EXHIBIT 10.24
================================================================================
MERGER AND CONTRIBUTION AGREEMENT
Dated as of February 6, 1998,
Among
TCI SATELLITE ENTERTAINMENT, INC.
PRIMESTAR, INC.
TIME WARNER ENTERTAINMENT COMPANY L.P.
ADVANCE/▇▇▇▇▇▇▇▇ PARTNERSHIP
COMCAST CORPORATION
▇▇▇ COMMUNICATIONS, INC.
MEDIAONE OF DELAWARE, INC.
GE AMERICAN COMMUNICATIONS, INC.
TABLE OF CONTENTS
Page
Parties and Recitals...................................... 1
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions............................... 2
SECTION 1.02. Terms and Usage Generally................. 21
ARTICLE II
Subsidiary Transactions
-----------------------
SECTION 2.01. Subsidiary Transactions................... 22
ARTICLE III
Asset Transfers and Mergers
---------------------------
SECTION 3.01. Drop Down; Charter and By-Laws............ 22
SECTION 3.02. Post-Drop Down Transactions............... 23
SECTION 3.03. Primestar Customer Statement.............. 23
SECTION 3.04. Primestar Inventory Statement............. 23
SECTION 3.05. Consideration............................. 24
ARTICLE IV
Closing
-------
SECTION 4.01. Closing Date.............................. 24
SECTION 4.02. Closing Adjustments on
Primestar Inventory....................... 25
SECTION 4.03. Adjustment for Primestar Customers........ 27
SECTION 4.04. Adjustment for Capital Contributions...... 30
SECTION 4.05. Netting................................... 30
ARTICLE V
(i)
Representations and Warranties
------------------------------
SECTION 5.01. Representations and Warranties of
TSAT................................... 31
SECTION 5.02 Representations and Warranties of
Certain Parties........................ 42
SECTION 5.03. Special Representation................. 47
ARTICLE VI
Covenants Relating to Business
------------------------------
SECTION 6.01. Alternative Transactions............... 47
SECTION 6.02 Interim Operations of TSAT............. 48
SECTION 6.03. Interim Operations of each Class C
Holder................................. 51
SECTION 6.04 Other Actions.......................... 52
ARTICLE VII
Additional Covenants
--------------------
SECTION 7.01. Preparation of Form S-4 and the Proxy
Statement/Prospectus; TSAT Stockholders
Meeting................................ 52
SECTION 7.02. Listing Application.................... 54
SECTION 7.03. Access to Information;
Confidentiality........................ 54
SECTION 7.04. Commercially Reasonable Efforts;
Notification........................... 55
SECTION 7.05 Primestar Customers.................... 57
SECTION 7.06 GE Agreements.......................... 57
SECTION 7.07 Equipment.............................. 57
SECTION 7.08 Financing; Letters of Credit........... 57
SECTION 7.09 Agreements............................. 58
SECTION 7.10 Compliance............................. 58
SECTION 7.11 ASkyB Transaction...................... 58
SECTION 7.12 Indemnification........................ 59
SECTION 7.13 Tax Indemnification.................... 61
SECTION 7.14 Post-Closing Cooperation;
Confidentiality........................ 63
SECTION 7.15 TCI Agreements......................... 64
(ii)
SECTION 7.16 Employee Matters....................... 64
SECTION 7.17 Other Stockholder Approvals............ 64
ARTICLE VIII
Conditions Precedent
--------------------
SECTION 8.01. Conditions Precedent................... 65
SECTION 8.02 Conditions to Obligations of each
of Comcast, Cox, MediaOne, TWE,
▇▇▇▇▇▇▇▇ and GE........................ 66
SECTION 8.03. Conditions to Obligations of TSAT...... 68
ARTICLE IX
Termination, Amendment and Waiver
---------------------------------
SECTION 9.01. Termination............................ 70
SECTION 9.02. Effect of Termination.................. 70
SECTION 9.03. Amendment.............................. 70
SECTION 9.04. Extension; Waiver...................... 71
ARTICLE X
General Provisions
------------------
SECTION 10.01. Nonsurvival of Representations and
Warranties............................. 71
SECTION 10.02. Notices................................ 72
SECTION 10.03. Assignment............................. 74
SECTION 10.04. Severability........................... 75
SECTION 10.05. Entire Agreement; No Third-Party
Beneficiaries.......................... 75
SECTION 10.06. Governing Law.......................... 76
SECTION 10.07. Enforcement; Exclusive Jurisdiction.... 76
SECTION 10.08. Counterparts........................... 77
SECTION 10.09. Headings............................... 77
(iii)
[DRAFT--2/9/98]
MERGER AND CONTRIBUTION AGREEMENT (the "Agreement"), dated
---------
as of February 6, 1998, among TCI SATELLITE ENTERTAINMENT, INC.,
a Delaware corporation, PRIMESTAR, INC., a Delaware corporation,
TIME WARNER ENTERTAINMENT COMPANY, L.P., a Delaware limited
partnership, ADVANCE/▇▇▇▇▇▇▇▇ PARTNERSHIP, a New York general
partnership, COMCAST CORPORATION, a Pennsylvania corporation, ▇▇▇
COMMUNICATIONS, INC., a Delaware corporation, MEDIAONE OF
DELAWARE, INC., a Delaware corporation, and GE AMERICAN
COMMUNICATIONS, INC., a Delaware corporation.
RECITALS
1. The parties hereto are either general and limited partners of
PRIMESTAR Partners L.P. or affiliates of such partners, and desire to consummate
the transactions contemplated herein, pursuant to which (a) TSAT will contribute
to a newly formed wholly owned subsidiary of TSAT, PRIMESTAR, Inc., all of
TSAT's assets and liabilities other than its stock in Tempo Satellite, Inc., and
PRIMESTAR, Inc. will acquire the partnership interests and certain related
Primestar assets from each of TWE, ▇▇▇▇▇▇▇▇, Comcast, Cox, MediaOne and GE, (b)
TSAT will agree to merge with and into PRIMESTAR, Inc., and (c) TSAT will enter
into certain other agreements with PRIMESTAR, Inc.;
2. For federal income tax purposes, the parties hereto intend that
the Restructuring Transaction (as defined below) qualify as an exchange under
Section 351 of the United States Internal Revenue Code of 1986, as amended (the
"Code"), and that the mergers under the Merger Agreements (as defined below)
----
each qualify as reorganizations under Section 368(a) of the Code;
3. The parties desire to make certain representations, warranties,
covenants and agreements in connection with the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are
2
hereby acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, the following
-----------
terms shall have the following meanings:
"Accounting Firm" is defined in Section 4.02(a).
---------------
"Agency Agreement" means an Agency Agreement with the Company on the
----------------
terms set forth under the caption "Founders' Distribution Rights--Medium Power
Subscribers" in the Term Sheet and in form and substance reasonably satisfactory
to each of the Parties.
"Agreement" is defined in the preamble hereto.
---------
"ASkyB Agreement" means the Asset Acquisition Agreement dated as of
---------------
June 11, 1997, among The News Corporation Limited, MCI Telecommunications
Corporation, American Sky Broadcasting LLC, the Partnership, and, with respect
to specified provisions only, the partners in the Partnership.
"Asset Transfer Agreements" means the MediaOne Asset Transfer
-------------------------
Agreement, the ▇▇▇▇▇▇▇▇ Asset Transfer Agreement and the TWE Asset Transfer
Agreement.
"Assumed Employment Liabilities" of any Person means (i) all
------------------------------
obligations and liabilities of such Person or any of its subsidiaries in respect
of the Stay Bonuses, (ii) all obligations and liabilities of such Person or any
of its subsidiaries relating to the employment by the Company of any Selected
Employee of such Person after the Closing Date and (iii) all obligations and
liabilities of such Person or any of its subsidiaries relating to the
termination of employment of any Selected Employee of such Person after the
Closing Date.
"Benefit Plans" is defined in Section 5.01(j).
-------------
3
"BSS Authorizations" means the FCC construction permit and related
------------------
authorizations, including earth station permits, held by Tempo on the date of
this Agreement, as the same may be modified, renewed or expanded from time to
time after the date of this Agreement by the FCC or any other Governmental
Entity. For avoidance of doubt, the BSS Authorizations include the permits,
authorizations and earth station permits relating to the 119 degrees West
Longitude orbital position and the permits, authorizations and earth station
permits relating to the 166 degrees West Longitude orbital position.
"By-laws" means the Amended and Restated By-laws of the Company in the
-------
form of Exhibit C hereto.
"Call Center Debt" means indebtedness, in an amount not in excess of
----------------
$23.75 million, incurred by TSAT to fund the acquisition by TSAT of TCI's call
center located in Boise, Idaho.
"Charter" means the Restated Certificate of Incorporation of the
-------
Company in the form of Exhibit B hereto.
"Class A Stock" means Class A Common Stock, par value $.01 per share,
-------------
of the Company.
"Class B Stock" means Class B Common Stock, par value $.01 per share,
-------------
of the Company.
"Class C Holder" means any of Comcast, Cox, MediaOne (collectively
--------------
with the MediaOne Transferors), TWE and ▇▇▇▇▇▇▇▇.
"Class C Stock" means Class C Common Stock, par value $.01 per share,
-------------
of the Company.
"Class D Stock" means Class D Common Stock, par value $.01 per share,
-------------
of the Company.
"Closing" is defined in Section 4.01.
-------
"Closing Date" is defined in Section 4.01.
------------
"Code" is defined in the preamble hereto.
----
4
"Comcast" means Comcast Corporation, a Pennsylvania corporation.
-------
"Comcast I Merger Agreement" means the agreement between the Company
--------------------------
and Comcast Sub I in substantially the form of the Form Merger Agreement.
"Comcast II Merger Agreement" means the agreement between the Company
---------------------------
and Comcast Sub II in substantially the form of the Form Merger Agreement.
"Comcast Sub I" means Comcast DBS, Inc. a Delaware corporation.
-------------
"Comcast Sub II" means Comcast Satellite Communications, Inc., a
--------------
Delaware corporation.
"Communications Act" is defined in Section 5.01(e).
------------------
"Company" means PRIMESTAR, Inc., a Delaware corporation and, prior to
-------
the Effective Time, a wholly owned subsidiary of TSAT.
"Contributed Corporation" is defined in Section 7.13(b).
-----------------------
"ContributionIndemnitor" is defined in Section 7.13(b).
----------------------
"Covered Taxes" means all Taxes, other than transfer Taxes applicable
-------------
to the conveyance and transfer of Primestar Assets and Primestar Liabilities
pursuant to any Asset Transfer Agreement. For avoidance of doubt, "transfer
Taxes" do not include any income Tax, capital gains Tax or similar Tax
attributable to the Pre-Closing Tax Period, even if such Tax is triggered by the
transfer of Primestar Assets and Primestar Liabilities or any related assumption
of indebtedness.
"Cox" means ▇▇▇ Communications, Inc., a Delaware corporation.
---
"Cox Merger Agreement" means the agreement between the Company and Cox
--------------------
Sub in substantially the form of the Form Merger Agreement.
5
"Cox Sub" means Cox Satellite, Inc., a Delaware corporation.
-------
"Customer Payment" of any Class C Holder means an amount (which may be
----------------
a positive or negative number) equal to:
(A) $1,100
multiplied by
(B) an amount equal to
(I) (x) the TSAT Customer Ratio multiplied by (y) the
Initial Primestar Customers of such Class C Holder
minus
(II) the Final Primestar Customers of such Class C Holder.
"Customer Premises Equipment" of any Person 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 a Selected
Office of such Person or installed in the home of any PRIMESTAR subscriber or
disconnected PRIMESTAR subscriber of such Person.
"DGCL" means the Delaware General Corporation Law.
----
"Digital Satellite Assets" is defined in Section 7.12(a).
------------------------
"Digital Satellite Business" means the business of distributing
--------------------------
multichannel programming services directly to consumers in the United States via
digital broadcast satellite, including the rental and sale of customer premises
equipment relating thereto.
"Dish" means a satellite dish, including mount and assembly, for
----
reception of the PRIMESTAR programming service.
6
"Distributor Agreement" means a Distributor Agreement with the Company
---------------------
on the terms set forth in the first paragraph under the caption "Founders'
Distribution Rights--High Power Subscribers" in the Term Sheet and in form and
substance reasonably satisfactory to each of the Parties.
"Drop Down" means the contribution of assets and liabilities by TSAT
---------
to the Company pursuant to the Drop Down Agreement.
"Drop Down Agreement" means the TSAT Asset Transfer Agreement dated as
-------------------
of February 6, 1998, between the Company and TSAT.
"Effective Time" means the time on the Closing Date at which the
--------------
filing of the certificates of merger under the Merger Agreements with the
Secretary of State of the State of Delaware in accordance with the DGCL shall
occur.
"Employee Stock Option" means any stock option to purchase shares of
---------------------
TSAT A Stock or TSAT B Stock granted under the TSAT Stock Plans.
"ERISA" is defined in Section 5.01(k).
-----
"Exchange Act" is defined in Section 5.01(e).
------------
"Excluded Accounts Receivable" of any Person means all accounts
----------------------------
receivable of such Person and its subsidiaries relating to the distribution of
the PRIMESTAR programming service, including rental and sales fees, to the
extent that such accounts receivable relate to service periods ending on or
prior to the Closing Date, plus a pro rata portion of any such accounts
--- ----
receivable that relate to any service period commencing on or prior to, and
ending after, the Closing Date (based on the numbers of days in such service
period on or prior to the Closing Date, and after the Closing Date, respectively
(i.e. the "earned" portion of such accounts receivable)).
"Excluded Liabilities" of any Person (other than TSAT) means (i)
--------------------
indebtedness for borrowed money of such Person and its subsidiaries incurred on
or prior to the Closing Date, other than Primestar Debt, (ii) accounts payable
incurred on or prior to the Closing Date in respect
7
of such Person's Primestar Business, (iii) Covered Taxes attributable to the
operation or ownership of such Person's Primestar Assets and Partnership
Interest during the Pre-Closing Tax Period and (iv) Retained Employment
Liabilities of such Person. For purposes hereof, "accounts payable" of a Person
include all obligations of such Person to pay for goods and services received by
such Person on or prior to the Closing Date in respect of such Person's
Primestar Business, whether or not an invoice for such goods and services shall
have been received by such Person on or prior to the Closing Date, including all
obligations of such Person to the Partnership in respect of programming and/or
satellite services for periods ending on or prior to the Closing Date. To the
extent any such obligation relates to any period that includes the Closing Date,
such obligation shall be allocated between "pre-closing" accounts payable and
"post-closing" accounts payable based on the numbers of days in such period on
or prior to the Closing Date, and after the Closing Date, respectively.
"FCC" is defined in Section 5.01(e).
---
"Field Assets" of any Person means the office equipment, furniture,
------------
tools and vehicles located at a Selected Office of such Person and exclusively
used to support such Person's Primestar Business (but in the case of office
equipment, tools and vehicles, only to the extent used by such Person's Selected
Employees).
"Filed SEC Documents" is defined in Section 5.01(h).
-------------------
"Final Primestar Customer Statement" is defined in Section 4.03(b).
----------------------------------
"Final Primestar Customers" of any Person means the number of
-------------------------
Primestar Customers set forth on such Person's Final Primestar Customer
Statement.
"Final Primestar Inventory" of any Person for any category of
-------------------------
Primestar Inventory set forth on Schedule 3.04 means the amount of such category
of Primestar Inventory set forth on such Person's Final Primestar Inventory
Statement.
"Final Primestar Inventory Statement" is defined in Section 4.02(a).
-----------------------------------
8
"Five Year Plan" is defined in Section 8.01(a).
--------------
"Form Asset Transfer Agreement" means the Asset Transfer Agreement in
-----------------------------
the form of Exhibit H hereto.
"Form Merger Agreement" means the Agreement and Plan of Merger in the
---------------------
form of Exhibit G hereto.
"Form S-4" is defined in Section 5.01(e).
--------
"Founder" means each of Comcast, Cox, MediaOne, TWE, and TCI, in each
-------
case, together with any or all of its affiliates that are controlled by it.
"GAAP" means U.S. generally accepted accounting principles as in
----
effect from time to time.
"GE" means GE American Communications, Inc., a Delaware corporation.
--
"GE Merger Agreement" means the agreement between the Company and GE
-------------------
Sub in substantially the form of the Form Merger Agreement.
"GE Sub" means GE Americom Services, Inc., a Delaware corporation.
------
"Glue Letters" means the two letters, each dated July 30, 1993, from
------------
the Partnership to Tempo, relating to the Option Agreement.
"Governmental Entity" is defined in Section 5.01(e).
-------------------
"HP Agency Agreement" means an HP Agency Agreement with the Company on
-------------------
the terms set forth in the second paragraph under the caption "Founders'
Distribution Rights--High Power Subscribers" in the Term Sheet and in form and
substance reasonably satisfactory to each of the Parties.
"HSR Act" is defined in Section 5.01(e).
-------
"Included Options" means the options, SARs and restricted stock listed
----------------
on Schedule 1.01-A.
"Indemnitor" is defined in Section 7.13(c).
----------
9
"Initial Primestar Customers" of any Person means the number of
---------------------------
Primestar Customers set forth on such Person's Primestar Customer Statement
(prior to any adjustment pursuant to Section 4.03(a)).
"Interim Financing Debt" means (i) any indebtedness of TSAT or the
----------------------
Company under any credit facility or other financing arrangement which
indebtedness is incurred to fund the payment of cash consideration to (or the
assumption of indebtedness of) Comcast, Cox, MediaOne, ▇▇▇▇▇▇▇▇, TWE or GE (or
their respective affiliates) pursuant to this Agreement and (ii) any
indebtedness of TSAT incurred to fund the payment of arrangement fees,
commitment fees and any other fees or expenses charged by the lenders and/or
arrangers of the indebtedness referred to in clause (i) above.
"Inventory Payment" of any Class C Holder means an amount (which may
-----------------
be a positive or negative number) equal to (A) the product of (x) the Final
Primestar Customers of such Class C Holder and (y) the TSAT Inventory Ratio
minus (B) the Primestar Inventory Valuation of such Class C Holder.
"IRD" means an Integrated Receiver Decoder.
---
"Letters of Credit" means letters of credit provided by Comcast, Cox,
-----------------
MediaOne, TWE, ▇▇▇▇▇▇▇▇, TCI or their respective affiliates, to Loral and GE on
behalf of the Partnership.
"Liens" is defined in Section 5.01(b).
-----
"LNB" means a Low Noise Block Converter.
---
"Loral" means Space Systems/Loral, Inc., a Delaware corporation.
-----
"Loral Contract" means Contract Amendment No. 4, dated July 19, 1993,
--------------
to Contract No. TPO-1-290 between Tempo and Loral for Tempo Direct Broadcast
Satellite System (DBSS).
"Losses" is defined in Section 7.12.
------
"▇▇▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇▇▇.
------
10
"▇▇▇▇▇▇ Letter" means the letter dated the date hereof from ▇▇▇▇▇▇ to
-------------
each Party.
"Material Adverse Change" or "Material Adverse Effect" with respect
----------------------- -----------------------
to:
(A) TSAT or the Company means any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any
change or effect) that (i) is materially adverse to the business,
properties, assets, condition (financial or otherwise) or results of
operations or prospects of TSAT or the Company, as applicable, and its
subsidiaries taken as a whole or (ii) would impair the ability of TSAT or
the TSAT Sub to perform its obligations under any of its Relevant
Agreements or (iii) would prevent the consummation of all or any part of
the Restructuring Transaction, the TSAT Merger or the Tempo Sale; or
(B) any Class C Holder or GE means any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that (i) is materially adverse to the
business, properties, assets, condition (financial or otherwise) or results
of operations or prospects of, in the case of a Class C Holder, such Class
C Holder's Primestar Business or (ii) would impair the ability of such
Class C Holder or any of its Subsidiaries, if any, or GE or its Subsidiary,
as applicable, to perform its obligations under any of its Relevant
Agreements or (iii) would prevent the consummation of all or any part of
the Restructuring Transaction, the TSAT Merger or the Tempo Sale.
Notwithstanding anything to the contrary contained herein, a change or effect
(or any development that, insofar as can reasonably be foreseen, is likely to
result in a change or effect) that affects the business of distributing the
PRIMESTAR programming service in general shall not constitute a "Material
Adverse Change" or a "Material Adverse Effect".
"MediaOne" means MediaOne of Delaware, Inc., a Delaware corporation.
--------
11
"MediaOne Asset Transfer Agreement" means the agreement among the
---------------------------------
Company, MediaOne and the MediaOne Transferors in substantially the form of the
Form Asset Transfer Agreement.
"MediaOne Sub" means MediaOne Satellite I, Inc., a Delaware
------------
corporation.
"MediaOne Transferors" means each of (i) Continental Satellite
--------------------
Company, Inc., a Massachusetts corporation, (ii) Continental Satellite Company
of Chicago, Inc., an Illinois corporation, (iii) Continental Satellite Company
of Minnesota, Inc., a Minnesota corporation, (iv) Continental Satellite Company
of New England, Inc., a New Hampshire corporation, (v) Continental Satellite
Company of Michigan, Inc., a Michigan corporation, (vi) Continental Satellite
Company of Ohio, Inc., an Ohio corporation, (vii) Continental Satellite Company
of Virginia, Inc., a Virginia corporation, and (viii) MediaOne Satellite II,
Inc., a Delaware corporation.
"Merger Agreements" means the Comcast I Merger Agreement, the Comcast
-----------------
II Merger Agreement, the Cox Merger Agreement and the GE Merger Agreement.
"MergerIndemnitor" is defined in Section 7.13(a).
----------------
"Monthly Fee" is defined in Section 7.08(c).
-----------
"Multiemployer Pension Plans" is defined in Section 5.01(k).
---------------------------
"NASDAQ" means the Nasdaq NMS Stock Market.
------
"▇▇▇▇▇▇▇▇" means Advance/▇▇▇▇▇▇▇▇ Partnership, a New York general
--------
partnership.
"▇▇▇▇▇▇▇▇ Asset Transfer Agreement" means the agreement between the
---------------------------------
Company and ▇▇▇▇▇▇▇▇ in substantially the form of the Form Asset Transfer
Agreement.
"▇▇▇▇▇▇▇▇ Voting Agreement" means the Voting Agreement between TWE and
-------------------------
▇▇▇▇▇▇▇▇ in substantially the form of Exhibit E hereto.
12
"Notice of Disagreement" is defined in Section 4.02(a).
----------------------
"Option Agreement" means the Option Agreement dated as of February 8,
----------------
1990, between Tempo and the Partnership.
"Partnership" means PRIMESTAR Partners L.P., a Delaware limited
-----------
partnership.
"Partnership Agreement" means the Partnership Agreement of the
---------------------
Partnership, as amended from time to time.
"Partnership Interest" means a partnership interest in the
--------------------
Partnership.
"Party" means any of Comcast, ▇▇▇, ▇▇, MediaOne, TSAT, TWE and
-----
▇▇▇▇▇▇▇▇.
"Pension Plans" is defined in Section 5.01(k).
-------------
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, trust, business association or other entity.
"Post-Closing Accounts Receivable" means all accounts receivable of
--------------------------------
the Company and its subsidiaries relating to the distribution of the PRIMESTAR
programming service, including rental and sales fees in respect of Dishes, to
the extent that such accounts receivable relate to service periods commencing
after the Closing Date, plus a pro rata portion of any such accounts receivable
--- ----
that relate to any service period commencing on or prior to, and ending after,
the Closing Date (based on the numbers of days in such service period on or
prior to the Closing Date, and after the Closing Date, respectively (i.e. the
"unearned" portion of such accounts receivable)).
"Post-Closing Tax Period" means a taxable period that begins after the
-----------------------
Closing Date or the portion that begins after the Closing Date of any taxable
period that begins before and ends after the Closing Date.
"Pre-Closing Tax Period" means a taxable period ending on or before
----------------------
the Closing Date or the portion that
13
ends on the Closing Date of any taxable period that begins before and ends after
the Closing Date.
"Primary Executives" is defined in Section 5.01(m).
------------------
"Primefinder Remote" means a "Primefinder Remote" remote control
------------------
device for selection of channels of the PRIMESTAR programming service by program
category.
"Primestar Assets" of any Person means:
----------------
(i) each PRIMESTAR subscriber of such Person's Primestar Business as
of the Closing Date (whether or not such PRIMESTAR subscriber is counted as
a Primestar Customer hereunder), together with any subscription contract,
equipment rental contract or other agreement with such subscriber relating
to such Person's Primestar Assets and all rights, claims and causes of
action thereunder (other than Excluded Accounts Receivable);
(ii) all leases, contracts and other agreements relating exclusively
to such Person's Primestar Business and all rights, claims and causes of
action thereunder (other than Excluded Accounts Receivable);
(iii) such Person's Primestar Inventory;
(iv) all IRDs, LNBs and Dishes installed in the home of any PRIMESTAR
subscriber of such Person;
(v) such Person's Unrecovered Inventory;
(vi) all Customer Premises Equipment held for use (wherever located,
whether in warehouses or in transit) in such Person's Primestar Business or
installed in the home of any current or disconnected PRIMESTAR subscriber
of such Person;
(vii) all rights, claims and causes of action, including under
warranties, of such Person in respect of (A) such Person's Primestar
Inventory, (B) such Person's Unrecovered Inventory, (C) outstanding
purchase orders of such Person in respect of IRDs, LNBs, Dishes and
Primefinder Remotes, (D) supply
14
agreements to which such Person is a party (or beneficiary) for IRDs, LNBs,
Dishes and Primefinder Remotes and (E) such Person's Customer Premises
Equipment;
(viii) all Primestar Records of such Person; and
(ix) all Field Assets of such Person.
"Primestar Business" of any Person means such Person's business of
------------------
distributing the PRIMESTAR programming service.
"Primestar Customer" of any Person as of any date of determination
------------------
means each PRIMESTAR subscriber of such Person's Primestar Business having an
"active" account (as defined below) on such date, determined in accordance with
the subscriber's receivable status on such date as follows: (i) a subscriber who
has a receivable balance of not more than 60 days from the first day of the
service period to which such receivable balance relates (without giving effect
to older balances that do not exceed $10 in the aggregate) shall count as one
full Primestar Customer; (ii) a subscriber who has a receivable balance of at
least 61 but not more than 90 days from the first day of the service period to
which such receivable balance relates (without giving effect to older balances
that do not exceed $10 in the aggregate) shall count as one half of a Primestar
Customer; and (iii) a subscriber who has a receivable balance of 91 days or more
from the first day of the service period to which such receivable balance
relates shall not be counted as a Primestar Customer. For purposes hereof, a
PRIMESTAR subscriber shall have an "active" account as of any date of
determination if (x) it is then authorized to receive service or (y) it has been
de-authorized, but has not yet been "hard" disconnected (as indicated by such
Person's billing system), and such subscriber has not voluntarily requested de-
authorization or disconnection. "Active" accounts shall not include
complimentary ("comp"), demonstration ("demo"), or other free accounts (other
than accounts which are provided one or two free months of service in connection
with any marketing, customer service or similar promotion).
"Primestar Customer Statement" is defined in Section 3.03.
----------------------------
15
"Primestar Debt" of any Person means the amount of indebtedness of
--------------
such Person to be assumed by the Company as set forth in Section 3.05, if any.
"Primestar Inventory" of any Person means all IRDs, LNBs, Dishes and
-------------------
Primefinder Remotes held for use (wherever located, whether in warehouses or in
transit) in such Person's Primestar Business, or, in the case of Primefinder
Remotes, installed in the home of any PRIMESTAR subscriber of such Person;
provided, however, that "Primestar Inventory" of any Person shall not include
-------- -------
(i) IRDs, LNBs or Dishes installed in the home of any PRIMESTAR subscriber of
such Person or (ii) Unrecovered Inventory of such Person.
"Primestar Inventory Statement" is defined in Section 3.04.
-----------------------------
"Primestar Inventory Valuation" of any Person means the sum of the
-----------------------------
amounts determined by taking the product, for each category of Primestar
Inventory set forth on Schedule 3.04, of (x) such Person's Final Primestar
Inventory of such category and (y) the dollar value set forth on Schedule 3.04
for such category of Primestar Inventory.
"Primestar Liabilities" of any Person means all obligations and
---------------------
liabilities of such Person of any nature, whether known or unknown, absolute,
accrued, contingent or otherwise, and whether due or to become due, arising out
of, relating to, or otherwise in respect of, (i) such Person's Primestar
Business, Primestar Assets or Partnership Interest, (ii) the operation by such
Person or any of its subsidiaries or affiliates of the Digital Satellite
Business, (iii) in the case of Comcast, ▇▇▇▇▇▇▇▇, TWE and GE, such Person's
Primestar Debt, together with all arrangement fees, commitment fees and any
other fees or expenses charged by the lenders and/or arrangers of any such
indebtedness that becomes Interim Financing Debt and (iv) such Person's Assumed
Employment Liabilities, other than, in any such case, Excluded Liabilities, all
of which are expressly excluded.
"Primestar Records" of any Person means all PRIMESTAR subscriber
-----------------
lists, billing records, subscriber and supplier correspondence (in any form or
medium) used or held
16
for use in such Person's Primestar Business, other than any of the foregoing
directly relating to such Person's Excluded Accounts Receivable or Excluded
Liabilities.
"Proceeding" is defined in Section 10.07(b).
----------
"Providing Person" means any of Comcast, Cox, MediaOne, TWE and
----------------
▇▇▇▇▇▇▇▇, as the case may be.
"Proxy Statement/Prospectus" is defined in Section 5.01(e).
--------------------------
"Recent Customer Reduction" is defined in Section 4.03(b).
-------------------------
"Recent Primestar Subscriber" of any Person means any Primestar
---------------------------
Customer of such Person included on such Person's Primestar Customer Statement
who became a subscriber of such Person's Primestar Business 90 days or less
prior to the Closing Date, or in the case of subscribers receiving one (or two)
initial "free" month(s) for promotional purposes, 120 days or less (or 150 days
or less, as applicable) prior to the Closing Date.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement among the Specified Class B Holders, the Class C Holders, GE and the
Company in substantially the form of Exhibit F hereto.
"Reimbursement Agreement" means a Reimbursement Agreement with the
-----------------------
Company in substantially the form of Exhibit I hereto.
"Relevant Agreements" means, (a) with respect to TSAT, this Agreement,
-------------------
the Drop Down Agreement, the TSAT Stockholders Agreement, the TSAT Merger
Agreement, the TSAT Tempo Agreement, and any agreement or instrument to be
delivered by TSAT under any of the foregoing agreements; (b) with respect to the
Company, this Agreement, the Drop Down Agreement, the TSAT Stockholders
Agreement, the TSAT Merger Agreement, the TSAT Tempo Agreement, each of the
Asset Transfer Agreements, each of the Merger Agreements, and any agreement or
instrument to be
17
delivered by the Company under any of the foregoing agreements; and (c) with
respect to any other Person, this Agreement, any Asset Transfer Agreement, any
Merger Agreement, and any agreement or instrument to be delivered by such Person
under any of the foregoing agreements, in each case to the extent such Person is
named as a party thereto.
"Representor" is defined in Section 5.02.
-----------
"ResNet Debt" means up to $12 million in indebtedness incurred by TSAT
-----------
to fund the acquisition by TSAT of a 4.99% interest in each of ResNet
Communications, LLC and ResNet Communications, Inc.
"Restricted Stock Award" means any award of shares of TSAT A Stock or
----------------------
TSAT B Stock granted under the TSAT Stock Plans.
"Restructuring Transaction" means the transactions contemplated by
-------------------------
this Agreement, the Drop Down Agreement, the Merger Agreements and the Asset
Transfer Agreements.
"Retained Employment Liabilities" of any Person means (i) all
-------------------------------
obligations and liabilities relating to the employment or termination of
employment of any Selected Employee of such Person's Primestar Business by such
Person or any of its subsidiaries on or prior to the Closing Date and (ii) all
obligations and liabilities relating to the employment or termination of
employment of any Terminated Employee of such Person's Primestar Business by
such Person or any of its subsidiaries at any time.
"Revised Primestar Customer Statement" is defined in Section 4.03(b).
------------------------------------
"Roll-up Plan" is defined in the Proxy Statement/Prospectus.
------------
"SAR" means a stock appreciation right granted under a TSAT Stock
---
Plan.
"Satellite Debt" means indebtedness of Tempo Satellite, Inc. to the
--------------
Partnership reflecting amounts advanced by the Partnership to fund certain
payments under the Satellite Construction Agreement dated as of February 22,
1990 between Tempo Satellite, Inc. and Space Systems/Loral, Inc.
18
"Satellite Financing" means any financing of the Partnership in
-------------------
respect of satellites that is supported by Letters of Credit.
"Satellite LOC Debt" means all reimbursement obligations of TSAT and
------------------
its subsidiaries to TCI (or, in the case of letters of credit for the account of
TSAT, to the issuer thereof) in respect of letters of credit supporting
Satellite Financing, but only to the extent such letters of credit are not drawn
upon on or prior to the Closing Date.
"SEC Documents" is defined in Section 5.01(f).
-------------
"Securities Act" is defined in Section 5.01(f).
--------------
"Selected Employee" means any full-time employee of any Class C
-----------------
Holder's Primestar Business engaged full-time in Primestar Business operations
who is informed in writing by the Company (or such Class C Holder at the
direction of the Company) on or prior to March 20, 1998 that he or she will be
employed by the Company.
"Selected Office" of any Person means an office of such Person listed
---------------
on Schedule 1.01-B.
"Senior Subordinated Discount Notes" means the 12-1/4% Senior
----------------------------------
Subordinated Discount Notes due 2007 of TSAT.
"Senior Subordinated Notes" means the 10-7/8% Senior Subordinated
-------------------------
Notes due 2007 of TSAT.
"Specified Class B Holder" has the meaning set forth in the
------------------------
Stockholders Agreement.
"Stay Bonus" means a bonus, in an amount equal to 50% of an employee's
----------
monthly base salary and accruing on a monthly basis from December 1, 1997 until
the date such employee's employment is terminated, payable to any full-time
employee of any Class C Holder's Primestar Business engaged full-time in
Primestar Business operations who is (i) informed in writing by such Class C
Holder (at the direction of the Company) that he or she will not be employed by
the Company after the Closing Date or (ii) offered employment by the Company but
chooses not to accept such offer but only if the position offered is not
"comparable" to such employee's position with such Class C
19
Holder's Primestar Business or would require a relocation to an office that is
more than 55 miles from such employee's current office.
"Stockholders Agreement" means the Stockholders Agreement among the
----------------------
Specified Class B Holders, the Class C Holders, GE and the Company in
substantially the form of Exhibit D hereto.
"Subsidiary" means, (i) with respect to Comcast, Comcast Sub I and
----------
Comcast Sub II, (ii) with respect to Cox, Cox Sub, (iii) with respect to GE, GE
Sub and (iv) with respect to MediaOne, MediaOne Sub and each MediaOne
Transferor.
"Super-majority Vote" shall have the meaning assigned thereto in the
-------------------
Partnership Agreement.
"Supplemental Indentures" means supplemental indentures providing for
-----------------------
assumption by the Company on the Closing Date of the Senior Subordinated
Discount Notes and the Senior Subordinated Notes, which supplemental indentures
shall be in form reasonably satisfactory to the Parties and which shall not
otherwise effect any amendment or modification of the indentures under which
such notes were issued without the prior approval of the Partnership by a Super-
majority Vote.
"Taxes" is defined in Section 5.01(l).
-----
"Tax Sharing Agreement" means the Tax Sharing Agreement dated as of
---------------------
June 11, 1997, between TCI and TSAT.
"TCI" means Tele-Communications, Inc., a Delaware corporation.
---
"TCIC Credit Facility" means the Amended and Restated Credit Agreement
--------------------
dated as of February 19, 1997, between TCIC and TSAT.
"Tempo" means Tempo Satellite, Inc., an Oklahoma corporation.
-----
"Tempo Assets" means the BSS Authorizations, the Tempo Satellites, the
------------
Loral Contract, and all rights, claims and causes of action under the Loral
Contract, all insurance
20
claims in respect of the Tempo Satellites, and Tempo's rights under the Tempo
Option.
"Tempo Option" means the Option Agreement and the Glue Letters,
------------
together with the option granted to the Partnership thereunder.
"Tempo Sale" is defined in the TSAT Tempo Agreement.
----------
"Tempo Satellites" means the satellites constructed under the Loral
----------------
Contract.
"Terminated Employee" means (i) any full-time employee of any Class C
-------------------
Holder's Primestar Business engaged full-time in Primestar Business operations
who is informed in writing by the Company (or such Class C Holder at the
direction of the Company) on or prior to March 20, 1998 that he or she will not
be employed by the Company, (ii) any full-time employee of any Class C Holder
not engaged full-time in Primestar Business operations and (iii) any part-time
employee of any Class C Holder's Primestar Business.
"Term Sheet" means the Summary of Business Terms attached to the
----------
letter dated June 11, 1997, from the Partnership to the Parties (or their
affiliates).
"Transition Services Agreement" means the Transition Services
-----------------------------
Agreement dated as of December 4, 1996, between TCI and TSAT.
"Transition Services Term Sheet" means a term sheet governing
------------------------------
transition arrangements between the Company and Comcast, Cox, MediaOne and TWE
in form and substance reasonably satisfactory to each of such Parties.
"TSAT" means TCI Satellite Entertainment, Inc., a Delaware
----
corporation.
"TSAT A Stock" means Series A Common Stock, par value $1.00 per share,
------------
of TSAT.
"TSAT B Stock" means Series B Common Stock, par value $1.00 per share,
------------
of TSAT.
21
"TSAT Closing Date" is defined in the TSAT Merger Agreement.
-----------------
"TSAT Credit Agreement Amendment" means an amendment to the Credit
-------------------------------
Agreement dated as of February 19, 1997, between TSAT and the lenders under the
Credit Agreement, to permit the Restructuring Transaction, which amendment shall
have been approved by a Super-majority Vote.
"TSAT Customer Ratio" means the ratio of (x) the Final Primestar
-------------------
Customers of TSAT to (y) the Initial Primestar Customers of TSAT.
"TSAT Debt" means, as of any date of determination, (i) the principal
---------
of and premium (if any) in respect of (A) indebtedness of TSAT and its
subsidiaries for borrowed money and (B) indebtedness of TSAT and its
subsidiaries evidenced by notes, debentures, bonds or other similar instruments;
(ii) the capitalized amount of all obligations of TSAT and its subsidiaries
required to be classified and accounted for as capital leases for financial
reporting purposes in accordance with GAAP; (iii) all obligations of TSAT and
its subsidiaries for the deferred purchase price of property or under title
retention agreements (excluding trade accounts payable arising in the ordinary
course of business); (iv) all reimbursement obligations of TSAT and its
subsidiaries in respect of letters of credit, banker's acceptances and similar
instruments; and (v) all guarantees (and similar instruments) issued by TSAT and
its subsidiaries in respect of obligations of the type listed in clauses (i)
through (iv) above of any other Person; provided, that the term "TSAT Debt"
--------
shall not include Call Center Debt, Interim Financing Debt, ResNet Debt,
Satellite Debt or Satellite LOC Debt.
"TSAT Inventory Ratio" means the ratio of (x) the Primestar Inventory
--------------------
Valuation of TSAT to (y) the Final Primestar Customers of TSAT.
"TSAT Merger Agreement" means the Agreement and Plan of Merger dated
---------------------
as of February 6, 1998, between the Company and TSAT.
22
"TSAT Merger" means the merger of TSAT with and into the Company, with
-----------
the Company as the surviving corporation, pursuant to the TSAT Merger Agreement.
"TSAT Stockholders Agreement" means the Stockholders Agreement among
---------------------------
the Company, ▇▇▇▇▇▇ and TSAT in substantially the form of Exhibit N hereto.
"TSAT Stockholder Approval" is defined in Section 5.01(e).
-------------------------
"TSAT Stockholders Meeting" is defined in Section 5.01(g).
-------------------------
"TSAT Stock Plans" means (i) the TSAT 1996 Stock Incentive Plan and
----------------
(ii) the TSAT 1997 Nonemployee Director Stock Option Plan.
"TSAT Sub" means the Company until consummation of the Closing.
--------
"TSAT Tempo Agreement" means the TSAT Tempo Agreement dated as of
--------------------
February 6, 1998, between the Company and TSAT.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware
---
limited partnership.
"TWE Asset Transfer Agreement" means the agreement between the Company
----------------------------
and TWE in substantially the form of the Form Asset Transfer Agreement.
"Unrecovered Inventory" of any Person means all IRDs, LNBs, Dishes and
---------------------
Primefinder Remotes installed in the home of any disconnected PRIMESTAR
subscriber of such Person.
"Up-Front Fee" is defined in Section 7.08(c).
------------
"US West" means U S WEST Media Group, Inc., a Delaware corporation.
-------
"US West Guarantee" means the Guarantee Agreement dated as of the date
-----------------
hereof among US West, Comcast, ▇▇▇, ▇▇▇▇, TWE and ▇▇▇▇▇▇▇▇.
23
"Voting Agreements" means (i) the Voting Agreement dated as of June
-----------------
12, 1997, among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a division of TWE, Comcast, TSAT, Cox,
MediaOne, ▇▇▇▇▇▇▇▇ and GE; (ii) the Voting Agreement dated as of June 12, 1997,
among ▇▇▇▇▇▇, a division of TWE, Comcast, TSAT, Cox, MediaOne, ▇▇▇▇▇▇▇▇ and GE;
and (iii) the Voting Agreement dated as of June 12, 1997, among TCI, a division
of TWE, Comcast, TSAT, Cox, MediaOne, ▇▇▇▇▇▇▇▇ and GE.
SECTION 1.02. Terms and Usage Generally. The definitions in Article
--------------------------
I shall apply equally to both the singular and plural forms of the terms defined
therein. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references herein to
Articles or Sections shall be deemed to be references to Articles or Sections of
this Agreement, unless the context shall otherwise require. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". All accounting terms not defined in this Agreement
shall have the meanings determined by GAAP. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein.
ARTICLE II
SUBSIDIARY TRANSACTIONS
SECTION 2.01. Subsidiary Transactions. Concurrently with the
-----------------------
execution and delivery of this Agreement:
(a) TSAT and the Company are executing and delivering the Drop Down
Agreement, the TSAT Merger Agreement and the TSAT Tempo Agreement;
24
(b) TSAT, ▇▇▇▇▇▇ and the Company are executing and delivering the TSAT
Stockholders Agreement;
(c) Comcast Sub I and the Company are executing and delivering the
Comcast I Merger Agreement;
(d) Comcast Sub II and the Company are executing and delivering the
Comcast II Merger Agreement;
(e) Cox Sub and the Company are executing and delivering the Cox
Merger Agreement;
(f) GE Sub and the Company are executing and delivering the GE Merger
Agreement;
(g) MediaOne, the MediaOne Transferors and the Company are executing
and delivering the MediaOne Asset Transfer Agreement;
(h) ▇▇▇▇▇▇▇▇ and the Company are executing and delivering the ▇▇▇▇▇▇▇▇
Asset Transfer Agreement; and
(i) TWE and the Company are executing and delivering the TWE Asset
Transfer Agreement.
ARTICLE III
ASSET TRANSFERS AND MERGERS
SECTION 3.01. Drop Down; Charter and By-laws. Upon the terms and
------------------------------
subject to the conditions set forth in this Agreement, immediately prior to the
Effective Time, TSAT shall consummate the Drop Down in accordance with the terms
of the Drop Down Agreement, and concurrently therewith, the Charter shall be
filed with the Delaware Secretary of State in accordance with the DGCL, and the
Charter and the By-laws shall become effective.
SECTION 3.02. Post-Drop Down Transactions. Upon the terms and
---------------------------
subject to the conditions set forth in this Agreement, at the Effective Time:
(a) each of Comcast Sub I, Comcast Sub II, Cox Sub and GE Sub,
respectively, shall merge with and into the Company, in each case in
accordance with the respective terms of the Comcast I Merger Agreement, the
Comcast II
25
Merger Agreement, the Cox Merger Agreement and the GE Merger Agreement; and
(b) each of MediaOne and the MediaOne Transferors (other than MediaOne
Satellite II, Inc.), ▇▇▇▇▇▇▇▇ and TWE, respectively, shall assign and
transfer all of such Party's right, title and interest in, to and under
such Party's Primestar Assets and Partnership Interest to the Company, and
the Company shall assume all of such Party's Primestar Liabilities, and
MediaOne Satellite II, Inc., will contribute all the issued and outstanding
capital stock of MediaOne Sub to the Company, in each case in accordance
with the respective terms of the MediaOne Asset Transfer Agreement, the
▇▇▇▇▇▇▇▇ Asset Transfer Agreement and the TWE Asset Transfer Agreement.
SECTION 3.03. Primestar Customer Statement. On the day immediately
-----------------------------
preceding the Closing Date, TSAT and each Class C Holder shall deliver to each
other Party a statement, certified by an officer of such Person (a "Primestar
---------
Customer Statement"), setting forth the number of Primestar Customers of such
------------------
Person as of 4 p.m. New York time on such day, as determined in good faith by
such Person, and such number shall be deemed to be the number of Primestar
Customers of such Person as of the Closing Date for purposes of the transactions
contemplated by Section 3.05.
SECTION 3.04. Primestar Inventory Statement. On the Closing Date,
------------------------------
TSAT and each Class C Holder shall deliver to each other Party a statement,
certified by an officer of such Person (a "Primestar Inventory Statement"),
-----------------------------
setting forth the Primestar Inventory transferred (whether by asset transfer or
merger) to the Company or a subsidiary thereof by or on behalf of such Person on
the Closing Date as set forth in Sections 3.01 or 3.02. Such Primestar
Inventory shall be stated by category in accordance with the categories and
subclassifications set forth in the definition of Primestar Inventory and on
Schedule 3.04.
SECTION 3.05. Consideration. At the Closing, TSAT will receive
--------------
(pursuant to the Drop Down Agreement) from the Company, in connection with the
transactions described above, shares of Class A Stock of the Company and shares
of Class B Stock of the Company, in such amounts as are
26
determined in accordance with the methodology set forth in Exhibit A hereto as
of the Closing Date. At the Closing, each of Comcast, Cox, MediaOne, ▇▇▇▇▇▇▇▇
and TWE will receive (directly, or through one or more of its Subsidiaries, in
each case pursuant to the Merger Agreements and/or Asset Transfer Agreements to
which it or any of its Subsidiaries is a party) from the Company, in connection
with the transactions described above, (i) shares of Class A Stock of the
Company and shares of Class C Stock of the Company and (ii) in the case of Cox
and MediaOne, an amount of cash, and in the case of Comcast, ▇▇▇▇▇▇▇▇ and TWE,
an assumption of indebtedness by the Company, in each case in such amounts as
are determined in accordance with the methodology set forth in Exhibit A hereto
as of the Closing Date. At the Closing, GE will receive (indirectly, through its
Subsidiary, pursuant to the GE Merger Agreement to which its Subsidiary is a
party) from the Company, in connection with the transactions described above,
(i) shares of Class A Stock of the Company and (ii) an assumption of
indebtedness by the Company, in each case in such amounts as are determined in
accordance with the methodology set forth in Exhibit A hereto as of the Closing
Date. The numbers set forth in Exhibit A are for illustrative purposes only and
are not binding on the parties hereto.
ARTICLE IV
CLOSING
SECTION 4.01. Closing Date. (a) Subject to the terms and conditions
-------------
of this Agreement, the closing of the Restructuring Transaction (the "Closing")
-------
shall take place (i) at the offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, on the later of (x) March 31, 1998
and (y) the first business day following the date on which the last to be
fulfilled or waived of the conditions set forth in Article VIII shall be
fulfilled or waived in accordance herewith or (ii) at such other time, date or
place as the Parties may agree (the "Closing Date").
------------
(b) At the Closing:
(i) the transactions described in Article III shall be consummated as
provided therein, in the Drop Down Agreement and in the applicable Merger
Agreements
27
and Asset Transfer Agreements, and appropriately executed documents to be
delivered pursuant to the Drop Down Agreement, the Merger Agreements and
Asset Transfer Agreements shall be delivered by the applicable parties;
(ii) the Company shall deliver to TSAT, Comcast, Cox, MediaOne, TWE,
▇▇▇▇▇▇▇▇ and GE (in connection with the Drop Down Agreement and the
applicable Merger Agreements and Asset Transfer Agreements) (x)
certificates representing the shares of Class A Stock, Class B Stock and
Class C Stock as provided in Section 3.05, which shares (when delivered to
such Parties pursuant to such agreements) shall have been duly authorized,
validly issued, fully paid and nonassessable, (y) in the case of Comcast,
TWE, ▇▇▇▇▇▇▇▇ and GE, an instrument assuming the amount of debt determined
pursuant to Section 3.05 and (z) in the case of Cox and MediaOne, the
amount of cash determined pursuant to Section 3.05;
(iii) the Company shall deliver to Comcast, Cox, MediaOne and TWE, by
wire transfer of immediately available funds, each such Party's respective
Up-Front Fee;
(iv) TSAT, Comcast, Cox, MediaOne, TWE and ▇▇▇▇▇▇▇▇ shall deliver to
the Company a list of its Primestar subscribers as of the day immediately
preceding the Closing Date, in paper and magnetic form;
(v) the Company and the appropriate Parties shall deliver to one
another duly executed counterparts of the Stockholders Agreement, the
Registration Rights Agreement and the Reimbursement Agreements;
(vi) TWE and ▇▇▇▇▇▇▇▇ shall deliver to one another duly executed
counterparts of the ▇▇▇▇▇▇▇▇ Voting Agreement; and
(vii) the Company and each of the Founders shall deliver to one
another duly executed counterparts of an Agency Agreement, an HP Agency
Agreement and a Distributor Agreement.
28
SECTION 4.02. Closing Adjustments on Primestar Inventory. (a)
-------------------------------------------
During the 45 day period following the Closing Date, the Company and its
independent auditors shall be permitted to review the working papers relating to
each Person's Primestar Inventory Statement delivered pursuant to Section 3.04,
and each Providing Person shall cooperate in good faith with the Company to
respond to any questions the Company may have in respect of such Providing
Person's Primestar Inventory Statement. At or prior to the conclusion of such
45 day period, the Company shall give written notice to each Party of its
agreement with a Primestar Inventory Statement (in which case such Primestar
Inventory Statement shall be deemed final and binding upon each Party), or of
its disagreement with the statement (a "Notice of Disagreement"). Any such
----------------------
Notice of Disagreement shall specify in detail the nature of such disagreement.
If a Notice of Disagreement is received in a timely manner, then the applicable
Primestar Inventory Statement, as revised in accordance with clause (x) or (y)
below, shall become final and binding upon each Party on the earlier of (x) the
date the Company and the applicable Providing Person resolve in writing the
differences they have with respect to the matter specified in a Notice of
Disagreement or (y) the date any disputed matters are finally resolved in
writing by the Accounting Firm, as described below; provided, that if any matter
--------
in respect of any Providing Person's Primestar Inventory Statement is submitted
to the Accounting Firm, then the Company shall submit TSAT's Primestar Inventory
Statement to the Accounting Firm so that the Accounting Firm may review and
revise (if necessary) TSAT's Primestar Inventory Statement, and TSAT's Primestar
Inventory Statement as so reviewed and/or revised shall become final and binding
upon each Party. Upon becoming final and binding as set forth above, a
Primestar Inventory Statement shall become a "Final Primestar Inventory
-------------------------
Statement".
---------
During the 30 day period following the delivery of a Notice of
Disagreement, the Company and the applicable Providing Person shall seek in good
faith to resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement. During such period such
Providing Person and its auditors shall have access to the working papers of the
Company and its auditors prepared in connection with the Notice of Disagreement.
At the end of such 30 day period, the Company
29
and such Providing Person shall submit to an independent accounting firm (the
"Accounting Firm") for review and resolution any and all matters which remain
---------------
in dispute and which were properly included in the Notice of Disagreement. The
Accounting Firm shall be such nationally recognized independent public
accounting firm as shall be agreed upon by the Company and all the Providing
Persons in writing. The Company and each applicable Providing Person shall
jointly request, and shall use their respective commercially reasonable efforts
to cause, the Accounting Firm to render a decision resolving the matters
submitted to it within 75 days following submission. The Company and each other
Party hereby agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the Party against which
such determination is to be enforced. The fees and expenses of an Accounting
Firm shall in each case be borne equally by the Company and the applicable
Providing Person.
(b) Within 5 business days after the Final Primestar Inventory and
Final Primestar Customers of TSAT and each Class C Holder shall have been
determined in accordance with Sections 4.02 and 4.03, the Company shall
calculate each Class C Holder's Inventory Payment. If a Class C Holder's
Inventory Payment is a positive number, such Class C Holder shall pay that
amount to the Company. If a Class C Holder's Inventory Payment is a negative
number, the Company shall pay the absolute value of that amount to such Class C
Holder. Any such payment shall be made by wire transfer of immediately
available funds within 5 business days after written notice from the Company to
the applicable Class C Holder of the amount thereof.
SECTION 4.03. Adjustment for Primestar Customers. (a) During the 45
-----------------------------------
day period following the Closing Date, the Company and its independent auditors
shall be permitted to review the working papers relating to each Person's
Primestar Customer Statement delivered pursuant to Section 3.03 to determine
whether the number of Primestar Customers set forth therein has been overstated
(including overstatements described in Section 7.05, and excluding
overstatements in respect of delinquencies of Recent Primestar Subscribers which
is addressed in Section 4.03(b)), and each Providing Person shall cooperate in
good faith with the Company to respond to any questions the Company may have in
respect of such Providing Person's
30
Primestar Customer Statement. At or prior to the conclusion of such 45 day
period, the Company shall give written notice to each Party of its agreement
with a Primestar Customer Statement (in which case such Primestar Customer
Statement shall be deemed final and binding upon each Party), or shall deliver a
Notice of Disagreement. Any such Notice of Disagreement shall specify in detail
the nature of such disagreement and the amount by which the Company believes
Primestar Customers have been overstated. If a Notice of Disagreement is
received in a timely manner, then the applicable Primestar Customer Statement,
as adjusted in accordance with clause (x) or (y) below, shall become final and
binding upon each Party on the earlier of (x) the date the Company and the
applicable Providing Person resolve in writing the differences they have with
respect to the matter specified in a Notice of Disagreement or (y) the date any
disputed matters are finally resolved in writing by the Accounting Firm, as
described below; provided, that if any matter in respect of any Providing
--------
Person's Primestar Customer Statement is submitted to the Accounting Firm, then
the Company shall submit TSAT's Primestar Customer Statement to the Accounting
Firm so that the Accounting Firm may review and revise (if necessary) TSAT's
Primestar Customer Statement, and TSAT's Primestar Customer Statement as so
reviewed and/or revised shall become final and binding upon each Party.
During the 30 day period following the delivery of a Notice of
Disagreement, the Company and the applicable Providing Person shall seek in good
faith to resolve in writing any differences they have with respect to the
matters specified in such Notice of Disagreement. During such period such
Providing Person shall have access to the working papers of the Company and its
auditors prepared in connection with the Notice of Disagreement. At the end of
such 30 day period, the Company and such Providing Person shall submit to the
Accounting Firm for review and resolution any and all matters which remain in
dispute and which were properly included in the Notice of Disagreement. The
Company and each applicable Providing Person shall jointly request, and shall
use their respective commercially reasonable efforts to cause, the Accounting
Firm to render a decision resolving the matters submitted to it within 75 days
following submission. The Company and each other Party hereby agree that
judgment may be entered upon the determination of the Accounting Firm in any
court having
31
jurisdiction over the Party against which such determination is to be enforced.
The fees and expenses of the Accounting Firm shall be borne equally by the
Company and the applicable Providing Person.
(b) On the 151st day following the Closing Date, the Company shall
determine, for each Person's Primestar Customer Statement (as adjusted pursuant
to Section 4.03(a)), the number of Recent Primestar Subscribers on such
statement which, if subjected to the delinquency tests set forth in the
definition of Primestar Customer as of such 151st day, would count as less than
one full Primestar Customer (for each such Person, the aggregate amount of such
reductions is referred to as such Person's "Recent Customer Reduction"). The
-------------------------
Company shall prepare and deliver to each Providing Person a revised Primestar
Customer Statement (a "Revised Primestar Customer Statement") for TSAT and each
------------------------------------
Providing Person, which shall set forth a number of Primestar Customers equal to
(x) the number of Primestar Customers set forth on such Person's Primestar
Customer Statement (as adjusted pursuant to Section 4.03(a)) minus (y) such
Person's Recent Customer Reduction (as determined by the Company), and the
Company shall cooperate in good faith with each Providing Person to respond to
any questions such Providing Person may have in respect of such Providing
Person's Revised Primestar Customer Statement. During the 30 day period
following receipt by the applicable Providing Person of such Providing Person's
Revised Primestar Customer Statement, such Providing Person and its independent
auditors shall be permitted to review the working papers relating to such
Revised Primestar Customer Statement. At the conclusion of such 30 day period,
such Providing Person shall give written notice to the Company of its agreement
with such Revised Primestar Customer Statement (in which case such Revised
Primestar Customer Statement shall be deemed final and binding upon each Party),
or shall deliver a Notice of Disagreement. Any such Notice of Disagreement
shall specify in detail the nature of such disagreement. If a Notice of
Disagreement is received in a timely manner, then the applicable Revised
Primestar Customer Statement, as further revised in accordance with clause (x)
or (y) below, shall become final and binding upon each Party on the earlier of
(x) the date the Company and the applicable Providing Person resolve in writing
the differences they have with respect to the matter specified in a Notice of
Disagreement or (y) the date any disputed matters are
32
finally resolved in writing by the Accounting Firm, as described below;
provided, that if any matter in respect of any Providing Person's Revised
--------
Primestar Customer Statement is submitted to the Accounting Firm, then the
Company shall submit TSAT's Revised Primestar Customer Statement to the
Accounting Firm so that the Accounting Firm may review and further revise (if
necessary) TSAT's Revised Primestar Customer Statement, and TSAT's Revised
Primestar Customer Statement as so further reviewed and/or revised shall become
final and binding upon each Party. Upon becoming final and binding as set forth
above, a Revised Primestar Customer Statement shall become a "Final Primestar
---------------
Customer Statement".
------------------
During the 30 day period following the delivery of a Notice of
Disagreement, the Company and the applicable Providing Person shall seek in good
faith to resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement. During such period the Company
and its auditors shall have access to the working papers of such Providing
Person and its auditors prepared in connection with the Notice of Disagreement.
At the end of such 30 day period, the Company and such Providing Person shall
submit to the Accounting Firm for review and resolution any and all matters
which remain in dispute and which were properly included in the Notice of
Disagreement. The Company and each applicable Providing Person shall jointly
request, and shall use their respective commercially reasonable efforts to
cause, the Accounting Firm to render a decision resolving the matters submitted
to it within 75 days following submission. The Company and each other Party
hereby agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the Party against which
such determination is to be enforced. The fees and expenses of an Accounting
Firm shall in each case be borne equally by the Company and the applicable
Providing Person.
(c) Within 5 business days after the Final Primestar Customer
Statement of TSAT and each Class C Holder shall have been determined, the
Company shall calculate each Class C Holder's Customer Payment. If a Class C
Holder's Customer Payment is a positive number, such Class C Holder shall pay
that amount to the Company. If a Class C Holder's Customer Payment is a
negative number, the Company shall pay the absolute value of that amount to such
Class C Holder.
33
Any such payment shall be made by wire transfer of immediately available funds
within 5 business days after written notice from the Company to the applicable
Class C Holder of the amount thereof.
SECTION 4.04. Adjustment for Capital Contributions. Within 10 days
-------------------------------------
after the Closing Date, the Company shall reimburse each Class C Holder and GE
(by wire transfer of immediately available funds) for 100% of any capital
contributions made to the Partnership after March 31, 1997 by such Party, as
evidenced by the Partnership's records of such contributions; provided, that for
--------
avoidance of doubt, such reimbursement shall not include any payment in respect
of interest on any such amount.
SECTION 4.05. Netting. Any payments pursuant to this Article IV by
--------
the Company to any Person on any payment date may be netted against payments due
to the Company on such date from such Person pursuant to this Article IV, and in
such event the Company shall deliver written notice to such Person setting forth
the calculation of such netting.
34
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of TSAT. TSAT
---------------------------------------
represents and warrants to each other Party as follows:
(a) Organization, Standing and Corporate Power. Each of TSAT and each
-------------------------------------------
of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry
on its business as now being conducted. Each of TSAT and each of its
subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a Material Adverse Effect on TSAT. TSAT has delivered to each other
Party complete and correct copies of its certificate of incorporation and
by-laws and the certificates of incorporation and by-laws of its
subsidiaries, in each case as amended to the date of this Agreement.
(b) Subsidiaries. (A) Schedule 5.01(b) lists each subsidiary of
-------------
TSAT. All the outstanding shares of capital stock of the TSAT Sub and each
such other subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in Schedule 5.01(b), are directly
owned by TSAT, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of its subsidiaries
-----
and except for the ownership interests set forth in Schedule 5.01(b), TSAT
does not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, limited liability company, joint
venture or other entity.
(B) The TSAT Sub was formed by TSAT solely for the purpose of engaging
in the transactions contemplated by
35
this Agreement. The TSAT Sub does not have any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) other
than those under this Agreement, the Drop Down Agreement, the Merger
Agreements, the Asset Transfer Agreements, the TSAT Merger Agreement, the
TSAT Tempo Agreement and the TSAT Stockholders Agreement.
(c) Tempo. Tempo's sole assets and liabilities consist of the Tempo
------
Assets and the liabilities associated therewith (including Tempo's
obligations to the Partnership in respect of advances by the Partnership to
Tempo). All agreements to which Tempo is a party or bound are listed on
Schedule 5.01(c). Except as set forth on Schedule 5.01(c), Tempo has no
indebtedness for borrowed money and has no other obligations of the type
set forth in the definition of "TSAT Debt".
(d) Capital Structure. The authorized capital stock of TSAT consists
------------------
of 185,000,000 shares of TSAT A Stock, 10,000,000 shares of TSAT B Stock
and 5,000,000 shares of preferred stock, par value $.01 per share. The
authorized capital stock of the TSAT Sub is as set forth in Schedule
5.01(b). At the close of business on February 6, 1998, (i) 58,237,114
shares of TSAT A Stock, 8,465,324 shares of TSAT B Stock and no shares of
preferred stock were issued and outstanding, (ii) no shares of TSAT A Stock
and no shares of TSAT B Stock were held by TSAT in its treasury, and (iii)
3,700,000 shares of TSAT A Stock and no shares of TSAT B Stock were
reserved for issuance pursuant to the TSAT Stock Plans. Except as set
forth above, at the close of business on February 6, 1998, no shares of
capital stock or other voting securities of TSAT were issued, reserved for
issuance or outstanding. Except as set forth in Schedule 5.01(d), there
are no outstanding SARs which were not granted in tandem with a related
Employee Stock Option. Ten shares of common stock of the TSAT Sub are
issued and outstanding and held by TSAT. All outstanding shares of capital
stock of TSAT and the TSAT Sub are, and all shares which may be issued
pursuant to the TSAT Stock Plans will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as set forth in
36
Schedule 5.01(d), there are not any bonds, debentures, notes or other
indebtedness of TSAT having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which stockholders of TSAT may vote. Schedule 5.01(d) sets forth a complete
list of all outstanding options (together with applicable exercise prices)
to purchase capital stock of TSAT. Except as set forth in Schedule 5.01(d),
there are not any securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
TSAT or any of its subsidiaries is a party or by which any of them is bound
obligating TSAT or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock
or other voting securities of TSAT or of any of its subsidiaries or
obligating TSAT or any of its subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are not any outstanding
contractual obligations of TSAT or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of TSAT or any of
its subsidiaries.
(e) Authority; Noncontravention. TSAT and the TSAT Sub each have the
----------------------------
requisite corporate power and authority to enter into their respective
Relevant Agreements and, subject to approval and adoption of the Roll-up
Plan by the holders of 66-2/3% of the total voting power of the outstanding
shares of TSAT A Stock and TSAT B Stock, voting together as a class (the
"TSAT Stockholder Approval"), to consummate the transactions contemplated
--------------------------
by each of its Relevant Agreements. The execution and delivery by TSAT and
the TSAT Sub of their respective Relevant Agreements and the consummation
by TSAT and the TSAT Sub of the Restructuring Transaction, the TSAT Merger
and the Tempo Sale have been duly authorized by all necessary corporate
action on the part of TSAT and the TSAT Sub, subject to the TSAT
Stockholder Approval. Each Relevant Agreement of TSAT and the TSAT Sub has
been (or upon execution will be) duly executed and delivered by TSAT and/or
the TSAT Sub and constitutes (or upon execution will constitute) a valid
and binding obligation of TSAT and/or the TSAT Sub, enforceable
37
against TSAT and/or the TSAT Sub in accordance with their respective terms.
The execution and delivery of each Relevant Agreement of TSAT and the TSAT
Sub does not, and the consummation of the Restructuring Transaction, the
TSAT Merger and the Tempo Sale, and compliance with the provisions of such
Relevant Agreements will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of TSAT or any of
its subsidiaries under, (i) the certificate of incorporation or by-laws of
TSAT or the comparable charter or organizational documents of any of its
subsidiaries, (ii) except as disclosed on Schedule 5.01(e), any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to TSAT or any of its subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to TSAT or any of its subsidiaries
or their respective properties or assets, other than, in the case of clause
(ii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Material Adverse Effect
on TSAT. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Federal, state or local government or any
court, administrative agency or commission or other governmental authority
or agency, domestic or foreign, including, without limitation, the European
Community (a "Governmental Entity"), is required by or with respect to TSAT
-------------------
or any of its subsidiaries in connection with (I) the execution and
delivery of any Relevant Agreement of TSAT or the TSAT Sub or (II) the
consummation by TSAT or the TSAT Sub of the Restructuring Transaction,
except for (i) the filing of a premerger notification and report form by
TSAT under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976
(together with the rules and regulations promulgated thereunder, the "HSR
---
Act"), (ii) applicable approvals of the Federal Communications Commission
---
(the
38
"FCC") pursuant to the Communications Act of 1934, as amended, and any
---
regulations promulgated thereunder (the "Communications Act"), (iii) the
------------------
filing with the SEC of (x) a proxy statement relating to the TSAT
Stockholder Approval (as amended or supplemented from time to time, the
"Proxy Statement/Prospectus"), (y) a registration statement of the Company
---------------------------
on Form S-4 in connection with the issuance of capital stock of the Company
in the TSAT Merger (the "Form S-4") and (z) such reports under Section
--------
13(a) of the Securities Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the "Exchange Act"), as may
------------
be required in connection with this Agreement and the Restructuring
Transaction, (iv) the filing of a certificate of merger under the TSAT
Merger Agreement and each other Merger Agreement with the Delaware
Secretary of State and appropriate documents with the relevant authorities
of other states in which TSAT is qualified to do business and (v) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings as are set forth on Schedule 5.01(e).
(f) SEC Documents; Undisclosed Liabilities. TSAT has filed all
---------------------------------------
required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1996 (the "SEC Documents"). As of their respective
-------------
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (together with the rules and
regulations promulgated thereunder, the "Securities Act"), or the Exchange
--------------
Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent that
information contained in any SEC Document has been revised or superseded by
a later filed SEC Document, none of the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made,
39
not misleading. The financial statements of TSAT included in the SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 1O-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of TSAT and
its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed SEC Documents or in Schedule
5.01(f), neither TSAT nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting principles to be set
forth on a consolidated balance sheet of TSAT and its consolidated
subsidiaries or in the notes thereto.
(g) Information Supplied. None of the information supplied or to be
---------------------
supplied by TSAT or any of its subsidiaries for inclusion or incorporation
by reference in (i) the Form S-4 will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, or (ii) the
Proxy Statement/Prospectus will, at the date it is first mailed to TSAT's
stockholders or at the time of the meeting of TSAT's stockholders held to
vote on approval and adoption of the Roll-up Plan, including, for avoidance
of doubt, this Agreement, the Drop Down Agreement, the TSAT Merger
Agreement and the TSAT Tempo Agreement (the "TSAT Stockholders Meeting"),
-------------------------
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or
40
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The financial
statements of TSAT included in the Form S-4 and the Proxy Statement/
Prospectus will comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, and will be prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and will fairly present the consolidated financial position of
TSAT and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments). The Proxy Statement/Prospectus will comply as to
form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation is made
by TSAT with respect to statements made or incorporated by reference
therein based on information supplied by any other Party for inclusion or
incorporation by reference in the Proxy Statement/Prospectus.
(h) Absence of Certain Changes or Events. Except as disclosed in the
-------------------------------------
SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents") or in Schedule 5.01(h), since the
-------------------
date of the most recent audited financial statements included in the Filed
SEC Documents, TSAT has conducted its business only in the ordinary course,
and there has not been (i) any Material Adverse Change in TSAT, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of TSAT's capital
stock, (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (x) any granting by TSAT or any of its
41
subsidiaries to any executive officer or director of TSAT or any of its
subsidiaries of any increase in compensation, except in the ordinary course
of business consistent with prior practice or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed SEC Documents, (y) any granting
by TSAT or any of its subsidiaries to any such executive officer or
director of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in
effect as of the date of the most recent audited financial statements
included in the Filed SEC Documents or (z) any entry by TSAT or any of its
subsidiaries into any employment, severance or termination agreement with
any such executive officer or director, (v) any damage, destruction or
loss, whether or not covered by insurance, that has or is likely to have a
Material Adverse Effect on TSAT, or (vi) any change in accounting methods,
principles or practices by TSAT materially affecting its assets,
liabilities or business, except insofar as may have been required by a
change in generally accepted accounting principles.
(i) Litigation. Except as disclosed in the Filed SEC Documents or in
-----------
Schedule 5.01(i), there is no suit, action or proceeding pending or, to the
knowledge of TSAT, threatened against or affecting TSAT or any of its
subsidiaries (and TSAT is not aware of any basis for any such suit, action
or proceeding) that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on TSAT, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against TSAT or any of its subsidiaries having, or
which, insofar as reasonably can be foreseen, in the future would have, any
such effect.
(j) Absence of Changes in Benefit Plans. Except as disclosed in the
------------------------------------
Filed SEC Documents or in Schedule 5.01(j), since the date of the most
recent audited financial statements included in the Filed SEC Documents,
there has not been any adoption or amendment in any material respect by
TSAT or any of its subsidiaries of any collective bargaining agreement or
any bonus, pension, profit sharing, deferred
42
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of TSAT or any of its
subsidiaries (collectively, "Benefit Plans"). Except as disclosed in the
-------------
Filed SEC Documents, there exist no employment, consulting, severance,
termination or indemnification agreements, arrangements or understandings
between TSAT or any of its subsidiaries and any current or former employee,
officer or director of TSAT or any of its subsidiaries.
(k) ERISA Compliance. (i) Schedule 5.01(k) contains a list and
-----------------
brief description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
-------------
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and
all other Benefit Plans maintained, or contributed to, by TSAT or any of
its subsidiaries for the benefit of any current or former employees,
officers or directors of TSAT or any of its subsidiaries. TSAT has
delivered to each other Party true, complete and correct copies of (v) each
Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (w) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if any such
report was required), (x) the most recent summary plan description for each
Benefit Plan for which such summary plan description is required, (y) each
trust agreement and group annuity contract relating to any Benefit Plan and
(z) the most recent actuarial and financial valuations prepared with
respect to each Benefit Plan.
(ii) Except as disclosed in Schedule 5.01(k), all Pension Plans
intended to be qualified under Section 401(a) of the Code have been the
subject of determination letters from the Internal Revenue Service to the
effect that such Pension Plans are so qualified and exempt from Federal
income Taxes under Section 501(a) of the Code, and no such determination
43
letter has been revoked nor, to the knowledge of TSAT, has revocation been
threatened, nor has any such Pension Plan been amended since the date of
its most recent determination letter or application therefor in any respect
that would adversely affect its qualification or materially increase its
costs.
(iii) Each Benefit Plan has been administered in material compliance
with its terms and the applicable provisions of ERISA, the Code and all
other applicable laws. No event has occurred that could reasonably be
expected to result in material liability with respect to the Benefit Plans.
There are no pending or, to the knowledge of TSAT, threatened
investigations, claims or lawsuits (other than routine benefit claims) with
respect to the Benefit Plans that could reasonably be expected to result in
material liability to the Benefit Plans, TSAT or its subsidiaries.
(iv) No Pension Plan that TSAT or any of its subsidiaries maintains,
or to which TSAT or any of its subsidiaries is obligated to contribute,
other than any Pension Plan that is a "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA; collectively, the "Multiemployer
-------------
Pension Plans"), had, as of the respective last annual valuation date for
-------------
each such Pension Plan, an "unfunded benefit liability" (as such term is
defined in Section 4001(a)(18) of ERISA), based on actuarial assumptions
which have been furnished to each other Party. None of the Pension Plans
has an "accumulated funding deficiency" (as such term is defined in Section
302 of ERISA or Section 412 of the Code), whether or not waived. None of
the Pension Plans has an "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived. None of TSAT, any of its subsidiaries, any officer of TSAT or any
of its subsidiaries or any of the Benefit Plans which are subject to ERISA,
including the Pension Plans, any trusts created thereunder or any trustee
or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code)
or any other breach of fiduciary responsibility that could subject TSAT,
any of its subsidiaries or any officer of TSAT or any of its subsidiaries
to the Tax or penalty on prohibited
44
transactions imposed by such Section 4975 or to any liability under Section
502(i) or (1) of ERISA. Neither any of such Benefit Plans nor any of such
trusts has been terminated, nor has there been any "reportable event" (as
that term is defined in Section 4043 of ERISA) with respect to any of the
Benefit Plans during the last five years. Neither TSAT nor any of its
subsidiaries has incurred a "complete withdrawal" or a "partial withdrawal"
(as such terms are defined in Section 4203 and Section 4205, respectively,
of ERISA) since the effective date of such Sections 4203 and 4205 with
respect to any of the Multiemployer Pension Plans.
(v) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Schedule 5.01(k), (x) each such
Benefit Plan that is a "group health plan", as such term is defined in
Section 5000(b)(1) of the Code, complies with the applicable requirements
of Section 4980B(f) of the Code and (y) each such Benefit Plan (including
any such Plan covering retirees or other former employees) may be amended
or terminated without material liability to TSAT or any of its subsidiaries
on or at any time after the Effective Time.
(vi) Except as disclosed in Schedule 5.01(k), consummation of the
transactions contemplated by this Agreement will not result in any
increased compensation or benefits, or the acceleration of the payment of
any increased compensation or benefits for any current or former employee
or director of TSAT or its subsidiaries.
(l) Taxes. Except as disclosed in Schedule 5.01(l), each of TSAT and
------
each of its subsidiaries has filed all material Tax returns and reports
required to be filed by it and has paid (or TSAT has paid on its behalf)
all material Taxes required to be paid by it, and the most recent financial
statements contained in the Filed SEC Documents reflect an adequate reserve
for all material Taxes payable by TSAT and its subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
No deficiencies for any material Taxes have been proposed, asserted or
assessed
45
against TSAT or any of its subsidiaries, and no requests for waivers of the
time to assess any such Taxes are pending. As used in this Agreement,
"Taxes" shall include all Federal, state, local and foreign income,
-----
property, sales, excise and other taxes, tariffs or governmental charges of
any nature whatsoever.
(m) No Excess Parachute Payments. Other than payments that may be
-----------------------------
made to the persons listed on Schedule 5.01(m) (the "Primary Executives"),
------------------
any amount that could be received (whether in cash or property or the
vesting of property) as a result of the Restructuring Transaction by any
employee, officer or director of TSAT or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in
effect would not be characterized as an "excess parachute payment" (as such
term is defined in Section 280G(b)(1) of the Code). Set forth in Sched-
ule 5.01(m) is (i) the maximum amount that could be paid to each Primary
Executive as a result of the transactions contemplated by this Agreement
and the TSAT Merger Agreement under all employment, severance and
termination agreements, other compensation arrangements and Benefit Plans
currently in effect and (ii) the "base amount" (as such term is defined in
Section 280G(b)(3) of the Code) for each Primary Executive calculated as of
the date of this Agreement.
(n) Voting Requirements. The TSAT Stockholder Approval is the only
--------------------
vote of the holders of any class or series of TSAT's capital stock
necessary to approve the Roll-up Plan, including, for avoidance of doubt,
this Agreement, the Drop Down Agreement, the TSAT Merger Agreement, the
TSAT Tempo Agreement, the Restructuring Transaction, the TSAT Merger and
the Tempo Sale, and the respective transactions contemplated by such
agreements.
(o) State Takeover Statutes. The Board of Directors of TSAT has
------------------------
unanimously approved the Roll-up Plan, including, for avoidance of doubt,
the Restructuring Transaction, the TSAT Merger, the Tempo
46
Sale, the Voting Agreements, this Agreement, the TSAT Merger Agreement, the
TSAT Tempo Agreement and the TSAT Stockholders Agreement, and such approval
is sufficient to render inapplicable to the Roll-up Plan, the Restructuring
Transaction, the TSAT Merger, the Tempo Sale, the Voting Agreements, this
Agreement, the TSAT Merger Agreement, the TSAT Tempo Agreement and the TSAT
Stockholders Agreement, the provisions of Section 203 of the DGCL.
(p) Brokers; Schedule of Fees and Expenses. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
& Co. Incorporated, no broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Restructuring
Transaction, the TSAT Merger and the Tempo Sale, based upon arrangements
made by or on behalf of TSAT. The estimated fees and expenses incurred and
to be incurred by TSAT in connection with this Agreement, the TSAT Merger
Agreement, the TSAT Tempo Agreement, the Restructuring Transaction, the
TSAT Merger and the Tempo Sale (including the fees of TSAT's legal counsel)
are set forth in Schedule 5.01(p).
(q) Opinion of Financial Advisor. TSAT has received the opinion of
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Incorporated, dated as of a date on or about the date
of this Agreement, a complete and correct copy of which has been provided
to each Party.
SECTION 5.02. Representations and Warranties of Certain Parties.
--------------------------------------------------
Each of Comcast, ▇▇▇, ▇▇, MediaOne, TWE and ▇▇▇▇▇▇▇▇, severally and not jointly,
represents and warrants (each in such capacity, a "Representor") to each other
-----------
Party as follows:
(a) Organization, Standing and Corporate Power. Such Representor and
-------------------------------------------
each of its Subsidiaries, if any, is a corporation or partnership duly
organized or formed, validly existing and, in the case of a corporation, in
good standing, under the laws of the jurisdiction in which it is
incorporated or formed and has the requisite corporate or partnership power
and authority to carry on its business as now being conducted. Such
Representor and each of its
47
Subsidiaries, if any, is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a Material Adverse Effect on such Representor.
(b) Subsidiaries; All Assets. (A) The authorized capital stock of
-------------------------
such Representor's Subsidiaries, if any, and the number of shares of such
capital stock that are issued and outstanding, are as set forth on such
Representor's Schedule 5.02(b)(A). Except as set forth on such
Representor's Schedule 5.02(b)(A), no shares of capital stock or other
voting securities of any of such Representor's Subsidiaries, if any, are
issued, reserved for issuance or outstanding. All the outstanding shares
of capital stock of each of such Representor's Subsidiaries, if any, have
been validly issued, fully paid and nonassessable and are owned, directly
or indirectly, by such Representor free and clear of all Liens.
(B) Except as disclosed on such Representor's Schedule 5.02(b)(B), on
and as of the Closing Date: (i) the sole assets of each Subsidiary of such
Representor, if any, will be Primestar Assets and Partnership Interests and
such Subsidiary's rights under its Merger Agreement or Asset Transfer
Agreement; (ii) no Subsidiary of such Representor will own, directly or
indirectly, any capital stock or other ownership interest in any
corporation, partnership, limited liability company, joint venture or other
entity, other than Partnership Interests; (iii) no Subsidiary of such
Representor will have any obligations or liabilities of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise, and whether
due or to become due, other than Primestar Liabilities (which shall not
include any Primestar Debt unless such Representor is Comcast, ▇▇▇▇▇▇▇▇,
TWE or GE), and such Subsidiary's obligations under its Merger Agreement or
Asset Transfer Agreement; and (iv) no Subsidiary of such Representor will
have any employees other than Selected Employees.
48
(c) Authority; Noncontravention. Such Representor and each of its
----------------------------
Subsidiaries, if any, has the requisite corporate power and authority to
enter into its Relevant Agreements and to consummate the transactions
contemplated by each of its Relevant Agreements. The execution and
delivery by such Representor and each of its Subsidiaries, if any, of its
Relevant Agreements and the consummation by such Representor and such
Subsidiaries of the Restructuring Transaction have been duly authorized by
all necessary corporate or partnership action on the part of such
Representor and such Subsidiaries. Each Relevant Agreement of such
Representor and each of its Subsidiaries, if any, has been (or upon
execution will be), duly executed and delivered by such Representor or
Subsidiary, as applicable, and constitutes (or upon execution will
constitute) a valid and binding obligation of such Representor or
Subsidiary, as applicable, enforceable against such Representor or
Subsidiary, as applicable, in accordance with their respective terms. The
execution and delivery of each Relevant Agreement of such Representor or
any of its Subsidiaries, if any, does not, and the consummation of the
Restructuring Transaction and compliance with the provisions of such
Relevant Agreements will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of such
Representor or Subsidiary under, (i) its certificate of incorporation or
by-laws or partnership agreement, as applicable, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to such
Representor or Subsidiary or their properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to such Representor or Subsidiary or their respective
properties or assets, other than, in the case of clause (ii), any such
conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not have a
49
Material Adverse Effect on such Representor. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to such Representor or
any of its subsidiaries in connection with (I) the execution and delivery
of any Relevant Agreement of such Representor or any of its Subsidiaries,
if any, or (II) the consummation by such Representor or any of its
Subsidiaries, if any of the Restructuring Transaction, except for (i) the
filing of a premerger notification and report form by such Representor
under the HSR Act, (ii) applicable approvals of the FCC pursuant to the
Communications Act, (iii) the filing with the SEC of (x) the Proxy
Statement/Prospectus, (y) the Form S-4 and (z) such reports under Section
13(a) of the Exchange Act, as may be required in connection with this
Agreement and the Restructuring Transaction, (iv) the filing of a
certificate of merger and appropriate documents with the relevant
authorities of other states in which such Representor is qualified to do
business and (v) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as are set forth on such
Representor's Schedule 5.02(c).
(d) Information Supplied. None of the informa tion supplied or to be
---------------------
supplied by such Representor or any of its subsidiaries for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form
S-4 is filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, or
(ii) the Proxy Statement/Prospectus will, at the date it is first mailed to
TSAT's stockholders or at the time of the TSAT Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. The financial statements of such Representor's
Primestar Business included in the Form S-4 and the Proxy
50
Statement/Prospectus will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, and will be prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and will fairly present the consolidated financial position of
such Representor's Primestar Business as of the dates thereof and the
consolidated results of operations and cash flows of such Representor's
Primestar Business for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(e) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
such Representor's Schedule 5.02(e), since June 11, 1997, such Representor
has conducted its Primestar Business (directly or through its Subsidiaries,
if any) only in the ordinary course, and there has not been (i) any
Material Adverse Change in such Representor's Primestar Business or (ii)
any damage, destruction or loss, whether or not covered by insurance, that
has or is likely to have a Material Adverse Effect on such Representor.
(f) Litigation. Except as disclosed on such Representor's Schedule
-----------
5.02(f), there is no suit, action or proceeding pending or, to the
knowledge of the Representor, threatened against or affecting such
Representor or such Representor's Primestar Assets or Partnership Interest
or any Subsidiary of such Representor (and the Representor is not aware of
any basis for any such suit, action or proceeding) that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect on such Representor, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
such Representor or any of its Primestar Assets or Partnership Interest or
any Subsidiary of such Representor having, or which, insofar as reasonably
can be foreseen, in the future would have, any such effect.
51
(g) Taxes. Such Representor and each of its Subsidiaries, if any,
------
have filed all material Tax returns and reports required to be filed by
them and have paid all material Taxes required to be paid by them, with
respect to their Primestar Assets and Partnership Interest. Except as
disclosed on such Representor's Schedule 5.02(g), no deficiencies for any
material Taxes have been proposed, asserted or assessed against such
Representor or any of its Subsidiaries, and no requests for waivers of the
time to assess any such Taxes are pending.
(h) Employee Matters. Neither the Representors, their Subsidiaries
-----------------
nor any entity required to be treated with the Representors as a single
employer under Section 414 of the Code has any unsatisfied liability under
Title IV of ERISA (other than insurance premiums not yet due). Each of the
employee benefit plans (as defined in Section 3(3) of ERISA) covering any
current or former employee of the Subsidiaries or the Primestar Business
(the "Representors' Benefit Plans") is in material compliance with ERISA,
the Code and all other applicable laws. No event or condition has occurred
with respect to the Representors' Benefit Plans that could give rise to any
liability of the Subsidiaries or the Primestar Business.
SECTION 5.03. Special Representation. (a) Comcast represents and
-----------------------
warrants to each other Party that Comcast Sub I and Comcast Sub II, together,
hold all of the Primestar Assets and Partnership Interests of Comcast's
Primestar Business.
(b) Cox represents and warrants to each other Party that Cox Sub
holds all of the Primestar Assets and Partnership Interests of ▇▇▇'▇ Primestar
Business;
(c) MediaOne represents and warrants to each other Party that
MediaOne, the MediaOne Transferors, and MediaOne Sub, together, hold all of the
Primestar Assets and Partnership Interests of US West's Primestar Business.
(d) TWE and ▇▇▇▇▇▇▇▇, jointly and severally, represent and warrant to
each other Party that except as disclosed on TWE's Schedule 5.03(d), TWE and
▇▇▇▇▇▇▇▇
52
together hold all of the Primestar Assets and Partnership Interests of TWE's and
▇▇▇▇▇▇▇▇'▇ Primestar Business.
(e) GE represents and warrants to each other Party that GE Sub holds
all of the Partnership Interests of GE.
ARTICLE VI
COVENANTS RELATING TO BUSINESS
SECTION 6.01. Alternative Transactions. (a) Prior to the Closing
-------------------------
Date, TSAT agrees that neither it nor any of its subsidiaries shall, nor shall
it or any of its subsidiaries permit their respective officers, directors,
employees, agents and representatives to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including any proposal or offer to its stockholders) with
respect to a merger, acquisition, consolidation or similar transaction that
would impede, interfere with, delay, postpone, discourage or adversely affect
the transactions contemplated in this Agreement, or could reasonably be expected
to have such effect. Prior to the Closing Date, neither the Board of Directors
of TSAT nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to any other Party, the approval or
recommendation by such Board of Directors or any such committee of the Roll-up
Plan, including, for avoidance of doubt, the Restructuring Transaction, the TSAT
Merger, the Tempo Sale, the Voting Agreements, this Agreement, the TSAT Merger
Agreement, the TSAT Tempo Agreement or the TSAT Stockholders Agreement or (ii)
approve or recommend, or propose to approve or recommend, any alternative
transaction of the type described in the first sentence of this Section 6.01.
(b) Each of TSAT, Comcast, ▇▇▇, ▇▇, MediaOne, TWE and ▇▇▇▇▇▇▇▇,
severally and not jointly, agrees that prior to the Closing Date, it will not,
and it will not permit any of its subsidiaries to, sell, or agree to sell, all
or any part of its Primestar Assets or Partnership Interests to any other
Person, except for sales of Primestar Inventory in the ordinary course of
business consistent with past practice; provided, that the foregoing shall not
--------
apply to any transfers between TWE and ▇▇▇▇▇▇▇▇ and their affiliates; and
53
provided, further, that the foregoing shall not apply to any indirect transfer
-------- -------
resulting from a merger of, a sale of substantially all the assets of, a spin-
off by, or a similar transaction involving all or any significant part of, any
of Comcast, ▇▇▇, ▇▇, US West, TWE, Time Warner Inc. or ▇▇▇▇▇▇▇▇ (so long as the
successor entity that succeeds to its predecessor(s) obligations under this
Agreement, after giving effect to such transaction, continues to (x) be bound by
the provisions of this Agreement to the same extent as such predecessor(s) and
(y) hold, directly or indirectly, substantially all the cable systems that such
predecessor(s) held prior to consummation of such transaction).
SECTION 6.02. Interim Operations of TSAT. For the period from June
---------------------------
11, 1997 until the Closing Date, TSAT:
(a) shall not (and shall cause each of its subsidiaries not to), take
any action that would result in any representation or warranty of TSAT
being untrue in any material respect;
(b) shall (and shall cause each of its subsidiaries to), conduct its
business and operations according to its ordinary course of business
consistent with past practice;
(c) shall use its commercially reasonable efforts to preserve intact
its and its subsidiaries' business organization;
(d) shall use its commercially reasonable efforts to keep available
the services of its and its subsidiaries' officers and employees;
(e) except for the amendments to the Company's certificate of
incorporation and by-laws as contemplated by Section 3.01, shall not (and
shall cause each of its subsidiaries not to) amend its certificate of
incorporation or by-laws;
(f) shall not (and shall cause each of its subsidiaries not to)
authorize for issuance, issue, sell, deliver, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting
54
securities or convertible securities (other than (i) shares issued upon
exercise of any rights, warrants or options outstanding as of June 11, 1997
or, in the case of Benefit Plans existing as of June 11, 1997, any rights,
warrants or options authorized under such existing plans and shares issued
upon exercise thereof and (ii) Employee Stock Options issued to directors,
officers or other employees of TSAT in the ordinary course of business and
consistent with past practice);
(g) shall not (and shall cause each of its subsidiaries not to) (i)
split, combine or reclassify any shares of its capital stock, (ii) declare,
set aside or pay any dividend or make any other distribution or payment
with respect to any shares of its capital stock or any other ownership
interests (whether in stock or property or a combination thereof) or (iii)
directly or indirectly purchase, redeem or otherwise acquire any shares of
or options or warrants or rights relating to its capital stock or that of
any of its subsidiaries, or make any commitment for any such action;
(h) shall not (and shall cause each of its subsidiaries not to) (i)
create, incur, assume, maintain or permit to exist any long term debt or
short term debt for borrowed money (other than (x) under lines of credit
and other credit facilities of TSAT existing on the date of this Agreement
and described in Schedule 6.02(h) and debt securities outstanding on the
date of this Agreement and in respect of capitalized lease obligations, not
to exceed $525,000,000 in the aggregate, and (y) the Interim Financing
Debt, (ii) issue or sell any debt securities, (other than borrowings under
existing lines of credit in the ordinary course of business), (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
Person except the Partnership and/or TSAT's wholly owned subsidiaries, or
(iv) make any loans, advances or capital contributions to or investments in
any other Person other than in the ordinary course of business and
consistent with past practice;
55
(i) shall not make any change to its (or any of its subsidiaries')
accounting (including Tax accounting) methods, principles, practices, or
policies, other than those required by GAAP and except, in the case of Tax
accounting methods, principles or practices, in the ordinary course of
business of TSAT or any of its subsidiaries;
(j) shall not make any payment in respect of indebtedness for borrowed
money (other than payments in accordance with the terms of such
indebtedness (as they existed as of June 11, 1997 if incurred prior to such
date));
(k) shall not (and shall cause each of its subsidiaries not to), sell,
lease, transfer, mortgage, subject to any Lien or otherwise dispose of, any
of its properties or assets except in the ordinary course of business;
(l) shall not (and shall cause each of its subsidiaries not to),
acquire or agree to acquire (x) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (y) any assets that are
material, individually or in the aggregate, to TSAT and its subsidiaries
taken as a whole, except purchases of inventory in the ordinary course of
business consistent with past practice;
(m) shall not (and shall cause each of its subsidiaries not to),
purchase or acquire any property or assets from or otherwise engage in any
transactions with, any Person that is affiliated with (i) TSAT, (ii) ▇▇▇▇▇▇
or (iii) TCI, other than in the ordinary course of business and consistent
with past practice and on terms and conditions not less favorable to TSAT
than could be obtained on an arm's length basis from unrelated third
parties;
(n) shall not (and shall cause the Company not to) amend, modify,
deliver any consent under or terminate, or agree to amend, modify, deliver
any consent under or terminate, any provision of the TSAT Stockholders
56
Agreement, the TSAT Merger Agreement or the TSAT Tempo Agreement, unless
each other Party shall have consented thereto;
(o) shall (and shall cause the Company to), comply with its respective
obligations under the TSAT Stockholders Agreement, the TSAT Merger
Agreement and the TSAT Tempo Agreement;
(p) shall cause the Company not to waive any defaults under the TSAT
Stockholders Agreement, the TSAT Merger Agreement or the TSAT Tempo
Agreement, unless each other Party shall have consented thereto; and
(q) shall not, and shall cause the Company not to, agree to do any of
the foregoing.
SECTION 6.03. Interim Operations of each Class C Holder. For the
------------------------------------------
period from June 11, 1997 until the Closing Date, GE, with respect to clause (a)
below only, and each Class C Holder, with respect to its Primestar Business,
Primestar Assets and its Subsidiaries, if any:
(a) except as otherwise provided in the Transition Term Sheet, shall
not, and shall cause its Subsidiaries not to, take any action that would
result in any representation or warranty of such Class C Holder or GE being
untrue in any material respect;
(b) except for transactions required in connection with consummation
of the Restructuring Transaction and except as otherwise provided in the
Transition Term Sheet, shall conduct its Primestar Business according to
its ordinary course of business consistent with past practice;
(c) except as otherwise provided in the Transition Term Sheet, shall
use its commercially reasonable efforts to preserve intact the organization
of its Primestar Business; and
(d) except as otherwise provided in the Transition Term Sheet, and
except for the orderly transitioning of Terminated Employees, shall use its
commercially reasonable efforts to keep available the services of
57
the officers and employees of its Primestar Business, to the extent failure
to do so would have a Material Adverse Effect on such Class C Holder.
SECTION 6.04. Other Actions. Subject to Section 7.04(b), each of
--------------
TSAT and each Class C Holder and (for purposes of clauses (a) through (c) below)
GE, hereby agrees to take no action that would reasonably be expected to cause:
(a) the failure of any such Party to perform and comply in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by such Party on or prior to the
Closing Date;
(b) the failure of any such Party to obtain all necessary approvals or
appropriate consents of any United States Federal or state governmental entity
or any other third party in connection with the consummation of the transactions
contemplated herein, including approvals and consents under the HSR Act and
applicable FCC rules and regulations;
(c) the institution of any suit, action or proceeding challenging,
seeking to restrain, prohibiting or adversely affecting in any material respect
the consummation of the transactions contemplated herein; or
(d) any Material Adverse Effect, in the case of TSAT, on TSAT, and in
the case of each Class C Holder, on such Class C Holder.
ARTICLE VII
ADDITIONAL COVENANTS
SECTION 7.01. Preparation of Form S-4 and the Proxy
-------------------------------------
Statement/Prospectus; TSAT Stockholders Meeting. (a) Each Party shall cooperate
------------------------------------------------
in the preparation of the Proxy Statement/Prospectus and the Form S-4 and all
pre- and post-effective amendments thereto and the filing thereof with the SEC.
Such cooperation shall include, without limitation, (i) preparation of
historical and pro forma financial statements relating to such Party required to
be included in such filings, (ii) provision of financial and
58
other information relating to such Party required to be included in such
filings, (iii) engagement of accountants to report on and provide comfort
letters in customary form in respect of financial information provided by such
Party for inclusion in such filings (which comfort letters will be received by
TSAT in accordance with customary practice) and (iv) responding to comments
relating to such Party received from the staff of the SEC in respect of such
filings promptly after receipt thereof.
(b) Each Party shall be entitled to review any materials related to
the Proxy Statement/Prospectus at any time and from time to time prior to their
mailing to the TSAT stockholders, and to comment thereon, and TSAT and the
Company shall incorporate into such materials each Party's reasonable comments
thereon so that such materials are reasonably acceptable to each Party. TSAT
shall cause the Company to prepare and file with the SEC the Form S-4 in which
the Proxy Statement/Prospectus will be included as a prospectus, as promptly as
practicable after the date of this Agreement. Each of TSAT and the Company
shall use its best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. TSAT will use its
best efforts to cause the Proxy Statement/Prospectus to be mailed to TSAT's
stockholders as promptly as practicable after the date the Form S-4 is declared
effective under the Securities Act. TSAT and the Company shall also take any
commercially reasonable action (other than qualifying to do business in any
jurisdiction in which TSAT is not now so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of capital
stock of the Company in the Restructuring Transaction.
(c) TSAT will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold the TSAT Stockholders
Meeting, and will use its best efforts to cause the TSAT Stockholders Meeting to
be held as promptly as practicable after the date the Proxy Statement/Prospectus
is mailed to the TSAT Stockholders, and to cause the TSAT Stockholder Approval
to be obtained at such meeting. TSAT will, through its Board of Directors,
recommend to its stockholders approval of the Roll-up Plan, including, for
avoidance of doubt, this Agreement, the TSAT Merger Agreement and the
Restructuring Transaction. Without limiting the generality of the foregoing,
TSAT agrees that
59
its obligations pursuant to the first sentence of this Section 7.01(c) shall not
be affected by the commencement, public proposal, public disclosure or
communication to TSAT of any alternative transaction of the type referred to in
Section 6.01.
(d) The Parties acknowledge and agree that, subject to Section
7.04(b), they shall each use their commercially reasonable efforts to cause the
Closing to occur by March 31, 1998 (or as soon as reasonably practicable
thereafter), and to cause the TSAT Stockholders Meeting to occur sufficiently
prior to such date to permit the Closing to occur by such date.
SECTION 7.02. Listing Application. The Company and TSAT shall
--------------------
prepare and submit to NASDAQ listing applications covering the shares of Class A
Stock and Class B Stock issuable by the Company pursuant to the TSAT Merger, and
shall use their respective best efforts to obtain, prior to the Effective Time,
approval for the listing of such stock, subject to official notice of issuance.
SECTION 7.03. Access to Information; Confidenti ality. The Company
----------------------------------------
and TSAT shall afford to each Class C Holder and GE, and each Class C Holder and
GE shall afford to TSAT, and, in each case, to the officers, employees,
accountants, counsel, financial advisors and other representatives of such
Parties, reasonable access during normal business hours during the period prior
to the Effective Time to (i) in the case of TSAT and each TSAT Sub, all their
respective properties, books, contracts, commitments, personnel and records and
(ii) in the case of each Class C Holder and GE, all their respective properties,
books, contracts, commitments, personnel and records in respect of their
Primestar Assets and Subsidiaries, if any. Each of the foregoing parties agrees
to use its best efforts in good faith to obtain all waivers and consents
necessary under any confidentiality or non-disclosure agreement (other than any
such agreement with a Party seeking disclosure hereunder, as to which the Party
seeking disclosure shall be deemed to have waived such confidentiality or non-
disclosure with respect to itself) to afford reasonable access to the applicable
Party. During such period, each of the Company and TSAT shall, and shall cause
each of its respective subsidiaries to, furnish promptly to each other Party (a)
a copy of each report, schedule, registration statement and
60
other document filed by it during such period pursuant to the requirements of
Federal or state securities laws and (b) all other information concerning its
business, properties and personnel as such other Party may reasonably request.
Except as required by law, each Party will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in confidence
until such time as such information becomes publicly available (otherwise than
through the wrongful act of any such Person) and shall use its best efforts to
ensure that such Persons do not disclose such information to others without the
prior written consent of the applicable Party from whom such information was
received. In the event of the termination of this Agreement for any reason, each
Party shall promptly return or destroy all documents containing nonpublic
information so obtained from any other Party or any of its subsidiaries and any
copies made of such documents.
SECTION 7.04. Commercially Reasonable Efforts; Notification. (a)
----------------------------------------------
Upon the terms and subject to the conditions set forth in this Agreement, each
Party agrees to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Restructuring Transaction, the TSAT Merger and (if the TSAT Merger shall not
first have been consummated) the Tempo Sale, including using its commercially
reasonable efforts to (i) obtain all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all commercially reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) obtain all necessary consents,
approvals or waivers from third parties, (iii) respond to requests for
information from the Department of Justice, the Federal Trade Commission, the
FCC and any other Governmental Entity relating to the Restructuring Transaction,
the TSAT Merger or the Tempo Sale, (iv) defend any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
all or any part of the Restructuring
61
Transaction, the TSAT Merger or the Tempo Sale, including seeking to have any
stay or temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (v) execute and deliver any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, TSAT and its Board of Directors shall (i) take all
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Roll-up Plan, including, for
avoidance of doubt, the Restructuring Transaction, the TSAT Merger, the Tempo
Sale, the Voting Agreements, this Agreement, the TSAT Merger Agreement, the TSAT
Tempo Agreement or the TSAT Stockholders Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Restructuring Transaction, the TSAT Merger, the Tempo Sale, the Voting
Agreements, this Agreement, the TSAT Merger Agreement, the TSAT Tempo Agreement
or the TSAT Stockholders Agreement, take all action necessary to ensure that the
Restructuring Transaction may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Restructuring Transaction, the TSAT Merger and
the Tempo Sale.
(b) Notwithstanding anything to the contrary in this Agreement, no
Party shall be required to agree to any prohibition, limitation or other
requirements that would (i) prohibit or limit the ownership or operation by such
Party or any of its subsidiaries or affiliates of any portion of the business or
assets of such Party or any of its subsidiaries or affiliates, or compel such
Party or any of its subsidiaries or affiliates to dispose of or hold separate
any portion of the business or assets of such Party or any of its subsidiaries
or affiliates, (ii) impose limitations on the ability of such Party to acquire
or hold, or exercise full rights of ownership of, any shares of capital stock of
the Company, including the right to vote the capital stock of the Company
acquired by it on all matters properly presented to the stockholders of the
Company, (iii) prohibit such Party or any of its subsidiaries or affiliates from
effectively controlling in any material respect the business or operations of
such Party or any of its subsidiaries or affiliates or (iv) change in any
respect the governance of the Company from
62
that set forth in the Charter and By-laws, or change such Party's rights under
the Stockholders Agreement or the ▇▇▇▇▇▇▇▇ Voting Agreement, or impose
limitations on the ability of such Party to exercise any such rights.
(c) Each Party shall give prompt written notice to the other Parties
of (i) any representation or warranty contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
-------- -------
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 7.05. Primestar Customers. None of TSAT, TWE, Newhouse, Cox,
--------------------
Comcast or MediaOne shall engage in any unusual selling or subscriber retention
practices (including rebates, give-backs, discounts and debt forgiveness outside
the ordinary course of business consistent with past practice) prior to the
Closing that are designed to inflate their Primestar Customer additions or
retentions beyond normal levels, and thereby increase the percentage of high
risk customers. The Company shall be entitled to review individual PRIMESTAR
subscriber records of each such Party to ensure that the foregoing has been
complied with, and instances of noncompliance shall be deemed to be
overstatements for purposes of the adjustment pursuant to Section 4.03(a) (and
shall be subject to the dispute resolution procedure set forth in Section
4.03(a)).
SECTION 7.06. GE Agreements. The Company shall succeed to and assume
--------------
the rights and obligations of the Partnership to GE under the existing
agreements between the Partnership and GE or its affiliates, including, without
limitation, the Ku-1 User Agreement between Primestar and GE, dated as of
February 8, 1990 and the Amended and Restated Memorandum of Agreement, dated as
of October 18, 1996, with GE.
SECTION 7.07. Equipment. Each party to this Agreement hereto
----------
acknowledges that the ground equipment and
63
"System" technology to be used by the Company in its high power business will be
General Instrument's DigiCipher II technology.
SECTION 7.08. Financing; Letters of Credit. (a) TSAT shall use its
-----------------------------
commercially reasonable efforts to arrange for financing sufficient to enable
the Company to pay the cash and assume the indebtedness contemplated to be paid
and assumed pursuant to Section 3.05, and shall consult with each of Comcast,
Cox, MediaOne, TWE, ▇▇▇▇▇▇▇▇ and GE in respect of the terms of such financing.
(b) TSAT shall negotiate in good faith with the banks in respect of
the TSAT Credit Agreement Amendment and the Supplemental Indentures and shall
use its best efforts to ensure that the TSAT Credit Agreement Amendment and the
Supplemental Indentures are entered into as soon as is reasonably practicable
after the date hereof.
(c) Each of Comcast, Cox, MediaOne and TWE, severally and not
jointly, agrees to maintain each of its Letters of Credit as in existence on the
date of this Agreement on the respective terms of such Letters of Credit, and in
consideration thereof, the Company shall pay to each such Party by wire transfer
of immediately available funds (i) on the Closing Date, a fee (the "Up-Front
--------
Fee") equal to 0.125% of the aggregate face amount of such Party's Letters of
---
Credit and (ii) on the first business day of each month during which such
Party's Letters of Credit are in effect, a fee (the "Monthly Fee") equal to
-----------
0.10% of the aggregate face amount of such Party's Letters of Credit
(retroactive to January 1, 1998). Each of Comcast, Cox, MediaOne and TWE,
severally and not jointly, agrees that prior to the expiration of its respective
Letters of Credit referred to above, such Party shall extend the maturity of
such Letters of Credit to June 30, 1999, and the Monthly Fee shall be payable in
respect of each such extended Letter of Credit in the same manner set forth
above. In addition, the Company shall reimburse each of Comcast, Cox, MediaOne
and TWE for all commitment fees and other costs incurred by such Parties in
respect of their Letters of Credit, as incurred, but only to the extent the
Company (directly or through TSAT) shall have agreed to reimburse such amounts
to TCI in respect of its Letters of Credit.
64
SECTION 7.09. Agreements. On the Closing Date, each Party and the
-----------
Company shall enter into the agreements referenced in Section 4.01.
SECTION 7.10. Compliance. (a) During the period from the date
-----------
hereof through the Closing Date, each Representor shall cause each of its
Subsidiaries, if any, to comply with and perform its obligations under each
Relevant Agreement of any such Subsidiary.
(b) During the period from the date hereof through the Closing Date,
TSAT shall cause the TSAT Sub to comply with and perform its obligations under
each Relevant Agreement of the TSAT Sub.
SECTION 7.11. ASkyB Transaction. (a) The Parties acknowledge and
-----------------
agree that the intent and desire of the Parties is to close both the
Restructuring Transaction and the transactions contemplated by the ASkyB
Agreement as promptly as possible and simultaneously if feasible. The Parties
hereto agree that the closing of the Restructuring Transaction is not contingent
on the closing of the transactions contemplated by the ASkyB Agreement. The
Parties hereto agree that if all conditions to the closing of the Restructuring
Transaction set forth in Article VIII are satisfied (or otherwise waived) prior
to the satisfaction (or waiver) of all conditions to the closing of the
transactions contemplated by the ASkyB Agreement, the Parties hereto agree
promptly to close the Restructuring Transaction.
(b) Subject to Section 7.04(b), the Parties shall cooperate with each
other in good faith to consummate the transactions contemplated by the ASkyB
Agreement. Subject to the preceding paragraph, the Parties shall also use
commercially reasonable efforts to respond to requests for information from the
Department of Justice, the Federal Trade Commission, the FCC and any other
Governmental Entity relating to the transactions contemplated by the ASkyB
Agreement, and to prepare and make such other filings as may be reasonably
required to apply for any approvals, authorizations and consents of any
Governmental Entity regarding the transactions contemplated by the ASkyB
Agreement as may be required by applicable law or regulation, and to prepare and
provide each other Party with the financial information regarding such Party and
its
65
Primestar Business (subject to appropriate confidentiality safeguards) as may be
reasonably required to comply with the requirements of such laws and
regulations, including the requirements of the Securities Act or the Exchange
Act relating to any filings to be made by TSAT or the Company in connection with
the transactions contemplated by the ASkyB Agreement, in each case on as prompt
a basis as is reasonably practicable.
SECTION 7.12. Indemnification. (a) Indemnification by the Company.
---------------- -------------------------------
If the Closing shall occur, the Company and its subsidiaries, jointly and
severally, shall indemnify each of TSAT, Comcast, Cox, MediaOne, TWE, ▇▇▇▇▇▇▇▇,
▇▇, each affiliate of TSAT, Comcast, Cox, MediaOne, TWE, ▇▇▇▇▇▇▇▇ or GE, and
each of their respective officers, directors, employees and agents against and
hold them harmless from (i) any and all losses, liabilities, claims, damages,
costs and expenses (including attorneys' fees and disbursements and other
reasonable professional fees and disbursements, whether or not litigation is
instituted) (collectively, "Losses") suffered or incurred by any such
------
indemnified party arising out of or resulting from any Primestar Liabilities of
any of TSAT, Comcast, Cox, MediaOne, TWE, ▇▇▇▇▇▇▇▇ or GE (or any of their
respective affiliates), (ii) any and all Losses arising out of or resulting from
the operation by the Company, its subsidiaries, or any of their respective
predecessors of the Primestar Business or the Digital Satellite Business or the
ownership by the Company, its subsidiaries, or any of their respective
predecessors of the Primestar Assets or any assets used primarily in the Digital
Satellite Business (the "Digital Satellite Assets"), whether before, on or after
------------------------
the Closing Date and (iii) any and all Losses arising out of or resulting from
the business, affairs, assets or liabilities of the Company and its
subsidiaries, whether arising before, on or after the Closing Date.
(b) Indemnification by Comcast, Cox, MediaOne, TWE, ▇▇▇▇▇▇▇▇ and GE.
----------------------------------------------------------------
If the Closing shall occur, each of Comcast, Cox, MediaOne, TWE, ▇▇▇▇▇▇▇▇ and
GE, severally and not jointly, shall indemnify the Company its subsidiaries and
each of their respective officers, directors, employees and agents against and
hold them harmless from, any and all Losses arising out of or resulting from (A)
such indemnitor's Excluded Liabilities, (B)(i) the operation by such indemnitor,
its subsidiaries or any of their respective
66
predecessors of any business other than the Primestar Business or the Digital
Satellite Business or (ii) the ownership by such indemnitor, its subsidiaries or
any of their respective predecessors of any assets other than Primestar Assets
or Digital Satellite Assets, in any such case whether before, on or after the
Closing Date or (C) any and all Losses arising out of or resulting from the
business, affairs, assets or liabilities, other than Primestar Liabilities, of
such indemnitor after the Closing Date.
(c) Indemnification by Comcast, Cox, MediaOne and GE. If the Closing
-------------------------------------------------
shall occur, each of Comcast, Cox, MediaOne and GE, severally and not jointly,
shall indemnify the Company its subsidiaries and each of their respective
officers, directors, employees and agents against and hold them harmless from,
any and all Losses arising out of or resulting from the breach of any of such
indemnitor's representations and warranties set forth in Section 5.02(b)(B).
(d) Procedures. Any party seeking indemnification hereunder shall
-----------
give prompt notice to the other party of any claim as to which indemnification
is sought, and the indemnifying party shall have the right to control, at its
own expense, the conduct of any such claim, and any litigation arising out of
such claim. An indemnifying party shall not be liable for any settlement of any
action or claim effected without its consent, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the party seeking
indemnification hereunder shall have the right, at its own expense, to
participate in (but not control) the defense of any third-party claim giving
rise to a claim of indemnification hereunder, and shall have the right to
control (with counsel of its own choice and at the expense of the indemnifying
party) the defense of any such third party claim if such third party claim shall
seek any material non-monetary damages or criminal penalties, or if the
indemnifying party shall also be a party or potential party to such claim (or
another claim based on substantially similar facts) and the party seeking
indemnification shall have received an opinion of counsel stating that the party
seeking indemnification has substantive defenses to such claim that are
different from and potentially inconsistent with those available to the
indemnifying party.
67
SECTION 7.13. Tax Indemnification. (a) Each of Comcast, Cox, and GE
--------------------
(each, in such capacity, a "MergerIndemnitor") shall indemnify the Company, its
----------------
affiliates and each of their respective officers, directors, employees,
stockholders, agents and representatives against and hold them harmless from (i)
all liability for Covered Taxes of the MergerIndemnitor's Subsidiary for the
Pre-Closing Tax Period, (ii) all liability (as a result of Treasury Regulation
(S) 1.1502-6(a) or otherwise) for Covered Taxes of any corporation which, prior
to the Closing, was affiliated with the MergerIndemnitor's Subsidiary or with
which the MergerIndemnitor's Subsidiary, prior to the Closing, otherwise filed a
consolidated, combined, unitary or aggregate Tax return, (iii) all liability for
Covered Taxes resulting from the merger of the MergerIndemnitor's Subsidiary
with and into the Company failing to qualify under either (I) Section 351(a) of
the Code coupled with a deemed liquidation of the MergerIndemnitor's Subsidiary
under Section 332 of the Code or (II) Section 368(a) of the Code, (except, in
either such case, if and to the extent any failure to so qualify attributable to
any action taken after the Closing by the Company or any of its subsidiaries,
other than any such action expressly required or contemplated by this
Agreement), and (iv) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the foregoing.
(b) Each of MediaOne, ▇▇▇▇▇▇▇▇, and TWE (each, in such capacity, a
"ContributionIndemnitor") shall indemnify the Company, its affiliates and each
-----------------------
of their respective officers, directors, employees, stockholders, agents and
representatives against and hold them harmless from (i) in the case of a
transfer of assets (other than stock of a corporation) to the Company by such
ContributionIndemnitor, all liability for Covered Taxes attributable to the
operation or ownership of such assets during the Pre-Closing Tax Period, (ii) in
the case of a transfer of stock of a corporation (a "Contributed Corporation")
-----------------------
to the Company by such ContributionIndemnitor, all liability for Covered Taxes
of the Contributed Corporation for the Pre-Closing Tax Period, (iii) in the case
of a Contributed Corporation, all liability (as a result of Treasury Regulation
(S)1.1502-6(a) or otherwise) for Covered Taxes of any corporation which, prior
to the Closing, was affiliated with the Contributed Corporation or with which
the Contributed Corporation, prior to the Closing, otherwise filed a
consolidated, combined,
68
unitary or aggregate Tax return, and (iv) all liability for any reasonable
legal, accounting, appraisal, consulting or similar fees and expenses relating
to the foregoing.
(c) Notwithstanding the foregoing, each MergerIndemnitor and
ContributionIndemnitor (together, each an "Indemnitor") shall not be required to
----------
indemnify and hold harmless the Company and its affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives, and the Company shall indemnify each Indemnitor, its affiliates
and each of their respective officers, directors, employees, stockholders,
agents, and representatives against and hold them harmless from, (i) all
liability for Covered Taxes of the Company for the Post-Closing Tax Period, (ii)
all liability for Covered Taxes resulting from the merger of the
MergerIndemnitor's Subsidiary with and into the Company failing to qualify under
Section 368(a) of the Code if and to the extent such failure is attributable to
any action taken after the Closing by the Company or any of its subsidiaries
(other than any such action expressly required or contemplated by this
Agreement), and (iii) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the foregoing.
(d) If a MergerIndemnitor is required to make an indemnity payment
pursuant to clause (iii) of Section 7.13(a) by virtue of a merger failing to
qualify under Section 368(a) of the Code and, as a result of such failure, the
Company or any of its subsidiaries actually realizes a tax benefit in a Post-
Closing Tax Period (including by virtue of an increase in the tax basis of the
assets acquired in the merger to fair market value), then the Company shall pay
to such MergerIndemnitor the amount of such tax benefit within ten days of
having actually realized such benefit (including at the time estimated Tax
payments are due). For this purpose, the Company or any of its subsidiaries
shall be deemed to actually realize a tax benefit to the extent, and at such
time as, the amount of the Tax payable by the Company or such subsidiary for the
relevant taxable period is reduced below the amount of Tax that the Company or
such subsidiary would otherwise have been required to pay for such taxable
period at such time if the merger had qualified under Section 368(a) of the
Code.
69
SECTION 7.14. Post-Closing Cooperation; Confidentiality. (a) For a
------------------------------------------
period of 180 days after the Closing, each Party shall cooperate with the
Company to ensure the orderly transition of such Person's Primestar Business to
the Company. Each Party and the Company shall cooperate with one another in
connection with the furnishing of information that is reasonably necessary for
financial reporting and accounting matters and in respect of compliance with
disclosure and reporting requirements under the Securities Act and the Exchange
Act.
(b) After the Closing, upon reasonable written notice, the Company
and each other Party shall furnish or cause to be furnished to one another, as
promptly as practicable, such information and assistance (to the extent within
the control of such Party) relating to such Party's Primestar Assets or
Partnership Interests (including access to books and records) as is reasonably
necessary for the filing of all Tax returns, and making of any election related
to Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding related to any Tax
return. The Company and each other Party shall cooperate with each other in the
conduct of any audit or other proceeding relating to Taxes involving such
Party's Primestar Assets or Partnership Interest. The Company and each other
Party shall retain the books and records relating to such Party's Primestar
Assets and Partnership Interest for a period of seven years after the Closing.
With respect to ad valorem Taxes attributable to the conduct of a Party's
Primestar Business prior to the Closing Date, the Company shall prepare the
first draft of each such Tax return and shall provide such draft to the
applicable Party for review and comment, and such Party shall file such Tax
return and shall be liable for, and shall pay, the amount of such Taxes as due
and shall reimburse the Company for its reasonable out-of-pocket costs and
expenses incurred in the preparation of such Tax returns.
(c) Each of Comcast and Cox, severally and not jointly, agrees that
from and after the Closing, the Company shall have the right and authority (x)
to collect for its own account all Post-Closing Accounts Receivable, (y) to
collect for the account of Comcast or Cox, as applicable, all Excluded Accounts
Receivable and (z) to collect for the respective accounts of the Company and
Comcast or Cox, as
70
applicable, (as provided herein) all accounts receivable that comprise both
Post-Closing Accounts Receivable and Excluded Accounts Receivable. Each of
Comcast and Cox, severally and not jointly, agrees to promptly deliver (or cause
its subsidiaries to deliver) to the Company any cash or other property received
directly or indirectly by it with respect to the Post-Closing Accounts
Receivable, including any amounts payable as interest. The Company agrees to
promptly deliver to Comcast or Cox, as applicable, any cash or other property
received directly or indirectly by it with respect to Excluded Accounts
Receivable of Comcast or Cox, as applicable. In the event that any amounts
received by the Company, Comcast or Cox, as applicable, relate to both Post-
Closing Accounts Receivable and Excluded Accounts Receivable, such amounts shall
be duly allocated by the recipient to the appropriate categories and the amounts
so allocated shall be delivered to the appropriate party as provided above.
(d) For a period of three years after the Closing, except as required
by law, each Party will hold, and will cause its respective officers and
employees to hold, any nonpublic information included in such Party's Primestar
Records in confidence until such time as such information becomes publicly
available (otherwise than through the wrongful act of any such Person).
SECTION 7.15. TCI Agreements. TSAT shall cause the Transition
---------------
Services Agreement to terminate effective on or prior to the Closing Date.
SECTION 7.16. Employee Matters. If the Closing shall occur, the
-----------------
Company shall make an offer of employment to each Selected Employee of TWE,
▇▇▇▇▇▇▇▇, MediaOne, Comcast and Cox, or any of their respective subsidiaries,
and shall take such other steps as shall be reasonably required to effectuate
the provisions of this Agreement in respect of such Selected Employees.
SECTION 7.17. Other Stockholder Approvals. (a) As soon as
----------------------------
practicable after the date of this Agreement and in any event prior to the TSAT
Stockholders Meeting, TSAT, as the sole stockholder of the Company, shall
execute and deliver a written consent of sole stockholder, approving and
adopting this Agreement, the Merger Agreements, the Asset
71
Transfer Agreements, the TSAT Merger Agreement and the TSAT Tempo Agreement.
(b) As soon as practicable after the date of this Agreement and in any
event prior to the TSAT Stockholders Meeting, Cox, as the sole stockholder of
Cox Sub, Comcast, as the sole stockholder of Comcast Sub I and Comcast Sub II,
and GE, as the sole stockholder of GE Sub, shall execute and deliver a written
consent of sole stockholder, approving and adopting the respective Merger
Agreements to which such respective Subsidiaries are parties.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.01. Conditions Precedent. The rights and obligations of
---------------------
each Party shall be subject to the satisfaction or waiver on or prior to the
Closing Date of each of the following conditions precedent:
(a) Strategic Plan. The five year strategic plan of the Company
--------------
shall have been approved by a Super-majority Vote (in the form approved,
the "Five Year Plan").
--------------
(b) Stockholder Approval. The TSAT Stockholder Approval shall have
---------------------
been obtained.
(c) HSR Act. The waiting period (and any extension thereof)
--------
applicable to the Restructuring Transaction under the HSR Act shall have
been terminated or shall have expired.
(d) Communications Act. All orders and approvals of the FCC required
-------------------
in connection with the consummation of the Restructuring Transaction, if
any, shall have been obtained or made.
(e) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Restructuring Transaction shall be in effect.
72
(f) NASDAQ Listing. The shares of Class A Stock and Class B Stock
---------------
issuable to the stockholders of TSAT pursuant to the TSAT Merger Agreement
and under the TSAT Stock Plans shall have been approved for listing on
NASDAQ, subject to official notice of issuance.
(g) Form S-4. The Form S-4 shall have become effective under the
---------
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(h) Secretary's Certificates. Each Party shall have received
-------------------------
certificates from a Secretary or Assistant Secretary of each other Party
(and any Subsidiary of any such Party that is a party to the Drop Down
Agreement or an Asset Transfer Agreement or Merger Agreement) (i)
certifying organizational documents of such Party and relevant board (or
partnership) resolutions authorizing the transactions contemplated by this
Agreement, the Drop Down Agreement (if applicable) and any applicable Asset
Transfer Agreement or Merger Agreement and (ii) as to the incumbency of
each person signing any Relevant Agreement on behalf of such Party or
Subsidiary.
SECTION 8.02. Conditions to Obligations of each of Comcast, Cox,
--------------------------------------------------
MediaOne, TWE, ▇▇▇▇▇▇▇▇ and GE. The obligations of each of Comcast, Cox,
-------------------------------
MediaOne, TWE, ▇▇▇▇▇▇▇▇ and GE are further subject to the following conditions:
(a) Representations and Warranties. The representation and
-------------------------------
warranties of each other Party set forth in this Agreement (and of ▇▇▇▇▇▇
set forth in the ▇▇▇▇▇▇ Letter) that are qualified as to materiality shall
be true and correct, and the representations and warranties of each other
Party set forth in this Agreement (and of ▇▇▇▇▇▇ set forth in the ▇▇▇▇▇▇
Letter) 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, except as otherwise contemplated by this Agreement, and such
Party shall have received certificates signed on behalf of each such other
Party by the chief executive officer and the chief financial officer of
such other Party (and from ▇▇▇▇▇▇) to such effect.
73
(b) Performance of Obligations. Each other Party (including any
---------------------------
Subsidiary of such other Party) and each TSAT Sub (and ▇▇▇▇▇▇) shall have
performed in all material respects all obligations required to be performed
by it under each of its Relevant Agreements (and under the ▇▇▇▇▇▇ Letter)
at or prior to the Closing Date, and such Party shall have received a
certificate signed on behalf of each such other Party (and Subsidiary) and
the TSAT Sub, by the chief executive officer and the chief financial
officer of such other Party (or Subsidiary) and the TSAT Sub (and from
▇▇▇▇▇▇) to such effect.
(c) Financing. All financing arrangements of the Company (including
---------
those of TSAT to be assumed by the Company or to remain in effect after the
Effective Time) shall be in accordance with the Five Year Plan.
(d) Capacity. The Company shall have sufficient credit lines and
--------
borrowing capacity to pay the cash and assume the indebtedness contemplated
to be paid and assumed pursuant to Section 3.05.
(e) Letters of Credit. The Letters of Credit of TCI and each other
-----------------
Party (or their respective affiliates, as applicable) shall be in effect,
and TCI shall have agreed in writing with TSAT to extend the maturity of
its Letters of Credit to June 30, 1999, and the consideration payable to
TCI in respect of its Letters of Credit shall be the same as that for the
other Parties as set forth in Section 7.08(c).
(f) No Litigation. There shall not be pending or threatened any
-------------
suit, action or proceeding by any Governmental Entity that has a reasonable
likelihood of success, (i) challenging the acquisition by such Party of any
shares of capital stock of the Company, seeking to restrain or prohibit the
consummation of the Restructuring Transaction or seeking to obtain from
such Party or the Company any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company or such Party or any of
their respective subsidiaries or affiliates of any portion of the business
or assets of the Company, such Party or any of their respective
subsidiaries or
74
affiliates, or to compel the Company, such Party or any of their respective
subsidiaries or affiliates to dispose of or hold separate any portion of
the business or assets of the Company, such Party or any of their
respective subsidiaries or affiliates, as a result of the Restructuring
Transaction, (iii) seeking to impose limitations on the ability of such
Party to acquire or hold, or exercise full rights of ownership of, any
shares of capital stock of the Company, including the right to vote the
capital stock of the Company acquired by it on all matters properly
presented to the stockholders of the Company, (iv) seeking to prohibit the
Company, such Party or any of their respective subsidiaries or affiliates
from effectively controlling in any material respect the business or
operations of the Company, such Party or any of their respective
subsidiaries or affiliates, (v) seeking to change in any respect the
governance of the Company from that set forth in the Charter and By-laws,
or to change such Party's rights under the Stockholders Agreement or the
▇▇▇▇▇▇▇▇ Voting Agreement, or seeking to impose limitations on the ability
of such Party to exercise any such rights or (vi) which otherwise is
reasonably likely to have a Material Adverse Effect on the Company.
(g) State Takeover Statutes. TSAT and the Board of Directors of TSAT
------------------------
shall have taken all actions required to render inapplicable to the Roll-up
Plan, including, for avoidance of doubt, the Restructuring Transaction, the
TSAT Merger, the Tempo Sale, the Voting Agreements, this Agreement, the
TSAT Merger Agreement, the TSAT Tempo Agreement and the TSAT Stockholders
Agreement, any state takeover statute or similar statute or regulation that
would otherwise apply or purport to apply to such transactions and
agreements.
(h) Tax Representation Letter. Each other Party shall have delivered
--------------------------
a tax representation letter, dated the Closing Date, in the same form as
the letter delivered by each such Party on the date of this Agreement.
75
SECTION 8.03. Conditions to Obligations of TSAT. The obligations of
----------------------------------
TSAT are further subject to the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of each other Party set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of each other Party set forth in this
Agreement 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, except as otherwise contemplated by this Agreement, and
TSAT shall have received certificates signed on behalf of each such other
Party by the chief executive officer and the chief financial officer of
such other Party to such effect.
(b) Performance of Obligations. Each other Party (including any
---------------------------
Subsidiary of such other Party) shall have performed in all material
respects all obligations required to be performed by it under each of its
Relevant Agreements at or prior to the Closing Date, and TSAT shall have
received a certificate signed on behalf of each such other Party (and
Subsidiary) by the chief executive officer and the chief financial officer
of such other Party (or Subsidiary) to such effect.
(c) Letters of Credit. The Letters of Credit of each other Party (or
-----------------
their respective affiliates, as applicable) shall be in effect.
(d) No Litigation. There shall not be pending or threatened any
-------------
suit, action or proceeding by any Governmental Entity that has a reasonable
likelihood of success, (i) seeking to restrain or prohibit the consummation
of the Restructuring Transaction or seeking to obtain from TSAT or the
Company any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company or TSAT or any of their respective
subsidiaries or affiliates of any portion of the business or assets of the
Company, TSAT or any of their respective affiliates, or to compel the
Company, TSAT or any of their respective affiliates to dispose of or hold
76
separate any portion of the business or assets of the Company, TSAT or any
of their respective affiliates, as a result of the Restructuring
Transaction, (iii) seeking to prohibit the Company or any of its
subsidiaries from effectively controlling in any material respect the
business or operations of the Company or its subsidiaries, (iv) seeking to
impose limitations on the ability of TSAT or any Person that (as of the
date of this Agreement) holds 5% or more of the TSAT A Stock or TSAT B
Stock to acquire or hold, or exercise full rights of ownership of, any
shares of capital stock of the Company, including the right to vote all
capital stock of the Company acquired by such Person pursuant to the
Restructuring Transaction on all matters properly presented to the
stockholders of the Company, (v) seeking to change in any respect the
governance of the Company from that set forth in the Charter and By-laws,
or to change TSAT's rights under the Stockholders Agreement, or seeking to
impose limitations on the ability of TSAT to exercise any such rights or
(vi) which otherwise is reasonably likely to have a Material Adverse Effect
on the Company.
(e) Tax Representation Letter. Each other Party shall have delivered
--------------------------
a tax representation letter, dated the Closing Date, in the same form as
the letter delivered by each such Party on the date of this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at any
------------
time prior to the Effective Time, whether before or after the vote of the
stockholders of TSAT at the TSAT Stockholders Meeting:
(a) by mutual written consent of the parties hereto; or
(b) by any Party:
(i) if, upon a vote at a duly held TSAT Stockholders Meeting or
any adjournment thereof,
77
the TSAT Stockholder Approval shall not have been obtained; or
(ii) if any judgment, decree, injunction, rule or order of any
Governmental Entity which prohibits, restricts or delays consummation
of the Restructuring Transaction shall have become final and
nonappealable;
provided, however, that the Party seeking termination is not in breach in any
-------- -------
material respect of any of its representations, warranties, covenants or
agreements contained in this Agreement.
SECTION 9.02. Effect of Termination. In the event of termination of
----------------------
this Agreement by any Party as provided in Section 9.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation
hereunder on the part of any Party, other than this Section 9.02 and Article X
and except to the extent that such termination results from the wilful and
material breach by a Party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the
----------
Parties at any time before or after the TSAT Stockholder Approval; provided,
--------
however, that after any such approval, there shall be made no amendment that by
-------
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the Parties.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
------------------
Time, the Parties may (a) extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 9.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its
78
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Nonsurvival of Representations and Warranties. Except
----------------------------------------------
as set forth in either of the next two sentences, none of the representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing. The representations and warranties of TSAT
in this Agreement shall survive the Closing solely for purposes of Section
5.02(a) of the TSAT Merger Agreement, and shall terminate on the earlier of (i)
the TSAT Closing Date and (ii) termination of the TSAT Merger Agreement. The
representation and warranty of MediaOne, Comcast, Cox and GE set forth in
Section 5.02(b)(B) shall survive the Closing solely for purposes of Section
7.12(c) and shall terminate at the close of business 18 months following the
Closing Date. This Section 10.01 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective
Time.
SECTION 10.02. Notices. Any notice or other communication that is
--------
required or that may be given in connection with this Agreement shall be in
writing and shall be delivered personally, telecopied or sent by certified,
registered or express mail or by Federal Express or similar courier service,
postage prepaid, and shall be deemed given when so received if delivered
personally or by telecopy or, if mailed, seven (7) calendar days after the date
of mailing (three (3) calendar days in the case of express mail, Federal Express
or similar courier service), as follows:
If to the Company:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
79
With a separate copy delivered to:
▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇ ▇. Leaf, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to TWE:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of General Counsel,
Time Warner Cable
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a separate copy delivered to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a separate copy delivered to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Comcast:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
80
With a separate copy delivered to:
Comcast Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Cox:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a separate copy delivered to:
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (202) 776-222
If to MediaOne:
US WEST Media Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a separate copy delivered to:
US WEST Media Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
81
If to GE:
Four ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a separate copy delivered to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to TSAT:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a separate copy delivered to:
▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of ▇▇▇▇ ▇. Leaf, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.03. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Notwithstanding the foregoing, this
Agreement may be assigned, in whole but not in part, to any Person who acquires
all or substantially all the assets of a party (whether by asset transfer, stock
transfer, merger, spin-off or other business combination or transaction or
series of transactions) so long as such assignee assumes in writing all of the
assignor's obligations under this Agreement; provided, that the assignor shall
--------
remain liable for such obligations unless such assignee (or any guarantor of
such assignee's obligations under such assumption) is, at the time of such
assignment and after giving effect to the transactions to be
82
consummated in connection with such assignment, at least as creditworthy as the
assignor was immediately prior to the assignment (and, in the case of MediaOne,
as creditworthy as US West was immediately prior to the assignment), and such
assignee agrees in writing that the other parties hereto shall be third party
beneficiaries of such assumption, in which case the assignor shall be released
in writing by the other parties hereto from such assumed obligations. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 10.04. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 10.05. Entire Agreement; No Third-Party Beneficiaries. This
-----------------------------------------------
Agreement, the Merger Agreements, the Asset Transfer Agreements, the TSAT Merger
Agreement, the Stockholders Agreement, the US West Guarantee, the ▇▇▇▇▇▇ Letter,
the Registration Rights Agreement, the ▇▇▇▇▇▇▇▇ Voting Agreement, the Voting
Agreements, the Reimbursement Agreements, the Tax Sharing Agreement, the TSAT
Stockholders Agreement, the TSAT Tempo Agreement and the Drop Down Agreement
(a) constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
Restructuring Transaction and (b) except for the provisions
83
of Sections 7.12, 7.13 and 10.03, are not intended to confer upon any person
other than the parties any rights or remedies.
84
SECTION 10.06. Governing Law. This Agreement shall be governed by
--------------
and construed in accordance with the internal laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof, except to the extent the laws of the State of
Delaware are mandatorily applicable to the TSAT Merger or any other merger under
any of the Merger Agreements.
SECTION 10.07. Enforcement; Exclusive Jurisdiction. (a) The Parties
------------------------------------
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the State of New York or the State of Delaware and any
court of the United States located in the Borough of Manhattan in New York City
or the State of Delaware.
(b) With respect to any suit, action or proceeding relating to this
Agreement (collectively, a "Proceeding"), each party to this Agreement
----------
irrevocably:
(i) consents and submits to the exclusive jurisdiction of the courts
of the States of New York and Delaware and any court of the United States
located in the Borough of Manhattan in New York City or the State of
Delaware;
(ii) waives any objection which such party may have at any time to the
laying of venue of any Proceeding brought in any such court, waives any
claim that such Proceeding has been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceeding, that
such court does not have jurisdiction over such party; and
(iii) consents to the service of process at the address set forth for
notices in Section 10.02 herein; provided that such manner of service of
--------
process shall not preclude the service of process in any other manner
permitted under applicable law.
85
SECTION 10.08. Counterparts. This Agreement may be executed by the
-------------
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by all
of the parties hereto.
SECTION 10.09. Headings. Headings of the Articles and Sections of
---------
this Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
IN WITNESS WHEREOF, each Party has caused this Agreement to be duly
executed as of the day first written above.
TCI SATELLITE ENTERTAINMENT, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Vice President/CFO
PRIMESTAR, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
TIME WARNER ENTERTAINMENT COMPANY, L.P.,
by AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION,
a general partner,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Vice President
86
ADVANCE/▇▇▇▇▇▇▇▇ PARTNERSHIP,
by ADVANCE COMMUNICATION CORP., as
general partner
by /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
COMCAST CORPORATION,
by /s/ ▇▇▇▇. ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇ COMMUNICATIONS, INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
MEDIAONE OF DELAWARE, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: EVP - Finance & Strategy
GE AMERICAN COMMUNICATIONS, INC.,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and CEO
