EXHIBIT 10.1
PURCHASE AGREEMENT
dated as of
November 30, 1998
by and among
AMERICAN SKY BROADCASTING, LLC,
THE NEWS CORPORATION LIMITED,
MCI TELECOMMUNICATIONS CORPORATION
and
ECHOSTAR COMMUNICATIONS CORPORATION
Table of Contents
Page
1. Definitions..........................................................1
2. Purchase and Sale....................................................7
(a) Shares to be Purchased by the Transferors.......................7
(b) Assets to be Transferred to Seller..............................8
(c) Assumption of Liabilities.......................................9
(d) The Closing.....................................................9
(e) Deliveries at Closing...........................................9
3. Representations and Warranties of Seller............................10
(a) Representations and Warranties True, Correct and Complete......10
(b) Organization of Seller and the Significant Subsidiaries........10
(c) Power and Authority of Seller..................................10
(d) Power and Authority of Significant Subsidiaries................11
(e) Corporate Authorization........................................11
(f) Governmental Authorization.....................................11
(g) Noncontravention...............................................12
(h) Capitalization..................................................12
(i) SEC Filings....................................................13
(j) Absence of Certain Changes.....................................14
(k) Brokers' Fees...................................................14
4. Representations and Warranties of the Transferors...................14
(a) Representations and Warranties True, Correct and Complete......15
(b) Organization of the Transferors................................15
(c) Power and Authority of the Transferors.........................15
(d) Corporate Authorization........................................15
(e) Governmental Authorization.....................................16
(f) Noncontravention...............................................16
(g) Gilbert Property...............................................17
(h) Assigned Contracts.............................................19
(i) Intellectual Property..........................................20
(j) Litigation.....................................................20
(k) Legal Compliance...............................................20
(l) FCC Matters....................................................22
(m) Transferred Assets.............................................23
(n) Broker's Fees..................................................23
(o) Resale.........................................................23
5. Further Agreements of the Parties...................................24
(a) General........................................................24
(b) Notices and Consents...........................................24
(c) Operation of Business..........................................25
(d) Assignment of the MCI FCC License..............................26
(e) Earth Station Authorizations...................................27
(f) Satellites.....................................................27
(g) Sony Contract..................................................29
(h) Full Access....................................................29
(i) Notice of Developments.........................................30
(j) NDS Equipment..................................................30
(k) Abeyance of EchoStar Litigation................................30
(l) Transfer Taxes and Prorations..................................31
(m) Further Assurances.............................................31
(n) No Solicitation................................................31
(o) Bundling.......................................................31
(p) Casualty Condemnation..........................................31
(q) Title Insurance................................................32
(r) Surveys........................................................33
6. Conditions to Obligation to Close...................................33
(a) Conditions to Obligation of the Transferors....................33
(b) Conditions to Obligation of Seller.............................34
7. Remedies for Breach of this Agreement...............................36
(a) Survival.......................................................36
(b) Indemnification Provisions for Benefit of the Transferors......36
(c) Indemnification Provisions for Benefit of Seller...............36
(d) Notification; Rights of Parties to Settle or Defend............37
(e) Exclusive Remedy...............................................37
(f) Limitations....................................................38
8. Termination.........................................................38
(a) Termination of Agreement.......................................38
(b) Effect of Termination..........................................39
9. Miscellaneous.......................................................40
(a) Press Releases and Announcements...............................40
(b) No Third-Party Beneficiaries...................................41
(c) Entire Agreement...............................................41
(d) Succession and Assignment......................................41
(e) Counterparts...................................................41
(f) Headings.......................................................41
(g) Notices........................................................41
(h) Governing Law..................................................42
(i) Amendments and Waivers.........................................42
(j) Severability...................................................43
(k) Expenses.......................................................43
(l) Construction...................................................43
(m) Restrictions on Transfer........................................43
(n) Legends........................................................44
(o) Specific Performance...........................................45
(p) Incorporation of Schedules.....................................45
Schedules
2(b)(i)(I) Gilbert Property
2(b)(i)(II) Furniture, Fixtures and Equipment
2(b)(ii) Gilbert Contracts
2(b)(v) Satellite Contracts
3(g) Noncontravention
3(h) Capitalization
3(i) SEC Filings
3(j) Absence of Certain Changes
4(f) Noncontravention
4(g)(i) Permitted Liens
4(g)(iii) Gilbert Property Improvements
4(g)(v) Insurance Policies
4(h) Assigned Contracts
4(j) Litigation
4(k) Legal Compliance
4(l)(i) FCC Matters
4(l)(ii) Earth Station Authorizations
4(l)(v) Insurance Policies
6(a)(ii) Consents
6(b)(ii) Consents
Exhibits
A Components License Agreement
B Fox News Channel Affiliation Agreement
C Registration Rights Agreement
D Retransmission Consent Agreement
E Settlement Agreement and Mutual Release
F Set Top Box Agreement
G Voting Agreement
H Abeyance Stipulation
I Special Warranty Deed
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of
November 30, 1998, by and among American Sky Broadcasting, LLC, a limited
liability company organized under the laws of the State of Delaware ("ASkyB");
The News Corporation Limited, a corporation organized under the laws of South
Australia ("News Corporation"); MCI Telecommunications Corporation, a
corporation organized under the laws of the State of Delaware ("MCI"); and
EchoStar Communications Corporation, a corporation organized under the laws of
the State of Nevada ("Seller"). ASkyB, News Corporation and MCI are referred to
collectively herein as the "Transferors." ASkyB, News Corporation, MCI and
Seller are referred to collectively herein as the "Parties."
RECITALS
WHEREAS, the Transferors own certain assets relating to the direct
broadcast satellite ("DBS") business;
WHEREAS, the Transferors desire to dispose of such assets, and Seller
desires to acquire such assets; and
WHEREAS, the Transferors have agreed to transfer such assets to Seller (or
one or more direct or indirect wholly owned Subsidiaries of Seller) in
consideration for, among other things, shares of Seller's Class A Common Stock,
par value $.01 per share ("Class A Common Stock"), upon the terms and subject to
the conditions set forth herein
NOW, THEREFORE, in consideration of the premises and the respective
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
"Acceptable Alternative Arrangement" means any arrangement
satisfactory to Seller and its counsel and to the Transferors and their
respective counsel that: (a) to the fullest extent feasible in light of any
regulatory constraint assures the Parties as nearly as possible the same
economic results as if the transactions contemplated by this Agreement and the
Collateral Agreements had occurred as contemplated herein and therein; provided,
however, that no Party shall be obligated to enter into any such arrangement
which would require it to make expenditures or dispose of assets in excess of
the amount of expenditures or assets contemplated by this Agreement and the
Collateral Agreements unless compensated for such arrangement; (b) would, in the
reasonable judgment of Seller and the Transferors, be reasonably expected either
not to require FCC consent or to result in such consent, if required; and (c)
would, in the reasonable judgment of Seller and the Transferors, be reasonably
expected to result in clearance of the arrangement by the relevant antitrust
enforcement agencies, if required.
"Affiliate" means any person or entity controlling, controlled
by, or under common control with, an entity. Control of any entity shall mean
the possession, direct or indirect, of the powers to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"ASkyB Buyer" has the meaning set forth in Section 2(a)(i)(A
hereof.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could reasonably
form the basis for any specified consequence.
"Bureau Order" means an order released by a bureau or other
division or subdivision of the FCC under delegated authority which conditionally
grants (and such condition is a Material Condition which is unacceptable to
Seller) the FCC's consent to the assignment of the MCI FCC License to Seller or
Newco.
"Collateral Agreements" means the Registration Rights
Agreement, the Fox News Channel Affiliation Agreement, the Settlement and Mutual
Release Agreement, the Components License Agreement, the Retransmission Consent
Agreement, the Set Top Box Agreement and the Voting Agreement.
"Communications Act" means the federal Communications Act of
1934, as amended.
"Components License Agreement" means the Components License
for NDS MPEG 2, DVB Conformant Digital Receivers, to be entered into by and
between NDS Limited and EchoStar Technologies Corporation, containing the terms
and conditions set forth in Exhibit A annexed hereto.
"Current Market Price" means the average of the daily closing
prices per share of Class A Common Stock for the 20 trading days ending on (a)
with respect to Section 2(a)(ii), the date that is two trading days prior to the
Closing Date; (b) with respect to Section 5(c)(i)(B), the date on which Seller
enters the contract governing the purchase in question; provided, however that
if such contract provides for a price which, whether or not so specified, was
based on the price reported on a national securities exchange at the time of
negotiation of the business arrangement or the execution of the agreement, then
Current Market Price means the price so provided; and provided further, that in
the case of shares issued pursuant to Seller's Employee Stock Purchase Plan,
Current Market Price means 85% of the closing price of Class A Common Stock on
the last business day of each calendar quarter in which shares were deemed sold
under such plan; and (c) with respect to 5(c)(i)(C), the date of the issuance or
grant of the rights, options or warrants in question. The closing price for each
day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the closing bid price regular way, in
either case on the principal national securities exchange (including, for
purposes hereof, The Nasdaq National Market ("Nasdaq")) on which the Class A
Common Stock is listed or admitted to trading or, if the Class A Common Stock is
not listed or admitted to trading on any national securities exchange, the
highest reported bid price for the Class A Common Stock as furnished by the
National Association of Securities Dealers, Inc. through Nasdaq or a similar
organization if Nasdaq is no longer reporting such information. If on any such
date the Class A Common Stock is not listed or admitted to trading on any
national securities exchange and is not quoted by Nasdaq or any similar
organization, the fair value of a share of Class A Common Stock on such date, as
determined in good faith by the Board of Directors of Seller, whose
determination shall be conclusive absent manifest error, shall be used.
"Damages" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, diminution in value, obligations,
Taxes, liens, losses, expenses, and fees, including all attorneys' fees and
court costs, whether or not arising out of a claim by a third party.
"Earth Station Facilities" means (a) the six earth station
facilities located on the Gilbert Property and corresponding to the Earth
Station Authorizations, and (b) the six additional 6.1 meter receive-only earth
station facilities also located on the Gilbert Property, with respect to which
there has been no FCC registration.
"Environmental Laws" means all foreign, federal, state and
local laws, statutes, ordinances, rules and regulations, now or hereafter in
effect, and in each case as amended or supplemented from time to time, and any
permits issued thereunder, relating to the protection of human health and
safety, the environment, or hazardous or toxic substances or wastes, pollutants
or contaminants.
"FCC" means the Federal Communications Commission and any
successor agency thereto.
"FCC Approval" means an order released by the FCC (and not by
a bureau or other division or subdivision thereof pursuant to delegated
authority) which is in full force and effect and has not been reversed,
reconsidered, stayed, enjoined, set aside, annulled or suspended, and the thirty
(30) day period for any such action on the FCC's own motion has expired, and
which grants, or conditionally grants (other than subject to a Material
Condition which is unacceptable to Seller), the FCC's consent to the assignment
of the MCI FCC License to Seller or Newco; provided, however, that timely
rejection of an FCC order by Seller or Newco shall not affect the status of such
order as an FCC Approval.
"FCC Order" means an order released by the FCC (and not by a
bureau or other division or subdivision thereof pursuant to delegated authority)
which is in full force and effect and has not been reversed, reconsidered,
stayed, enjoined, set aside, annulled or suspended, and the thirty (30) day
period for any such action on the FCC's own motion has expired, and which
conditionally grants (and such condition is a Material Condition which is
unacceptable to Seller) or denies the FCC's consent to the assignment of the MCI
FCC License to Seller or Newco; provided, however, that timely rejection of an
FCC order by Seller or Newco shall not affect the status of such order as an FCC
Order.
"Fox News Channel Affiliation Agreement" means the Fox News
Channel Affiliation Agreement, entered into by and between EchoStar Satellite
Corporation and Fox News Network, LLC as of the date hereof, annexed as Exhibit
B hereto.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
"Intellectual Property" means all (a) patents, patent
applications, patent disclosures and improvements thereto, (b) trademarks,
service marks, trade dress, logos, trade names and corporate names and
registrations and applications for registration thereof, (c) copyrights and
registrations and applications for registration thereof, (d) mask works and
registrations and applications for registration thereof, (e) computer software,
data and documentation, (f) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, (g) other proprietary rights, and (h) copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable inquiry
and investigation.
"Liability" means any liability or obligation of any nature
(whether known or unknown, whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"LIBOR Rate" means relative to any interest period, the rate
of interest determined as follows: (a) on the interest determination date, the
lending party shall obtain the offered quotation(s) that appear on the Reuter's
Screen for Dollar deposits for a period comparable to such interest period. If
at least two such offered quotations appear on the Reuter's Screen, the LIBOR
Rate shall be the arithmetic average (rounded upwards, if necessary to the
nearest 1/16th of 1%) of such offered quotations, as determined by the lending
party; or (b) if the Reuter's Screen is not available or has been discontinued,
the LIBOR Rate shall be the rate per annum which the lending party in good faith
determines to be the arithmetic average (rounded as aforesaid) of the offered
quotations for Dollar deposits in an amount comparable to the lending party's
share of the relevant amount in respect of which the LIBOR Rate is being
determined for a period comparable to the relevant LIBOR Interest Period that
lending banks in New York City selected by the lending party are quoting at
11:00 A.M. on the interest determination date in New York Interbank Market to
major international banks.
"Liens" means, with respect to any property or assets, any
mortgage, deed of trust, pledge, hypothecation, assignment, security interest,
lien, charge, easement, encumbrance, preference, priority or other security
agreement or preferential arrangement of any kind or nature with respect to such
property or assets (including, without limitation, any conditional sale or other
title retention agreement having substantially the same economic effect as any
of the foregoing).
"Material Condition" has the meaning set forth in Section 5(d)
hereof.
"MCI Buyer" has the meaning set forth in Section 2(a)(i)(B)
hereof.
"MCI FCC License" means MCI's FCC authorization to construct,
launch and operate satellites in the Direct Broadcast Satellite Service
operating over 28 frequency channels at the 110(0) West Longitude orbital
location (FCC DA 96-2165, released December 20, 1996).
"Newco" has the meaning set forth in Section 2(b) hereof.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Person" means an individual, partnership, trust, corporation,
joint venture, limited liability company, association, government bureau or
agency or other entity of whatever kind or nature.
"Preliminary FCC Approval" means an order released by the FCC
(and not by a bureau or other division or subdivision thereof pursuant to
delegated authority) which grants, or conditionally grants (other than subject
to a Material Condition which is unacceptable to Seller), the FCC's consent to
the assignment of the MCI FCC License to Seller or Newco.
"Registration Rights Agreement," means the Registration Rights
Agreement to be entered into by and among Seller, MCI (or a direct or indirect
wholly-owned subsidiary of MCI) and ASkyB (or a direct or indirect wholly-owned
subsidiary of News Corporation), in the form of Exhibit C annexed hereto.
"Regulatory Provisions" means all applicable requirements of
the Communications Act and the published policies, rules, decisions, and
regulations of the FCC as amended from time to time.
"Requisite Corporate Approvals" means the approval of Seller's
Board of Directors and its stockholders and, if applicable, the Board of
Directors of any Subsidiary of Seller required pursuant to applicable law with
respect to the authorization of Seller or such Subsidiary to execute and deliver
this Agreement and the Collateral Agreements to which it is a party and to
perform the transactions contemplated hereby and thereby.
"Retransmission Consent Agreement" means the Retransmission
Consent Agreement, to be entered into by and between Fox Television Holdings,
Inc. and Seller, in the form of Exhibit D annexed hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien, other than (a) liens arising under
worker's compensation, unemployment insurance, social security, retirement, and
similar legislation, (b) liens on goods in transit incurred pursuant to
documentary letters of credit, and (c) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of money,
the extension of credit or default or potential default of money owed.
"Seller Material Adverse Effect" means a material adverse
effect on the business, assets, operations, prospects or condition (financial or
otherwise) of the Seller and its Subsidiaries, taken as a whole, excluding any
change or development resulting from (a) events adversely affecting any of the
principal markets served by the business of Seller or (b) general economic
conditions, including changes in the economies of any of the jurisdictions in
which Seller or any of its Subsidiaries conduct business.
"Settlement Agreement and Mutual Release" means the Settlement
Agreement and Mutual Release, to be entered into by and among Seller, Charles W.
Ergen, News Corporation and ASkyB, in the form of Exhibit E annexed hereto.
"Set Top Box Agreement" means the Development and Supply
Agreement for Set Top Boxes, to be entered into by and between Seller and a DBS
company in which News Corporation has an interest, containing the terms and
conditions set forth in Exhibit F annexed hereto.
"Significant Subsidiary" means any Subsidiary of Seller that
(i) falls within the definition of "significant subsidiary" set forth in Rule
1-02 of Regulation S-X under the Securities Act, (ii) is subject to the periodic
reporting requirements of the Securities Exchange Act or (iii) is, or becomes, a
party to this Agreement or any of the Collateral Agreements.
"Subsidiary" of a specified Person means any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the Board of Directors or other Persons
performing similar functions are directly or indirectly owned by such Person.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, however denominated,
including any interest, penalty, or addition thereto, whether disputed or not.
"Transferred Asset Material Adverse Effect" means a material
adverse effect on the use by or benefit to Seller of any of the Transferred
Assets, excluding any change or development resulting from (a) events adversely
affecting any of the principal markets served by the businesses of Seller or any
of its Subsidiaries, or (b) general economic conditions, including changes in
the economies of any of the jurisdictions in which Seller or any of its
Subsidiaries conduct business.
"U.S. Satellite Business" means any proposed or ongoing uses
of communications satellites to provide direct-to-home (including hotels,
motels, bars, restaurants, multiple dwelling units and other similar uses) video
and associated audio programming services using FSS/BSS frequencies directly to
the antennas or other reception equipment of customers or subscribers of such
business activity principally in the United States, or to multiple dwelling
units comprising such customers or subscribers.
"Voting Agreement" means the letter agreement entered into by
and among Charles W. Ergen, Seller, MCI, News Corporation and ASkyB, as of the
date hereof, annexed as Exhibit G hereto.
2. Purchase and Sale
(a) Shares to be Purchased by the Transferors
(i) At the Closing (as hereinafter defined), upon the
terms and subject to the conditions set forth in this Agreement, the
Transferors agree to purchase from Seller, and Seller agrees to issue
and sell to the Transferors, an aggregate of 30,000,000 shares (the
"Shares") of Seller's Class A Common Stock, subject to adjustment (x)
for any stock split, stock dividend, subdivision or combination of the
Common Stock (as hereinafter defined) or any other action having a
similar effect on the Common Stock, and (y) as set forth in Section
2(a)(ii) below, as follows:
(A) 24,030,000 shares of Class A Common
Stock shall be issued and sold to ASkyB or a direct or indirect wholly-owned
Subsidiary of News Corporation designated by ASkyB (the "ASkyB Buyer"); and
(B) 5,970,000 shares of Class A Common Stock
shall be issued and sold to MCI or a direct or indirect wholly-owned
Subsidiary of MCI designated by MCI (the "MCI Buyer").
(ii) The number of shares of Common Stock issuable to
the ASkyB Buyer and the MCI Buyer pursuant to Section 2(a)(i) shall be
subject to adjustment as follows: (A) if the Current Market Price is
less than $15.00 per share (subject to adjustment for any stock split,
stock dividend, subdivision or combination of the Common Stock or any
change in corporate structure affecting the Common Stock), then Seller
shall issue such number of additional shares of Common Stock to the
ASkyB Buyer and the MCI Buyer, on a pro rata basis, so that the total
market value of the Shares issued to them (based on such Current Market
Price) is not less than $450,000,000; provided, however, that in no
event shall the Transferors collectively own of record or vote shares
corresponding to more than 49.9% of the total outstanding voting power
of Seller or more voting power of Seller than all other shareholders of
Seller; or (B) if the Current Market Price is greater than $39.00 per
share (subject to adjustment for any stock split, stock dividend,
subdivision or combination of the Common Stock or any change in
corporate structure affecting the Common Stock), then the number of
Shares issued to the ASkyB Buyer and the MCI Buyer shall be reduced, on
a pro rata basis, so that the total market value of the Shares issued
to them (based on such Current Market Price) is not greater than
$1,170,000,000.
(b) Assets to be Transferred to Seller. At the Closing, upon the terms and
subject to the conditions set forth in this Agreement, and in consideration for
the Shares to be purchased by the Transferors hereunder, each of the Transferors
agrees to assign, transfer and convey to Seller, or, at Seller's option, one or
more direct or indirect wholly owned Subsidiaries of Seller (collectively,
"Newco") all of its right, title and interest in and to the specified assets set
forth below (collectively, the "Transferred Assets"):
(i) Gilbert Property. ASkyB shall transfer and convey
to Seller or Newco all of its right, title and interest in and to
certain real property located in Gilbert, Arizona, as more particularly
described in Section 2(b)(i)(I) of the Transferor Disclosure Schedule
(as hereinafter defined), and all improvements thereon, including,
without limitation, (A) all buildings, Earth Station Facilities and
other structures, (B) the fixtures, furniture and equipment described
in Section 2(b)(i)(II) of the Transferor Disclosure Schedule, and all
instruction manuals and other personal property (including all
warranties associated therewith), and (C) keys to such property, to the
extent the foregoing are owned by the Transferors (the "Gilbert
Property").
(ii) Gilbert Contracts. ASkyB shall assign all of its
right, title and interest in and to all maintenance and equipment
contracts entered into with respect to the Gilbert Property, including
all warranties set forth therein (collectively the "Gilbert
Contracts"), as set forth in Section 2(b)(ii) of the Transferor
Disclosure Schedule including, among others, the equipment contract
with Sony Electronics, Inc. (the "Sony Contract"), except that the
Transferred Assets shall not include, and the Transferors shall not
assign to Seller, any of the Gilbert Contracts that Seller designates
as "Excluded Contracts" in accordance with Section 5(c)(iii) hereof.
(iii) MCI FCC License. MCI shall assign, transfer and
convey to Seller or Newco all of its right, title and interest to (A)
the MCI FCC License and (B) the application for minor modification and
clarification of license conditions for the MCI FCC License filed by
MCI on May 5, 1997, and to any application for modification of the MCI
FCC License that may be required to be filed hereafter until Closing.
(iv) Earth Station Authorizations. ASkyB shall
assign, transfer and convey to Seller or Newco all of its right, title
and interest in and to its FCC earth station authorizations in respect
of the Gilbert Property (the "Earth Station Authorizations") under Call
Signs E980174, E980178, E980180, E970394, E970395 and E970396.
(v) Satellite Contracts and Satellite Work in
Process. Each of the Transferors shall assign all of its respective
right, title and interest in and to the agreements and insurance
policies or arrangements set forth in Section 2(b)(v) of the Transferor
Disclosure Schedule annexed hereto, including but not limited to the
satellites and launches work in process pursuant thereto, and all
deliverables pursuant to those agreements, and including all rights to
enforce such contracts (collectively, the "Satellite Contracts" and,
together with the Gilbert Contracts, but excluding any Excluded
Contracts, the "Assigned Contracts"), in accordance with the terms of
the Satellite Contracts.
(vi) Intellectual Property. The Transferors shall
assign, transfer and convey all of their respective right, title and
interest in and to any Intellectual Property acquired from the U.S.
government or other parties to the Satellite Contracts in connection
with the MCI FCC License, the Earth Station Authorizations or the
Assigned Contracts.
It is specifically acknowledged and agreed by the Seller that the
Transferors are not assigning, transferring and conveying to Seller any assets
pursuant to this Agreement other than the Transferred Assets.
(c) Assumption of Liabilities. Except as provided in Sections 5(f)(vii) and
5(g) hereof, effective as of the Closing, and upon the terms and subject to the
conditions of this Agreement, Seller agrees to assume all liabilities and
obligations of the Transferors and their Affiliates arising under the Assigned
Contracts and the other Transferred Assets, including all obligations of the
Transferors under the MCI FCC License and the Earth Station Authorizations,
including, without limitation, obligations with respect to completion of
satellite construction, system deployment and provision of telemetry, tracking
and control services.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Squadron, Ellenoff,
Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York, commencing at
9:00 a.m. local time on the fifth business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby or such other date as the Transferors and
Seller may mutually determine (the "Closing Date").
(e) Deliveries At Closing. (i) Seller shall deliver to the Transferors the
various certificates, instruments, agreements and documents referred to in
Section 6(a) below, (ii) the Transferors shall deliver to Seller the various
certificates, instruments, agreements and documents referred to in Section 6(b)
below and (iii) Seller shall deliver to the Transferors duly executed and
authenticated stock certificates, representing all of the Shares to be purchased
by the MCI Buyer and the ASkyB Buyer pursuant hereto. The certificates
representing the Shares shall initially bear the legend set forth in Section
9(n) hereto.
3. Representations and Warranties. Seller represents and warrants to
the Transferors as follows:
(a) Representations and Warranties True, Correct and Complete. Seller
represents and warrants to each of the Transferors that the statements contained
in this Section 3 that are qualified by reference to materiality or a material
adverse effect are true, correct and complete as of the date of this Agreement
and will be true, correct and complete as of the Closing Date, and that all of
the other statements made in this Section 3 that are not so qualified are true,
correct and complete in all material respects as of the date of this Agreement
and will be true, correct and complete in all material respects as of the
Closing Date, except, in each case, (i) for such representations and warranties
that are expressly made as of the date of this Agreement, in which case such
representations and warranties need only to be true, correct and complete on and
as of the date of this Agreement, (ii) for such representations and warranties
that are expressly made as of an earlier date, in which case such
representations and warranties need only to be true, correct and complete on and
as of such earlier date and (iii) as disclosed in a document referring
specifically to the representations and warranties in this Section 3 which has
been delivered by Seller to each of the Transferors on or prior to the date
hereof (the "Seller Disclosure Schedule"). Nothing in the Seller Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein unless the Seller Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty itself solely addresses the existence of
the document or other item). The Seller Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section.
(b) Organization of Seller and the Significant Subsidiaries
(i) Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada,
and each of the Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(ii) As of the date hereof, Seller and each of the
Significant Subsidiaries is duly qualified or licensed to do business
as a foreign corporation and is in good standing, in each jurisdiction
where the character of the property owned or leased by it, or the
nature of its activities, makes such qualification or licensing
necessary, except for those jurisdictions where the failure to be so
qualified or licensed and in good standing would not, individually or
in the aggregate, have a Seller Material Adverse Effect.
(c) Power and Authority of Seller
(i) Seller has all requisite corporate power and
authority to own, lease and operate its properties as now conducted and
to execute and deliver this Agreement and each Collateral Agreement to
which it is a party, including any additional documents contemplated by
this Agreement, and to perform its obligations hereunder and
thereunder.
(ii) As of the date hereof, Seller has all
governmental licenses, authorizations, consents and approvals required
to own, lease and operate its properties as now conducted, except where
the failure to have such governmental licenses, authorizations,
consents and approvals would not, individually or in the aggregate,
have a Seller Material Adverse Effect.
(d) Power and Authority of Significant Subsidiaries
(i) As of the date hereof, each Significant
Subsidiary has all requisite corporate power and authority and all
governmental licenses, authorizations, consents and approvals required
to own, lease and operate its properties as now conducted, except where
the failure to have such governmental licenses, authorizations,
consents and approvals would not, individually or in the aggregate,
have a Seller Material Adverse Effect.
(ii) Each Significant Subsidiary which is, or will
be, a party to this Agreement or a Collateral Agreement has, or will
have, as of the date of execution of this Agreement or such Collateral
Agreement, all requisite corporate power and authority to execute and
deliver such Collateral Agreement and to perform its obligation
thereunder.
(e) Corporate Authorization. The execution, delivery and performance by
Seller of this Agreement and the execution, delivery and performance by Seller
and each Significant Subsidiary of each of the Collateral Agreements to which
Seller or such Significant Subsidiary is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action of Seller and such Significant Subsidiary, as the
case may be, other than shareholder approval pursuant to the rules and
regulations of Nasdaq, which shall be obtained on or prior to the Closing Date.
This Agreement and each of the Collateral Agreements to which Seller or a
Significant Subsidiary is a party, including any additional documents
contemplated by this Agreement, constitutes (or when executed, will constitute)
the valid and legally binding obligation of Seller and such Significant
Subsidiary, as the case may be, enforceable against each of Seller and such
Significant Subsidiary, as the case may be, in accordance with each document's
respective terms and conditions, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles.
(f) Governmental Authorization. The execution, delivery and performance by
Seller of this Agreement and each of the Collateral Agreements to which it is a
party, and the consummation of the transactions contemplated hereby and thereby,
do not require any consent, approval, authorization or permit of, or filing with
or notification to any governmental or regulatory authority, except (A) for (i)
compliance with any applicable requirements of the Hart-Scott-Rodino Act, and
the rules and regulations thereunder; (ii) compliance with any applicable
provisions of the Securities Act, and the rules and regulations thereunder,
state securities or "blue sky" laws and state takeover laws, and approval of the
inclusion of the Shares for trading on Nasdaq; (iii) compliance with any
applicable requirements of the Securities Exchange Act and the rules and
regulations thereunder; and (iv) compliance with any applicable requirements of
the Regulatory Provisions or (B) where the failure to obtain such consents,
approvals, authorizations and permits, or to make such filings or notifications,
would not prevent or delay in any material respect the consummation of the
transactions contemplated hereby or thereby or otherwise prevent Seller from
performing its obligations under this Agreement or any of the Collateral
Agreements to which it is a party in accordance with the terms and subject to
the conditions hereof and thereof, and would not, individually or in the
aggregate, have a Seller Material Adverse Effect.
(g) Noncontravention. Except as set forth in Section 3(g) of the Seller
Disclosure Schedule and Section 3(f) hereof, the execution, delivery and
performance of this Agreement and each of the Collateral Agreements to which
Seller or a Significant Subsidiary is a party do not, and the consummation of
the transactions contemplated hereby and thereby will not, (A) contravene or
conflict with the certificate of incorporation, by-laws or other organizational
documents of Seller, or any Significant Subsidiary; (B) contravene, conflict
with or constitute a violation of any provision of any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court binding upon or
applicable to Seller or any Significant Subsidiary or any of their respective
properties or assets, which contravention, conflict or violation could
reasonably be expected to have a Seller Material Adverse Effect; (C) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, require any notice or give rise to a loss of any benefit under, any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other arrangement to which Seller or any Significant Subsidiary is a
party or by which any of them is bound or to which any of their assets is
subject or result in the creation or imposition of any Security Interests on any
assets of Seller or any Significant Subsidiary, which contravention, violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or loss of benefit would have a Seller Material Adverse Effect or
adversely affect the ability of Seller or any Significant Subsidiary to
consummate the transactions contemplated hereby or by the Collateral Agreements;
or (D) assuming approval by Seller's shareholders in accordance with the rules
and regulations of Nasdaq, violate or conflict with the rules, regulations or
listing requirements of Nasdaq or any other exchange or trading market on which
Seller's securities may be listed or traded.
(h) Capitalization
(i) As of the date hereof, the authorized capital
stock of Seller consists of (x) 400,000,000 shares of Common Stock, par
value $.01 per share, of which 200,000,000 shares are designated Class
A Common Stock, 100,000,000 shares are designated Class B Common Stock,
and 100,000,000 shares are designated Class C Common Stock (the Class A
Common Stock, the Class B Common Stock and the Class C Common Stock are
referred to collectively herein as the "Common Stock"), and (y)
20,000,000 shares of Preferred Stock. As of the date hereof, 15,268,708
shares of Class A Common Stock, 29,804,401 shares of Class B Common
Stock, no shares of Class C Common Stock, 1,616,681 shares of Preferred
Stock, which has been designated 8% Series A Cumulative Preferred
Stock, 225,301 shares of Preferred Stock, which has been designated
121/8% Series B Senior Redeemable Exchangeable Preferred Stock, par
value $.01 per share, and 2,300,000 shares of Preferred Stock, which
has been designated 6 3/4% Series C Cumulative Convertible Preferred
Stock, are issued and outstanding and no shares of any class or series
are held in treasury.
(ii) All of the issued and outstanding shares of
capital stock of Seller have been, and on the Closing Date will be,
duly authorized, validly issued, fully paid and nonassessable.
(iii) As of the Closing Date, the Shares will have
been duly authorized and, when issued to the ASkyB Buyer and the MCI
Buyer, upon payment of the consideration therefor, will be validly
issued, fully paid and non-assessable, and the issuance will not be
subject to (x) any Liens (other than those relating to the activities
of the Transferors) or (y) any preemptive or similar rights of any
security holder of Seller.
(iv) As of the date hereof, except as set forth in
Section 3(h) of the Seller Disclosure Schedule, (A) all of the issued
shares of capital stock of each Significant Subsidiary of Seller are
owned, directly or indirectly, by Seller; (B) there are no outstanding
or authorized convertible or exchangeable securities of Seller or any
Significant Subsidiary, options, warrants, rights, contracts, calls,
puts, rights to subscribe, conversion rights, or agreements or
commitments pursuant to which any Person has any rights to acquire from
Seller or any Significant Subsidiary, and neither Seller nor any
Significant Subsidiary has any obligations, contingent or otherwise, to
repurchase, redeem or otherwise acquire any shares of capital stock or
voting securities of Seller or any Significant Subsidiary; (C) there
are no outstanding or authorized stock appreciation, phantom stock or
similar rights of Seller or any Significant Subsidiary; and (D) there
are no voting trusts, proxies or any other agreements or understandings
to which Seller or any Significant Subsidiary is a party or of which it
has Knowledge with respect to the voting of the capital stock or voting
securities of Seller or any Significant Subsidiary.
(i) SEC Filings
(i) Seller has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission
("SEC") since January 1, 1995, and Seller has heretofore made available
to the Transferors, in the form filed with the SEC (including any
exhibits thereto), (A) the Annual Reports on Form 10-K of Seller for
the fiscal years ended December 31, 1995, December 31, 1996 and
December 31, 1997 (the "1997 Annual Report"), respectively, and the
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998 (the "September Quarterly
Report"), respectively; (B) all proxy and information statements
relating to meetings of stockholders of Seller (whether annual or
special) held since January 1, 1995; and (C) all other reports and
registration statements (including all Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K) filed by Seller with the SEC since
January 1, 1995 (including all amendments to each of the foregoing, the
forms, reports and other documents referred to in clauses (A) through
(C) being referred to herein, collectively, as the "Seller Disclosure
Documents"). The Seller Disclosure Documents and other forms, reports
or other documents filed by Seller with the SEC after the date of this
Agreement but prior to the Closing Date (x) were prepared, or will be
prepared, in accordance with the Securities Act or the Securities
Exchange Act, as the case may be, and the rules and regulations
thereunder, and (y) did not at the time they were filed, or will not at
the time they are filed, with the SEC contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading.
(ii) Each of the consolidated financial statements
(including any notes thereto) contained in the Annual Reports on Form
10-K of Seller for the fiscal years ended December 31, 1995, December
31, 1996 and December 31, 1997, and Quarterly Reports on Form 10-Q of
Seller for the quarterly periods through and including September 30,
1998, was prepared in accordance with generally accepted accounting
principles and all applicable rules of the SEC and fairly presents in
all material respects the consolidated financial position, results of
operations and cash flows of each of Seller and its consolidated
Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, subject, in the case of unaudited
statements, to normal year-end adjustments.
(iii) Except as set forth in the 1997 Annual Report
and the September Quarterly Report, or as otherwise set forth in
Section 3(i) of the Seller Disclosure Schedule, neither Seller nor its
consolidated Subsidiaries had, as of the respective dates thereof, any
Liability that (i) would be required under generally accepted
accounting principles to be reflected in such consolidated balance
(including the notes thereto) or (ii) would reasonably be expected to
have, individually or in the aggregate, a Seller Material Adverse
Effect.
(j) Absence of Certain Changes. As of the date hereof, since September 30,
1998, and except as (i) set forth in the 1997 Annual Report or in the September
Quarterly Report or (ii) disclosed in Section 3(j) of the Seller Disclosure
Schedule, or as otherwise contemplated by this Agreement or the Collateral
Agreements, there has not been any event, occurrence or development of a state
of circumstances or facts which has had or reasonably would be expected to have
a Seller Material Adverse Effect.
(k) Brokers' Fees. Neither Seller nor any Subsidiary of Seller has any
Liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
any of the Transferors would be liable.
4. Representations and Warranties of the Transferors. Each of ASkyB, News
Corporation and MCI, jointly and severally, represents and warrants to Seller as
follows:
(a) Representations and Warranties True, Correct and Complete. Each of
ASkyB, News Corporation and MCI represents and warrants to Seller that the
statements contained in this Section 4 that are qualified by reference to
materiality or a material adverse effect are true, correct and complete as of
the date of this Agreement and will be true, correct and complete as of the
Closing Date and all other statements in this Section 4 that are not so
qualified are true, correct and complete in all material respects as of the date
of this Agreement and will be true, correct and complete in all material
respects as of the Closing Date except, in each case, (i) for such
representations and warranties that are expressly made as of the date of this
Agreement, in which case such representations and warranties need only to be
true, correct and complete on and as of the date of this Agreement, (ii) for
such representations and warranties that are expressly made as of an earlier
date, in which case such representations and warranties need only to be true,
correct and complete on and as of such earlier date and (iii) as disclosed in a
document referring specifically to the representations and warranties in this
Section 4 which has been delivered by the Transferors to Seller on or prior to
the date hereof (the "Transferor Disclosure Schedule"). Nothing in the
Transferor Disclosure Schedule shall be deemed adequate to disclose an exception
to a representation or warranty made herein unless the Transferor Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty itself solely
addresses the existence of the document or other item). The Transferor
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section.
(b) Organization of the Transferors. ASkyB is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware. News Corporation is a corporation duly organized under the
laws of South Australia, Australia. MCI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(c) Power and Authority of the Transferors
(i) Each of the Transferors has all requisite
corporate or limited liability company power and authority to own,
lease and operate the Transferred Assets as now conducted and to
execute and deliver this Agreement and each Collateral Agreement to
which it is a party, including any additional documents contemplated by
this Agreement, and to perform its obligations hereunder and
thereunder.
(ii) Each of the Transferors has all governmental
licenses, authorizations, consents and approvals required to own, lease
and operate the Transferred Assets being transferred by it, except
where the failure to have such governmental licenses, authorizations,
consents and approvals would not, individually or in the aggregate,
have a Transferred Asset Material Adverse Effect.
(d) Corporate Authorization. The execution, delivery and performance by
each of the Transferors of this Agreement and each of the Collateral Agreements
to which such Transferor is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action of each Transferor. This Agreement and each of the Collateral
Agreements to which each Transferor is a party, including any additional
documents contemplated by this Agreement, constitutes (or when executed, will
constitute) the valid and legally binding obligation of each Transferor,
enforceable against each Transferor, in accordance with each document's
respective terms and conditions, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles.
(e) Governmental Authorization. The execution, delivery and performance by
each Transferor of this Agreement and each of the Collateral Agreements to which
each Transferor is a party, and the consummation of the transactions
contemplated hereby and thereby, do not require any consent, approval,
authorization or permit of, or filing with or notification to any governmental
or regulatory authority, except (A) for (i) compliance with any applicable
requirements of the Hart-Scott-Rodino Act, and the rules and regulations
thereunder; (ii) compliance with any applicable provisions of the Securities Act
and the rules and regulations thereunder, state securities or "blue sky" laws
and state takeover laws; (iii) compliance with any applicable requirements of
the Securities Exchange Act, and the rules and regulations thereunder; and (iv)
compliance with any applicable requirements of the Regulatory Provisions, and
(B) where the failure to obtain such consents, approvals, authorizations and
permits, or to make such filings or notifications, would not prevent or delay in
any material respect the consummation of the transactions contemplated hereby or
thereby or otherwise prevent the Transferors from performing their respective
obligations under this Agreement or any of the Collateral Agreements to which
such Transferor is a party in accordance with the terms and subject to the
conditions hereof and thereof, and would not, individually or in the aggregate,
have a Transferred Asset Material Adverse Effect.
(f) Noncontravention. Except as set forth in Section 4(f) of the Transferor
Disclosure Schedule and Section 4(e) hereof, the execution, delivery and
performance of this Agreement and each of the Collateral Agreements to which
each of the Transferors is a party do not, and the consummation of the
transactions contemplated hereby and thereby will not, (A) contravene or
conflict with the certificate of incorporation, by-laws or other organizational
or charter documents of each of the Transferors; (B) contravene or conflict with
or constitute a violation of any provision of any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court binding upon or applicable to
any of the Transferors, or any of their respective properties or assets; or (C)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, require any notice or give rise to a loss of any benefit under, any
of the Transferred Assets or any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest or other arrangement to which any
of the Transferors is a party or by which any of them is bound or to which any
of the Transferred Assets, is subject or result in the creation or imposition of
any Security Interests on any of the Transferred Assets, which contravention,
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, or loss of benefit would have a Transferred Asset Material Adverse
Effect or adversely affect the ability of any Transferor to consummate the
transactions contemplated hereby or by the Collateral Agreements.
(g) Gilbert Property
(i) ASkyB owns good and marketable title to the
Gilbert Property, free and clear of all Liens or other matters
affecting Seller's or its Subsidiaries' title to or possession of the
Gilbert Property, except for Liens (a) for taxes and other governmental
charges, assessments or fees which are not yet due and payable or (b)
set forth on Section 4(g)(i) of the Transferor Disclosure Schedule.
(ii) There are no outstanding options or rights of
first refusal to purchase the Gilbert Property, or any portion thereof
or interest therein; and there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any party
or parties the right of use or occupancy of any portion of the Gilbert
Property.
(iii) ASkyB and News Corporation shall keep and
maintain the Gilbert Property substantially in the same condition as it
exists on the date hereof and shall preserve the Gilbert Property from
deterioration, other than ordinary wear and tear; provided, however,
that Seller acknowledges and agrees that the Transferors are under no
obligation to continue construction of or make any additional
improvements to any of the structures, furniture, fixtures or equipment
located at the Gilbert Property, including, without limitation, the
improvements described in Section 4(g)(iii) of the Transferor
Disclosure Schedule, other than pursuant to the Gilbert Contracts.
(iv) With respect to the Gilbert Property:
(A) as of the date hereof, there are no
pending or, to the Knowledge of any of the Transferors, threatened
condemnation proceedings relating to the Gilbert Property;
(B) there are no parties (other than ASkyB)
in possession of the Gilbert Property who are lawfully in possession;
(C) the use and condition of and the
operations on the Gilbert Property are in compliance with Environmental Laws,
except where the failure to comply, individually or in the aggregate, would not
have a Transferred Asset Material Adverse Effect;
(D) as of the date hereof, (i) there are
no judicial or administrative actions, proceedings or investigations pending
or, to the Knowledge of any Transferor, currently threatened to revoke any
environmental permits required for the current use of and the operations
on the Gilbert Property, and (ii) ASkyB has not received any written notice
from any governmental entity or written notice from any Person to the
effect that there is lacking such permit;
(E) as of the date hereof, there are
no judicial or administrative actions, proceedings, or investigations pending
or, to the Knowledge of any Transferor, currently threatened against ASkyB
alleging the violation of, or liability pursuant to, any Environmental Law,
except for liabilities or violations which could not reasonably be expected to
have, individually or in the aggregate, a Transferred Asset Material
Adverse Effect;
(F) except as set forth in Section
4(g)(iv)(H) of the Transferor Disclosure Schedule, neither ASkyB nor News
Corporation has Knowledge of, nor has filed any notice with respect to the
Gilbert Property under any Environmental Law indicating, past or present
treatment, storage, transfer, release, manufacture, presence or disposal of or
reporting a release or currently threatened release of hazardous material into
the environment, except for such releases that could not reasonably be
expected to have, individually or in the aggregate, a Transferred Asset
Material Adverse Effect;
(G) neither ASkyB nor News Corporation is
subject to any outstanding order, injunction, judgment, decree, ruling,
assessment, or arbitration award or any agreement with any governmental entity
or other Person, or to any federal, state, local or foreign investigation
respecting (i) Environmental Laws or (ii) the release or currently threatened
release of any hazardous material, except in either case for such orders,
injunctions, judgments, decrees, rulings, assessments, arbitration
awards, or agreements which could not reasonably be expected to have,
individually or in the aggregate, a Transferred Asset Material Adverse
Effect;
(H) except as set forth in Section
4(g)(iv)(H) of the Transferor Disclosure Schedule, none of the operations
on the Gilbert Property involves or, to ASkyB's Knowledge, previously involved
the generation, transportation, treatment, storage, release, use,
manufacture or disposal of hazardous waste, as defined under 40 C.F.R.
Parts 260-270 or any state, local or foreign equivalent, except for as
may be permitted by law or as could not reasonably be expected to have,
individually or in the aggregate, a Transferred Asset Material Adverse
Effect;
(I) ASkyB will provide to Seller, a
promptly as practicable, all environmental reports the existence of which
it is aware concerning the Gilbert Property;
(J) as of the date hereof, ASkyB has
expended to date in respect of the Gilbert Property not less than $109 million,
excluding capitalized interest;
(K) as of the date hereof, (1) the
buildings and improvements are located within the boundary lines of the Gilbert
Property, and do not encroach on any easement which may burden the land,
(2) the land does not serve any adjoining property for any purpose inconsistent
with the use of the land, and (3) the Gilbert Property is not located
within any flood plain, wetland, or subject to any similar type of restriction
for which any permits or licenses necessary for the use thereof have not
been obtained, except where such encroachment or restriction would not,
individually or in the aggregate, have a Transferred Asset Material
Effect;
(L) as of the date hereof, all
facilities located on the Gilbert Property are supplied with utilities and
other services necessary for the current use and operation of such
facilities; and
(M) as of the date hereof, the
Gilbert Property abuts on and has direct vehicular access to a public road.
(v) Section 4(g)(v) of the Transferor Disclosure
Schedule sets forth a listing of all insurance policies (other than
title insurance) in force associated with the Gilbert Property and the
amount of coverage thereunder. Each such insurance policy is in full
force and effect, and the rights of the parties thereunder will not be
affected in any material respect by the transactions contemplated by
this Agreement and the Collateral Agreements. ASkyB shall maintain all
such insurance policies or similar coverages until the Closing Date,
and shall obtain an endorsement to all such policies requiring the
insurer to notify Seller prior to any cancellation or termination
thereof or amendment thereto.
(h) Assigned Contracts
(i) The Transferors have delivered to Seller a
correct and complete copy of each Assigned Contract, as amended to
date, listed in Sections 2(b)(ii) and (v) of the Transferor Disclosure
Schedule.
(ii) Except as set forth in Section 4(h) of the
Transferor Disclosure Schedule, each of the Transferors has complied
with and performed in all material respects all of its obligations
required to be performed under each of the Assigned Contracts to which
it is a party.
(iii) Except as set forth in Section 4(h) of the
Transferor Disclosure Schedule, with respect to each Assigned Contract
so listed: (A) the arrangement or agreement is legal, valid and binding
obligation of the applicable Transferor and, to the Knowledge of such
Transferor, each of the other parties thereto, enforceable against such
parties in accordance with the terms thereof, and is in full force and
effect; (B) the arrangement or agreement will continue to be legal,
valid, binding and enforceable and in full force and effect on
identical terms immediately following the Closing; (C) none of the
Transferors is in breach or default under any Assigned Contract to
which it is a party, and no event has occurred which, with notice or
lapse of time, or both, would constitute a breach or default by any of
the Transferors, or permit termination, modification, or acceleration,
under the arrangement or agreement; (D) to the Knowledge of the
Transferors, no third party is in breach or default under any Assigned
Contract, and no event has occurred which, with notice or lapse of
time, or both, would constitute a breach or default by such party
thereunder or permit termination, modification, or acceleration, under
the arrangement or agreement; (E) none of the Transferors has received
written notice canceling, terminating or repudiating or exercising any
option to cancel, terminate or repudiate under any of the Assigned
Contracts to which it is a party and none of the Transferors has any
Knowledge that any party has failed to comply with or perform all of
its obligations required to be performed under any of the Assigned
Contracts; (F) none of the Transferors has any Knowledge that the
validity of any of the Assigned Contracts to which it is a party is
being contested by a third party; (G) neither Sky I nor Sky II (as
hereinafter defined) have been delivered into storage; and (H) as of
the date hereof, the Transferors know of no reason why the launch
vehicle will not be available by the August 31, 1999 date with respect
to Sky I or the fourth quarter of 1999 date with respect to Sky II,
specified in Sections 5(f)(ii) and 5(f)(iii), respectively, other than
as set forth in the letter dated September 18, 1998 from James Dongog
of International Launch Services to an employee of Loral.
(iv) Subject to the receipt of necessary consents,
the execution and delivery by the Transferors of this Agreement and the
Collateral Agreements to which a Transferor is a party and the
consummation of the transactions contemplated hereby and thereby have
not resulted and will not result in a breach or default under, or
permit any party to modify any obligation under, or cause or permit any
termination, cancellation or loss of benefits under, any of the
Assigned Contracts.
(i) Intellectual Property. Each of the Transferors owns or has the right to
use pursuant to license, sublicense, agreement or permission all Intellectual
Property currently necessary for the construction, use or operation of the
Transferred Assets. The Transferors have no Knowledge of any condition or event
that would prevent Seller from obtaining in a timely manner all Intellectual
Property necessary to complete the construction and launch of Sky I and Sky II
at no cost to Seller, or to use or operate any of the Transferred Assets.
(j) Litigation. Sections 4(j), 4(l)(i) and 4(l)(ii) of the Transferor
Disclosure Schedule sets forth each instance in which any Transferor (i) is
subject to any unsatisfied judgment, order, decree, stipulation, injunction, or
charge or (ii) is a party or, to the Knowledge of such Transferor and the
directors and officers (and employees with responsibility for litigation
matters) of such Transferor or any Subsidiary of such Transferor, is threatened
to be made a party to any charge, complaint, action, suit, proceeding, hearing,
or investigation of or in any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any arbitrator,
other than any judgment, order, decree, stipulation, injunction, charge,
complaint, action, suit, proceeding, hearing or investigation that, individually
or in the aggregate, would not reasonably be expected to have a Transferred
Asset Material Adverse Effect.
(k) Legal Compliance. Except as set forth in Sections 4(k), 4(l)(i) and
4(l)(ii) of the Transferor Disclosure Schedule, as of the date hereof, and, with
respect to the Satellite Contracts and the MCI FCC License, as of the Closing
Date as well, each of the Transferors has complied in all material respects, and
the Transferred Assets, including the operations thereof, are in compliance in
all material respects, with all laws (including, without limitation, all
Environmental Laws), including rules and regulations thereunder, of federal,
state, local and foreign governments (and all agencies thereof), except for
failures which would not, individually or in the aggregate, reasonably be
expected to have a Transferred Asset Material Adverse Effect or a material
adverse effect on the consummation of the transactions contemplated by this
Agreement and the Collateral Agreements, and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has been filed or
commenced against any Transferor alleging any failure to comply with any such
law or regulation which, individually or in the aggregate, could reasonably be
expected to have a Transferred Asset Material Adverse Effect.
(l) FCC Matters
(i) Except as set forth in Section 4(l)(i) of the
Transferor Disclosure Schedule, the MCI FCC License is valid; MCI
controls and has always controlled the MCI FCC License and the system
authorized thereunder; MCI has timely and completely performed all
obligations required to date under the MCI FCC License; MCI has timely
submitted all filings and reports required thereunder; MCI has taken
all actions required of MCI to date to achieve international
coordination of the authorized system, including, without limitation,
all actions required to date to achieve (a) all necessary modifications
to the International Telecommunication Union's Region 2
Broadcasting-Satellite Service Plan and associated feeder link plan set
forth at Appendices 30 and 30A to the International Radio Regulations
and (b) coordination of the system's Telemetry, Tracking and Control
functions; and has proceeded with the construction of the DBS system
with "diligence" (as such term is used in the Regulatory Provisions);
and such DBS system has been designed and is being constructed to
comply with, and when so constructed will be in compliance with, all
obligations required to date under the MCI FCC License and the
applicable Regulatory Provisions, including without limitation the
geographic service requirements currently imposed on DBS permittees.
(ii) Except as set forth in Section 4(l)(ii) of the
Transferor Disclosure Schedule, ASkyB's Earth Station Authorizations
are valid and in full force and effect, ASkyB has performed to date all
obligations required to be performed thereunder, and the Gilbert
Property includes Earth Station Facilities that are fully capable of
operating in accordance thereto.
(iii) MCI has delivered to Seller a true, correct and
complete copy of the MCI FCC License. The MCI FCC License is in full
force and effect and is unimpaired by any materially adverse condition.
MCI has delivered to Seller true, correct and complete copies of all
material correspondence from the FCC to MCI relating to the MCI FCC
License and all material correspondence, submissions and/or other
filings from MCI to the FCC relating thereto sent to or received by MCI
subsequent to the auction of 28 frequency channels at the 110(0) West
Longitude orbital location. Except as set forth in Section 4(l)(i) of
the Transferor Disclosure Schedule, no application, action or
proceeding is pending for the renewal or modification of the MCI FCC
License, and no application, complaint, action or proceeding is pending
or, to the Knowledge of MCI, threatened, that may result in the
revocation, modification, non-renewal or suspension of the license or
the imposition of any administrative or judicial sanction with respect
to MCI. MCI has no Knowledge of any failure of MCI to comply (whether
or not known by or disclosed to the FCC or any other Person) in all
material respects with all Regulatory Provisions applicable to the U.S.
Satellite Business, and with the terms and conditions of the MCI FCC
License, including, but not limited to, any due diligence obligations
or reporting requirements associated with the MCI FCC License.
(iv) Except for the Earth Station Authorizations,
neither ASkyB nor News Corporation holds or controls any license in
connection with the U.S. Satellite Business contemplated to be operated
by MCI, News Corporation and ASkyB.
(v) Section 4(l)(v) of the Transferor Disclosure
Schedule sets forth a listing of all insurance policies in force
associated with any satellite or other facility related to the
Transferred Assets. Each such insurance policy is in full force and
effect, and the rights of the parties thereunder will not be affected
in any material respect by the transactions contemplated by this
Agreement or any Collateral Agreement.
(vi) Except as contemplated by Section 5(b) hereof,
no consent, approval, authorization, order or waiver of, or filing
with, the FCC is required under the applicable Regulatory Provisions to
be obtained or made by MCI in connection with the transactions
contemplated by this Agreement, except such as may already have been
obtained and made.
(m) Transferred Assets
(i) No Person other than the Transferors and their
respective Affiliates has any right, title or interest in, or with
respect to, the MCI FCC License, and the rights being transferred by
MCI hereunder with regard to the MCI FCC License, constitute all of the
rights, including contractual rights, held by the Transferors and their
respective Affiliates with regard to the MCI FCC License. Any rights of
News Corporation or ASkyB or any of their Affiliates relating to the
MCI FCC License are either included in the Transferred Assets or will
be terminated prior to the Closing.
(ii) No Person, other than ASkyB, has any right,
title or interest in, or with respect to, the Earth Station
Authorizations, and the rights being transferred by ASkyB hereunder
with regard to the Earth Station Authorizations constitute all of the
rights, including contractual rights, held by ASkyB with regard to the
Earth Station Authorizations. The Satellite Contracts include all of
the contracts, agreements, understandings, rights, insurance policies
and arrangements necessary for the construction, launch or insurance of
Sky I and Sky II. The Gilbert Contracts include all of the maintenance
and equipment contracts, agreements, understandings, rights, warranties
and arrangements of ASkyB with respect to the Gilbert Property.
(n) Broker's Fees. The Transferors do not have any Liability or obligation
to pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement for which the Seller would be
liable.
(o) Resale. Each of the ASkyB Buyer and the MCI Buyer is acquiring the
Shares under this Agreement for its own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act. Each of the ASkyB Buyer
and the MCI Buyer has such knowledge and experience in financial and business
matters as to be capable of evaluating the risks and merits of an investment in
the Shares and is able to bear the economic risk of such investment. Each of the
ASkyB Buyer and the MCI Buyer acknowledges and agrees that none of the Shares
have been registered under the Securities Act and such Shares may be sold or
disposed of in the absence of such registration only pursuant to an exemption
from such registration and in accordance with the terms of this Agreement and
Seller's transfer agent is authorized to place stop transfer instructions on the
Seller's stock transfer records and may refuse to transfer any Shares not
transferred in compliance therewith or in compliance with the restrictions on
transfer set forth in Section 9(m).
5. Further Agreements of the Parties
(a) General. Each of the Parties will cooperate to its fullest extent and
use its respective best efforts to take all action and to do all things
necessary, proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Section 6 below) as soon as practicable following the
date of this Agreement.
(b) Notices and Consents. Seller shall give all required notices to its
stockholders and to third parties, and shall use its best efforts to obtain all
required consents, including, without limitation, all Requisite Corporate
Approvals and all required consents of Seller's bondholders, all consents
required by Nasdaq or any other exchange where Seller's securities may be listed
or trading and any other material third-party consents that may be required or
that the Transferors reasonably may request, in connection with the transactions
contemplated by this Agreement. Each of the Transferors shall give all required
notices to third parties, and shall use its best efforts to obtain all required
consents, including, without limitation, all consents required by counterparties
to the Satellite Contracts, regulatory authorities and any other material
third-party consents that may be required or that Seller reasonably may request,
in connection with the transactions contemplated by this Agreement. Within five
(5) calendar days following the date of this Agreement, each of the Parties
shall file any Notification and Report Forms and related materials that it may
be required to file with the Federal Trade Commission ("FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
under the Hart-Scott-Rodino Act, and shall make any further filings pursuant
thereto that may be necessary, proper or advisable. Within five (5) calendar
days following the date of this Agreement, each of the Parties shall make all
notifications and file all applications and related materials that it may be
required to file with the FCC or any other federal, state or foreign government
or governmental agency having authority with respect to licenses, permits or
authorizations for the use of orbital slots or the provision of communications
services or other communications licenses, permits or authorizations in
connection with the transactions contemplated hereby, and shall use its best
efforts to obtain at the earliest practicable date all necessary consents,
authorizations and approvals, including FCC Approval for assignment of the MCI
FCC License. As promptly as is practicable after the date of this Agreement,
each of the Parties shall take any additional action, including, without
limitation, the implementation of an Acceptable Alternative Arrangement, and any
additional filings, submissions or applications required by the FCC, the FTC and
the Antitrust Division, that may be necessary, proper or advisable to effect to
the fullest extent feasible the consummation of the transactions contemplated by
this Agreement and the Collateral Agreements in connection with any other
notices to, filings with, and authorizations, consents and approvals of,
governments, governmental agencies and third parties that it may be required to
give, make or obtain and shall refrain from taking any action the purpose or
effect of which could reasonably be expected to make less likely that such
authorizations, consents and approvals will not be given, made or obtained on
the terms provided for in this Agreement. Without limiting the generality of the
foregoing, each party shall: (i) use all reasonable efforts to cooperate in all
respects with each other in connection with any filing, submission, adversarial
proceeding or the timing thereof; (ii) in connection with any investigation or
other inquiry, including any proceeding initiated by a private party, keep the
other parties informed on a timely basis of any material communication received
by such party from, or given by such party to, the FTC, the Antitrust Division,
the FCC or any other governmental authority and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the transactions contemplated by this Agreement, and
permit any other party to preview any material communication given by or to it;
and (iii) consult with each other, in advance of any meeting or conference with
such governmental authorities or, in connection with any proceeding by a private
party. The Parties will use their best efforts to obtain such approvals as
promptly as possible and, in this regard, provide all information reasonably
requested, assist and cooperate with one another to make the necessary filings
and take such steps as may be necessary to secure the non-objection of the
relevant antitrust and regulatory authorities, including FCC Approval for
assignment of the MCI FCC License.
(c) Operation of Business
(i) During the period between the date hereof and the
Closing Date, (A) each of the Transferors shall use commercially
reasonable efforts in the Ordinary Course of Business, (1) to preserve
the value and utility of the Transferred Assets, (2) to preserve the
goodwill of its suppliers and others having business relations with
such Transferor with respect to any Transferred Assets and (3) to
perform and observe all the terms, covenants and conditions required to
be performed and observed by it under the Satellite Contracts and all
FCC and other governmental permits, licenses and other authorizations
with respect to the Transferred Assets, in each case, except to the
extent that a failure to do so would not result in a Transferred Asset
Material Adverse Effect; provided, however, that timely requests for
extension of operation or certification deadlines applicable to Earth
Station Authorizations shall be deemed to be a commercially reasonable
effort required by this paragraph; (B) except as contemplated by this
Agreement, the Transferors shall not agree to materially modify the
deliverables pursuant to, or waive any material performance under, any
of the Assigned Contracts without the consent of Seller, which consent
shall not be unreasonably withheld; (C) except for the issuance of
shares of Common Stock pursuant to the exercise of outstanding rights,
warrants, options, convertible securities or exchangeable securities
(including any of the foregoing that are assumed in connection with the
acquisition of any Person), Seller shall not issue any shares of Common
Stock (or securities convertible into or exchangeable for Common Stock)
at a price per share (or having a conversion or exchange price per
share, if a security convertible into or exchangeable for Common Stock)
less than the Current Market Price per share of Common Stock; (D)
Seller shall not issue or fix a record date for the issuance to holders
of Common Stock of rights, options, or warrants to subscribe for or
purchase Common Stock (or securities convertible into or exchangeable
for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or
exchangeable for Common Stock) less than the Current Market Price per
share of Common Stock (excluding any of the foregoing that are assumed
or issued in connection with the acquisition of any Person); and (E)
MCI shall take all actions reasonably necessary to keep the MCI FCC
License in full force and effect until the Closing.
(ii) If it comes to the attention of any of the
Transferors that any events or circumstances regarding the Transferred
Assets require the taking of any action to preserve the value and
utility of the Transferred Assets, such Transferor will (A) promptly
notify Seller of such events or circumstances and of any potential
responses to such events and circumstances of which such Transferor is
aware and (B) take such actions as shall be requested by Seller and
reasonably required to preserve such value and utility.
(iii) At any time after the date hereof, until the
date that is 30 days prior to the Closing Date, Seller may notify the
Transferors in writing that it does not require the assignment of one
or more of the Gilbert Contracts. In such case, the Transferors shall
be permitted to terminate any such contract, and it shall be designated
an "Excluded Contract" for purposes of this Agreement and shall no
longer be included in the Transferred Assets.
(d) Assignment of the MCI FCC License. In accordance with Section 5(b),
upon execution of this Agreement, ASkyB, News Corporation, MCI and Seller shall
seek FCC Approval of the assignment of the MCI FCC License to Seller or Newco.
Each of the Transferors and Seller shall take all reasonable steps necessary,
and shall supply to the other parties and/or to the FCC all information
reasonably necessary, to obtain such FCC Approval, and shall take all reasonable
steps necessary, including the implementation of an Acceptable Alternative
Arrangement, to effect to the fullest extent feasible the consummation of the
transactions contemplated in this Agreement and the Collateral Agreements , and
shall cooperate with respect to any required submission to the FCC and/or the
International Telecommunication Union, including any submission required to
allow use of the 110(0) and 119(0) West Longitude orbital locations in
conjunction with a single consumer satellite receive antenna; provided, however,
that nothing contained in this Agreement shall create any obligation on the part
of Seller to accept (as a condition to receipt of such FCC Approval or
otherwise): (i) any restriction (other than a restriction imposed in respect of
the identity of the owners of Seller's outstanding voting securities) on the
right of Seller to operate pursuant to the MCI FCC License or the DBS
authorizations held by Subsidiaries of Seller with respect to frequency channels
at 61.5(degree) West Longitude, 119(degree) West Longitude and 148(degree) West
Longitude orbital locations, including, without limitation, the right to use all
assigned frequency channels authorized thereunder to provide high-powered DBS
services, other than any such restrictions generally imposed on operators of
high-powered DBS services, by applicable Regulatory Provisions and restrictions
of the types generally and customarily imposed by the FCC on operators of
high-powered DBS services and such other restrictions, which, individually or in
the aggregate, do not have a Transferred Asset Material Adverse Effect or a
Seller Material Adverse Effect; (ii) any change in the management or ownership
(other than as contemplated hereunder) of Seller, or in any voting or other
rights of any shareholder of Seller other than the Transferors; or (iii) a
requirement that Seller dispose of all or any part of the 21 frequency channels
at 119(Degree) West Longitude, the 11 frequency channels at 61.5(Degree) West
Longitude or the 24 frequency channels at 148(Degree) West Longitude owned by
Subsidiaries of Seller, other than any such restrictions generally imposed on
operators of high-powered DBS services, by applicable regulatory provisions and
restrictions of the types generally and customarily imposed by the FCC on
operators of high-powered DBS services and such other restrictions, which,
individually or in the aggregate, do not have a Seller Material Adverse Effect
(each of the conditions contained in the foregoing Sections 5(d)(i), (ii) and
(iii), which Seller is under no obligation to accept, are referred to herein as
a "Material Condition"). If the parties implement an Acceptable Alternative
Arrangement in lieu of assigning the MCI FCC License to Seller as provided
herein, Seller shall have the continuing right and option, exercisable in its
sole discretion, and for no additional consideration to the Transferors beyond
that contemplated by this Agreement, to require the Transferors to immediately
assign the MCI FCC License to Seller, upon receipt of FCC Approval, in which
case the Acceptable Alternative Arrangement shall be canceled concurrently with
the effectiveness of such assignment. MCI shall continue to perform all of its
material obligations under the MCI FCC License until the earlier of the Closing
Date or the date of termination of this Agreement, and shall continue to remain
in "diligence" (as the term is used in the FCC's rules and as defined in the
Regulatory Provisions), and to hold a valid authorization for its DBS System,
until the earlier of the Closing Date or the date of termination of this
Agreement. If the Closing Date shall not have occurred by December 20, 2000, MCI
shall confirm to Seller completion of construction of the first satellite on its
proposed DBS system by December 20, 2000.
(e) Earth Station Authorization. Subject to Section 4(l)(ii) of the
Transferor Disclosure Schedule, until the earlier of the Closing Date or
termination date of this Agreement, ASkyB shall continue to perform all of its
obligations under its Earth Station Authorizations and to hold valid
authorizations (including through seeking the extension of deadlines for
construction and certification contained in the existing authorizations).
(f) Satellites
(i) From the date of this Agreement until the Closing
Date, the Transferors agree to continue to perform their respective
obligations under the Satellite Contracts.
(ii) The Transferors hereby confirm that, pursuant to
the Contract dated February 26, 1996 between MCI and Space Systems
Loral, Inc. ("Loral"), as amended by Amendment No. 1 dated March 26,
1996, and Amendment No. 2 dated as of November 25, 1998 (as amended,
the "Loral Contract"), the acceptance on-orbit of Satellite No. 1 (as
defined in the Loral Contract) ("Sky I") is scheduled to occur no later
than August 31, 1999 (subject to launch vehicle availability, as set
forth in Amendment No. 2 to said Contract). The Transferors agree to
attempt to integrate satellite construction and launch preparation as
expeditiously as possible so as to provide for the potential to move up
the launch dates for each of Sky I and Sky II in the event that earlier
launch dates become available. Notwithstanding anything to the contrary
in this Section 5(f)(ii), the Transferors shall have no obligation to
approve the launch of Sky I for a date prior to the Closing Date;
provided, however, that the Transferors shall use their best efforts to
ensure that the launch shall occur at the earliest practicable date
following the Closing in accordance with the terms and provisions of
the Loral Contract, including, to the extent permitted under the Loral
Contract, delaying the launch date for the shortest incremental periods
of time possible which are consistent with the then reasonably
anticipated Closing Date.
(iii) Transferors hereby agree to direct Loral to
resume work immediately after the date hereof on Satellite No. 2 (as
defined in the Loral Contract) ("Sky II") by exercising Option No. 3 of
the Loral Contract (as defined in Amendment No. 2 of the Loral
Contract). Transferors hereby confirm that Loral has agreed to use its
best efforts to ship and launch Sky II by the fourth quarter of 1999.
(iv) As soon as reasonably practicable following the
Closing Date, the Transferors agree to provide to Seller, at no cost to
Seller, the consulting services of Romulo Pontual with respect to the
construction and launch of Sky I and Sky II, which services shall be
provided on an "as needed" basis, up to the full time and efforts of
Mr. Pontual.
(v) Prior to the Closing Date, the Transferors shall
use commercially reasonable efforts consistent with past practice to
provide that Loral will continue to perform under the Satellite
Contracts in accordance with their terms in order to achieve completion
of construction and launch of each of Sky I and Sky II at the earliest
practicable date.
(vi) On or prior to the Closing Date, the Transferors
shall provide for policies of insurance covering Sky I and Sky II,
which policies shall either name Seller or a wholly owned Subsidiary of
Seller designated by Seller as the named insured, or cause such
policies to be issued in the name of Seller or such Subsidiary,
providing for insurance in the amount of $225 million per satellite and
continuing for one year following launch, regardless of the actual date
of launch, and which shall otherwise contain such customary terms and
conditions as Seller reasonably requests; provided, however, that to
the extent the Transferors are able to terminate existing policies and
receive a full refund in respect thereof, Seller may request the
Transferors to procure, and if requested the Transferors shall procure,
from such insurance companies or brokers as Seller directs, insurance
("Seller's Launch Insurance") in the amount of $225 million per
satellite, per launch plus one year in orbit, containing such customary
industry terms and conditions as Seller shall reasonably request.
(vii) Subject to Section 8(b) of this Agreement, from
and after the Closing Date, the Transferors shall continue to pay, on
behalf of Seller, as and when due, all amounts due under the Satellite
Contracts, as such obligations to pay arise pursuant to the Satellite
Contacts in existence as of the Closing Date, or, in the event of a
breach or termination of any Satellite Contract for any reason, as such
obligations to pay would reasonably be expected to have arisen pursuant
to the Satellite Contracts in existence as of the Closing Date had
there been no such breach or termination; provided, however, that if
Seller agrees to a modification of any of the Satellite Contracts and
as a result is entitled to a reduction in the purchase price therein,
the Transferors shall be only obligated to pay the purchase price as so
reduced. In the event the Transferors fail to make such payments within
the time periods provided in the Satellite Contracts, the Transferors
shall either (x) pay, in addition to the amounts due, any penalties
that become due under the Satellite Contracts as a result of such
failure or (y) in the event that Seller elects to make such payments,
promptly pay to Seller an amount equal to such payments, together with
interest thereon at a rate of 17.5% per annum from the date of Seller's
payment until the date of the Transferors' repayment.
(viii) In the event the Transferors are unable to
procure the necessary consents to assignment of any of the Satellite
Contracts, from and after the Closing Date the Transferors shall use
their respective best efforts to provide to Seller all of the benefits
received or to be received under such Satellite Contracts, and the
Transferors shall assign to Seller all of their right, title and
interest in and to each of Sky I and Sky II immediately following their
receipt of title thereto from Loral pursuant to Section 12.1 of the
Loral Contract. In addition, from and after the Closing Date, if the
Transferors have not assigned all of the Satellite Contracts pursuant
to this Agreement, Seller shall have the right to direct all actions to
be taken in connection with such unassigned Satellite Contracts.
(g) Sony Contract.
(i) From and after the Closing Date, the Transferors
shall continue to pay, on behalf of Seller, as and when due, all
amounts due under the Sony Contract as such obligations to pay arise
pursuant to the Sony Contract in existence as of the Closing Date, or,
in the event of a breach or termination of the Sony Contract for any
reason, as such obligations to pay would reasonably be expected to have
arisen pursuant to the Sony Contract in existence as of the Closing
Date hereof had there been no such breach or termination; provided,
however, if Seller agrees to a modification of the Sony Contract and as
a result is entitled to a reduction in the purchase price therein, the
Transferors shall be only obligated to pay the purchase price as so
reduced. In the event the Transferors fail to make such payments within
the time periods provided in the Sony Contract, the Transferors shall
either (x) pay, in addition to the amounts due, any penalties that
become due under the Sony Contract as a result of such failure or (y)
in the event that Seller elects to make such payments, promptly pay to
Seller an amount equal to such payments, together with interest thereon
at a rate of 17.5% per annum from the date of Seller's payment until
the date of the Transferors' repayment.
(ii) In the event the Transferors are unable to
procure the necessary consents to assignment of the Sony Contract, from
and after the Closing Date the Transferors shall use their respective
best efforts to provide to Seller all of the benefits received or to be
received under the Sony Contract. In addition, from and after the
Closing Date, if the Transferors have not assigned the Sony Contract
pursuant to this Agreement, Seller shall have the right to direct all
actions to be taken in connection with the Sony Contract.
(h) From the date of this Agreement through the Closing, each of the
Transferors, on the one hand, and Seller, on the other hand, shall afford to the
other party and its representatives free and full access at all reasonable times
to the properties, personnel, books and records relating to the Transferred
Assets or of the Seller, as the case may be (such access not to unreasonably
interfere with the business of such party), subject to compliance with all
export control restrictions, to the extent applicable, in order that the other
party may have full opportunity to make such investigations as it may reasonably
desire to make of all matters relating to the transactions contemplated
hereunder. Notwithstanding the foregoing, Seller shall not be obligated to
disclose any information that is competitively sensitive or strategically
sensitive, and if Seller shall determine to withhold any information on such
grounds, a reasonable summary of the portions thereof that are not competitively
or strategically sensitive shall be provided to the party requesting information
pursuant to this Section 5(h). Any information provided pursuant to this Section
5(h) shall be kept confidential by the Transferors and Seller, as applicable,
and shall not be revealed to any Person other than the respective officers,
directors, employees, agents and representatives of such parties (it being
agreed that the Transferors, on the one hand, and Seller, on the other hand,
shall be liable for any breach of this Section 5(h) by any of their respective
officers, directors, employees, agents and representatives), except to the
extent such information (i) is or becomes generally available to the public
(other than as a result of a breach of this Section 5(h) by the recipient of
such information) or (ii) is required to be disclosed under any applicable law
or under subpoena or other legal process. No such investigation shall diminish
in any respect any of the representations or warranties of the Parties. The
Parties shall be entitled to seek injunctive relief or such other remedy as may
be available at law or in equity for any breach by another Party of this
Section.
(i) Notice of Developments. Each Party will give prompt written notice to
the others of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement or any of the
Collateral Agreements, including, but not limited to, a breach of a
representation, warranty or covenant of this Agreement. No disclosure by any
Party pursuant to this Section 5(i) shall, however, be deemed to amend or
supplement the Seller Disclosure Schedule or Transferor Disclosure Schedule or
to prevent or cure any misrepresentation, breach of warranty or breach of
covenant.
(j) NDS Equipment. The Parties agree that all equipment previously
delivered by any Affiliate of News Corporation to Seller or its Subsidiaries
(the "NDS Equipment") at its broadcast operations center at Cheyenne, Wyoming or
elsewhere, will be removed by News Corporation or an Affiliate at the expense of
News Corporation or such Affiliate. The Parties further agree that any
agreements related to the acquisition and delivery of the NDS Equipment are
terminated as of the date of this Agreement and shall be of no further force or
effect. News Corporation, on the one hand, and the Seller, on the other hand, on
behalf of themselves and their respective Affiliates, agree to fully, finally
and forever release and discharge Seller or News Corporation, as the case may
be, and their respective Affiliates, officers, directors, employees,
representatives and agents from and against any and all claims, actions,
damages, liabilities, costs or expenses arising out of or relating to the NDS
Equipment.
(k) Abeyance of EchoStar Litigation. Seller, News Corporation and ASkyB
shall promptly as practicable following the date of this Agreement file the
Stipulation annexed as Exhibit H hereto with the United States District Court
for the District of Colorado to stay all discovery, deadlines, motions and other
proceedings in EchoStar Communications Corporation v. The News Corporation
Limited, pending in the United States District Court for the District of
Colorado (the "EchoStar Litigation").
(l) Transfer Taxes and Prorations. Any sales or other transfer taxes
resulting from the transfer of the Transferred Assets shall be borne one-half by
the Transferors, on the one hand, and one-half by the Seller, on the other hand.
Notwithstanding the foregoing, real estate taxes and other customary prorations
made in connection with the sale of real property in the state of Arizona shall
be made as of the Closing Date in accordance with Arizona custom and usage.
(m) Further Assurances. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement or
the Collateral Agreements or the transactions contemplated hereby or thereby,
including, among other things, the orderly transfer and transition of the
Transferred Assets from the Transferors to Seller or Newco, as the case may be,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, the costs and expenses of such actions to be borne
one-half by the Transferors, on the one hand, and one-half by the Seller, on the
other hand, except as otherwise provided in this Agreement or any of the
Collateral Agreements. None of the Parties shall take any action or fail to take
any action which would reasonably be expected to frustrate the intent and
purposes of this Agreement and the Collateral Agreements or the transactions
contemplated hereby or thereby.
(n) No Solicitation. Except for the transactions contemplated by this
Agreement, from and after the date of this Agreement, until the date of an FCC
Order or, in the case of a Bureau Order, the later of October 31, 1999 or five
days from the date of such Bureau Order, none of the Transferors shall, nor
shall they authorize or permit any officer, director or employee of, or any
investment banker, attorney, accountant, or other representative retained by,
any one of them to, directly or indirectly, solicit, initiate, encourage or
entertain (including by way of furnishing information) discussions, inquiries,
offers or proposals or participate in any discussions or negotiations for the
purpose or with the intention of leading to any proposal or offer from any
Person which constitutes or concerns, or may reasonably be expected to lead to,
any proposal for a merger or other business combination involving any proposal
or offer to acquire any portion of the Transferred Assets. Each of the
Transferors shall promptly (and in any event within two business days) notify
Seller of any inquiry it receives from any Person with respect to the subject
matter of the first sentence of this Section 5(n).
(o) Bundling. Seller and MCI agree that, following the Closing, MCI shall
have the non-exclusive right to bundle Seller's DBS service with MCI's telephony
service offerings on mutually agreeable terms.
(p) Casualty; Condemnation.
(i) The Transferors, after learning of any fire or
other casualty on or to the Gilbert Property, shall promptly notify
Seller thereof, and, as soon as reasonably practicable thereafter, the
Transferors shall provide Seller with an estimate of the cost of
repairs and the amount of insurance proceeds available to undertake
such repairs. Within ten (10) days after receipt of such notices and
estimates, Seller shall in turn notify the Transferors whether Seller
wants the Transferors to commence repair of the resultant damage of the
Gilbert Property. If Seller wants the Transferors to so commence, or if
Transferors, in the exercise of prudent business judgment, decide to so
commence, the Transferors shall proceed to repair the Gilbert Property
but shall not be obligated to expend more than any collected insurance
proceeds and the amount of any insurance deductible. Should such fire
or other casualty create an emergency situation, the Transferors may
elect to take such measures to protect, secure and repair the Gilbert
Property as the Transferors in their own discretion determine. At the
Closing Date, the Transferors shall pay to Seller any proceeds they
have received in respect of any such fire or other casualty; provided,
however, that if the Transferors have undertaken any repairs in
accordance with this Section 5(p)(i), the Transferors shall turn over
to Seller the balance of any unused insurance proceeds in the
Transferors' possession. At the Closing, the Transferors shall also
assign (without warranty or recourse to the Transferors) to Seller all
of the Transferors' rights to any payments to be made after the Closing
Date under any hazard insurance policy then in effect with respect to
the Gilbert Property. If it is necessary to prosecute a claim to
maximize the proceeds of insurance recovery, from and after the Closing
Date the Transferors shall diligently undertake such prosecution for
the benefit of Seller. The Transferors shall not enter into any
agreement to undertake repairs with a term that extends beyond the
Closing Date without the prior written consent of Seller, which consent
shall not be unreasonably withheld. Following the Closing Date, except
as set forth above, the Transferors shall have no further liability or
responsibility with respect to any such preceding fire or other
casualty at the Gilbert Property. Following the Closing Date, Seller
shall reimburse the Transferors for the cost of any repairs made by the
Transferors prior to the Closing and not reimbursed by the Transferors'
hazard insurance company, to the extent Seller receives any insurance
proceeds from and after the Closing Date.
(ii) At the Closing Date, the Transferors shall pay
to Seller any proceeds it has received in respect of any taking of any
part of the Gilbert Property, and shall assign to Seller without
recourse or warranty its right to any future proceeds in respect
thereof. Following the Closing Date, the Transferors shall have no
further liability or responsibility with respect to any such preceding
taking or proceeding regarding the Gilbert Property. If it is necessary
to prosecute a claim to maximize the proceeds of taking recovery, from
and after the Closing Date the Transferors shall diligently undertake
such prosecution for the benefit of Seller.
(q) Title Insurance. ASkyB will obtain, not later than thirty
(30) calendar days following the date of this Agreement with respect to the
Gilbert Property, a commitment for an extended coverage ALTA Owner's Policy of
Title Insurance Form 1992 issued by a Chicago Title Insurance Company or such
other title insurer reasonably satisfactory to Seller (and, if requested by
Seller, reinsured in whole or in part by one or more insurance companies and
pursuant to a direct access agreement reasonably acceptable to Seller), such
amount as Seller reasonably may determine to be the fair market value of such
real property (including all improvements located thereon), insuring title to
such real property to be in the name of Seller as of the Closing (subject only
to the title exceptions described above in Section 4(g)(i) of the Transferor
Disclosure Schedule) and containing in substance such endorsements as ASkyB
obtained in Chicago Title Insurance Company Policy No. 106 0000449, a copy of
which has been furnished to Seller. The cost of such title policy shall be borne
one-half by the Transferors, on the one hand, and one-half by Seller, on the
other hand.
(r) Surveys. With respect to the Gilbert Property, ASkyB will
procure in preparation for the Closing a current survey certified to Seller,
prepared by a licensed surveyor and conforming to current ATLA Minimum Detail
Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters shown customarily on such surveys, and showing access
affirmatively to a public street or road (the "Survey"). The cost of the Survey
shall be borne one-half by the Transferors, on the one hand, and one-half by
Seller, on the other hand.
6. Conditions to Obligation to Close
(a) Conditions to Obligation of the Transferors. The obligation of each of
the Transferors to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions on or prior to the Closing, any of which may be waived by News
Corporation:
(i) The representations and warranties of Seller set
forth in Sections 3(b)(i), 3(c)(i), 3(d)(ii), 3(e), 3(g)(A), 3(g)(D)
and 3(h)(iii) that are qualified by materiality or a material adverse
effect shall be true and correct at and as of the Closing Date, and all
other representations and warranties of Seller set forth in such
sections that are not so qualified shall be true and correct in all
material respects at and as of the Closing Date, except, in each case,
(i) for such representations and warranties that are expressly made as
of an earlier date in which case such representations and warranties
shall only be true and correct on and as of such earlier date and (ii)
as disclosed in the Seller Disclosure Schedule;
(ii) Seller shall have procured all of the consents
and approvals specified in Section 6(a)(ii) of the Seller Disclosure
Schedule;
(iii) There shall be no statute, law, judgment,
decree, injunction, rule or order of any federal, state, local or
foreign government, governmental authority, governmental department,
commission, administrative or regulatory agency, instrumentality, court
or arbitrator ("Governmental Entities") outstanding that prohibits,
restricts or delays consummation of the transactions contemplated by
this Agreement;
(iv) Seller shall have delivered to the Transferors a
certificate, dated the Closing Date, in form and substance reasonably
satisfactory to the Transferors, executed by an executive officer of
Seller, to the effect that each of the conditions specified above in
Section 6(a)(i)-(iii) is satisfied in all respects;
(v) All applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act shall have expired
or otherwise been terminated, and the Parties shall have received the
FCC Approval and other authorizations, consents and approvals of other
Governmental Entities set forth in the Seller Disclosure Schedule and
the Transferor Disclosure Schedule;
(vi) The Transferors shall have received from counsel
to Seller an opinion addressed to the Transferors and dated as of the
Closing Date in form and substance reasonably satisfactory to the
Transferors;
(vii) Seller shall have executed and delivered to the
Transferors the Registration Rights Agreement;
(viii) Seller shall have executed and delivered, and
shall have caused Charles W. Ergen to execute and deliver, to the
Transferors the Settlement Agreement and Mutual Release;
(ix) Seller shall have caused to be executed and
delivered to the Transferors the Set Top Box Agreement;
(x) Seller shall have executed and delivered to the
Transferors the Retransmission Consent Agreement; and
(xi) Seller shall have executed and delivered to the
Transferors an Assignment and Assumption Agreement with respect to the
Assigned Contracts, in a form to be mutually agreed upon by the parties
thereto (the "Contract Assignment and Assumption"), and the assumption
of the Assigned Contracts and the MCI FCC License shall be effective as
of the Closing Date.
In the event that one or more of the preceding conditions to the
Transferor's obligations to close have not been satisfied on or prior to the
Closing Date, the Transferors may nonetheless proceed to close (without waiving
such condition) and seek a purchase price adjustment from or pursue a cause of
action for damages against Seller for the failure of Seller to satisfy such
condition.
(b) Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions on or prior to the
Closing, any of which may be waived by Seller:
(i) The representations and warranties of each of the
Transferors set forth in Sections 4(b) (excluding the representations
and warranties with respect to good standing status), 4(c)(i), 4(d),
4(f)(A), 4(h)(iii)(A), 4(h)(iii)(B), 4(h)(iii)(C), 4(l)(i) and 4(m)(i)
that are qualified by reference to materiality or a material adverse
effect shall be true and correct at and as of the Closing Date, and all
other representations and warranties set forth in such sections that
are not so qualified shall be true and correct in all material respects
at and as of the Closing Date except, in each case, (i) for such
representations and warranties that are expressly made as of an earlier
date, in which case such representations and warranties shall only be
true and correct on and as of such earlier date and (ii) as disclosed
in the Transferor Disclosure Schedule;
(ii) The Transferors shall have procured all of the
consents specified in Section 6(b)(ii) of the Transferor Disclosure
Schedule; provided, however, that if the Transferors are unable to
procure a consent to the assignment of an Assigned Contract, but are
able to provide Seller with all of the benefits under such Assigned
Contract at no additional cost to Seller, then Seller shall waive this
condition with respect to such Assigned Contract;
(iii) There shall be no statute, law, judgment,
decree, injunction, rule or order of any Governmental Entity which
prohibits, restricts or delays consummation of the transactions
contemplated by this Agreement;
(iv) Each of the Transferors shall have delivered to
Seller a certificate, dated the Closing Date, in form and substance
reasonably satisfactory to Seller, executed by an executive officer of
each of the Transferors, respectively, to the effect that (A) each of
the conditions specified above in Section 6(b)(i)-(iii) is satisfied in
all respects and (B) the representations and warranties set forth in
Section 4(o) are true and correct in all material respects;
(v) All applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act shall have expired
or otherwise been terminated, and the Parties shall have received the
FCC Approval and other authorizations, consents and approvals of other
Governmental Entities set forth in the Seller Disclosure Schedule and
the Transferor Disclosure Schedule;
(vi) Seller shall have received from counsel to MCI,
an opinion or opinions addressed to Seller and dated as of the Closing
Date in form and substance reasonably satisfactory to Seller;
(vii) The Transferors shall have executed and
delivered to Seller the Registration Rights Agreement;
(viii) The Transferors shall have executed and
delivered the Settlement Agreement and Mutual Release;
(ix) The Transferors shall have caused to be executed
and delivered to Seller the Set Top Box Agreement;
(x) The Transferors shall have caused to be executed
and delivered to Seller the Retransmission Consent Agreement;
(xi) The Transferors shall have caused to be executed
and delivered to Seller the Components License Agreement;
(xii) The Transferors shall have delivered to Seller
a Special Warranty Deed in the form of Exhibit I annexed hereto,
conveying the Gilbert Property to Seller;
(xiii) The Transferors shall have satisfied their
obligations contained in Section 5(f)(vi) hereof; and
(xiv) The Transferors shall have executed and
delivered to Seller the Contract Assignment and Assumption, and an
instrument or instruments of transfer in form and substance reasonably
satisfactory to Seller with respect to the transfer of the Earth
Station Authorizations and the Intellectual Property set forth in
Section 2(b)(vi), and the assignment of all Assigned Contracts, the MCI
FCC License, the Earth Station Authorization and the Intellectual
Property shall be effective as of the Closing Date.
In the event that one or more of the preceding conditions to Seller's
obligations to close have not been satisfied on or prior to the Closing Date,
Seller may nonetheless proceed to close (without waiving such condition) and
seek a purchase price adjustment from or pursue a cause of action for damages
against the Transferors for the failure of the Transferors to satisfy such
condition.
7. Remedies for Breach of this Agreement
(a) Survival. All covenants and agreements contained in this Agreement and
the right to indemnification with respect to all representations and warranties
contained in this Agreement or in any certificate, document or statement
delivered pursuant hereto, shall survive (and not be affected in any respect by)
the Closing, any investigation conducted by any party hereto and any information
which any party may receive. Notwithstanding anything to the contrary in the
foregoing, the right to indemnification with respect to each representation and
warranty (but not the covenants and other agreements) contained in this
Agreement or made pursuant to any certificate, document or statement delivered
pursuant hereto shall terminate on the last day of the eighteenth month after
the month that includes the Closing Date (the "Survival Date"); provided,
however, that the right to indemnification with respect to such representations
and warranties, and the Liability of any party with respect thereto, shall not
terminate with respect to any claim, whether or not fixed as to Liability or
liquidated as to amount, with respect to which such party has been given written
notice prior to the Survival Date.
(b) Indemnification Provisions for Benefit of the Transferors. Seller shall
indemnify each of the Transferors and their respective shareholders, officers,
directors, employees, agents and Affiliates (collectively, "Transferor
Indemnitees") and hold each of them harmless from and against and in respect of
any Damages directly or indirectly incurred by any of them as a result of any
breach of a representation, warranty, covenant or agreement of Seller made
hereunder. For purposes of determining any such Damages incurred by the
Transferor Indemnitees, no regard shall be given to the adjustment provisions
set forth in Section 2(a)(ii) hereof.
(c) Indemnification Provisions for Benefit of Seller. Each of News
Corporation, MCI and ASkyB, jointly and severally, shall indemnify Seller, and
its shareholders, officers, directors, employees, agents and Affiliates and hold
each of them harmless from and against and in respect of any Damages directly or
indirectly incurred by any of them as a result of any breach of a
representation, warranty, covenant or agreement of News Corporation, ASkyB, the
ASkyB Buyer, MCI or the MCI Buyer made hereunder other than Section 4(g)(i), if
any Damages suffered as a result thereof are recoverable under Seller's title
insurance policy.
(d) Notification; Rights of Parties to Settle or Defend. Promptly after the
occurrence of any event which may give rise to a claim for indemnification under
this Section 7, the party entitled to indemnification (the "Indemnified Party")
shall notify the indemnifying party (the "Indemnitor") in writing of such claim
(the "Claims Notice"). The Claims Notice shall describe the asserted liability
in reasonable detail, and shall indicate the amount (estimated, if necessary and
to the extent feasible) of the Damages that have been or may be suffered by the
Indemnified Party. Failure by the Indemnified Party to give a Claims Notice to
the Indemnitor in accordance with the provisions of this Section 7(d) shall not
relieve the Indemnitor of its obligations hereunder except to the extent that
the Indemnitor has been actually and materially prejudiced by such failure. The
Indemnitor may elect to compromise or defend, at its own expense, by its own
counsel and to the extent an election with respect to such compromise or defense
is available to the Indemnified Party, any asserted liability. If the Indemnitor
elects to compromise or defend such asserted liability, it shall within 30
calendar days (or sooner, if the nature of the asserted liability so requires)
notify the Indemnified Party of its intent to do so, and the Indemnified Party
shall cooperate, at the expense of the Indemnitor, in the compromise of, or
defense against, such asserted liability. If the Indemnitor elects to defend any
claim, the Indemnified Party shall make available to the Indemnitor any books,
records or other documents within its control that are necessary or appropriate
for such defense. If the Indemnitor elects not to compromise or defend the
asserted liability, fails to notify the Indemnified Party of its election as
herein provided or contests its obligation to indemnify under this Agreement (or
if counsel to the Indemnified Party advises such party that there may be a
potential conflict of interest between the Indemnitor and the Indemnified Party,
or between the Indemnified Party and any other indemnified party, or that
different or additional defenses from those available to the Indemnified Party
may be available to any other indemnified party), the Indemnified Party may pay,
compromise or defend (at the expense of the Indemnitor) such asserted liability
as the Indemnified Party considers appropriate. The Parties agree to cooperate
fully with one another in the defense, settlement or compromise of any asserted
liability. Notwithstanding the foregoing, neither the Indemnitor nor the
Indemnified Party may settle or compromise any claim over the objection of the
other; provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnified Party and the Indemnitor
may participate, at their own expense, in the defense of such asserted
liability. For the avoidance of doubt, the rights to indemnification under this
Agreement shall arise in the event of both claims asserted directly by one Party
against the other as well as claims asserted by third parties against a Party.
(e) Exclusive Remedy. Except with respect to a termination of this
Agreement pursuant to Section 8(a)(ii) or Section 8(a)(iii) hereof, the Parties
acknowledge and agree that the indemnity rights set forth in this Section 7 are
to be their exclusive monetary remedies for breaches of the representations,
warranties and covenants contained herein; provided, however, that nothing in
this Section 7(e) shall limit in any way the availability of specific
performance, injunctive relief or other equitable remedies to which a Party may
otherwise be entitled or a cause of action for fraud.
(f) Limitations. Any indemnity amounts payable by an Indemnitor hereunder
shall be net of any tax benefit received by the Indemnified Party as a result of
the claim or event giving rise to indemnification.
8. Termination
(a) Termination of Agreement.
The Parties may terminate this Agreement only as provided
below:
(i) The Parties may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) The Transferors may terminate this Agreement by
giving written notice to Seller at any time prior to the Closing in the
event Seller is in breach, in any material respect, of any of the
representations and warranties set forth in Section 6(a)(i), unless
such breach shall be subject to cure, in which event termination may
only be effected if such breach shall remain uncured on the 60th day
following receipt of notice of breach; provided, however, that if any
such breach is incapable of cure within 60 days and Seller acted
reasonably diligently during such 60-day period in attempting to cure
such breach, this Agreement shall not be terminated pursuant to this
Section 8(a)(ii) for so long as the breach remains subject to cure and
Seller acts continuously with reasonable diligence in attempting to
cure such breach;
(iii) Seller may terminate this Agreement by giving
written notice to the Transferors at any time prior to the Closing in
the event any of the Transferors is in breach, in any material respect,
of any of the representations and warranties set forth in Section
6(b)(i), unless such breach shall be subject to cure, in which event,
termination may only be effected if such breach shall remain uncured on
the 60th day following receipt of notice of breach; provided, however,
that if any such breach is incapable of cure within 60 days and the
breaching party acted reasonably diligently during such 60-day period
in attempting to cure such breach, this Agreement shall not be
terminated pursuant to this Section 8(a)(iii) for so long as the breach
remains subject to cure and the breaching party acts continuously with
reasonable diligence in attempting to cure such breach; or
(iv) Either the Transferors or Seller may terminate
this Agreement by giving written notice to Seller or the Transferors,
as the case may be:
(A) if, within the later of (x) December 31,
1999 and (y) sixty (60) days following the date of a Bureau
Order, the FCC does not release a Preliminary FCC Approval, or
if such Preliminary FCC Approval is released within such sixty
(60) day period but does not become an FCC Approval within
thirty (30) days thereafter;
(B) if, within sixty (60) days following the
date of an FCC Order, the FCC does not release a Preliminary
FCC Approval, or if such Preliminary FCC Approval is released
within such sixty (60) day period but does not become an FCC
Approval within thirty (30) days thereafter; or
(C) if within sixty (60) days following the
date of an FCC Approval or FCC Order which conditionally
grants the FCC's consent to the assignment of the MCI FCC
License to Seller or Newco, the Parties are unable to satisfy
a condition other than a Material Condition.
(b) Effect of Termination
(i) If any Party terminates this Agreement pursuant
to Section 8(a), this Agreement shall become null and void and all
obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party, except for (A) any Liability
of any Party then in breach and (B) the provisions of the third
sentence of Section 5(h) relating to confidential information which
shall survive termination.
(ii) Notwithstanding the foregoing, (A) if this
Agreement is terminated for any reason other than pursuant to Section
8(a)(ii) or Section 8(a)(iii), Seller shall purchase from the
Transferors, and the Transferors shall sell to Seller, Sky II, together
with all rights associated therewith, immediately following the later
of the date of termination or the Transferors' receipt of title to Sky
II from Loral pursuant to Article 12.1 of the Loral Contract, i.e.,
in-orbit delivery, at a purchase price equal to the actual direct
payments made under the Loral Contract in respect of Sky II through the
date of purchase, and Seller shall assume all obligations of the
Transferors with respect to Sky II under Article 13 of the Loral
Contract dealing with orbital performance incentives; provided,
however, that, as an alternative to purchasing Sky II, Seller may, at
its option, purchase Sky I, together with all rights associated
therewith, from the Transferors, immediately following the later of the
date of termination or the Transferors' receipt of title to Sky I from
Loral pursuant to Article 12.1 of the Loral Contract, i.e., in-orbit
delivery, at a purchase price equal to the actual direct payments made
under the Loral Contract in respect of Sky I through the date of
purchase, and Seller shall assume all obligations of Transferors with
respect to Sky I under Article 13 of the Loral Contract dealing with
orbital performance incentives; (B) if this Agreement is terminated by
the Transferors pursuant to Section 8 (a)(ii), the Transferors may
elect to sell to Seller, and if so elected Seller shall purchase from
the Transferors, at the Transferors' option, either Sky I or Sky II,
together with all rights associated therewith, immediately following
the later of the date of termination or the Transferors' receipt of
title thereto from Loral pursuant to Article 12.1 of the Loral
Contract, i.e, in-orbit delivery, at a purchase price equal to the
actual direct payments made under the Loral Contract in respect of Sky
I or Sky II, as applicable, through the date of purchase, and Seller
shall assume all obligations of the Transferors with respect to Sky I
or Sky II, as the case may be, under Article 13 of the Loral Contract
dealing with orbital performance incentives; or (C) if this Agreement
is terminated by Seller pursuant to Section 8(a)(iii), Seller may elect
to purchase from the Transferors, and if so elected the Transferors
shall sell to Seller, at Seller's option, either Sky I or Sky II,
together with all rights associated therewith, immediately following
the later of the date of termination or the Transferors' receipt of
title thereto from Loral pursuant to Article 12.1 of the Loral
Contract, i.e, in-orbit delivery, at a purchase price equal to the
actual direct payments made under the Loral Contract in respect of Sky
I or Sky II, as applicable, through the date of purchase, and Seller
shall assume all obligations of the Transferors with respect to Sky I
or Sky II, as the case may be, under Article 13 of the Loral Contract
dealing with orbital performance incentives. As an alternative to the
foregoing provisions with respect to the Transferors' sale to Seller of
Sky I or Sky II, and subject to Loral's prior written consent,
Transferors may assign to Seller the Loral Contract as it relates to
the applicable satellite, together with all rights associated
therewith. In all events, Transferors may also assign Seller's Launch
Insurance, if any, relating to the applicable satellite, in which
event, the purchase price for such satellite, shall include the actual
direct payments made with respect to such satellite under Seller's
Launch Insurance policy. The purchase price for either Sky I or Sky II
shall be payable in cash on or prior to the 180th day (the "Payment
Date") following the assignment of the Loral Contract, the termination
of this Agreement or the Transferors' receipt of title thereto from
Loral pursuant to Article 12.1 of the Loral Contract (the "Transfer
Date"), i.e, in-orbit delivery, as applicable, together with interest
thereon at the LIBOR rate from the Transfer Date to the payment date of
such purchase price; provided, however, that if Seller fails to pay
such purchase price, together with all accrued interest thereon, on or
prior to the Payment Date, interest will accrue on such unpaid purchase
price and accrued interest at a rate of 17.5% per annum from the 181st
day following the Transfer Date to the payment date therefor. All
representations, warranties and covenants of the Transferors in this
Agreement with respect to the Satellite Contracts shall be applicable
in connection with the purchase or assignment of either Sky I or Sky II
pursuant to this paragraph.
(iii) Without limiting the generality of subsection
(b)(i) above, if this Agreement is terminated pursuant to either
Section 8(a)(ii) or Section 8(a)(iv), Seller, News Corporation and
ASkyB shall promptly as practicable following the date of such
termination execute and file the Settlement Agreement and Mutual
Release and the Final Stipulation of Dismissal annexed thereto with the
United States District Court for the District of Colorado to dismiss
the EchoStar Litigation with prejudice provided, however, if this
Agreement is terminated pursuant to Section 8(a)(iv)(C) because an FCC
Approval or FCC Order contained a condition that is within the control
of the Transferors, and such condition is not satisfied, even though
the Seller acted in good faith in connection therewith, the EchoStar
Litigation shall not be dismissed.
.
9. Miscellaneous
(a) Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party, which
approval shall not be unreasonably withheld; provided, however, that no Party
shall be prohibited from making any public disclosure it believes in good faith
on advice of counsel is required by law or regulation, including, the rules and
regulations of any securities exchange or inter-dealer quotation system upon
which the securities of one of the Parties are listed or admitted for trading(in
which case the disclosing Party will advise the other Parties prior to making
the disclosure). Prior to the making of any disclosure required by law or
regulation, the disclosing Party shall consult with the other Parties, to the
extent feasible, as to the content of such public announcement or press release
and provide the other Party with an opportunity to review and comment thereon.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the Schedules hereto and
the Collateral Agreements referred to herein), constitutes the entire agreement
among the Parties and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, that may have related
in any way to the subject matter hereof (except for any contemporaneous writing
signed by Seller, on the one hand, and any of the Transferors, on the other
hand, which specifically refers to their Agreement).
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the Transferors and Seller, except as provided in Sections 2(a) and (b) with
respect to the designation of the ASkyB Buyer (if it is not a Party), the MCI
Buyer (if it is not a Party) and Newco and in Section 9(m)(iv) with respect to
the transfer of Shares to direct or indirect wholly-owned Subsidiaries of News
Corporation or MCI; provided, however, that as a condition to any such
designation, ASkyB, MCI Buyer and Newco, as the case may be, shall agree in
writing to be bound by all of the provisions of this Agreement applicable to the
Party making such designation; and provided further, that as a condition to any
transfer pursuant to Section 9(m)(iv), the transferee shall agree in writing to
be bound by the restrictions set forth in Section 9(m).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below:
If to Seller:
EchoStar Communications Corporation
5701 South Santa Fe Drive
Littleton, Colorado 80120
Attn: David K. Moskowitz, Esq.
Senior Vice President, General
Counsel and Secretary
Telecopy: (303) 723-1699
If to MCI: MCI Telecommunications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Michael Salsbury, Esq.
General Counsel
Telecopy: (202) 887-3353
If to ASkyB or News The News Corporation Limited
Corporation: c/o News America Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Senior Executive Vice
President and Group General Counsel
Telecopy: (212) 768-2029
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(i) Amendments and Waivers. No amendment of any provisions of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties hereto. Any Party may waive compliance by another Party with any
provision of this Agreement, which waiver must be in writing. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(k) Expenses. Except as otherwise provided in this Agreement, each of the
Parties shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(l) Construction. The language used in this Agreement will be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied against any Party. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. Any reference to the "transactions contemplated hereby," the
"transactions contemplated by this Agreement," the "transactions contemplated
under this Agreement" or the "transactions contemplated pursuant to this
Agreement" shall be deemed to also refer to any other document, agreement or
certificate to be executed or delivered on or prior to the Closing. The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Restrictions on Transfer. Notwithstanding anything to the contrary set
forth herein or in the Registration Rights Agreement, the ASkyB Buyer and the
MCI Buyer agree that:
(i) Until such time (the "Completion Date") as all
amounts due under the Satellite Contracts have been paid (including, at
the Transferors' option, through the payment into escrow of all amounts
scheduled to become due under the Satellite Contracts), the ASkyB Buyer
and the MCI Buyer (collectively, the "Buyers") may, directly or
indirectly, sell, assign, transfer, pledge, hypothecate or otherwise
dispose of any interest in the Shares (a "Disposition") in an amount
not to exceed 10% of the Shares issued to the Buyers on the Closing
Date (subject to adjustment for any stock split, stock dividend,
subdivision or combination of the Common Stock or any other action
having a similar effect on the Common Stock);
(ii) Subject to subsection (i) above, from and after
the Closing Date and during the two-year period commencing on the
Closing Date, Dispositions may be made by the ASkyB Buyer and the MCI
Buyer in an amount not to exceed for each 365-day period thereafter
one-third (1/3) of the Shares issued to the Buyers on the Closing Date
(subject to adjustment for any stock split, stock dividend, subdivision
or combination of the Common Stock or any other change in corporate
structure affecting the Common Stock); provided, however, that any
Shares permitted to be sold, but not sold during the first 365-day
period, shall be added to the number of Shares permitted to be sold
during the second 365-day period; and provided, further, that the ASkyB
Buyer and the MCI Buyer shall be permitted pursuant to a firm
commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act, to make a Disposition
of Shares in an amount not to exceed (x) the difference between 50% of
the Shares issued to the Buyers and the number of shares Disposed of by
the Buyers in accordance with this subsection (ii) during the first
365-day period, or (y) the difference between 80% of the Shares issued
to the buyers and the number of Shares Disposed of by the buyers in
accordance with this subsection (ii) during the first and second
365-day periods;
(iii) Subject to subsection (i) above, from and after
the second anniversary of the Closing Date, Dispositions may be made by
the ASkyB Buyer and the MCI Buyer without regard to any restriction on
the amount of Shares sold, except as may be imposed by applicable law;
and
(iv) Nothing contained in this Section 9(m) shall
limit the right of the ASkyB Buyer or the MCI Buyer to transfer any of
its Shares to a direct or indirect wholly-owned subsidiary of either
MCI or News Corporation.
(n) Legends. The Transferors agree to the placement on certificates
representing the Shares purchased pursuant hereto, of a legend, substantially as
set forth below (except that such legend shall not be placed on any Shares that
have been registered under the Securities Act or if, in the opinion of counsel
(which opinion shall be in form and substance satisfactory to Seller), such
legend is no longer required under the Securities Act):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
ANY APPLICABLE SECURITIES LAWS OF SUCH OTHER STATE OR JURISDICTION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS (INCLUDING THE PROVISIONS THAT RESTRICT THE TRANSFER OF
SUCH SECURITIES) OF A PURCHASE AGREEMENT, DATED AS OF NOVEMBER 30,
1998, AMONG AMERICAN SKY BROADCASTING, LLC, THE NEWS CORPORATION
LIMITED, MCI TELECOMMUNICATIONS CORPORATION AND ECHOSTAR
COMMUNICATIONS CORPORATION (THE "COMPANY"), COPIES OF WHICH ARE ON
FILE AT THE OFFICES OF THE SECRETARY OF THE COMPANY. THE HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES THAT IT WILL
COMPLY WITH THE FOREGOING RESTRICTIONS."
(o) Speciic Performance. Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event of any of the
provisions of this Agreement are not performed in accordance with their specific
terms or are otherwise breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of the Agreement and to enforce specifically this
Agreement and the terms and Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
(p) Incorporation of Schedules. The Schedules identified in this Agreement,
including the Seller Disclosure Schedule and the Transferor Disclosure Schedule,
are incorporated herein by reference in their entirety and made a part hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
AMERICAN SKY BROADCASTING, LLC
By: /s/ Lawrence A. Jacobs
Name: Lawrence A. Jacobs
Title: Senior Vice President
THE NEWS CORPORATION LIMITED
By: /s/ Arthur M. Siskind
Name: Arthur M. Siskind
Title: Director
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ William S. Armistead
Name: William S. Armistead
Title: Vice President
ECHOSTAR COMMUNICATIONS
CORPORATION
By: /s/ David K. Moskowitz
Name: David K. Moskowitz
Title: Senior Vice President