent
Securities in accordance with this Agreement for its own account solely for the
purpose of investment and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act. Primestar has
such knowledge and experience in financial and business matters as to be capable
of evaluating the risks and merits of an investment in the Parent Securities and
is able to bear the economic risk of such investment. Primestar acknowledges and
agrees that none of the Parent Securities have been or will be registered under
the Securities Act at the time of delivery and that such Parent Securities may
be sold or disposed of in the absence of registration only in accordance with
the terms of this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each Stockholder represents and warrants to Buyer as follows:
Section 7.1. Authority. Such Stockholder has all requisite power and
authority to execute and deliver this Agreement, to execute and deliver each
document to be delivered by it pursuant to this Agreement and to perform all of
its obligations hereunder and thereunder. The execution and delivery by such
Stockholder of this Agreement, the performance by such Stockholder of its
obligations hereunder and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary and proper action
on the part of such Stockholder. This Agreement has been duly executed and
delivered by such Stockholder and constitutes the legal, valid and binding
obligation of such Stockholder, enforceable against it in accordance with its
terms.
Section 7.2. Noncontravention. The execution and delivery by such
Stockholder of this Agreement and each other document to be delivered by it
pursuant to this Agreement and the performance by such Stockholder of its
obligations to be performed hereunder will not (A) contravene or conflict with
the organizational documents of such Stockholder or any of its Subsidiaries; (B)
contravene or conflict with or constitute a violation of any provision of any
Law or License (subject to compliance with the HSR Act and the rules and
regulations promulgated thereunder, and the Regulatory Provisions) to which such
Stockholder or any of its properties or assets is subject; or (C) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, cause such Stockholder to make an offer to purchase
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under, create in any party the right to accelerate, terminate, modify or cancel,
require any notice or give rise to a loss of any benefit under, any Contract,
Lease, Lien or other arrangement to which such Stockholder is a party or by
which it is bound or to which any of its assets or properties is subject other
than any loss of benefit, Lien or any other such event which would not have a
Material Adverse Effect on such Stockholder.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 8.1. Organization and Standing. Buyer 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, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power and authority would neither have a Material Adverse Effect on
Buyer nor materially impair or delay the ability of Buyer to consummate the
transactions contemplated hereby.
Section 8.2. Authority Relative to this Agreement. Buyer has all
requisite power and authority, corporate or otherwise, to execute and deliver
this Agreement and to perform all of its obligations hereunder. Buyer has all
requisite power and authority, corporate or otherwise, to execute and deliver
each instrument of transfer and other document to be delivered by it pursuant to
this Agreement and to perform all of its obligations hereunder and thereunder.
Other than the consent of the Board of Directors of GM, the execution and
delivery by Buyer of this Agreement and the performance by Buyer of its
obligations hereunder have been duly authorized by all necessary and proper
corporate action. Buyer hereby agrees that it will recommend approval of this
Agreement and the transactions contemplated hereby to the Board of Directors of
GM. Except as contemplated in this Section 8.2, no consent of the stockholder of
Buyer is required in connection with the execution, delivery and performance of
this Agreement by Buyer. This Agreement has been duly executed and delivered by
Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms. Each instrument of transfer
and other document to be delivered by Buyer pursuant to this
45
Agreement will be duly executed and delivered by Buyer and, when so executed and
delivered, will constitute the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
Section 8.3. Noncontravention. The execution and delivery by Buyer
of this Agreement and each instrument of transfer and other document to be
delivered by Buyer pursuant to this Agreement, the performance by Buyer of its
obligations to be performed hereunder and the consummation of the transactions
contemplated hereby and thereby will not, (A) contravene or conflict with the
certificate of incorporation, by-laws or other organizational documents of Buyer
or its Subsidiaries; (B) contravene or conflict with or constitute a violation
of any provision of any Law or License (subject to compliance with the HSR Act
and the rules and regulations promulgated thereunder) to which Buyer or any of
its properties or assets is subject; or (C) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, cause Buyer to
make an offer to purchase under, create in any party the right to accelerate,
terminate, modify or cancel, require any notice or give rise to a loss of any
benefit under, any Contract, Lease, Lien or other arrangement to which Buyer is
a party or by which it is bound or to which any of its properties or assets is
subject or result in the creation or imposition of any Liens (other than
Permitted Liens) on any assets of Buyer, other than any loss of benefit, Lien or
any other such event which would not have a Material Adverse Effect on Buyer or
adversely affect the ability of Buyer to consummate the transactions
contemplated hereby or by any instrument of transfer or other document to be
delivered by Buyer pursuant to this Agreement.
Section 8.4. Governmental Authorization. The execution and delivery
by Buyer of this Agreement and each instrument of transfer or other document to
be delivered pursuant to this Agreement, the consummation of the transactions
contemplated hereby and thereby and the performance by Buyer of its obligations
to be performed hereunder, do not require any Consent of, with or to any
Governmental Entity, except (A) for compliance with any applicable requirements
of the HSR Act and the rules and regulations thereunder, and (B) where the
failure to obtain or make such Consents would not prevent or delay in any
material respect the consummation of the transactions contemplated hereby or
thereby or otherwise prevent Buyer from performing its obligations under this
Agreement or any instrument of transfer or other document to be delivered
pursuant to this Agreement in accordance with the terms and subject to the
conditions hereof and thereof, and would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer.
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Section 8.5. Litigation. There is not in effect any judgment,
ruling, order, writ, decree, stipulation or injunction by or with any
Governmental Entity to which Buyer or any of its Affiliates is party or by which
Buyer or any of its Affiliates or any properties or assets of any of the
foregoing is bound, and which relates to or affects the Transferred Assets, the
Assumed Liabilities, this Agreement or the transactions contemplated hereby, and
(ii) none of Buyer or any of its Affiliates is party to, engaged in or, to the
Knowledge of Buyer, threatened with any Action which relates to or affects the
Transferred Assets, the Assumed Liabilities, this Agreement or the transactions
contemplated hereby, and, to the Knowledge of Buyer, no event has occurred and
no condition exists which could reasonably be expected to result in any such
Action.
Section 8.6. Brokers. Except for Xxxxxxx, Sachs & Co., whose
compensation shall be paid by Buyer, Buyer represents and warrants to Sellers
that it has not authorized any Person to act as broker, finder or in any other
similar capacity in connection with the transactions contemplated by this
Agreement or the High Power Agreement and the negotiations leading thereto which
will have a right of payment from or claim against Sellers or any of their
Subsidiaries or Affiliates.
ARTICLE IX
COVENANTS
Section 9.1. Conduct of Business of the Company. Except as
contemplated by this Agreement, during the period from the date hereof to the
Closing Date, each Seller will, and will cause each of its Subsidiaries to,
conduct its operations in the Ordinary Course of Business (including the
continued maintenance, servicing and refurbishment and retrieval of IRDs) and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, seek to preserve intact its current
business organizations, and seek to keep available the service of its current
officers and key employees and seek to preserve its relationships with master
sales agents, Full Service Providers, customers, suppliers and others having
business dealings with it to the end that goodwill and ongoing businesses shall
be unimpaired at the Closing Date. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Closing Date, each Seller shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Buyer (which will not
unreasonably be withheld or delayed):
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(a) amend its certificate or articles of incorporation or bylaws (or
other similar governing instrument) in a manner that would reasonably be likely
to have an adverse effect on the Business, the Transferred Assets or the rights
of Buyer hereunder;
(b) except in connection with the Debt Tender Condition, or as
otherwise provided herein or consistent herewith, adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of such Seller or any of its
Subsidiaries, provided, that any such action taken in connection with the Debt
Tender Condition, may only be taken by such Seller if such action would not
interfere with, or be inconsistent with, the rights of Buyer under this
Agreement and would not be reasonably likely to result in a Material Adverse
Change;
(c) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any Subsidiary
of such Seller;
(d) except as contemplated by this Agreement, (i) enter into, adopt
or amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreement, trust, plan, fund, award or other arrangement for the benefit or
welfare of any director, officer or employee in any manner (other than any Stay
Bonuses paid in accordance with the terms hereof or any other stay bonuses paid
at such Seller's expense that such Seller reasonably determines in good faith to
be necessary to retain the services of the recipients thereof through the
Closing Date); provided, that such Seller may amend its severance plans as long
as such amendment does not increase the Liability of Buyer or adversely affect
Buyer's rights hereunder; or (ii) except for normal increases in the Ordinary
Course of Business that, in the aggregate, do not result in a material increase
in benefits or compensation expense to either Seller, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect as of the date
hereof (including the granting of stock appreciation rights or performance
units);
(e) except as set forth on Schedule 9.1(e), hire or retain any
individual as an employee of or consultant to such Seller or any Subsidiary of
such Seller, except in the Ordinary Course of Business;
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(f) except as set forth on Schedule 9.1(f), modify in any material
respect any Material Contract or enter into or renew any material Contract
which, if in effect on the date hereof, would have been required to be disclosed
on Schedule 6.11(a);
(g) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(h) revalue any of its assets, including writing up or down the
value of inventory or writing-off notes or accounts receivable other than in the
Ordinary Course of Business;
(i) make or revoke any tax election or settle or compromise any tax
liability material to such Seller, or change (or make a request to any taxing
authority to change) any material aspect of its method of accounting for tax
purposes, other than such revocation, settlement, compromise or change that does
not increase any Liability of Buyer or adversely affect Buyer or its rights
hereunder;
(j) pay, discharge or satisfy any material claims or Liabilities,
other than the payment, discharge or satisfaction of Liabilities reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of Primestar and its Subsidiaries;
(k) settle or compromise any pending or threatened material Action
or Contractual claim or initiate or join any material Action or Contractual
claim, including any Action or claim arising under the Loral Contract, other
than any such Action or claim relating to any Excluded Assets or Excluded
Liabilities; provided, that, in each case, such settlement or compromise does
not increase any Liability of Buyer or adversely affect Buyer or its rights
hereunder;
(l) (i) incur or assume any long-term or short-term debt or issue
any debt securities except for borrowings under existing lines of credit in the
Ordinary Course of Business and in amounts not material to such Seller and its
Subsidiaries, taken as a whole; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person except in the Ordinary Course of Business
and in amounts not material to such Seller and its Subsidiaries, taken as a
whole; (iii) make any loans, advances or capital contributions to, or
investments in, any other Person (other than customary loans or advances to
employees in the Ordinary Course of Business and in
49
amounts not material to the maker of such loan or advance); (iv) pledge or
otherwise encumber shares of capital stock of such Seller or its Subsidiaries;
or (v) mortgage or pledge any of its assets, tangible or intangible, or create
or suffer to exist any Lien thereupon;
(m) except as contemplated by the High Power Agreement, (i) acquire,
sell, lease or dispose of any assets outside the Ordinary Course of Business or
any assets which in the aggregate are material to such Seller and its
Subsidiaries, taken as a whole; (ii) enter into any commitment or transaction
outside the Ordinary Course of Business; or (iii) grant any exclusive
distribution rights;
(n) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $10,000 or, in
the aggregate, are in excess of $1 million, other than the purchase of 75,000
IRDs under the GI Contract pursuant to purchase orders in effect on the date
hereof and purchases of Dishes, LNBs, Primefinder Remotes and other equipment in
the Ordinary Course of Business at the expense of Sellers; or (iii) enter into
or amend any Contract providing for the taking of any action that would be
prohibited hereunder;
(o) modify or alter any of its programming content or the Subscriber
acquisition and packaging offers currently being utilized or enter into any new
programming Contracts, other than any commercially reasonable response to
promotional market activity of any multichannel video programming distributor
which is intended by Seller to retain existing Subscribers or to obtain new
Subscribers;
(p) disclose to any Person other than Buyer or its representatives
any Records or other information regarding any Subscribers; or
(q) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Section 9.1(a) through Section 9.1(p) or any
other action which would make any of the representations or warranties of such
Seller contained in this Agreement untrue or incorrect.
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Section 9.2. No Solicitation. Except for the transactions
contemplated by this Agreement until the Closing Date, such Seller and its
Affiliates shall not, nor shall such Seller or its Affiliates authorize or
permit any officer, director or employee of, or any investment banker, attorney,
accountant, or other representative retained by, such Seller or such Affiliates
to, directly or indirectly, solicit, initiate, encourage or entertain (including
by way of furnishing information) discussions, inquiries, offers or proposals or
participate in any discussions or negotiations for the purpose or with the
intention of leading to any proposal or offer from any Person which constitutes
or concerns, or may reasonably be expected to lead to, any transaction involving
any proposal or offer to acquire all or any portion of the Transferred Assets.
Such Seller shall promptly (and in any event within two Business Days) notify
Buyer in writing of any inquiry they receive from any Person (and shall set
forth in such notice the identity of such Person) with respect to the subject
matter of the first sentence of this Section 9.2. Each Seller will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Person conducted heretofore with respect to any of the
foregoing. Each Seller will (x) promptly request all Persons who heretofore have
executed a confidentiality agreement in connection with such Persons'
consideration of acquiring the Transferred Assets to return or destroy all
confidential information heretofore furnished to such Persons by or on behalf of
Seller and (y) enforce all obligations under such confidentiality agreements. At
the Closing, each Seller will assign to Buyer all its rights under all
confidentiality agreements relating to the sale of or other transactions
involving the Transferred Assets. Upon the Closing, the Confidentiality
Agreement will be terminated.
Section 9.3. Representations and Warranties. Each Seller will not
nor will any of them permit any of their respective Affiliates to take or agree
or commit to take any action on or prior to the Closing Date that could
reasonably be expected to result in any of its representations and warranties
hereunder being untrue.
Section 9.4. Access to Information.
(a) From the date of this Agreement through the Closing Date, each
Seller shall afford to Buyer and its representatives free and full access at all
reasonable times to the properties, personnel, books and records (including
Material Contracts, marketing materials and customer satisfaction reports)
relating to the Transferred Assets and the Assumed Liabilities (such access not
to unreasonably interfere with the business of any Seller) in order that the
Buyer and its representatives may have full opportunity to make such
investigations as they may reasonably desire to make of all matters relating to
the transactions contemplated
51
hereunder. Any proprietary information provided pursuant to this Section 9.4(a)
shall be kept confidential by Buyer and shall not be revealed to any Person
other than the respective officers, directors, employees, agents and
representatives of such parties (it being agreed that Buyer shall be liable for
any breach of this Section 9.4(a) by any of its officers, directors, employees,
agents and representatives), except to the extent such information (i) is or
becomes generally available to the public (other than as a result of a breach of
this Section 9.4(a) by Buyer), (ii) was previously known by Buyer, (iii)
hereafter is disclosed to Buyer without restrictions on its use by a Person who,
to the Knowledge of Buyer, is not bound by an agreement of confidentiality with
any Seller with respect thereto; or (iv) is required to be disclosed under any
applicable Law or under subpoena or other legal process. No such investigation
shall diminish in any respect any of the representations or warranties of any
Seller or Buyer's rights in respect of any inaccuracy or breach thereof. The
parties hereto shall be entitled to seek injunctive relief or such other remedy
as may be available at law or in equity for any breach by another party of this
Section 9.4(a).
(b) Between the date hereof and the Closing Date, Primestar shall
furnish to Buyer (i) within two Business Days after the delivery thereof to
management, such monthly financial statements and data as are regularly prepared
for distribution to Primestar's Chief Executive Officer and/or the Stockholders
and (ii) at the earliest time at which they are available and prior to filing
thereof with the SEC, such quarterly and annual financial statements as are
prepared for Primestar's SEC filings, which shall be in accordance with the
books and records of Primestar, and drafts of all such SEC filings.
(c) Buyer will hold and will cause its consultants and advisors to
hold in confidence all documents and information concerning Primestar and its
Subsidiaries furnished to Buyer in connection with the transactions contemplated
by this Agreement to the extent required by the Confidentiality Agreement.
(d) For a period of four years beginning on the Closing Date, Buyer
agrees to make available to each Seller and its representatives, at reasonable
times and at such Seller's expense and in a manner that will not unreasonably
interfere in any material respect with Buyer's business (and such Seller shall
enter into an appropriate confidentiality agreement with Buyer in connection
therewith): (i) personnel of Buyer (including Transferred Employees) and (ii)
books and records of the Business through the Closing Date, including the
Records, in each case, as necessary in order to assist Seller and its Affiliates
in (i) making all required or appropriate regulatory filings and
52
other reports relating to the Excluded Assets, Excluded Contracts and Excluded
Liabilities or (ii) defending against or asserting claims arising out of or
relating to the Excluded Assets, Excluded Contracts and Excluded Liabilities.
Section 9.5. Notices and Consents. Buyer shall give all required
notices to third parties, and shall use its commercially reasonable efforts to
obtain any material third-party Consents that may be required, in connection
with the transactions contemplated by this Agreement. Each Seller shall give all
required notices to third parties, and shall use its commercially reasonable
efforts to obtain all required Consents, including all required Consents of
Governmental Entities and bondholders or lenders of Primestar or any of its
Affiliates, and any other material third-party Consents that may be required or
that Buyer reasonably may request, in connection with the transactions
contemplated by this Agreement. Within five Business Days following the date of
this Agreement (but in no event prior to approval of this Agreement by the Board
of Directors of GM), Buyer and each Seller shall file any Notification and
Report Forms and related materials that it may be required to file with the FTC
and the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") under the HSR Act, and shall make any further filings
pursuant thereto that may be necessary, proper or advisable. As promptly as is
practicable after the date of this Agreement, Buyer and each Seller shall take
any additional action in connection with any other Consents of, to or with any
Governmental Entities and third parties that it may be required to give, make or
obtain and shall refrain from taking any action the purpose or effect of which
could reasonably be expected to make it less likely that such Consents will be
given, made or obtained on the terms provided for in this Agreement. Without
limiting the generality of the foregoing, Buyer and each Seller shall: (i)
cooperate in all respects with each other in connection with any filing,
submission, adversarial proceeding or the timing thereof; (ii) in connection
with any investigation or other inquiry, including any proceeding initiated by a
private party, keep the other parties hereto informed on a timely basis of any
material communication received by such party from, or given by such party to,
the FTC, the Antitrust Division, the FCC or any other Governmental Entity and of
any material communication received or given in connection with any Action by a
private party, in each case regarding any of the transactions contemplated by
this Agreement, and permit any other party hereto to preview any material
communication given by or to it; and (iii) consult with each other, in advance
of any meeting or conference with such Governmental Entities or in connection
with any Action by a private party. Buyer and each Seller will use their
commercially reasonable efforts to obtain such approvals as promptly as possible
and, in this regard, provide all information reasonably requested, assist and
cooperate with
53
one another to make the necessary filings and take such steps as may be
necessary to secure the non-objection of the relevant antitrust and regulatory
authorities.
Section 9.6. Notification of Certain Matters. Each Seller, on the
one hand, and Buyer, on the other, shall give prompt notice to each other of (i)
the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Closing Date, (ii) any material failure of a party hereto to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by a party hereto or any of its Subsidiaries subsequent to the date of
this Agreement and prior to the Closing Date, under any contract or agreement
material to the financial condition, properties, businesses or results of
operations of a party hereto and its Subsidiaries taken as a whole to which it
or any of its Subsidiaries is a party or is subject, (iv) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, or (v) any Material Adverse Effect on a party hereto; provided, that
the delivery of any notice pursuant to this Section 9.6 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to Buyer.
Section 9.7. Public Announcements. No press release or announcement
concerning the transactions contemplated hereby will be issued by any party
hereto without the prior consent of the other parties hereto, except as such
release or announcement may be required by Law in which case the party required
to make the release or announcement will allow the other party reasonable time
to comment on such release or announcement in advance of such issuance.
Section 9.8. Employee Matters. (a) Transferred Employees. Prior to
the Closing Date, Buyer shall provide Primestar with a list of employees of the
Sellers to whom Buyer proposes to offer employment effective as of the Closing
Date ("Potential Transferred Employees"). With respect to each Potential
Transferred Employee who accepts employment with Buyer as of the Closing Date or
Transition Employee who accepts employment with Buyer during his or her
Transition Period (each a "Transferred Employee" and, collectively "Transferred
Employees"), Buyer shall provide such employee with: (i) vacation and sick leave
to the extent accrued, unused and reflected in Working Capital Liabilities as of
the Closing Date, (ii) past service credit for eligibility and vesting purposes
under the Buyer's employee welfare
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benefit plans and 401(k) plan for their period of employment on record with the
Sellers and (iii) past service credit for vesting only under the Buyer's
"Non-Bargaining Retirement Plan" for their period of employment on record with
the Sellers; provided, that such service recognition does not result in any
duplication of benefits. Each Transferred Employee who completes one year of
employment during which the Transferred Employee completed 1,000 hours of
service with Buyer shall accrue a benefit under the Buyer's "Non-Bargaining
Retirement Plan" with respect to such year. Each such Transferred Employee shall
be credited, in accordance with the terms of the Buyer's "Non-Bargaining
Retirement Plan", only with his or her period of employment with the Buyer for
eligibility for early retirement subsidies under such plan. Past service credit
for employment with the Sellers shall not be granted for purposes of benefit
accrual and early retirement subsidies. Individuals who terminate their
employment with the Sellers prior to the Closing Date and are subsequently hired
by Buyer shall not be entitled to any past service recognition under this
Section 9.8.
(b) Transition Employees. Within 30 days after the date hereof,
Buyer shall notify Primestar in writing of the names of any of the employees of
the Sellers which Buyer would like the Sellers to continue to employ after the
Closing Date ("Potential Transition Employees"), but in no event beyond a date
specified in writing by Buyer within six months following the Closing Date
("Wind-up Date"). Buyer may revise its list of Potential Transition Employees at
any time. Potential Transition Employees who remain actively employed on the
Closing Date (including employees absent solely by reason of vacation, but
excluding employees absent for any other reason) shall constitute "Transition
Employees," and Seller shall continue to employ and to make available to Buyer
the services of each such employee from the Closing Date through the earlier of
(i) the Wind-up Date or (ii) with respect to any such employee, any date
designated in a written notice provided by Buyer to Sellers, at least 30
calendar days prior to such date ("Transition Period"). The Transition Period
need not be the same for each Transition Employee, and the provision for 30 days
prior notice by Buyer of its termination of any Transition Employee's services
shall not be required if such termination is for "cause" (as determined by Buyer
in good faith in accordance with its policies with respect to its employees).
(c) Buyer shall promptly reimburse the Sellers for the salary and
Benefit Plan payments (excluding payments relating to stock option, stock
purchase, stock appreciation, bonus or other incentive compensation, relocation
benefits, and similar plans or arrangements) arising solely from the employment
of Transition Employees during their respective Transition Periods; provided,
however, that Buyer
55
shall not be liable or otherwise responsible for: (i) any increases in salary or
wage rates granted after the date hereof, (ii) any costs relating to changes to
the Benefit Plans after the Closing Date, (iii) severance benefits and (iv) any
payments arising from the employment of Transition Employees by Sellers before
or after the applicable Transition Period. Notwithstanding the preceding
sentence, to the extent a Benefit Plan is covered by an insurance policy, Buyer
shall reimburse the Sellers for the applicable premiums (and not benefit
payments), net of employee contributions. Sellers shall not be obligated to
re-hire or take any other action with respect to Transition Employees who resign
from employment with the Sellers prior to the Closing Date.
(d) Sellers specifically acknowledge and agree that they shall be
exclusively responsible for any and all Liabilities arising under Workers
Adjustment and Retraining Notification Act or Part 6, Title I of ERISA (COBRA),
or similar Laws with respect to their employees, including Transferred Employees
and Transition Employees, with respect to their termination of employment with
the Sellers and such employees' eligible dependents and beneficiaries.
(e) Notwithstanding the foregoing, Sellers shall be responsible for
all severance benefits paid or payable with respect to any employee of Buyer,
whose employment is terminated prior to the first anniversary of the Closing
Date and for any employee of Seller (including any Transition Employee) whose
employment is terminated at any time. Buyer shall be responsible for all
severance benefits paid or payable with respect to any Transferred Employee
whose employment is terminated at any time beginning the day after the first
anniversary of the Closing Date.
(f) Primestar will consult with Buyer in good faith in determining
which employees should receive Stay Bonuses. If the Closing occurs and Seller
complies with such obligation, Buyer agrees to reimburse the Sellers (or, at
Buyer's option, increase the Purchase Price by the amount of such Stay Bonus)
for any Stay Bonuses paid to its employees after and for employment with Sellers
through April 1, 1999, but in no event shall Buyer be obligated to reimburse
Sellers for (i) the amount of any Stay Bonus for any employee exceeding the
applicable amount set forth in the most recent Stay Bonus plan document provided
to Buyer prior to the date hereof or (ii) more than $2 million in the aggregate.
Primestar represents to Buyer that as of the date hereof the amount of Stay
Bonuses it is considering offering would be between $1.8 million and $2.5
million in the aggregate.
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(g) Solicitation of Employees. Sellers, the Stockholders and their
respective Affiliates shall not solicit or assist any other Person to solicit
for employment or otherwise offer employment to:
(i) any employees of the Sellers for the period from the date hereof
through and including the thirtieth (30th) day following the Closing Date;
(ii) any Potential Transition Employees, Potential Transferred
Employees or Transition Employees prior to the 60th day following the
later of the Closing Date or the date any such employee first becomes a
Transition Employee, if at all; and
(iii) any Transferred Employee prior to the second anniversary of
the Closing Date;
provided, however, that Sellers and Buyer shall reasonably cooperate in good
faith to identify those Transition Employees whose services are essential to the
efficient, effective and orderly transfer of the Business to Buyer and
thereafter the operation of the Business by Buyer and that Sellers, the
Stockholder and their respective Affiliates shall not induce any such employees
to terminate their employment prior to the end of their Transition Period if
such termination would materially disrupt the efficient, effective and orderly
transfer of the Business to Buyer.
Section 9.9. Tax Matters. Each Seller and Buyer shall cooperate
fully with each other and make available or cause to be made available to each
other in a timely fashion such Tax data, prior Tax returns and filings and other
information as may be reasonably required for the preparation by Buyer or such
Seller of any Tax returns, elections, consents or certificates required to be
prepared and filed by Buyer or such Seller and any audit or other examination by
any taxing authority, or judicial or administrative proceeding relating to
liability for Taxes in connection with the transactions contemplated hereby.
Seller will retain and provide to Buyer all records and other information which
may be relevant to any such Tax return, audit or examination, proceeding or
determination, and will provide Buyer with any final determination of any such
audit or examination, proceeding or determination that affects any amount
required to be shown on any Tax return of the other party for any period.
Without limiting the generality of the foregoing, Seller will retain copies of
all Tax returns, supporting work schedules and other records relating to Tax
periods or portions thereof ending prior to or on the Closing Date.
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Section 9.10. Commercially Reasonable Efforts; Further Assurances.
(a) Each of Buyer and Seller will use its commercially reasonable
efforts to cause to be fulfilled the conditions to the respective obligations of
the other party set forth in Article X and Sellers agree to use all commercially
reasonable efforts to satisfy the Debt Tender Condition as promptly as
practicable after the date hereof.
(b) From time to time, as and when requested by either party hereto,
the other party will execute and deliver, or cause to be executed and delivered,
all such documents and instruments and will take, or cause to be taken, all such
reasonable actions, as such other party may reasonably deem necessary or
desirable to consummate the transactions contemplated by this Agreement,
including the orderly transfer and transition of the Transferred Assets to Buyer
or Newco, as the case may be. None of the parties hereto shall take any action
or fail to take any action which would reasonably be expected to frustrate the
intent and purposes of this Agreement or the transactions contemplated hereby.
(c) Anything contained in this Agreement to the contrary
notwithstanding, none of the parties hereto will nor will any Affiliate thereof
be required to commence litigation, divest or hold separate any business or
assets or agree to any limitation on such party's or Affiliate's ability to
control in any respect its business or operations in connection with the
consummation of the transactions contemplated by this Agreement.
Section 9.11. Billing and Customer Management Systems. Prior to the
Closing Date, Primestar will cooperate with Buyer to facilitate the planning of
the consolidation of billing, customer service and other business support
systems.
Section 9.12. Bulk Transfer Laws. Each Seller shall comply with the
provisions of any bulk transfer and similar laws which may be applicable to the
transactions contemplated by this Agreement.
Section 9.13. Subscriber List, Etc.
(a) Each Seller and Stockholder agrees not to use or disseminate for
any purpose after the date hereof any Records or other information with respect
to Subscribers (or which would be of assistance in identifying Subscribers) in
the possession of such Stockholder, including not using such information for any
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marketing activities, including with respect to any direct marketing to such
Subscriber by any multi-channel video program distributor.
(b) Each Seller and Stockholder agrees to assist Buyer in
negotiating with programming providers to ameliorate the adverse impact of
provisions in programming Contracts that increase the cost per subscriber for
such programming as the number of subscribers declines.
Section 9.14. Shutdown. Buyer intends to terminate the provisions of
the medium-power service on a day that is the last day of a calendar month
between and including the months of March 2001 and September 2001. Buyer shall
notify Primestar in writing within 60 days after the Closing Date as to the
Shutdown Date. Notwithstanding any other provisions of this Agreement to the
contrary, Buyer shall only be responsible for Assumed Liabilities with respect
to Contracts assumed by Buyer from the Closing Date through the Shutdown Date.
Sellers shall be responsible for all obligations, covenants and other
Liabilities with respect to such assumed Contracts, including the Shutdown
Liabilities, for all periods beginning on the day after the Shutdown Date;
provided, that no Seller shall be responsible to provide any services to Buyer
with respect to such assumed Contracts for any period beginning after the
Shutdown Date. In addition, if the actual termination of the medium-power
business occurs on a date other than the Shutdown Date, no Seller shall be
responsible to Buyer for any incremental Liabilities resulting from the
termination on a day other than the Shutdown Date. Buyer agrees to assist
Sellers in negotiating with programming providers to ameliorate the adverse
impact of provisions in programming Contracts which impose on Sellers Shutdown
Liabilities resulting from rebates or repayments made to program services
providers that had previously provided launch support to Seller to the extent
such cooperation would not impact the Business in any adverse respect or result
in any additional expenses by Buyer.
Section 9.15. Transfer Restrictions. (a) The transfer agent of
Buyer's parent is authorized to place stop transfer instructions on its stock
transfer records and may refuse to transfer any Parent Securities not
transferred in compliance therewith or in compliance with the restrictions on
transfer set forth herein. Each certificate shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act. Such shares may be transferred only in
compliance with the
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conditions specified in the Stock Purchase Agreement dated ________,
1999 between Primestar and Buyer. A complete and correct copy of
such Agreement is available for inspection at the principal office
of the Buyer and will be furnished without charge to the holder of
such shares upon written request."
(b) Primestar and Buyer agree to use commercially reasonable efforts
to enter into the Parent Security Documents as of the Closing Date. The Parent
Security Documents will provide, among other things, that no Parent Securities
may be transferred prior to the first anniversary of the Closing Date, other
than transfers to the Stockholders in compliance with applicable Law. Buyer's
parent will provide registration rights to Primestar in connection with the
Parent Securities. These rights will consist of two demand registration rights
which would only be available if registration under the Securities Act is
required to effectuate the disposition of such securities; such registration
would require notice from the holders of a majority of the Parent Securities.
Buyer's parent will be entitled to defer any such registration for up to six
months if it reasonably determines that registration of the Parent Securities
could materially interfere with business activities or plans of Buyer or Buyer's
parent. Buyer's parent will agree to incur the expenses in connection with any
registration, other than the expenses of counsel to the holders of securities to
be registered thereunder and any underwriting commissions and discounts payable
in connection therewith and, in addition, Buyer's parent will agree to provide
customary indemnification to each holder and the Affiliates thereof and any
underwriters retained by such holders. Buyer's parent will also be entitled to
select the managing underwriter of any underwritten registered offering, subject
to the consent of such holders (which consent will not be unreasonably
withheld). Buyer's parent and each holder intending to register its securities
in an underwritten offering will be required to enter into customary
underwriting agreements prior to such sale and provide customary indemnification
to each such holder and their Affiliates, Buyer and the underwriters in
connection with such registration.
Section 9.16. Power of Attorney with Respect to Assets. On the
Closing Date, each Seller (at its sole cost and expense) will constitute and
appoint Buyer its true and lawful attorney, with full power of substitution, in
its name and on its behalf but for the benefit of Buyer, to institute and
prosecute all proceedings that Buyer may deem proper in order to collect, assert
or enforce any claim, right or title of any kind in or to the Transferred Assets
or the Assumed Liabilities, or to defend or compromise any Action in respect of
any of such Transferred Assets or Assumed Liabilities, and to take all such
action in relation thereto as Buyer shall deem
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advisable. Each such party acknowledges that such powers will be coupled with an
interest and will not be revocable by either of them for any reason. Buyer will
retain for its own account any amount collected as a result of any action taken
pursuant to the foregoing powers.
Section 9.17. ResNet Communications, LLC and Global Interactive
Communications Corporation. Primestar represents to Buyer that it has the right,
prio to April 1, 1999, to exercise, without the payment of any consideration, an
option (the "Option") to cause the sale for cash of its equity interest in
ResNet Communications, LLC or Global Interactive Communications Corporation, as
the case may be (the "Shares"). The parties agree that the Shares and the Option
constitute Transferred Assets for purposes of this Agreement; provided, however,
that Primestar will have the right to exercise the Option prior to the Closing
Date (but will not have the right to transfer any of the Shares or the Option).
If Primestar exercises the Option prior to the Closing Date, the proceeds
therefrom will be shared equally by Primestar and Buyer. If Primestar does not
exercise the Option prior to the Closing Date, the Shares and the Option will be
transferred to Buyer on the Closing Date. If Buyer elects after the Closing Date
(but prior to the time that the Final Working Capital Certificate is required to
be delivered to Sellers pursuant to Section 4.2) to exercise the Option, the
proceeds therefrom will be shared equally by Primestar and Buyer. If Buyer has
not exercised the Option prior to the time that the Final Working Capital
Certificate is delivered to the Sellers pursuant to Section 4.2, the Shares and
the Option will be collectively reflected on the Final Working Capital
Certificate as Working Capital Assets equal to 50% of the consideration which
would be received by Buyer were it to exercise the Option. Buyer will have the
sole right to retain any proceeds received from transferring the Shares or
exercising the Option after the time of delivery of the Final Working Capital
Certificate.
ARTICLE X
CONDITIONS TO TRANSFER OF TRANSFERRED ASSETS
Section 10.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the transfer of the Transferred Assets as
contemplated in Section 2.1(a) are subject to the satisfaction or waiver on or
prior to the Closing Date of each of the following conditions:
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(a) Regulatory Approvals. All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated.
(b) No Injunctions or Restraints. No Law issued by any Governmental
Entity or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect.
The parties hereto expressly acknowledge that the consummation of the
transactions contemplated by the High Power Agreement is not a condition to the
consummation of the transactions contemplated hereby.
Section 10.2. Conditions to Obligations of Buyer. The obligations of
Buyer to effect the transfer of the Transferred Assets as contemplated by
Section 2.1(a) are subject to the satisfaction or waiver by Buyer on or prior to
the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Sellers set forth in this Agreement (x) that are qualified as to
materiality shall be true and correct in all respects and (y) that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, and each Seller shall have delivered to Buyer a certificate
signed by one of its executive officers confirming the foregoing as of the
Closing Date; provided, however, that the certification made with respect to the
representations and warranties contained in Sections 6.9, 6.12(a) and 6.14(i)
shall be satisfied if, as of the Closing Date, such representation or warranty
shall not have become inaccurate in a manner that would reasonably be likely to
result in a material diminution in the value of the Transferred Assets or the
benefits expected to be derived by Buyer as a result of the transactions
contemplated hereby or which otherwise would reasonably be likely to have a
Material Adverse Effect on Buyer.
(b) Performance of Obligations of Seller. Each and all of the
covenants and agreements of Sellers to be performed or complied with pursuant to
this Agreement on or prior to the Closing Date shall have been fully performed
and complied with in all material respects, and each Seller shall have delivered
to Buyer a certificate signed by one of its executive officers confirming the
foregoing as of the Closing Date.
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(c) Litigation, Etc. There shall not exist or have been instituted
or be pending any Action (i) which could reasonably be expected to make illegal,
or to materially delay or otherwise directly or indirectly materially restrain
or prohibit, the consummation of the transactions contemplated by this
Agreement, or which could reasonably be expected to result in material Damages
in connection with the transactions contemplated by this Agreement, (ii) which
could reasonably be expected to result in (x) the prohibition of ownership or
the operation by Buyer of any portion of the Transferred Assets or (y) the Buyer
being compelled to dispose of or to hold separately any portion of the business
or assets of Buyer or its Affiliates or Subsidiaries as a result of the
transactions contemplated by this Agreement, (iii) which could reasonably be
expected to result in any material diminution in the benefits expected to be
derived by Buyer as a result of the transactions contemplated by this Agreement
or (iv) which otherwise has had or could reasonably be expected to have a
Material Adverse Effect on Buyer or a material adverse effect on the ability of
Buyer to consummate the transactions contemplated hereby.
(d) Laws, Etc. On or after the date of this Agreement, there shall
not exist or have been enacted, entered, enforced, promulgated or deemed
applicable to the transactions contemplated by this Agreement, any Law or any
other action taken by any Governmental Entity that has resulted, or could
reasonably be expected to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of Section 10.2(c).
(e) Consents. All material Consents of all Persons (including
Governmental Entities) required to be obtained prior to the Closing Date in
connection with the execution, delivery and performance of this Agreement by
Sellers and Buyer, shall have been obtained and shall be in full force and
effect. Without limiting the generality of the foregoing, all Consents set forth
on Schedule 10.2(e) shall have been obtained and shall be in full force and
effect.
(f) No Material Adverse Change. There shall not have occurred (or
reasonably be expected to occur) any Material Adverse Change.
(g) Tax Certificates. Sellers shall have furnished to Buyer
affidavits of non-foreign status that comply with Section 1445 of the Code and
all tax clearance certificates or similar documents which may be required by any
state taxing authority in order to relieve Buyer of any obligation to withhold
any portion of the Purchase Price.
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(h) Opinion of Counsel. Buyer shall have received the opinions of
Xxxxx & Xxxxx, L.L.P. counsel to Sellers, and the General Counsel of Seller, in
a form reasonably agreeable to Buyer and Sellers.
(i) Parent Security Documents. Primestar and its Affiliates, to the
extent a party thereto, shall have executed and delivered the Parent Security
Documents to be executed by such Person.
(j) Additional Conditions. Buyer shall be satisfied and Sellers
shall certify to Buyer to the effect that, there exists on such date no
arrangements whereby any Seller or its Affiliates has any Contract or other
interest with respect to any of the Transferred Assets except as expressly set
forth hereunder.
(k) Leasing Arrangements. (i) Arrangements reasonably satisfactory
to Buyer shall be made to assure that Buyer will have continued access to the
Boise, Idaho call center through the Shutdown Date on terms no less favorable
than those terms currently provided to Primestar. Buyer agrees that the
acquisition of the Boise facility by Buyer from the owner thereof, at Buyer's
sole cost and expense (should Buyer and such owner elect to enter into any such
transaction) will be one method sufficient to satisfy such condition.
(ii) Primestar shall have made arrangements reasonably satisfactory to
Buyer, whether through a sublease arrangement or otherwise, in order for Buyer
to have the benefit on the same terms as those currently provided to Primestar,
under those Excluded Contracts identified under the heading "Excluded Transition
Contracts" set forth on Schedule 1.1(a)(iii) for the period of time specified on
such schedule. For such specified period of time, Buyer shall be responsible for
those obligations under such leases applicable to Primestar to the extent that
such obligations arise from and after the Closing Date, including with respect
to the rental fees owed under such leases.
Section 10.3. Conditions to Obligations of Sellers. The obligation
of Sellers to effect the transfer of the Transferred Assets as contemplated by
Section 2.1(a) is subject to the satisfaction or waiver by Primestar on or prior
to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement (x) that are qualified as to
materiality shall be true and correct in all respects and (y) that are not so
qualified shall be true
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and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, and Buyer shall have delivered to Seller, a certificate signed by an
executive officer of Buyer confirming the foregoing as of the Closing Date;
provided, however, that the certification made with respect to the
representations and warranties contained in Section 8.5 shall be satisfied if,
as of the Closing Date, such representation or warranty shall not have become
inaccurate in a manner that would reasonably be likely to result in a material
diminution in the value of the Transferred Assets or the benefits expected to be
derived by Seller as a result of the transactions contemplated hereby or which
otherwise would reasonably be likely, to have a Material Adverse Effect on
Seller.
(b) Performance of Obligations of Buyer. Each and all of the
covenants and agreements of Buyer to be performed or complied with pursuant to
this Agreement on or prior to the Closing Date shall have been fully performed
and complied with in all material respects, and Buyer shall have delivered to
Seller, a certificate signed by an executive officer of Buyer confirming the
foregoing as of the Closing Date.
(c) Opinion of Counsel. Seller shall have received the opinion of
Weil, Gotshal & Xxxxxx LLP, counsel to Buyer, in a form reasonably agreeable to
Buyer and Seller.
(d) Parent Security Documents. Buyer shall have executed and
delivered the Parent Security Documents to be executed by Buyer and the Parent
Securities shall have been duly issued to Primestar.
(e) Debt Tender Condition. The Debt Tender Condition shall have been
satisfied.
ARTICLE XI
TERMINATION
Section 11.1. Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement abandoned at any time prior to the
Closing Date:
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(a) by the mutual written agreement of Buyer and Primestar;
(b) by either Buyer or Primestar, if the Closing Date shall not have
occurred on or before April 30, 1999; provided, however, that neither Buyer, on
the one hand, nor Primestar, on the other hand, may so terminate this Agreement
if the absence of such occurrence is due to the failure of Buyer, on the one
hand, or either Seller, on the other hand, to perform in all material respects
each of its obligations required to be performed on or prior to the Closing
Date;
(c) by either Buyer or Primestar, if there shall be any Law that
makes consummation of the transactions contemplated by this Agreement illegal or
otherwise prohibited or if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall not be subject
to appeal or shall have become final and unappealable;
(d) by Buyer, if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of Primestar set
forth in this Agreement, or if any representation or warranty of Primestar set
forth in this Agreement shall have become untrue, in any such case such that the
breach of such representation, warranty, covenant or agreement could reasonably
be expected to have a Material Adverse Effect on the Sellers or the Transferred
Assets; provided, that if such breach is curable by Primestar prior to April 30,
1999 through the exercise of its commercially reasonable efforts, then for so
long as Primestar continues to exercise such commercially reasonable efforts to
cure the same, Buyer may not terminate this Agreement pursuant to this Section
11.1(d);
(e) by Seller, if there shall have been a breach of any
representation, warranty, covenant or agreement on the part of Buyer set forth
in this Agreement, or if any representation or warranty of Buyer set forth in
this Agreement shall have become untrue, in any such case such that the breach
of such representation, warranty, covenant or agreement could reasonably be
expected to have a Material Adverse Effect on the Buyer if not remedied prior to
the Closing Date, provided, that if such breach is curable by Buyer prior to
April 30, 1999, through the exercise of its commercially reasonable efforts,
then for so long as Buyer continues to exercise such commercially reasonable
efforts to cure the same, Seller may not terminate this Agreement pursuant to
this Section 11.1(e);
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(f) by Buyer or Primestar if the Board of Directors of GM shall not
have approved this Agreement and the transactions contemplated hereby within 10
Business Days of the date hereof.
Section 11.2. Effect of Termination. Except as set forth below in
this Section 11.2 and subject to Section 13.5(c), in the event of the
termination of this Agreement pursuant to Section 11.1, this Agreement, other
than with respect to Sections 9.7, the second and fourth sentences of Section
9.4(a) and Section 14.6, which shall continue in effect, shall thereafter become
void and have no effect, without any liability on the part of any party or its
Subsidiaries or Affiliates in respect thereof, except that nothing herein will
relieve any party from liability for any breach of this Agreement. If (i) the
Sellers fail to obtain the requisite consent of bondholders specified in
Schedule 11.2 or waive such requirement prior to April 30, 1999, and (ii) this
Agreement is terminated by Buyer or Sellers pursuant to Section 11.1(b), and
(iii) at the time of such termination the conditions to Closing contained in
Section 10.1(a), 10.1(b), 10.3(a) and 10.3(b) (other than the delivery by Buyer
of the certificates of an executive officer of Buyer referred to in Section
10.3(a) and 10.3(b)) shall have been satisfied, Buyer shall be paid $7.5 million
in cash. If, after such termination and prior to December 31, 1999, Primestar or
its Subsidiaries enters into a transaction pursuant to which all or a
substantial portion of the Transferred Assets would be acquired by or combined
with any Person, Persons or group, Buyer shall be entitled to receive an
additional $62.5 million in cash at the closing of such transaction (regardless
of when the closing thereunder shall occur). The payment of such amount to Buyer
shall be a condition to the entry into any such transaction by either Seller.
The obligations to pay Buyer the monies described in this Section 11.2 will be
joint and several obligations of each of the Sellers and the Stockholders.
ARTICLE XII
SURVIVAL
Section 12.1. Survival. The respective representations and
warranties of the Sellers and Buyer contained in this Agreement (other than the
representations and warranties with respect to title contained in Section 6.4
and Taxes contained in Section 6.8 or on any related schedule hereto or in any
certificate or document delivered pursuant hereto and representations and
warranties with respect to brokers contained in Section 6.20 and Section 8.6)
will survive the execution and delivery of
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this Agreement, the consummation of the transactions contemplated hereby and the
Closing Date and will continue in full force and effect until the earlier to
occur of (i) the termination of this Agreement prior to the Closing Date and
(ii) two years after the Closing Date, and then terminate and expire with
respect to any theretofore unasserted claims arising out of or otherwise in
respect of any falsity, breach or inaccuracy of such representations and
warranties. The representations and warranties with respect to Taxes contained
in Section 6.8, or on any related schedule hereto or in any related certificate
or document delivered pursuant hereto and the representations and warranties
with respect to brokers contained in Section 6.20 and Section 8.6 will survive
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the Closing Date until 60 days after all
applicable statutes of limitation (including any extensions thereof) have
expired and then expire with respect to any theretofore unasserted claims
arising out of or otherwise in respect of any falsity, breach or inaccuracy of
such representations and warranties. The representations and warranties with
respect to title contained in Section 6.4 or on any related schedule hereto or
in any related certificate or document delivered pursuant hereto will survive
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the Closing Date without time limitation,
but will terminate if this Agreement terminates prior to the Closing Date.
ARTICLE XIII
INDEMNIFICATION
Section 13.1. Indemnification by Seller and the Stockholders.
Subject to the other provisions of this Article XIII, each Seller and each
Stockholder, jointly and severally (except that the obligation of GE American
Communications, Inc. shall be several, as to its pro rata share, based on the
percentage of equity ownership of GE American Communications, Inc. in
Primestar), shall indemnify, defend and hold harmless Buyer and its Subsidiaries
and Affiliates and their respective employees, directors, officers,
stockholders, representatives and agents (collectively, the "Buyer Group") from
and against, and pay or reimburse, as the case may be, the Buyer Group for, any
and all Damages, as incurred, suffered by Buyer or any other member of the Buyer
Group based upon, arising out of or otherwise in any way relating to or in
respect of:
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(a) any falsity, breach or inaccuracy of any representation or
warranty made by Sellers or Stockholders herein or in any certificate or other
document delivered pursuant hereto (except that no Stockholder shall be
obligated to provide indemnification for any falsity, breach or inaccuracy of
any representation or warranty with respect to any other Stockholder);
(b) any breach or violation of any covenant or agreement of Sellers
or the Stockholders contained herein or in any certificate or other document
delivered pursuant hereto;
(c) any Excluded Liability;
(d) the enforcement by the Buyer Group of their rights to be
indemnified, defended and held harmless under this Agreement; or
(e) any Liability of any nature whatsoever, whether under federal or
state securities laws or otherwise, in connection with the satisfaction or
attempted satisfaction of the Debt Tender Condition.
Section 13.2. Indemnification by Buyer. Subject to the other
provisions of this Article XIII, Buyer shall indemnify, defend and hold harmless
each Seller, its Subsidiaries and Affiliates and its employees, directors,
officers, stockholders, representatives and agents (collectively, the "Seller
Group") from and against, and pay or reimburse, as the case may be, the Seller
Group for, any and all Damages, as incurred, suffered by Seller or any other
member of the Seller Group based upon, arising out of or otherwise in any way
relating to or in respect of:
(a) any falsity, breach or inaccuracy of any representation or
warranty made by Buyer herein or in any certificate or other document delivered
pursuant hereto;
(b) any breach or violation of any covenant or agreement of Buyer
contained herein or in any certificate or other document delivered pursuant
hereto;
(c) the Assumed Liabilities; or
(d) the enforcement by the Seller Group of their rights to be
indemnified, defended and held harmless under this Agreement.
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Section 13.3. Procedures for Indemnification.
(a) If a claim or demand is made against an Indemnitee, or an
Indemnitee shall otherwise learn of an assertion, by any Person who is not a
party to this Agreement (or an Affiliate thereof) (a "Third Party Claim") as to
which one or more parties (collectively, the "Indemnifying Party") may be
obligated to provide indemnification pursuant to this Agreement, such Indemnitee
will notify the Indemnifying Party in writing, and in reasonable detail, of the
Third Party Claim reasonably promptly after becoming aware of such Third Party
Claim; provided, however, that failure to give such notification will not affect
the indemnification provided hereunder except to the extent the Indemnifying
Party shall have been actually prejudiced as a result of such failure.
(b) If a Third Party Claim is made against an Indemnitee and the
Indemnifying Party unconditionally and irrevocably acknowledges in writing its
obligation to indemnify the Indemnitee therefor (subject to verification that
any losses or costs in respect thereof constitute Damages and compliance with
the other terms hereof), the Indemnifying Party will be entitled to assume the
defense thereof (at the expense of the Indemnifying Party) with counsel selected
by the Indemnifying Party and reasonably satisfactory to the Indemnitee. Should
the Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party will not be liable to the Indemnitee for any legal or
other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided that, if in any Indemnitee's reasonable judgment a
conflict of interest exists in respect of such claim, such Indemnitee shall have
the right to employ separate counsel (which shall be reasonably satisfactory to
the Indemnifying Party) and one local counsel to represent such Indemnitee and
in that event the reasonable fees and expenses of each such counsel shall be
paid by such Indemnifying Party. If the Indemnifying Party assumes the defense
of any Third Party Claim, the Indemnitee shall have the right to participate in
the defense thereof and to employ counsel, at its own expense (except as
otherwise provided in the preceding sentence), separate from the counsel
employed by the Indemnifying Party. The Indemnifying Party shall be liable for
the fees and expenses of counsel employed by the Indemnitee for any period
during which the Indemnifying Party has failed to assume the defense thereof or
if it does not expressly elect to assume the defense thereof (including
acknowledging its indemnification obligation as aforesaid). If the Indemnifying
Party assumes the defense of any Third Party Claim, the Indemnifying Party will
promptly supply to the Indemnitee copies of all correspondence and documents
relating to or in connection with such Third Party Claim and keep the Indemnitee
fully informed of all developments relating to or in
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connection with such Third Party Claim (including providing to the Indemnitee on
request updates and summaries as to the status thereof). If the Indemnifying
Party chooses to defend a Third Party Claim, all the Indemnitees shall
reasonably cooperate with the Indemnifying Party in the defense thereof (such
cooperation to be at the expense, including reasonable legal fees and expenses,
of the Indemnifying Party).
(c) If the Indemnifying Party unconditionally and irrevocably
acknowledges in writing its obligation to indemnify the Indemnitee for a Third
Party Claim (subject to verification that any losses or costs in respect thereof
constitute Damages and compliance with the other terms hereof), the Indemnitee
will agree to any settlement, compromise or discharge of such Third Party Claim
which the Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of Damages in connection with such
Third Party Claim and unconditionally and irrevocably releases the Indemnitee
(and the other members of the Buyer Group or the Seller Group, as the case may
be) completely from all Liability in connection with such Third Party Claim,
provided, however, that, without the Indemnitee's prior written consent, the
Indemnifying Party shall not consent to any settlement, compromise or discharge
(including the consent to entry of any judgment), and the Indemnitee may refuse
to agree to any such settlement, compromise or discharge that, in the reasonable
opinion of the Indemnitee could reasonably be expected to materially and
adversely affect the Indemnitee. If the Indemnifying Party unconditionally and
irrevocably acknowledges in writing its obligation to indemnify the Indemnitee
for a Third Party Claim, the Indemnitee shall not (unless required by law) admit
any liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the Indemnifying Party's prior written consent (which
consent shall not be unreasonably withheld).
(d) Any claim on account of Damages which does not involve a Third
Party Claim shall be asserted by reasonably prompt written notice given by the
Indemnitee to the Indemnifying Party from whom such indemnification is sought.
The failure by any Indemnitee so to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may have to such
Indemnitee under this Agreement, except to the extent that the Indemnifying
Party shall have been actually prejudiced by such failure. If the Indemnifying
Party does not dispute its liability to the Indemnitee with respect to the claim
made in such notice by notice to the Indemnitee prior to the expiration of a
30-calendar-day period following the Indemnifying Party's receipt of notice of
such claim, the claim shall be conclusively deemed a liability of the
Indemnifying Party under this Agreement. The Indemnifying Party shall pay the
amount of such liability to the Indemnitee on
71
demand or, in the case of any notice in which the amount of the claim (or any
portion thereof) is estimated, on such later date when the amount of such claim
(or such portion thereof) becomes finally determined. If the Indemnifying Party
has timely disputed its liability with respect to such claim, as provided above,
the Indemnifying Party and the Indemnitee shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through negotiations
by the 90th day after notice of such claim was given to the Indemnifying Party,
the Indemnifying Party and the Indemnitee will resolve such dispute in
accordance with Section 14.11.
Section 13.4. Termination of Indemnification Obligations. The
obligations of each party to indemnify, defend and hold harmless the other party
and other Indemnitees (i) pursuant to Sections 13.1(a) and Section 13.2(a) shall
terminate when the applicable representation or warranty expires pursuant to
Article XII, (ii) pursuant to Section 13.1(b) and Section 13.2(b) shall
terminate upon the later to occur of (A) two years after the Closing Date and
(B) six months after the last day on which obligations described in Sections
13.1(b) and 13.2(b) shall have been required to be performed and (iii) pursuant
to Sections 13.1(c), (d) and (e), and Sections 13.2(c) and (d) shall continue
without time limitation and shall not terminate at any time; provided, however,
that as to clauses (i) and (ii) above, such obligations to indemnify, defend and
hold harmless shall not terminate with respect to any individual item as to
which the Indemnitee shall have, before the expiration of the applicable period,
made a claim by delivering a notice (stating in reasonable detail the basis of
such claim) to the Indemnifying Party.
Section 13.5. Certain Limitations.
(a) No monetary amount shall be payable by Sellers or Buyer to any
member of the Buyer Group or the Seller Group, respectively, with respect to the
indemnification of any claims pursuant to Section 13.1(a) or Section 13.2(a), as
the case may be (other than with respect to the representations and warranties
in Sections 6.3, 6.4, 6.8, 6.14(i), 6.20 and 8.6) until the aggregate amount of
Damages actually incurred by the Buyer Group or the Seller Group, as the case
may be, with respect to all claims shall exceed on a cumulative basis Two
Hundred Fifty Thousand Dollars ($250,000) (the "Threshold"), in which event
Primestar and each of the Stockholders or Buyer, as the case may be, shall be
responsible for the full amount of such Damages, including the initial $250,000
of Damages which are subject to the Threshold. Claims made pursuant to the
representations and warranties contained in or made pursuant to Sections 6.3,
6.4, 6.8, 6.14(i), 6.20 and 8.6 will not be subject to the Threshold.
72
(b) Except for Damages arising out of, attributable to or resulting
from any breach of the representations and warranties in Sections 6.3, 6.4, 6.8
and 6.14, no member of the Buyer Group or the Seller Group, as the case may be,
shall have any right to obtain an indemnification payment under this Agreement
to the extent amounts received by the members of such group as indemnification
payments hereunder equal or exceed $500,000,000; provided, that the limitation
on Damages set forth in this Section 13.5(b) shall in no way affect the amount
of any Assumed Liabilities assumed by Buyer or the amount of Excluded
Liabilities retained by Seller.
(c) Anything contained herein to the contrary notwithstanding, and
without limiting the rights of Buyer and the Buyer Group against Primestar, MDU
and PLP hereunder, the indemnification provided for in this Article XIII shall
be the sole and exclusive remedy of Buyer and the Buyer Group against the
Stockholders with respect to the matters described in Sections 13.1(a) through
(e).
In addition, if the transactions contemplated hereby are terminated
prior to the Closing Date in accordance with the terms hereof, and without
limiting any rights against Primestar, MDU and PLP, the Buyer Group will not
have the right to seek indemnification from a Stockholder except with respect to
(i) any breach by Sellers of their obligation under Section 11.2, (ii) any
breach by such Stockholder of its obligations hereunder to be performed prior to
such termination and (iii) any Third Party Claim.
ARTICLE XIV
GENERAL PROVISIONS
Section 14.1. Assignment. No party to this Agreement shall convey,
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties hereto in their
sole and absolute discretion, except that Buyer may (without obtaining any
consent) assign its rights, interests or obligations under this Agreement, in
whole or in part, to any direct or indirect Subsidiary. Any conveyance,
assignment or transfer requiring the prior written consent of the other parties
hereto which is made without such consent shall be void ab initio. No assignment
of this Agreement will relieve the assigning party of its obligations hereunder.
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Section 14.2. Parties in Interest. This Agreement is binding upon
and is for the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not made for the benefit of any Person not
a party hereto, and no Person other than the parties hereto or their respective
successors and permitted assigns will acquire or have any benefit, right, remedy
or claim under or by reason of this Agreement, except that members of the Buyer
Group and the Seller Group shall be entitled to the rights to indemnification
provided to the Buyer Group and the Seller Group, respectively, hereunder. The
Stockholders are parties to this Agreement with respect to the following
Sections and Articles only: Sections 3.2(j), 9.2, 9.8(g), 9.13 and 11.2 and
Articles VII, XII, XIII and XIV.
Section 14.3. Amendment. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Buyer and
Seller.
Section 14.4. Waiver; Remedies. No failure or delay on the part of
either Buyer or Seller in exercising any right, power or privilege hereunder
will operate as a waiver thereof, nor will any waiver on the part of either
Buyer or Seller of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor will any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein provided are cumulative and, except as
otherwise provided in Section 13.5(c), are not exclusive of any rights or
remedies which the parties may otherwise have at law or in equity.
Section 14.5. Effect of Investigation. All representations,
warranties, covenants and agreements made by Seller in this Agreement or in any
certificates, statements or other documents delivered pursuant to this Agreement
shall be unaffected by any investigation made by or on behalf of Buyer or
Knowledge obtained as a result thereof or otherwise.
Section 14.6. Fees and Expenses. Each of Buyer, on the one hand, and
Seller, on the other hand, agrees to pay, without right of reimbursement from
the other, all costs and expenses incurred by it, incident to the performance of
its obligations hereunder, including the fees and disbursements of counsel,
accountants, financial advisors, experts and consultants employed by the
respective parties in connection with the transactions contemplated hereby,
whether or not the transactions contemplated by this Agreement are consummated.
74
Section 14.7. Notices. All notices, requests, claims, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be delivered by hand or telecopied or sent, postage prepaid,
by registered, certified or express mail or reputable overnight courier service
and will be deemed given when so delivered by hand or telecopied, or three
Business Days after being so mailed (one Business Day in the case of express
mail or overnight courier service). All such notices, requests, claims, demands
and other communications shall be addressed as set forth below, or pursuant to
such other instructions as may be designated in writing by the party to receive
such notice:
(a) If to Buyer:
Xxxxxx Electronics Corporation
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to Sellers:
Primestar, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Chief Executive Officer
Telecopy: (000) 000-0000
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with a copy to:
Xxxxx & Xxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Leaf
Telecopy: (000) 000-0000
(c) If to any Stockholder:
If to Cox:
0000 Xxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention of Xxxx Xxxxx
Facsimile: (000) 000-0000
With a separate copy delivered to:
Dow, Xxxxxx & Xxxxxxxxx
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention of Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to MediaOne:
US WEST Media Group, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention of President
Facsimile: (000) 000-0000
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With a separate copy delivered to:
MediaOne Group, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention of General Counsel
Facsimile: (000) 000-0000
If to GE:
GE American Communications
Four Research Way
Princeton, NJ 08540
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
With a separate copy delivered to:
Xxxxx & Xxxxxxx
000 00xx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
If to TWE:
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention of General Counsel,
Time Warner Cable
Facsimile: (000) 000-0000
With a separate copy delivered to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention of Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
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If to Xxxxxxxx:
0000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attention of Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a separate copy delivered to:
Xxxxx, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention of Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Comcast:
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a separate copy delivered to:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention of Xxxxxx X. Block
Facsimile: (000) 000-0000
Section 14.8. Captions; Currency. The article, section and paragraph
captions herein and the table of contents hereto are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof. Unless otherwise
specified, all references contained in this Agreement, in any exhibit or
schedule referred to herein or in any instrument or document delivered pursuant
hereto to dollars or "$" shall mean United States Dollars. Unless otherwise
specified, all references herein to numbered articles and sections are to
articles and sections of this Agreement, all references herein to
78
schedules are to schedules to this Agreement and all references herein to
exhibits are to exhibits to this Agreement.
Section 14.9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and this Agreement supersedes all prior negotiations, agreements and
understandings of the parties of any nature, whether oral or written, relating
thereto, other than the Confidentiality Agreement.
Section 14.10. Severability. If any provision of this Agreement or
the application thereof to any Person or circumstance is determined by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby. If the economic or legal substance of
the transactions contemplated hereby is affected in any manner adverse to any
party as a result thereof, the parties shall negotiate in good faith in an
effort to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
Section 14.11. Dispute Resolution. Except as provided in Sections
4.2 and 4.3 and subject to Section 13.3, resolution of any and all disputes
arising from or in connection with this Agreement, whether based on contract,
tort, or otherwise (collectively, "Disputes"), shall be exclusively governed by
and settled in accordance with the provisions of this Section 14.11. The parties
hereto shall use all commercially reasonable efforts to settle all Disputes
without resorting to mediation, arbitration or otherwise. If any Dispute remains
unsettled, a party hereto may commence proceedings hereunder by delivering a
written notice from a Senior Vice President or comparable executive officer of
such party (the "Demand") to the other parties providing reasonable description
of the Dispute to the others and expressly requesting mediation hereunder. The
parties hereby agree to submit all Disputes to non-binding mediation before a
mediator reasonably acceptable to all parties involved in such Dispute. If,
after such mediation, the parties subject to such mediation disagree regarding
the mediator's recommendation, such Dispute shall be submitted to arbitration
under the terms hereof, which arbitration shall be final, conclusive and binding
upon the parties, their successors and assigns. The arbitration shall be
conducted in Los Angeles, California by three arbitrators acting by majority
vote (the "Panel") selected by agreement of the parties not later than ten (10)
days after delivery of the Demand or, failing such agreement, appointed pursuant
to the
79
commercial arbitration rules of the American Arbitration Association, as amended
from time to time (the "AAA Rules"). The decision of the Panel shall be rendered
promptly but in no event more than 60 days after the conclusion of submission of
evidence. If an arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted pursuant to the Federal Arbitration Act and such procedures as the
parties subject to such arbitration may agree, or, in the absence of or failing
such agreement, pursuant to the AAA Rules. Notwithstanding the foregoing: (i)
each party to a Dispute shall have the right to audit the books and records of
the other party to such dispute that are reasonably related to the Dispute; (ii)
each party to a Dispute shall provide to the other, reasonably in advance of any
hearing, copies of all documents which such party intends to present in such
hearing; and (iii) each party to a Dispute shall be allowed to conduct
reasonable discovery through written requests for information, document
requests, requests for stipulation of fact and depositions, the nature and
extent of which discovery shall be determined by the parties. The award shall be
in writing and shall specify the factual and legal basis for the award. The
Panel shall apportion all costs and expenses of arbitration, including the
Panel's fees and expenses and fees and expenses of experts, between the
prevailing and non-prevailing party as the Panel deems fair and reasonable.
Notwithstanding the foregoing, in no event may the Panel award consequential,
special, exemplary or punitive damages. Any arbitration award, including
injunctive relief, shall be binding and enforceable against the parties hereto
and judgment may be entered thereon in any court of competent jurisdiction.
Section 14.12. Exhibits and Schedules; Disclosure. All exhibits and
schedules attached hereto are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Capitalized terms used in the
schedules hereto but not otherwise defined therein shall have the respective
meanings assigned to such terms in this Agreement. Disclosure of any item in any
section of or on any schedule to this Agreement shall not constitute disclosure
of such item in any other section of or on any other schedule to this Agreement,
whether or not the existence of the item or its contents should be or is
relevant to any other section of or schedule to this Agreement, unless an
explicit cross-reference thereto appears in such other section or schedule.
Section 14.13. Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
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Section 14.14. Counterparts. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
Section 14.15. Interpretation. For the purposes of this Agreement,
(i) words in the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other gender as the context
requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation", unless otherwise specified, and (iv) the word
"or" shall not be exclusive.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
XXXXXX ELECTRONICS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
PRIMESTAR, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
PRIMESTAR PARTNERS L.P.,
by Primestar Partner 1, Inc. and Primestar
Partner 2, Inc., as general partners
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President of each of Primestar
Partner 1, Inc. and Primestar Partner
2, Inc.
PRIMESTAR MDU, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
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TIME WARNER ENTERTAINMENT COMPANY, L.P.,
by AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION, a general partner
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President and Deputy General
Counsel
ADVANCE/XXXXXXXX PARTNERSHIP,
by ADVANCE COMMUNICATIONS CORP., as general
partner
By: /s/ Xxxxxxx X. Futura
-----------------------------------------
Name: Xxxxxxx X. Futura
Title: Senior Vice President
COMCAST CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
XXX COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President, Finance
83
MEDIAONE OF DELAWARE, INC.
By: /s/ Miles X. Xxxxxxxxx
-----------------------------------------
Name: Miles X. Xxxxxxxxx
Title: Vice President
GE AMERICAN COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
84
