Exhibit 1
TRANSACTION AGREEMENT
dated as of
April 20, 2004
among
Constellation, LLC,
PanAmSat Corporation,
The DIRECTV Group, Inc.,
and
PAS Merger Sub, Inc.
TABLE OF CONTENTS
PAGE
ARTICLE I SALE AND PURCHASE OF SHARES; CONSIDERATION......................................................1
Section 1.01. Sale and Purchase of Shares...........................................................1
Section 1.02. Consideration.........................................................................2
Section 1.03. Payment of Purchase Price.............................................................2
Section 1.04. Company Options; Other Equity.........................................................2
ARTICLE II PRE-CLOSING TRANSACTIONS........................................................................3
Section 2.01. Pre-Closing Transactions..............................................................3
Section 2.02. Debt Offer............................................................................3
Section 2.03. Merger................................................................................4
Section 2.04. Repurchase...........................................................................14
Section 2.05. Asset Transfers......................................................................14
Section 2.06. Redemption Notice for 6.125% Senior Notes due 2005...................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................14
Section 3.01. Organization; Subsidiaries; Charter Documents........................................15
Section 3.02. Capitalization of the Company........................................................16
Section 3.03. Corporate Authorization; Board Approval..............................................17
Section 3.04. Governmental Approvals...............................................................18
Section 3.05. Non-Contravention....................................................................18
Section 3.06. Company SEC Documents................................................................19
Section 3.07. Financial Statements; No Undisclosed Liabilities; Internal and Disclosure Controls...20
Section 3.08. Information in Offer Documents.......................................................21
Section 3.09. Absence of Certain Changes...........................................................21
Section 3.10. Insurance............................................................................21
Section 3.11. Real Property; Title to Assets.......................................................22
Section 3.12. Company Intellectual Property........................................................23
Section 3.13. Litigation...........................................................................23
Section 3.14. Taxes................................................................................24
Section 3.15. Employee Benefit Plans; ERISA........................................................25
Section 3.16. Compliance with Laws; Permits........................................................27
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Section 3.17. Company Satellites...................................................................27
Section 3.18. Environmental Matters................................................................28
Section 3.19. Company Material Contracts...........................................................28
Section 3.20. Finders' Fees........................................................................29
Section 3.21. Opinion of Financial Advisor.........................................................29
Section 3.22. Takeover Statutes....................................................................29
Section 3.23. Transactions with Affiliates.........................................................29
Section 3.24. Labor Matters........................................................................29
Section 3.25. Limitation on Warranties.............................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................30
Section 4.01. Organization and Power; Subsidiaries.................................................30
Section 4.02. Corporate Authorization..............................................................30
Section 4.03. Governmental Authorization...........................................................31
Section 4.04. Non-Contravention....................................................................31
Section 4.05. Information Supplied.................................................................31
Section 4.06. Litigation...........................................................................32
Section 4.07. Finders' Fees........................................................................32
Section 4.08. Financing............................................................................32
Section 4.09. Condition of the Business; Independent Investigation.................................32
Section 4.10. Qualifications to Hold Communications Licenses.......................................33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER AND MERGER SUB...................................34
Section 5.01. Organization and Power...............................................................34
Section 5.02. Corporate Authorization..............................................................34
Section 5.03. Governmental Authorization...........................................................35
Section 5.04. Non-Contravention....................................................................35
Section 5.05. Information Supplied.................................................................36
Section 5.06. Litigation...........................................................................36
Section 5.07. Ownership and Transfer of Shares.....................................................36
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Section 5.08. Merger Sub...........................................................................36
Section 5.09. Finders' Fees........................................................................36
ARTICLE VI COVENANTS......................................................................................36
Section 6.01. Conduct of the Company...............................................................36
Section 6.02. Conduct of Purchaser.................................................................40
Section 6.03. Offer Documents; SEC Documents; Company Financial Statements.........................40
Section 6.04. Company Stockholders' Meeting........................................................42
Section 6.05. Confidentiality; Access to Information...............................................43
Section 6.06. No Solicitation......................................................................44
Section 6.07. Commercially Reasonable Efforts......................................................46
Section 6.08. Regulatory Matters...................................................................47
Section 6.09. Cooperation..........................................................................49
Section 6.10. Public Announcements.................................................................49
Section 6.11. Director and Officer Liability.......................................................49
Section 6.12. Employee Benefits....................................................................50
Section 6.13. Cooperation with Financing...........................................................51
Section 6.14. Employee Solicitation................................................................52
Section 6.15. Merger Sub...........................................................................52
Section 6.16. Insurance............................................................................52
ARTICLE VII CONDITIONS TO STOCK PURCHASE CLOSING...........................................................54
Section 7.01. Conditions to the Obligations of Stockholder and Purchaser...........................54
Section 7.02. Conditions to the Obligations of Purchaser...........................................55
Section 7.03. Conditions to the Obligations of Stockholder.........................................56
ARTICLE VIII TERMINATION....................................................................................57
Section 8.01. Termination..........................................................................57
Section 8.02. Notice of Termination; Effect of Termination.........................................58
Section 8.03. Expenses; Termination Fees...........................................................59
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ARTICLE IX MISCELLANEOUS..................................................................................60
Section 9.01. Certain Definitions..................................................................60
Section 9.02. Notices..............................................................................67
Section 9.03. Entire Agreement; Third Party Beneficiaries..........................................69
Section 9.04. Non-Survival of Representations and Warranties.......................................69
Section 9.05. Amendments; No Waivers...............................................................69
Section 9.06. Successors and Assigns...............................................................69
Section 9.07. Governing Law........................................................................70
Section 9.08. Exclusive Jurisdiction...............................................................70
Section 9.09. Counterparts; Effectiveness..........................................................70
Section 9.10. Interpretation.......................................................................70
Section 9.11. Disclosure Schedules.................................................................71
Section 9.12. Severability.........................................................................71
Section 9.13. Specific Performance.................................................................71
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TRANSACTION AGREEMENT
This TRANSACTION AGREEMENT (the "Agreement"), is made and entered
into as of April 20, 2004, by and among Constellation, LLC, a Delaware limited
liability company ("Purchaser"), PanAmSat Corporation, a Delaware corporation
(the "Company"), The DIRECTV Group, Inc., a Delaware corporation (the
"Stockholder"), and PAS Merger Sub, Inc., a Delaware corporation and a
wholly-owned subsidiary of Stockholder ("Merger Sub"). Certain capitalized and
non-capitalized terms used herein are defined in Section 9.01.
WHEREAS, Stockholder beneficially owns, through its wholly owned
subsidiaries, an aggregate of 120,812,175 shares of Company Common Stock, which
constitute approximately 80.5% of the outstanding capital stock of the Company
as of the date hereof;
WHEREAS, the respective Boards of Directors of the Company,
Stockholder and Merger Sub have approved, and deem it advisable to consummate,
the merger of Merger Sub with and into the Company, with the Company surviving
as the Surviving Corporation, on the terms and conditions set forth herein;
WHEREAS, as a condition and an inducement to the willingness of
Purchaser to enter into this Agreement, Stockholder has concurrently herewith
entered into that certain Voting Agreement with Purchaser in substantially the
form attached hereto as Exhibit A; and
WHEREAS, after the consummation of the Merger, Stockholder desires to
sell to Purchaser, and Purchaser desires to purchase from Stockholder, 100% of
the capital stock (excluding the Company Options and Other Equity that, in
accordance with Section 1.04, remain outstanding as of the Effective Time) of
the Surviving Corporation (the "Shares") for the Purchase Price and upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES; CONSIDERATION
Section 1.01. Sale and Purchase of Shares.
(a) Sale and Purchase of Shares. Upon the terms and subject to the
conditions contained herein, on the Stock Purchase Closing Date, Stockholder
agrees to sell to Purchaser, and Purchaser agrees to purchase from Stockholder,
all of the Shares.
(b) Stock Purchase Closing. Upon the terms and subject to the
conditions set forth in this Agreement, the closing of the sale and purchase
(the "Stock Purchase Closing") shall take place at 10:00 a.m. on a date (the
"Stock Purchase Closing Date") which shall be the second Business Day after
satisfaction or waiver of the conditions set forth in Article VII, other than
those conditions that by their nature are to be satisfied at the Stock Purchase
Closing, but subject to the fulfillment or waiver of those conditions, at the
offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ or at such other time, date or place as agreed to in writing by the
parties hereto. Stockholder and Purchaser agree to use their commercially
reasonable efforts to consummate the purchase and sale of the Shares as
contemplated herein on the second Business Day after the Merger Closing Date.
Section 1.02. Consideration. The aggregate consideration for the
Shares shall be the difference between $2,839,086,113 (the "Total Payment
Amount") minus the Repurchase Amount (the "Purchase Price").
Section 1.03. Payment of Purchase Price. On the Stock Purchase
Closing Date, Purchaser shall pay or cause the Company to pay the Purchase Price
to Stockholder or its designee by wire transfer of immediately available United
States funds into one or more accounts designated by Stockholder; provided,
however, that Stockholder hereby agrees that a portion of the Purchase Price
shall be withheld by Purchaser but only if and to the extent required herein
(such portion, if any, the "Withheld Amount").
Section 1.04. Company Options; Other Equity.
(a) Treatment of Company Options. Unless otherwise agreed to by the
Company and optionee (with the consent of Purchaser), this Section 1.04(a) shall
govern the treatment of Company Options. At the Effective Time, all outstanding
options to purchase shares of Company Common Stock (each, a "Company Option" and
collectively, the "Company Options"), including those granted under the PanAmSat
1997 Long-Term Incentive Plan (the "Stock Plan"), shall remain outstanding and
shall, until the Stock Purchase Closing Date, continue to vest in accordance
with the vesting schedule set forth in the award agreement underlying such
Company Options. Immediately following the Stock Purchase Closing, each holder
of a Company Option, including those issued pursuant to the Stock Plan, whether
or not then vested or exercisable, shall in cancellation and settlement thereof,
be entitled to receive, at the Stock Purchase Closing from the Company (from
funds provided by Purchaser), for each share of Company Common Stock subject to
such Company Option, a cash payment equal to the excess, if any, of the Merger
Consideration over the per share exercise price of such Company Option (the
"Company Option Consideration"), net of applicable withholding taxes. Upon
receipt of the Company Option Consideration, each Company Option shall be
cancelled. Company Options with an exercise price equal to or greater than the
Merger Consideration will be cancelled at the Stock Purchase Closing and no
consideration will be paid to the holder thereof.
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(b) Restricted Stock, Restricted Stock Units and Other Equity
Compensation. Unless otherwise agreed by the Company and the holder of
restricted stock (with the consent of Purchaser), restricted stock units, or
other equity compensation (other than Company Options) (collectively, "Other
Equity"), this Section 1.04(b) shall govern the treatment of Other Equity.
Immediately before the Effective Time, all restrictions upon each outstanding
share of restricted Company Common Stock (including those shares issued under
the Stock Plan) and any restrictions on restricted stock units and restricted
shares (other than Company Options) granted under the Stock Plan shall
immediately lapse and all such restricted shares, restricted stock and other
forms of equity compensation shall vest. At the Effective Time, each holder of
Other Equity shall, in cancellation and settlement thereof, be entitled to
receive, at the Effective Time from the Company, for each such share of Other
Equity, a cash payment equal to Merger Consideration (the "Restricted Stock
Consideration"), net of applicable withholding Taxes. Upon receipt of the
Restricted Stock Consideration, each share of restricted stock, restricted stock
unit and other forms of equity compensation shall be cancelled.
(c) Stock Plan. The Stock Plan and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock or other equity interest of the Company or any Subsidiary
of the Company shall terminate as of the Stock Purchase Closing. Unless
otherwise agreed pursuant to Sections 1.04(a) and 1.04(b), the Company will take
all action reasonably necessary to ensure that, as of the Stock Purchase Closing
and following payment of the Company Option Consideration to each holder of
Company Options, none of Stockholder, Purchaser, the Company, or any of their
respective Subsidiaries is or will be bound by any Company Options or other
options, warrants, rights (including restricted stock units) or agreements which
would entitle any Person, other than Purchaser or its affiliates, to own any
capital stock or other equity interest of the Company or any of their respective
Subsidiaries or to receive any payment in respect thereof after the Stock
Purchase Closing.
ARTICLE II
PRE-CLOSING TRANSACTIONS
Section 2.01. Pre-Closing Transactions. Each party hereto will use
its commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws and Orders to consummate the transactions contemplated by this
Article II (collectively, the "Pre-Closing Transactions").
Section 2.02. Debt Offer.
(a) The Company shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act) an offer to purchase, and related consent
solicitations (the "Debt Offer"), on the terms set forth in Section 2.02 of the
Company Disclosure Schedule, with respect to all of the outstanding aggregate
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principal amount of the Company's 8.50% Senior Notes due 2012 (the "8.50% Senior
Notes") at such time as agreed to by Stockholder, the Company and Purchaser in
order to attempt to consummate the Debt Offer immediately after the Stock
Purchase Closing. The Company shall waive any of the conditions to the Debt
Offer as may be reasonably requested by Purchaser and shall not, without the
consent of Purchaser, waive any condition to the Debt Offer or make any changes
to the terms and conditions of the Debt Offer other than as agreed between
Purchaser, Stockholder and the Company.
(b) The Company covenants and agrees that, immediately following the
consent expiration date, assuming the requisite consents are received, it shall
execute a supplemental indenture to the indenture governing the 8.50% Senior
Notes, which supplemental indenture shall implement the amendments set forth in
the Debt Offer Documents, subject to the terms and conditions of this Agreement
(including the conditions to the Debt Offer).
(c) Subject to the terms of this Agreement and the satisfaction or
earlier waiver of all the conditions of the Debt Offer set forth in Section 2.02
of the Company Disclosure Schedule hereto as of any expiration date of the Debt
Offer, the Company shall accept for payment and pay for the 8.50% Senior Notes
validly tendered and not withdrawn pursuant to the Debt Offer promptly after it
is permitted to do so under applicable Law, but not before the Stock Purchase
Closing Date.
Section 2.03. Merger.
(a) Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time, Merger Sub shall be merged (the "Merger")
with and into the Company in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), whereupon the separate existence of Merger Sub
shall cease, and the Company shall continue as the surviving corporation (the
"Surviving Corporation").
(b) Merger Closing. Upon the terms and subject to the conditions set
forth in this Agreement, the closing of the Merger (the "Merger Closing") shall
take place at 10:00 a.m. on a date (the "Merger Closing Date") which shall be
the second Business Day after satisfaction or waiver of the conditions set forth
in Sections 2.03(c), (d), (e) and (f) other than those conditions that by their
nature are to be satisfied at the Merger Closing, but subject to the fulfillment
or waiver of those conditions, at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other time, date or
place as agreed to in writing by the parties hereto.
(c) Mutual Conditions to the Merger. The respective obligations of
the Company, Merger Sub and Stockholder to consummate the Merger contemplated by
this Agreement are subject to the satisfaction (or if permitted by applicable
Law waiver by each party, including Purchaser, for whose benefit the applicable
condition exists) of each of the following conditions:
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(i) No Order. No temporary restraining order, preliminary or
permanent injunction or other order or decree issued by a court of competent
jurisdiction located in the United States or in another jurisdiction outside of
the United States in which the Company and its Subsidiaries, taken as a whole,
engage in substantial business activities that prevents the consummation of any
of the transactions contemplated by this Agreement shall have been issued and
remain in effect, and no Law shall prohibit or make illegal the consummation of
any of the transactions contemplated by this Agreement;
(ii) Governmental Consents. (a) All waiting periods applicable
to the consummation of the transactions contemplated by this Agreement under the
HSR Act and comparable statutes in Germany, South Africa and Canada shall have
expired or been terminated or all approvals thereunder shall have been obtained,
(b) the Company shall have received registration to be an exporter under ITAR
and (c) all other approvals of, or filings with, any Governmental Authority
(other than the FCC) required to consummate the transactions contemplated by
this Agreement shall have been obtained or made, other than approvals and
filings, the failure to obtain or make which, in the aggregate, would not
reasonably be expected to have a material adverse effect on the business,
operations, assets, liabilities or financial condition of the Company and its
Subsidiaries taken as a whole;
(iii) FCC. All approvals of the FCC required in connection with
the consummation of the transactions contemplated by this Agreement shall have
been obtained;
(iv) Company Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted and the
Merger shall have been approved by the stockholders of the Company by the
Company Requisite Vote;
(v) Credit Agreement. At or prior to the Effective Time, Credit
Suisse First Boston, as administrative agent under the Credit Agreement
("CSFB"), shall have provided the Company with a "payoff" letter acknowledging
that (i) the Credit Agreement shall have been terminated, (ii) any and all Liens
held by CSFB related thereto shall be released and (iii) the Company and the
Subsidiaries shall have been released from any and all liabilities under the
Credit Agreement and any related guaranties (other than any obligations under
any indemnification or similar provision that survive such termination); and
(vi) Tax Separation Agreement. The Tax Separation Agreement and
the Transition Services Agreement shall remain in full force and effect.
(d) Conditions to the Obligations of Stockholder and Merger Sub. The
obligations of Stockholder and Merger Sub to consummate the Merger are subject
to the fulfillment, on or prior to the Merger Closing Date, of each of the
5
following conditions (any or all of which may be waived by Stockholder in whole
or in part to the extent permitted by applicable Law):
(i) Officer's Certificate from the Company. The Company shall
have furnished Stockholder with a certificate dated the Merger Closing Date
signed on its behalf by its Chief Executive Officer or the Chief Financial
Officer to the effect that it intends to repurchase the shares and pay the
Repurchase Amount to Stockholder in accordance with Section 2.04;
(ii) Representations and Warranties of Purchaser. The
representations and warranties of Purchaser set forth in Article IV herein shall
be true and correct as of the date of this Agreement and at and as of the Merger
Closing Date as though made on and as of the Merger Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except to the extent that all of the
breaches of such representations and warranties collectively (without giving
effect to any materiality or similar qualification) have not had and would not
reasonably be expected to result in a material adverse impact on the Purchaser's
ability to consummate the transactions contemplated by this Agreement; provided,
however, that any and all actions required to be taken pursuant to Section 6.08
and the effects thereof on the representations and warranties of Purchaser set
forth in Article IV shall be ignored for purposes of this Section 2.03(d)(ii);
(iii) Performance of Obligations of the Purchaser. Purchaser
shall have performed in all material respects all of its obligations hereunder
to be performed by it on or prior to the Merger Closing Date; and
(iv) Officer's Certificate from Purchaser. Purchaser shall have
furnished Stockholder with a certificate dated the Merger Closing Date signed on
its behalf by its Chief Executive Officer or the Chief Financial Officer to the
effect that (a) the conditions set forth in Sections 2.03(d)(ii) and (iii) have
been satisfied, and (b) acknowledges Purchaser's belief that all of Purchaser's
conditions to consummate the Merger contained in Section 2.03(f) shall have been
satisfied and that Purchaser has received confirmation from the Fund that it
intends to satisfy its obligations under the Equity Letter subject to the
satisfaction of the conditions contained therein.
(e) Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the fulfillment, on or prior
to the Merger Closing Date, of each of the following conditions (any or all of
which may be waived by the Company in whole or in part to the extent permitted
by applicable Law):
(i) Representations and Warranties of Stockholder and Merger
Sub. The representations and warranties of Stockholder and Merger Sub set forth
in Article V herein shall be true and correct as of the date of this Agreement
and at and as of the Merger Closing Date as though made on and as of the Merger
Closing Date (except for representations and warranties made as of a specified
date, which need be true and correct only as of the specified date), except to
the extent that all of the breaches of such representations and warranties
6
collectively (without giving effect to any materiality or similar qualification)
have not had and would not reasonably be expected to result in a material
adverse impact on Stockholder's or Merger Sub's ability to consummate the
transactions contemplated by this Agreement.
(ii) Performance of Obligations of Stockholder and Merger Sub.
Stockholder and Merger Sub shall have performed in all material respects all of
its obligations hereunder to be performed by it on or prior to the Merger
Closing Date; and
(iii) Officer's Certificate from Stockholder and Merger Sub.
Each of Stockholder and Merger Sub shall have furnished the Company with a
certificate dated the Merger Closing Date signed on its behalf by its Chief
Executive Officer or the Chief Financial Officer to the effect that the
conditions set forth in Sections 2.03(e)(i) and (ii) have been satisfied.
(f) Additional Conditions to the Consummation of the Merger for the
Benefit of Purchaser. The consummation of the Merger is also subject to the
fulfillment, on or prior to the Merger Closing Date, of each of the following
conditions (any or all of which may be waived by Purchaser in whole or in part
to the extent permitted by applicable Law):
(i) Representations and Warranties of the Company. The
representations and warranties of the Company in Article III herein shall be
true and correct as of the date of this Agreement and at and as of the Merger
Closing Date as though made on and as of the Merger Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except to the extent that all of the
breaches of such representations and warranties collectively (without giving
effect to any materiality or similar qualification) have not had and would not
reasonably be expected to result in a Company Material Adverse Effect; provided
that the representations and warranties set forth in Section 3.02(a) shall be
true and correct in all material respects as of the date of this Agreement and
at and as of the Merger Closing Date as though made on and as of the Merger
Closing Date (except for representations and warranties made as of a specified
date which need be true and correct only as of the specified date); provided,
further, that any and all actions required to be taken pursuant to Section 2.02
or Section 6.08 and the effects thereof on the representations and warranties of
the Company set forth in Article III shall be ignored for purposes of this
Section 2.03(f)(i);
(ii) Performance of Obligations of the Company. The Company
shall have performed in all material respects all of its respective obligations
hereunder to be performed by it on or prior to the Merger Closing Date;
(iii) Officer's Certificate from the Company. The Company shall
have furnished Purchaser with a certificate dated the Merger Closing Date signed
on its behalf by its Chief Executive Officer or Chief Financial Officer to the
effect that the conditions set forth in Sections 2.03(f)(i) and (ii) have been
satisfied;
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(iv) Representations and Warranties of Stockholder and Merger
Sub. The representations and warranties of the Stockholder and Merger Sub set
forth in Article V herein shall be true and correct as of the date of this
Agreement and at and as of the Merger Closing Date as though made on and as of
the Merger Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct only as of the specified date),
except to the extent that all of the breaches of such representations and
warranties collectively (without giving effect to any materiality or similar
qualification) have not had and would not reasonably be expected to result in a
material adverse impact on Stockholder's or Merger Sub's ability to consummate
the transactions contemplated by this Agreement;
(v) Performance of Obligations of Stockholder and Merger Sub.
Each of Stockholder and Merger Sub shall have performed in all material respects
all of its obligations hereunder to be performed by it on or prior to the Merger
Closing Date;
(vi) Officer's Certificate from Stockholder and Merger Sub. Each
of Stockholder and Merger Sub shall have furnished Purchaser with a certificate
dated the Merger Closing Date signed on its behalf by its Chief Executive
Officer or the Chief Financial Officer to the effect that the conditions set
forth in Sections 2.03(f)(iv) and (v) have been satisfied;
(vii) Commercial Arrangements. The parties shall have entered
into definitive agreements memorializing the terms of those commercial
arrangements specified on Section 2.03(f)(vii) of the Company Disclosure
Schedule, each of which will become effective immediately on the Stock Purchase
Closing;
(viii) Asset Transfers. The asset transfers described in Section
2.05 shall have occurred;
(ix) No Order. No temporary restraining order, preliminary or
permanent injunction or other order or decree issued by a court of competent
jurisdiction located in the United States or in another jurisdiction outside of
the United States in which the Company and its Subsidiaries, taken as a whole,
engage in substantial business activities that prevents the consummation of any
of the transactions contemplated by this Agreement shall have been issued and
remain in effect, and no Law shall prohibit or make illegal the consummation of
any of the transactions contemplated by this Agreement;
(x) Governmental Consents. (a) All waiting periods applicable to
the consummation of the transactions contemplated by this Agreement under the
HSR Act and comparable statutes in Germany, South Africa and Canada shall have
expired or been terminated or all approvals thereunder shall have been obtained,
(b) the Company shall have received registration to be an exporter under ITAR
and (c) all other approvals of, or filings with, any Governmental Authority
(other than the FCC) required to consummate the transactions contemplated by
this Agreement shall have been obtained or made, other than approvals and
filings, the failure to obtain or make which, in the aggregate, would not
8
reasonably be expected to have a material adverse effect on the business,
operations, assets, liabilities or financial condition of the Company and its
Subsidiaries taken as a whole;
(xi) FCC. All approvals of the FCC required in connection with
the consummation of the transactions contemplated by this Agreement shall have
been obtained, provided that such approvals do not impose a materially
burdensome condition on the Company and its Subsidiaries;
(xii) Company Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted and the
Merger shall have been approved by the stockholders of the Company by the
Company Requisite Vote;
(xiii) Credit Agreement. At or prior to the Effective Time,
CSFB, shall have provided the Company with a "payoff" letter acknowledging that
(i) the Credit Agreement shall have been terminated, (ii) any and all Liens held
by CSFB related thereto shall be released and (iii) the Company and the
Subsidiaries shall have been released from any and all liabilities under the
Credit Agreement and any related guaranties (other than any obligations under
any indemnification or similar provision that survive such termination); and
(xiv) Tax Separation Agreement. The Tax Separation Agreement and
the Transition Services Agreement shall remain in full force and effect;
provided, however, that, notwithstanding anything contained in this Section
2.03, the parties hereby acknowledge and agree that if all of the conditions set
forth in Sections 2.03(c)-(f) above have been satisfied or waived other than the
conditions specified in Sections 2.03(c)(iii) and Section 2.03(f)(xi), then the
parties will discuss whether to waive such conditions and consummate the Merger
prior to the satisfaction of such conditions.
(g) Effective Time. Upon the Merger Closing, the Company and Merger
Sub will file a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware as executed in accordance with the
relevant provisions of the DGCL and, as soon as practicable on or after the
Merger Closing Date, make all other filings or recordings required by the DGCL
in connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is agreed by Stockholder and the Company
and specified in the Certificate of Merger (the "Effective Time"). The Merger
shall have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
9
(h) Certificate of Incorporation. The certificate of incorporation of
the Company as in effect immediately prior to the Effective Time shall be
amended to read in its entirety in the same fashion as the Certificate of
Incorporation of Merger Sub, other than its corporate name which shall remain
PanAmSat Corporation and it shall not include Article Fifth (sole incorporator)
of the Certificate of Incorporation of Merger Sub and as so amended, shall be
the Certificate of Incorporation of the Surviving Corporation.
(i) Bylaws. The bylaws of the Merger Sub in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
(j) Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with the
DGCL and the certificate of incorporation and bylaws of the Surviving
Corporation, (a) the directors of Merger Sub at the Effective Time shall be the
directors of the Surviving Corporation, and (b) the officers of the Company at
the Effective Time shall be the officers of the Surviving Corporation.
(k) Conversion of Securities. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Stockholder, Merger Sub, the Company or the holders of any
securities of Merger Sub or the Company:
(i) Merger Consideration. Each share of common stock, par value
$0.01 per share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of Company Common
Stock to be cancelled in accordance with Section 2.03(k)(ii), the Dissenting
Shares, and the shares of Company Common Stock beneficially owned by
Stockholder, or any direct or indirect wholly owned Subsidiary of the Company,
which shall remain outstanding) shall automatically be converted into the right
to receive $23.50 in cash per share (the "Merger Consideration"), without
interest, payable to the holder of such shares of Company Common Stock, upon
surrender, in the manner provided in Section 2.03(l), of the certificate that
formerly evidenced such share of Company Common Stock. All such shares of
Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor, without interest, upon the surrender of such
certificate in accordance with Section 2.03(l).
(ii) Cancellation. Each issued and outstanding share of common
stock, par value $0.01 per share, of Merger Sub shall be cancelled and
extinguished without any conversion thereof. Each share of Company Common Stock
owned by the Company immediately prior to the Effective Time shall be cancelled
and extinguished without any conversion thereof and no payment or other
consideration shall be made with respect thereto.
10
(l) Surrender of Certificates.
(i) Exchange Agent. Prior to the Effective Time, Stockholder and
Purchaser shall select a bank or trust company reasonably acceptable to the
Company to act as the exchange agent (the "Exchange Agent") for the holders of
shares of Company Common Stock in connection with the Merger and shall enter
into an agreement with the Exchange Agent which is reasonably acceptable to the
Company. Promptly and in any event no later than simultaneously with the Stock
Purchase Closing, the Surviving Corporation shall deposit, or cause to be
deposited, with the Exchange Agent, for the benefit of the holders of shares of
Company Common Stock cash in an aggregate amount equal to the product of (i) the
number of shares of Company Common Stock issued and outstanding at the Effective
Time (other than shares of Company Common Stock to be cancelled in accordance
with Section 2.03(k)(ii), the Dissenting Shares, the shares of Company Common
Stock beneficially owned by Stockholder or any of its wholly owned direct or
indirect Subsidiaries and Company Options and Other Equity which remain
outstanding in accordance with Section 1.04) and (ii) the Merger Consideration.
Any funds deposited with the Exchange Agent shall hereinafter be referred to as
the "Exchange Fund."
(ii) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record as of the Effective Time of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock and whose shares were converted
pursuant to Section 2.03(k) into the right to receive the Merger Consideration:
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions not inconsistent with this Agreement as Stockholder
and Surviving Corporation shall reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration to which the holder of such Certificate is entitled pursuant to
Section 2.03(k) (without limiting the effect of Section 2.03(o)). Upon surrender
of a Certificate for cancellation to the Exchange Agent and such other documents
as may be reasonably requested by the Exchange Agent, together with such letter
of transmittal duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive promptly in exchange therefor the aggregate Merger Consideration which
such holder has the right to receive pursuant to Section 2.03(k) (after taking
into account all Certificates surrendered by such holder), and the Certificate
so surrendered shall forthwith be cancelled. Until so surrendered, each
Certificate will represent, from and after the Effective Time, only the right to
receive the Merger Consideration in cash as contemplated by this Article II. No
interest shall accrue or be paid on the amounts payable pursuant to this Article
II upon surrender of a Certificate.
(iii) No Liability. Notwithstanding anything to the contrary in
this Section 2.03(l), neither the Exchange Agent, Stockholder, the Surviving
Corporation nor any party hereto shall be liable to any Person in respect of any
11
Merger Consideration for any amount properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(iv) Termination of Exchange Agent. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates six (6) months
after the Effective Time shall, at the request of the Surviving Corporation, be
delivered to the Surviving Corporation or otherwise on the instruction of the
Surviving Corporation, and any holders of the Certificates who have not
surrendered such Certificates in compliance with this Section 2.03 shall after
such delivery to the Surviving Corporation look only to the Surviving
Corporation (subject to abandoned property, escheat and similar laws) for
payment, as general creditors thereof, of their claim for the Merger
Consideration, without interest, to which such holders may be entitled pursuant
to Section 2.03. Any such portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental
Authority shall, to the extent permitted by law, become the property of the
Surviving Corporation free and clear of any claims or interest of any Person
previously entitled thereto.
(m) No Further Ownership Rights in Company Common Stock. From and
after the Effective Time, the holders of Company Common Stock outstanding
immediately prior to the Effective Time whose shares of Company Common Stock
were converted into the right to receive Merger Consideration in the Merger
shall cease to have any rights with respect to such shares of Company Common
Stock except as otherwise provided herein or by applicable law. The Merger
Consideration paid in exchange for shares of Company Common Stock in accordance
with the terms hereof shall be deemed to have been paid in full satisfaction of
all rights pertaining to such shares of Company Common Stock previously
represented by such Certificates. As of the Effective Time, the stock transfer
books of the Company shall be closed with respect to those stockholders whose
shares of Company Common Stock were converted into the right to receive the
Merger Consideration in the Merger and there shall be no further registration of
transfers on the records of the Surviving Corporation of such shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates with respect to those stockholders whose
shares of Company Common Stock were converted into the right to receive Merger
Consideration in the Merger are presented to the Surviving Corporation or the
Exchange Agent for any reason, such Certificates shall be cancelled and
exchanged as provided for in this Article II.
(n) Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration to which the holder thereof is entitled pursuant to this Article
II; provided, however, Stockholder or the Surviving Corporation may, as a
condition precedent to such delivery, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as they may reasonably
direct as indemnity against any claim that may be made against Stockholder, the
12
Surviving Corporation, the Company or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
(o) Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock held by a Person who has the right to and has demanded appraisal of such
shares in accordance with Section 262 of the DGCL ("Dissenting Holder") and as
of the Effective Time has not failed to perfect, effectively withdrawn or has
not lost his right to such appraisal ("Dissenting Shares"), shall not be
converted into or represent a right to receive the Merger Consideration pursuant
to Section 2.03(k), but such Dissenting Holder thereof shall only be entitled to
such rights in respect thereof as are granted by Section 262 of the DGCL.
(p) Withdrawal. Notwithstanding the provision of subsection (o) of
this Section 2.03, if any Dissenting Holder shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to appraisal, then as of the
Effective Time or the occurrence of such event, whichever occurs later, such
shares shall automatically be converted into and represent only the right to
receive the Merger Consideration, as provided in Section 2.03(k), without
interest thereon, upon surrender of the certificate or certificates representing
such shares in accordance with Section 2.03(l).
(q) Notice of Dissenters. The Company shall provide Purchaser and,
until the Stock Purchase Closing Date, Stockholder (i) prompt notice of any
written demands for appraisal or payment of the fair value of any shares of
Company Common Stock, the withdrawals of such demands and any other related
instruments served pursuant to the DGCL and received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal under the DGCL. Except with the prior written consent of
Purchaser and, until the Stock Purchase Closing Date, Stockholder and the
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not settle or offer to settle any such demands.
(r) Withholding Taxes. Each of the Exchange Agent, the Company, the
Surviving Corporation and, until the Stock Purchase Closing Date, Stockholder
shall be entitled to deduct and withhold from the Merger Consideration pursuant
to the Merger such amounts as the Exchange Agent, the Company, the Surviving
Corporation and, until the Stock Purchase Closing Date, Stockholder is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or under any applicable
provision of state, local or foreign Law. To the extent that amounts are so
withheld, such amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock, in respect of which
such deduction and withholding was made by the Exchange Agent, the Company, the
Surviving Corporation or, until the Stock Purchase Closing Date, Stockholder.
13
(s) Transfer of Ownership. If the Merger Consideration is to be paid
to a Person other than the Person in whose name the surrendered Certificate
formerly evidencing shares of Company Common Stock is registered, it will be a
condition of payment that the Certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the Persons
requesting such payment will have paid to the Surviving Corporation or any agent
designated by it any transfer or other Taxes required by reason of the payment
of the amount specified in Section 2.03(k) to a Person other than the registered
holder of the Certificates surrendered, or established to the satisfaction of
the Surviving Corporation or any agent designated by it that such Tax has been
paid or is not payable.
(t) Further Action. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company and Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company and Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
Section 2.04. Repurchase. Immediately prior to the Stock Purchase
Closing, the Company shall repurchase from the affiliates of Stockholder that
are the stockholders of record as of such time an aggregate number of shares of
Common Stock at a purchase price of $23.50 per share such that, assuming the
entire amount of equity provided by Purchaser pursuant to the Equity Letter
(assuming the entire amount thereunder is so provided) and any other Permitted
Person has been paid to Stockholder or its designees, the Stockholder will have
received the Total Payment Amount less any Withheld Amount (the aggregate amount
of such payment, the "Repurchase Amount"), which shall be paid by wire transfer
of immediately available United States funds into one or more accounts
designated by Stockholder.
Section 2.05. Asset Transfers. Immediately prior to the Effective
Time, Stockholder shall cause the Company to effect the transfer of the assets
as set forth on Section 2.05 of the Company Disclosure Schedule with conveyances
to be made in a manner reasonably acceptable to Stockholder, the Company and
Purchaser.
Section 2.06. Redemption Notice for 6.125% Senior Notes due 2005. At
the request of Purchaser, the Company shall send out a notice to redeem the
Company's 6.125% Senior Notes due 2005, which redemption is intended to occur
immediately after the Stock Purchase Closing.
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser and
Stockholder as follows, except as specifically described on the schedule
(subject to Section 9.11) delivered by the Company to Purchaser and Stockholder
in connection with the execution and delivery of this Agreement (the "Company
Disclosure Schedule"):
Section 3.01. Organization; Subsidiaries; Charter Documents.
(a) Organization. Each of the Company and its Significant
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each Subsidiary of the Company that is not a
Significant Subsidiary is a corporation, partnership or other entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, and has the requisite
corporate or other power and authority to own, lease and operate its properties
and to carry on its business as now being conducted, except where the failure to
be so duly organized, validly existing and in good standing or to have such
requisite corporate or other power and authority has not had and would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Each of the Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing has not had and would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure Schedule
sets forth a complete list of the Company's Subsidiaries and all other entities
in which the Company owns, directly or indirectly, any shares of capital stock
or equity interests and such list sets forth the jurisdiction of organization of
each such Subsidiary and other entity as of the date hereof and separately
identifies each Significant Subsidiary.
(c) Charter Documents. The Company has delivered or made available to
Purchaser: (i) a true and correct copy of the Restated Certificate of
Incorporation and Bylaws of the Company, each as amended to date (collectively,
the "Company Charter Documents") and (ii) true and correct copies of the
certificate of incorporation and bylaws, or like organizational documents, each
as amended to date (collectively, "Subsidiary Charter Documents") of each of its
Significant Subsidiaries, and each such instrument is in full force and effect
and no other organizational documents are applicable to or binding upon the
Company or any Significant Subsidiary. The Company is not in violation of any of
the provisions of the Company Charter Documents. No Subsidiary of the Company is
15
in violation of its respective Subsidiary Charter Documents in any material
respect.
Section 3.02. Capitalization of the Company.
(a) Company Capitalization. The authorized capital stock of the
Company consists of 400,000,000 shares of the Company Common Stock and
50,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"). As of the close of business on April 16, 2004, (i) 150,247,805 shares
of the Company Common Stock were issued and outstanding and 6,520,486 shares of
the Company Common Stock were reserved for issuance upon the exercise of
outstanding Company Options and Other Equity, (ii) no shares of Preferred Stock
were issued and outstanding and (iii) no bonds, debentures, notes or other
instruments or evidence of indebtedness having the right to vote (or convertible
into, or exercisable or exchangeable for, securities having the right to vote)
on any matters of which stockholders of the Company may vote were issued or
outstanding. All outstanding shares of Company Common Stock are, and all shares
which may be issued pursuant to the Stock Plan will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and non-assessable and not issued in violation of preemptive rights
or similar rights. Except (x) as set forth in Section 3.02 of the Company
Disclosure Schedule and (y) for changes since April 16, 2004 resulting from the
exercise of employee and director stock options outstanding on such date, there
are no outstanding (A) shares of capital stock or other voting securities of the
Company, (B) securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company, (C)
options, warrants, restricted stock, restricted stock units, or other rights to
acquire from the Company, and no preemptive or similar rights, subscriptions or
other rights, convertible securities, agreements, arrangements or commitments of
any character, relating to the capital stock or voting securities of the Company
obligating the Company to issue, register, transfer or sell, any capital stock,
voting securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of the Company or obligating the Company
to grant, extend or enter into any such option, warrant, restricted stock units,
subscription or other right, convertible security, agreement, arrangement or
commitment or (D) no equity equivalents, interests in the ownership or earnings
of the Company or other similar rights (the items in clauses (A), (B), (C) and
(D) being referred to collectively as the "Company Securities"). Except as set
forth in Section 3.02(a) of the Company Disclosure Schedule, none of the Company
or its Subsidiaries has any obligation, commitments or arrangements to redeem,
repurchase or otherwise acquire any of the Company Securities or any of the
Company Subsidiary Securities, including as a result of the transactions
contemplated by this Agreement, or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any Subsidiary or
other Person. Except as set forth in Section 3.02(a) of the Company Disclosure
Schedule, there are no voting trusts or registration rights or other agreements
or understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting or disposition of the capital stock of the Company or
any of its Subsidiaries.
16
(b) Subsidiary Capitalization. All outstanding shares of capital
stock or other interests of each Company Subsidiary have been duly authorized
and validly issued, are fully paid and nonassessable and were not issued in
violation of preemptive rights or similar rights. Except as set forth in Section
3.02(b) of the Company Disclosure Schedule, all of the outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary of the
Company, is owned by the Company, directly or indirectly, free and clear of any
Liens. There are no outstanding (i) securities of the Company or any of its
Subsidiaries convertible into or exchangeable or exercisable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary of the Company, or (ii) options, warrants, restricted stock,
restricted stock units or other rights to acquire from the Company or any of its
Subsidiaries, and no other obligation of the Company or any of its Subsidiaries
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for, any
capital stock, voting securities or ownership interests in, any Subsidiary of
the Company or any equity equivalents, interests in the ownership or earnings of
any Subsidiary or other similar rights (the items in clauses (i) and (ii) being
referred to collectively as the "Company Subsidiary Securities").
(c) Indebtedness. Section 3.02(c) of the Company Disclosure Schedule
sets forth a complete and correct list, as of the date of this Agreement, of
each Contract pursuant to which any Indebtedness of the Company or its
Subsidiaries is outstanding in an amount in excess of $1,000,000, together with
the amount outstanding thereunder as of the date of this Agreement. No Contract
pursuant to which any Indebtedness of the Company or its Subsidiaries is
outstanding or may be incurred provides for the right to vote (or is convertible
into, or exchangeable or exercisable for, securities having the right to vote)
on any matters on which the shareholders of the Company or its Subsidiaries may
vote. No event has occurred which entitles (with or without notice or lapse of
time or both) the holder of any Indebtedness set forth in Section 3.02(c) of the
Company Disclosure Schedule to accelerate, or which does accelerate, the
maturity of any such Indebtedness.
Section 3.03. Corporate Authorization; Board Approval.
(a) Corporate Authorization. The Company has all necessary power and
authority to enter into this Agreement and each Transaction Document to which it
is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Company of this Agreement and each Transaction
Document to which it is a party and the consummation by the Company of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action, except, with respect to the
Merger, for the approval and adoption of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote on
this Agreement (the "Company Requisite Vote"). The Company Requisite Vote is the
only vote of holders of any class or series of securities necessary to approve
this Agreement and the transactions contemplated hereby. This Agreement and each
Transaction Document to which the Company is a party has been duly executed and
17
delivered by the Company and, assuming the due authorization, execution and
delivery by the other parties hereto and thereto, constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar Laws affecting creditors
rights generally and, by general principles of equity, including good faith and
fair dealing, regardless whether in a proceeding at equity or at law).
(b) Board Approval. The Board of Directors of the Company has, at a
meeting duly called and held on or prior to the date hereof, (i) determined and
declared that this Agreement and the Merger are fair to, advisable and in the
best interests of the Company and its stockholders, (ii) approved and adopted
this Agreement and the transactions contemplated hereby, including the Merger
and the transactions contemplated thereby, (iii) resolved to make the Company
Recommendation and (iv) directed that this Agreement be submitted to the
Company's stockholders for adoption.
Section 3.04. Governmental Approvals. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated hereby, require no action, permit,
license, authorization, certification, consent, approval, concession or
franchise by or in respect of, or filing with, any federal, state, or local U.S.
or foreign government, court, administrative agency, commission, arbitrator or
other governmental or regulatory agency or authority (a "Governmental
Authority") other than: (i) the filing of the Certificate of Merger with respect
to the Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business; (ii) compliance with any applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and any other applicable Antitrust Laws; (iii) such
filings with and consents of the Federal Communications Commission ("FCC") as
may be required (including any notifications or other filings that do not
require consent); (iv) such other consents, approvals, orders, authorizations,
registrations, declarations, filings, notices and permits set forth in Section
3.04 of the Company Disclosure Schedule; (v) the filing with the Securities and
Exchange Commission ("SEC") of (A) a Proxy Statement relating to the Company
Stockholders' Meeting and (B) such reports under Section 13(a), 13(d), 13(e),
15(d) or 16(a) of the Securities Exchange Act of 1934, as amended (together with
the rules and regulations thereunder, the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement; (vi) such filings with and approvals of The Nasdaq Stock Market,
Inc.; (vii) those that may be required solely by reason of Purchaser's (as
opposed to any other third party's) participation in the transactions
contemplated by this Agreement; and (viii) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate would not
reasonably be expected to have a Company Material Adverse Effect.
Section 3.05. Non-Contravention. Except as set forth in Section 3.05
of the Company Disclosure Schedule, the execution, delivery and performance by
the Company of this Agreement and each Transaction Document to which it is a
18
party do not, and the consummation of the transactions contemplated hereby or
thereby will not: (i) contravene, conflict with or violate the Company Charter
Documents or Subsidiary Charter Documents; (ii) subject to obtaining the
adoption of this Agreement by the Company's stockholders as contemplated in
Section 6.04 and obtaining all the consents, approvals and authorizations
specified in clauses (i) through (vii) of Section 3.04, contravene or conflict
with or constitute a violation of any provision of any law, statute, ordinance,
rule, code, or regulation of any Governmental Authority ("Law"), or any
outstanding order, writ, judgment, injunction, ruling, determination, award or
decree by or with any Governmental Authority ("Order") binding upon or
applicable to the Company or its Subsidiaries or by which any of their
respective properties are bound or affected; (iii) subject to obtaining all the
consents, approvals and authorizations and compliance with the matters referred
to in clauses (i) through (vii) of Section 3.04, constitute a default (or an
event which with notice, the lapse of time or both would become a default) under
or give rise to a right of termination, cancellation, modification or
acceleration of any right or obligation of the Company or any of its
Subsidiaries, or cause increased liability or fees or to the loss of a material
benefit or imposition of a penalty under (A) any Company Material Contract (but,
for purposes hereof, without regard to the dollar thresholds set forth in the
definition thereof) or (B) any Company Permit; or (iv) result in the creation or
imposition of any mortgage, lien, right of first refusal, pledge, claim,
license, charge, limitation in voting rights, encumbrance or other security
interest (collectively, the "Liens") on any asset of the Company or any of its
Subsidiaries, other than, in the case of clauses (ii), (iii) or (iv), any such
contraventions, conflicts, violations, defaults, rights of termination,
cancellation, modification, acceleration or other occurrences or Liens that have
not had and would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
Section 3.06. Company SEC Documents. The Company has filed all
registration statements, prospectuses, reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated by
reference) required to be filed by it with the SEC since January 1, 2001
(collectively, the "Company SEC Documents"). The Company SEC Documents (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act of 1933, as amended (together with the rules
and regulations thereunder, the "Securities Act"), or the Exchange Act, as the
case may be, applicable to the Company SEC Documents each as in effect on the
date so filed, and (ii) did not at the time they were filed 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 therein, in the
light of the circumstances under which they were made, not misleading, except to
the extent corrected by a subsequently filed Company SEC Document filed and
publicly available prior to the date of this Agreement (including any financial
statements or other documentation incorporated by reference therein). No
Subsidiary of the Company is required to file any form, report or other document
with the SEC.
19
Section 3.07. Financial Statements; No Undisclosed Liabilities;
Internal and Disclosure Controls.
(a) Company Financials. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Documents as of their respective dates (the "Company Financials"): (i)
complied as to form in all material respects with all applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (ii) was prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Forms 10-Q, 8-K or any successor forms under the Exchange Act), and (iii)
fairly presented in all material respects the consolidated financial condition
of the Company and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of the Company's operations and cash flows
for the periods indicated. All of the Subsidiaries of the Company are
consolidated for accounting purposes as required by GAAP. The consolidated
balance sheet of the Company contained in the Company SEC Documents as of
December 31, 2003 is hereinafter referred to herein as the "Company Balance
Sheet," and December 31, 2003 is hereinafter referred to herein as the "Company
Balance Sheet Date."
(b) No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) except (i) liabilities or obligations
disclosed or provided for in the Company Financials or the notes thereto or in
the Company SEC Documents filed prior to the date hereof and publicly available
after the filing of the Company SEC Document containing the Company Financials
or (ii) liabilities or obligations incurred in the ordinary course of business
consistent with past practice since the Company Balance Sheet Date, none of
which have had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) Amendments or Modifications. The Company has made available to
Purchaser a complete and correct copy of any amendments or modifications which
have not yet been filed with the SEC to Company Material Contracts which
previously had been filed by the Company with the SEC pursuant to the Securities
Act or the Exchange Act.
(d) Internal and Disclosure Controls. The management of the Company
has (i) implemented disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act) to ensure that material information relating to
the Company, including its consolidated Subsidiaries, is made known to the
management of the Company by others within those entities, and (ii) has
disclosed, based on its most recent evaluation, to the Company's outside
auditors and the audit committee of the Board of Directors of the Company (A)
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) which are reasonably likely to adversely affect the Company's
20
ability to record, process, summarize and report financial data and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal control over financial
reporting.
Section 3.08. Information in Offer Documents. None of the Proxy
Statement to be filed with the SEC in connection with the Merger, the Debt Offer
Documents, nor any amendment or supplement to the Proxy Statement or the Debt
Offer Documents, will contain, in the case of the Proxy Statement or any
amendment or supplement thereto, at the date the Proxy Statement or any such
amendment or supplement is first mailed to stockholders of the Company and at
the time of the Company Stockholders' Meeting, and in the case of the Debt Offer
Documents or any amendments or supplements thereto, at the time the Debt Offer
Documents are first published, sent or given to holders of the 8.50% Senior
Notes and at the expiration of the Debt Offer, any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Purchaser or Stockholder for inclusion or incorporation by reference in the
Offer Documents. The Proxy Statement will, when filed with the SEC, comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
Section 3.09. Absence of Certain Changes. Except as set forth in
Section 3.09 of the Company Disclosure Schedule or in the Company SEC Documents
filed and publicly available prior to the date hereof, since the Company Balance
Sheet Date, the businesses of the Company and its Subsidiaries have been
conducted in all material respects in the ordinary course of business consistent
with past practice, and there has not been any change, development, event,
condition, occurrence or effect that individually or in the aggregate has had or
would reasonably be expected to have (i) a Company Material Adverse Effect or
(ii) a material adverse impact on the ability of the Company to consummate the
Merger. Since the Company Balance Sheet Date, except as (i) specifically
contemplated by this Agreement, (ii) disclosed in the Company SEC Documents
filed and publicly available prior to the date of this Agreement or (iii) set
forth in Section 3.09 of the Company Disclosure Schedule, there has not occurred
any action, event or failure to act that, if it had occurred after the date of
this Agreement, would have required the consent of Purchaser under Section 6.01.
Section 3.10. Insurance. A list of all launch and in-orbit satellite
insurance policies as of the date hereof is set forth in Section 3.10 of the
Company Disclosure Schedule. Copies of all such insurance policies have been
made available to Purchaser. Except as set forth in Section 3.10 of the Company
Disclosure Schedule: (i) all such policies are in full force and effect; (ii)
neither the Company nor any Subsidiary is in breach or default in any material
respect (including any such breach or default in any material respect with
respect to the payment of premiums or the giving of notice), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
21
or default, or permit termination or modification in any material respect, under
any policy; (iii) all premiums due thereon have been paid and the Company has
not received any written notice of cancellation, termination or non-renewal of
any such policy (other than in connection with settlement of any claims
thereunder); (iv) all appropriate insurers under such insurance policies have
been notified of all potentially insurable losses known to the Company and no
such insurer has informed the Company or any of its Subsidiaries of any denial
of coverage or reservation of rights thereto; and (v) to the knowledge of the
Company, no insurer on the policy has been declared insolvent or placed in
receivership, conservatorship or liquidation. Section 3.10 of the Company
Disclosure Schedule also sets forth all other material insurance policies in
effect as of the date hereof and owned, held by or applicable to the Company and
its Subsidiaries.
Section 3.11. Real Property; Title to Assets.
(a) Owned Real Property. Section 3.11(a) of the Company Disclosure
Schedule contains a true and complete list of all the real property owned in fee
by the Company and its Subsidiaries (the "Owned Real Property"). To the
knowledge of the Company, each of the Company and its Subsidiaries has good,
valid, fee simple and marketable title to each parcel of Owned Real Property,
including, without limitation, all buildings, structures, fixtures and
improvements located thereon, in each case, free and clear of all Liens, except
(i) liens set forth in Section 3.11(a) of the Company Disclosure Schedule, (ii)
liens for Taxes and general and special assessments not in default and payable
without penalty and interest or which are being contested in good faith by
appropriate proceedings, and (iii) other Liens which, individually or in the
aggregate, would not reasonably be expected to materially interfere with the
Company's or any of its Subsidiaries' use and enjoyment of such Owned Real
Property or with the conduct of the business of the Company or its Subsidiaries.
Except as set forth in Section 3.11(a) of the Company Disclosure Schedule, there
are no outstanding contracts for the sale of any of the Owned Real Property.
Except as set forth in Section 3.11(a) of the Company Disclosure Schedule, there
are no leases, subleases, licenses, concessions or any other contracts, options
or rights of first refusal or agreements granting to any person or entity other
than the Company and its Subsidiaries any right to the possession, use,
occupancy or enjoyment of any of the Owned Real Property or any portion thereof.
(b) Real Property Leases. Section 3.11(b) of the Company Disclosure
Schedule contains a true and complete list of all leases, subleases,
sub-subleases, licenses and other agreements under which the Company or any of
its Subsidiaries, leases, subleases, licenses uses or occupies (whether as
landlord, tenant, subtenant other occupancy arrangement) or has the right to use
or occupy, now or in the future, any real property (collectively, the "Real
Property Leases," and the property subject to the Real Property Leases together
with the Owned Real Property, the "Real Property"). The Company has previously
furnished or otherwise made available to Purchaser true, correct and complete
copies of all Real Property Leases. Each Real Property Lease constitutes the
valid and legally binding obligation of the Company or its Subsidiaries,
enforceable against the Company or its Subsidiaries, as applicable, in
accordance with its terms. Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, with
22
respect to each Real Property Lease (i) there is no default or event which, with
notice or lapse of time or both, would constitute a default on the part of
Company or its Subsidiaries, or, to the knowledge of the Company any other party
thereto and (ii) except as set forth in Section 3.11(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries, as
applicable, has assigned, sublet or transferred its leasehold interest. Each of
the Company and its Subsidiaries has a good and valid leasehold interest in each
Real Property Lease free and clear of all Liens, except (i) as set forth in
Section 3.11(b) of the Company Disclosure Schedule, (ii) liens for Taxes and
general and special assessments not in default and payable without penalty or
interest or which are being contested in good faith by appropriate proceedings
and (iii) other liens which do not materially interfere with the Company's or
any of its Subsidiaries' use and enjoyment of such Real Property Lease.
Section 3.12. Company Intellectual Property. Section 3.12 of the
Company Disclosure Schedule lists all registrations or applications for
registration of any Company Intellectual Property. All rights in material
Company Intellectual Property are valid, subsisting and enforceable in all
material respects and the Company or its Subsidiaries owns or has the right to
use all material Company Intellectual Property, free and clear of all Liens,
except as set forth on Section 3.12 of the Company Disclosure Schedule. Except
as set forth in Section 3.12 of the Company Disclosure Schedule, (i) no Action
is pending or, to the Company's knowledge, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective properties, which
challenge the validity or use of, or the ownership by, the Company and/or its
Subsidiaries of the Company Intellectual Property; (ii) the Company has no
knowledge of any infringement or infringing use of any of the Company
Intellectual Property or licenses by any Person; (iii) the Company or the
Subsidiaries take reasonable actions to maintain and protect the material
Company Intellectual Property, including confidential material Company
Intellectual Property, except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and (iv) to
the Company's knowledge, no infringement, misappropriation or violation of any
material intellectual property right or other proprietary right of any third
party has occurred or will result from the conduct of the business of the
Company and its Subsidiaries or from the signing and execution of this Agreement
or the consummation of the transactions contemplated hereby, and no written
claim has been made to the Company or any Subsidiary by any third party based
upon an allegation of any such infringement.
Section 3.13. Litigation. There is no action, suit, investigation,
claim, charge or proceeding ("Actions") pending against, or to the knowledge of
the Company, threatened against or affecting, the Company or any of its
Subsidiaries or any of their respective assets, properties or rights which,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect. As of the date of this Agreement, no officer or
director of the Company is a defendant in any Action commenced by shareholders
of the Company with respect to the performance of his or her duties as an
officer and/or director of the Company. Except as set forth in Section 3.13 of
the Company Disclosure Schedule, there exist no Contracts with any of the
23
directors and officers of the Company or its Subsidiaries that provide for
indemnification by the Company or its Subsidiaries. Except as specifically
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement, neither the Company nor any of its Subsidiaries nor any
of their respective properties or assets is or are subject to any Order that,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.
Section 3.14. Taxes. Except as set forth in Section 3.14 of the
Company Disclosure Schedule:
(a) The Company and each of its Subsidiaries, and each affiliated
group (within the meaning of Section 1504 of the Code) of which the Company or
any of its Subsidiaries is a member, has timely filed (or has had timely filed
on its behalf, taking into account all applicable extensions) all material Tax
Returns required by applicable Law to be filed by it. All such Tax Returns, as
they relate to the Company and its Subsidiaries are correct and complete in all
material respects. The Company and each of its Subsidiaries has paid (or has had
paid on its behalf) all material Taxes due and owing (whether or not shown on
any Tax Return) and has established an adequate reserve for the payment of all
Taxes not yet due and owing.
(b) The Company and each of its Subsidiaries has withheld and paid
all material Taxes required to have been withheld and paid in connection with
any amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) As of the date of this Agreement, none of the material Tax
Returns of the Company or its Subsidiaries have been examined by any Taxing
Authority and no material audit, action, proceeding or assessment is pending or
threatened by any such Taxing Authority against the Company or its Subsidiaries.
(d) As of the Stock Purchase Closing, neither the Company nor its
Subsidiaries will be a party to any tax allocation, tax sharing, tax indemnity
or similar agreement with respect to Taxes, except the Tax Separation Agreement.
(e) There are no liens for Taxes (other than Taxes not yet due and
payable or which are being contested in good faith by appropriate proceedings)
upon any of the assets of the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries has ever been a
member of an "affiliated group" (as defined in Section 1504(a) of the Code),
except for any group of which the Company, General Motors Corporation or ▇▇▇▇▇▇
Electronics Corporation (now known as The DIRECTV Group, Inc.) was the common
parent corporation.
(g) Neither the Company nor any of its Subsidiaries will be required
to include any item of income in, or exclude any deduction from, taxable income
for any taxable period (or portion thereof) ending after the Stock Purchase
24
Closing Date as a result of any: (i) change in method of accounting for a
taxable period ending or prior to the Stock Purchase Closing Date; (ii) "closing
agreement" as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign Tax law) executed on or prior to
the Stock Purchase Closing Date; or (iii) installment sale or open transaction
disposition made on or prior to the Stock Purchase Closing Date.
(h) Neither the Company nor any Company Subsidiary has distributed
stock of another entity, or had its stock distributed by another entity, in a
transaction that was purported or intended to be governed in whole or in part by
Section 355 or 361 of the Code.
Section 3.15. Employee Benefit Plans; ERISA. Except as set forth in
Section 3.15(a) of the Company Disclosure Schedule:
(a) All employee benefit plans within the meaning of Section 3(3) of
the Employment Retirement Income Security Act of 1974, as amended ("ERISA"), and
all stock purchase, stock option, severance, retention, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation, employee loan, multiemployer and all other employee
benefit plans, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future), whether formal or informal, oral or written, legally binding or not
(collectively, "Plans"), under which (i) any current or former employee,
director or consultant of the Company or its Subsidiaries (the "Company
Employees") has any present or future right to benefits and which are
contributed to, sponsored by or maintained by the Company or any of its
Subsidiaries or (ii) the Company or any of its Subsidiaries has had or has any
present or future liability (other than Stockholder Maintained Plans)
(collectively, the "Company Plans") are in compliance with, and have been
established, administered and operated in accordance with, the terms of such
Company Plans and applicable Law, except for any failure to so comply,
administer or operate the Company Plans that would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect. All
Company Plans that are maintained by the Company or any of its Subsidiaries
since January 1, 2001 (collectively, the "Company Maintained Plans") are set
forth in Section 3.15(a) of the Company Disclosure Schedule. Section 3.15(a) of
the Company Disclosure Schedule also sets forth a list of all Plans under which
(i) any current or former employee, director or consultant of the Company and
its Subsidiaries has any present or future right to benefits and which are
contributed to, sponsored by or maintained by Stockholder or its affiliates
(other than the Company and its Subsidiaries) or (ii) the Stockholder or its
affiliates (other than Company and its Subsidiaries) has had or has any present
or future liability (collectively, "Stockholder Maintained Plans").
(b) The Internal Revenue Service has issued a determination or
opinion letter to the effect that each such Company Maintained Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified. Except as could not, individually or in the aggregate, result in a
Company Material Adverse Effect, (i) no event has occurred, and no condition
25
exists, that would subject the Company or its Subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled Group"
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Sections 414(b), (c), (m) or (o) of the
Code), to any tax, fine, lien, penalty or other liability imposed by applicable
Law; (ii) neither the Company nor any of its Subsidiaries has engaged in any
nonexempt prohibited transactions in connection with any Company Maintained Plan
(or its related trust) with respect to which the Company or its Subsidiaries or
any officer, director, employee of the Company or any of its Subsidiaries would
be subject to either a penalty pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code; and (iii) neither the Company nor its
Subsidiaries has incurred any liability under the fiduciary provisions of ERISA.
No Company Maintained Plan that is subject to Part 3 of Subtitle B of Title I of
ERISA has incurred any "accumulated funded deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived. None of
the Company or its Subsidiaries has participated in or contributed to any
multiemployer plan as defined in Section 3(37) of ERISA at any time during the
prior six (6) years. Neither the Company nor any of its Subsidiaries has
incurred or could reasonably be expected to incur any liability with respect to
any Company Maintained Plan or Stockholder Maintained Plan that is subject to
Title IV of ERISA, except for (i) any liability that would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect or (ii) any contingent liability that will cease to be a contingent
liability of the Company and its Subsidiaries upon the Stock Purchase Closing.
(c) With respect to any Company Plan, except as would not,
individually or in the aggregate, result in a Company Material Adverse Effect,
no (i) actions, suits or claims (other than routine claims for benefits in the
ordinary course) are pending or threatened and (ii) facts or circumstances exist
that could give rise to any such actions, suits or claims.
(d) Except as set forth in Section 3.15(d) of the Company Disclosure
Schedule, no Company Maintained Plan exists that, as a result of the execution
of this Agreement or the transactions contemplated by this Agreement (whether
alone or in connection with any subsequent event(s)), could result in the (i)
payment to any Company Employee of any money or other property; (ii) provision
of any benefits or other rights of any Company Employee; or (iii) increase,
acceleration or provision of any payments, benefits or other rights (whether or
not a "parachute payment" within the meaning of Section 280G of the Code) to any
Company Employee.
(e) Except as set forth in Section 3.15(e) of the Company Disclosure
Schedule, all Company Maintained Plans maintained outside the United States
(collectively, the "Company Non-U.S. Plans") are in compliance with, and have
been established, administered and operated in accordance with, the terms of
such Company Non-U.S. Plans and applicable Law, except for any failure to so
comply, establish, administer or operate the Company Non-U.S. Plans as would not
reasonably be expected to have a Company Material Adverse Effect. All such
Company Non-U.S. Plans are set forth in Section 3.15(e) of the Company
26
Disclosure Schedule. All contributions or other payments which are due with
respect to each Company Non-U.S. Plan have been made in full and there are no
funding deficiencies thereunder, except to the extent any such events would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.16. Compliance with Laws; Permits.
(a) Compliance with Laws. Except as disclosed in the Company SEC
Documents filed and publicly available prior to the date hereof and except for
such violations and failures to comply, and notices, Actions and assertions
concerning such violations and failures to comply, that have not had and would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or have a material adverse impact on the ability of the
Company or any of its Subsidiaries to consummate the transactions contemplated
by this Agreement: (i) the Company and each of its Subsidiaries has conducted
its business and is, in compliance with all Orders and Laws and corporate
policies applicable thereto and (ii) no notice, Action or assertion has been
received by the Company or any of its Subsidiaries or, to the knowledge of the
Company, has been filed, commenced or threatened against the Company or any of
its Subsidiaries alleging any violation of any Law applicable to them or by
which their respective properties are bound or affected.
(b) Company Permits. Except as set forth in Section 3.16(b) of the
Company Disclosure Schedule, the Company and each of its Subsidiaries hold all
licenses, franchises, permits, certificates, approvals and authorizations from
Governmental Authorities (i) necessary to operate each Company Satellite and
(ii) necessary for the lawful conduct of their respective businesses except, in
the case of clause (ii), where the failure to hold the same has not had and
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect (collectively, the "Company Permits"). Section
3.16(b) of the Company Disclosure Schedule sets forth a true and complete list
as of the date hereof of all Company Permits. The Company and its Subsidiaries
are in compliance with the terms of all Company Permits, except for such
non-compliance as has not had and would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(c) Pending Applications. Section 3.16(c) of the Company Disclosure
Schedule sets forth a true and complete list as of the date hereof of the
Company's pending applications for authorization for satellites or earth
stations with Governmental Authorities.
Section 3.17. Company Satellites.
(a) Company Satellites. Set forth in Section 3.17(a) of the Company
Disclosure Schedule is a complete and accurate list, by orbital location, of
each satellite listing the number and type of transponders thereon, owned by the
Company or any of its Subsidiaries as of the date of this Agreement (each a
"Company Satellite"). Subject to applicable Law, the Company has made available
to Purchaser true and correct copies of the most recent monthly "Health Status
27
Report" in existence as of the date of this Agreement summarizing all spacecraft
related incidents and anomalies experienced by Company Satellites known to the
Company at such date. Except as set forth in Section 3.17(a) of the Company
Disclosure Schedule, as of the date hereof, the Company has no knowledge of any
spacecraft-related incidents or anomalies experienced by Company Satellites that
are not disclosed in the "Health Status Reports" referred to in the immediately
preceding sentence.
(b) ITU Frequency Registration. Section 3.17(b) of the Company
Disclosure Schedule contains a summary, by orbital location, of the status of
frequency registration at the International Telecommunications Union, of each
Company Satellite and each advanced published satellite filed on behalf of the
Company, including the identity of the sponsoring administration and the
frequency bands covered. Except as set forth in Section 3.17(b) of the Company
Disclosure Schedule, as of the date hereof, the Company has no knowledge of any
material and significant conflicting claim(s) with respect to its rights to use
the frequency assignment(s) described in its ITU filings at any such orbital
location(s) that reasonably would be expected to restrict or otherwise affect,
in either case in a materially adverse manner, the Company's ability to operate
the Company Satellite(s) on such frequency assignment(s) at such location(s).
Section 3.18. Environmental Matters. Except as set forth in Section
3.18 of the Company Disclosure Schedule and except as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (i) each of the Company and its Subsidiaries is, and at all times prior,
was in compliance with all applicable Environmental Laws, (ii) no notice,
notification, demand, request for information, citation, summons or order has
been received by, no complaint has been filed against or received, no penalty
has been assessed against, and no investigation, action, claim, suit, proceeding
or review is pending or threatened by any Person against, the Company or any of
its Subsidiaries with respect to any matters relating to or arising out of any
Environmental Law which; (iii) no Hazardous Substance has been discharged,
disposed of, arranged to be disposed of, dumped, injected, pumped, deposited,
spilled, leaked, emitted or released by the Company at, on, under or from any
property or facility owned, leased or operated by the Company or its
Subsidiaries or, to the knowledge of the Company, by any prior owner, lessee or
operator; and (iv) there are no Environmental Liabilities. For purposes of this
Section, the terms "Company" and its "Subsidiaries" shall include any entity
which is, in whole or in part, a predecessor of the Company or any of its
Subsidiaries.
Section 3.19. Company Material Contracts. All Company Material
Contracts are legal, valid and binding and in full force and effect and are
enforceable by the Company and its Subsidiaries in accordance with their
respective terms in all material respects. The Company and its Subsidiaries have
performed in all material respects all respective obligations required to be
performed by them to date under the Company Material Contracts and are not, and
to the knowledge of the Company are not alleged to be (with or without the lapse
of time or the giving of notice, or both), in breach or default thereunder in
28
any material respect. Section 3.19 of the Company Disclosure Schedule sets forth
a complete and correct list of all Company Material Contracts as of the date
hereof except that such schedule does not list (1) any Construction/Launch
Contract where the remaining payments to be made by the Company do not exceed
$10 million and (2) the individual Customer Contracts with the Company Material
Customers but instead lists such Company Material Customers. True and correct
copies of the Company Material Contracts have been made available to Purchaser.
Section 3.20. Finders' Fees. Except for Evercore Partners, a copy of
whose engagement agreement has been provided to Purchaser, no investment banker,
broker, finder, other intermediary or other Person is entitled to any fee or
commission from the Company or any of its Subsidiaries in connection with the
consummation of the transactions contemplated by this Agreement.
Section 3.21. Opinion of Financial Advisor. The Company has received
the opinion of Evercore Partners to the effect that, as of the date of such
opinion, the Merger Consideration to be received by the holders of shares of the
Company Common Stock in connection with the Merger (other than the Stockholder)
is fair to such holders from a financial point of view. An executed copy of such
opinion has been made available to Purchaser.
Section 3.22. Takeover Statutes. The Company has elected in its
Restated Certificate of Incorporation not to be governed by Section 203 of the
DGCL such that neither Section 203 of the DGCL nor the restrictions on "business
combinations" set forth therein apply to, or restrict the Company's authority to
effect or complete the Merger, this Agreement and the transactions contemplated
by this Agreement.
Section 3.23. Transactions with Affiliates. Except (i) as set forth
in Section 3.23 of the Company Disclosure Schedule, (ii) as disclosed in the
Company's proxy statement relating to the election of directors dated ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇▇) as would not be required to be disclosed pursuant to Item 404 of
Regulation S-K, or (iv) those of a type available to employees of the Company
generally, there are no Contracts or transactions between the Company or any of
its Subsidiaries, on the one hand, and any (i) officer or director of the
Company or any of its Subsidiaries, (ii) record or beneficial owner of five
percent or more of the voting securities of the Company or (iii) Affiliate of
any such officer, director or record or beneficial owner, on the other hand. For
purposes of this Section, the term "Affiliate" shall have the meaning provided
in Rule 501(b) promulgated under the Securities Act.
Section 3.24. Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to Persons employed by the Company or any Subsidiary,
nor, to the knowledge of the Company, are there any activities or proceedings of
any labor union to organize any such employees.
29
Section 3.25. Limitation on Warranties. EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, THE COMPANY MAKES NO REPRESENTATION OR WARRANTY TO PURCHASER,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, WITH RESPECT TO THE COMPANY OR ANY
SUBSIDIARY OF THE COMPANY, INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE. ALL REPRESENTATIONS OR WARRANTIES NOT EXPRESSLY SET
FORTH IN THIS AGREEMENT ARE HEREBY DISCLAIMED, AND PURCHASER ACKNOWLEDGES THAT
IT IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF THE COMPANY NOT EXPRESSLY
SET FORTH IN THIS AGREEMENT.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and Stockholder as
set forth below:
Section 4.01. Organization and Power; Subsidiaries.
(a) Organization. Purchaser is a limited liability company duly
organized, validly existing and is in good standing under the Laws of the
jurisdiction under which it was organized, and has the requisite limited
liability company power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Purchaser has no
Subsidiaries.
(b) Charter Documents. Purchaser has delivered or made available to
the Company and Stockholder a true and correct copy of the Certificate of
Formation of Purchaser, as amended to date (collectively, the "Purchaser
Formation Documents"), and such instrument is in full force and effect and no
other organizational documents are applicable to or binding upon Purchaser.
Purchaser is not in violation of any of the provisions of the Purchaser
Formation Documents.
Section 4.02. Corporate Authorization. Purchaser has all necessary
power and authority to enter into this Agreement and each Transaction Document
to which it is a party, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and each Transaction
Document to which it is a party and the consummation by Purchaser of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary limited liability company action. No vote of any
class or series of Purchaser's capital stock is necessary in connection with the
execution of this Agreement or any Transaction Document and the consummation of
the transactions contemplated hereby and thereby. This Agreement and each
Transaction Document to which it is a party has been duly executed and delivered
by Purchaser and, assuming the due authorization, execution and delivery by the
30
other parties hereto and thereto, constitutes a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms (subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar Laws affecting creditors rights generally and, by
general principles of equity, including good faith and fair dealing, regardless
whether in a proceeding at equity or at Law).
Section 4.03. Governmental Authorization. The execution, delivery and
performance by Purchaser of this Agreement and each Transaction Document to
which it is a party, and the consummation by Purchaser of the transactions
contemplated hereby and thereby, require no action, permit, license,
authorization, certification, consent, approval, concession or franchise by or
in respect of, or filing with, any Governmental Authority other than: (i)
compliance with any applicable requirements of the HSR Act and any other
applicable Antitrust Laws; (ii) such filings with and consents of the FCC as may
be required (including any notifications or other filings that do not require
consent); (iii) such other consents, approvals, orders, authorizations,
registrations, declarations, filings, notices and permits set forth in Section
3.04 of the Company Disclosure Schedule; (iv) those that may be required solely
by reason of Company's (as opposed to any other third party's) participation in
the transactions contemplated by this Agreement and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made individually or in the aggregate would
not reasonably be expected to impair the ability of Purchaser to perform their
obligations hereunder, or prevent, impede, interfere with or hinder or delay the
consummation of the transactions contemplated hereby.
Section 4.04. Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement and each Transaction Document to
which it is a party do not, and the consummation by Purchaser of the
transactions contemplated hereby and thereby will not: (i) contravene or
conflict with the Purchaser Formation Documents; (ii) subject to obtaining all
the consents, approvals and authorizations specified in clauses (i)-(iv) of
Section 4.03, contravene or conflict with or constitute a violation of any
provision of any Law or Order binding upon or applicable to Purchaser; (iii)
subject to obtaining all the consents, approvals and authorizations specified in
clauses (i)-(iv) of Section 4.03, constitute a default (or an event which with
notice, the lapse of time or both would become a default) under or give rise to
a right of termination, cancellation or acceleration of any right or obligation
of Purchaser under (A) any provision of any material Contract binding upon
Purchaser or (B) any material license, franchise, or permit held by Purchaser;
or (iv) result in the creation or imposition of any Lien on any asset of
Purchaser, other than, in the case of clauses (ii), (iii) or (iv), any such
contraventions, conflicts, violations, defaults, rights of termination,
cancellation or acceleration or Liens that would not, individually or in the
aggregate, reasonably be expected to impair the ability of Purchaser to perform
their obligations hereunder, or prevent, impede, interfere with or hinder or
delay the consummation of the transactions contemplated hereby.
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Section 4.05. Information Supplied. None of the information supplied
or to be supplied by Purchaser for inclusion or incorporation by reference in
the Offer Documents or any amendment or supplement thereto will contain, in the
case of the Proxy Statement or any amendment or supplement thereto, at the date
the Proxy Statement or any such amendment or supplement is first mailed to
stockholders of the Company and at the time of the Company Stockholders'
Meeting, and in the case of the Debt Offer Documents or any amendments or
supplements thereto, at the time the Debt Offer Documents are first published,
sent or given to holders of the 8.50% Senior Notes and at the expiration of the
Debt Offer, any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 4.06. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Purchaser, threatened against
or affecting, Purchaser or any of its properties which, individually or in the
aggregate, would reasonably be expected to impair the ability of Purchaser to
perform its obligations hereunder, or prevent, impede, interfere with or hinder
or delay the consummation of the transactions contemplated hereby.
Section 4.07. Finders' Fees. No investment banker, broker, finder,
other intermediary or other Person is entitled to any fee or commission from
Purchaser upon consummation of the transactions contemplated by this Agreement.
Section 4.08. Financing. Simultaneously with the execution and
delivery of this Agreement, Purchaser has delivered to the Company and
Stockholder true and correct copies of (i) an equity commitment letter executed
by KKR Millennium Fund L.P. (the "Fund") (the "Equity Letter") and (ii) a
binding commitment letter from Citicorp North America, Inc., Citigroup Global
Markets Inc. and Credit Suisse First Boston (the "Debt Commitment Letter," and
together with the Equity Letter, the "Commitment Letters"). The financing
contemplated by the Commitment Letters will provide sufficient funds to allow
the Company to pay the Repurchase Amount and to consummate the Debt Offer and
the purchase of the Shares on the terms and conditions set forth in this
Agreement and for the Company to pay the Company Option Consideration on the
Stock Purchase Closing Date.
Section 4.09. Condition of the Business; Independent Investigation.
(a) Notwithstanding anything contained in this Agreement to the
contrary, Purchaser acknowledges and agrees that neither the Company nor
Stockholder or Merger Sub is making any representations or warranties
whatsoever, express or implied, beyond those expressly given by the Company in
Article III or by Stockholder and Merger Sub in Article V. Any claims Purchaser
may have for breach of representation or warranty shall be based solely on the
representations and warranties of the Company set forth in Article III or of
Stockholder and Merger Sub set forth in Article V. Purchaser further represents
that none of the Company, Stockholder, Merger Sub or any of their respective
32
affiliates nor any other Person has made any representation or warranty, express
or implied, as to the accuracy or completeness of any information regarding the
Company or any of its Subsidiaries or the transactions contemplated by this
Agreement not expressly set forth in this Agreement, and none of the Company,
Stockholder, any of their respective affiliates or any other Person will have,
or be subject to, any liability to Purchaser or any other Person resulting from
the distribution to Purchaser or its representatives or Purchaser's use of, any
such information, including any confidential memoranda distributed on behalf of
the Company relating to the Company or any of its Subsidiaries or other
publications or data room information provided to Purchaser or its
representatives, or any other document or information in any form provided to
Purchaser or its representatives in connection with the sale of the Company and
it Subsidiaries and the transactions contemplated hereby, except that nothing
herein shall constitute a waiver of any rights of Purchaser in the case of
fraud.
(b) Purchaser acknowledges and agrees that it has made its own
inquiry and investigation into, and, based thereon, has formed an independent
judgment concerning, the Company and its Subsidiaries and their businesses and
operations. In connection with Purchaser's investigation of the Company and its
Subsidiaries and their businesses and operations, Purchaser and its
representatives have received from Stockholder, the Company or their
representatives certain projections and other forecasts for the Company and its
Subsidiaries and certain estimates, plans and budget information. Purchaser
acknowledges and agrees that (i) there are uncertainties inherent in attempting
to make such projections, forecasts, estimates, plans and budgets, (ii)
Purchaser is familiar with such uncertainties, (iii) Purchaser is taking full
responsibility for making its own evaluations of the adequacy and accuracy of
all estimates, projections, forecasts, plans and budgets so furnished to
Purchaser or its representatives, and (iv) Purchaser will not (and will cause
all of its Subsidiaries and other affiliates and all other Persons and
representatives acting on its behalf not to) assert any claim or cause of action
against Stockholder, the Company, their respective Subsidiaries or any of
Stockholder's or the Company's direct or indirect directors, officers,
employees, agents, stockholders, affiliates, consultants, counsel, accountants,
investment bankers or representatives with respect thereto, or hold any such
other Person liable with respect thereto, except that nothing herein shall
constitute a waiver of any rights of Purchaser in the case of fraud.
Section 4.10. Qualifications to Hold Communications Licenses.
Purchaser is legally, financially and otherwise qualified under the
Communications Act to be the licensee of and to own and operate the Company
Satellites and to perform its obligations hereunder. To Purchaser's knowledge,
no fact or circumstance exists relating to the qualifications of Purchaser or
any foreign qualifications of Purchaser that (i) has prevented or delayed, or
would reasonably be expected to prevent or delay, the FCC from granting approval
of the FCC Consent Application; or (ii) has prevented or delayed, or would
reasonably be expected to prevent or delay, or otherwise disqualify Purchaser as
the licensee, owner, operator or transferee of any Satellite in any foreign
jurisdiction.
33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER AND MERGER SUB
Each of Stockholder and, solely for purposes of the Merger Closing
Date, Merger Sub represents and warrants to Purchaser as set forth below:
Section 5.01. Organization and Power.
(a) Organization. Each of Stockholder and Merger Sub is a corporation
duly organized, validly existing and is in good standing under the Laws of the
jurisdiction of its incorporation, and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
(b) Charter Documents. Stockholder has delivered or made available
to: (i) Purchaser a true and correct copy of the Certificate of Incorporation
(including any Certificate of Designations) and Bylaws of Stockholder, each as
amended to date (collectively, the "Stockholder Charter Documents"), and (ii)
the certificate of incorporation and bylaws, each as amended to date
(collectively, "Merger Sub Charter Documents") of Merger Sub, and each such
instrument is in full force and effect. Stockholder is not in violation of any
of the provisions of the Stockholder Charter Documents, and Merger Sub is not in
violation of any of the provisions of the Merger Sub Charter Documents.
Section 5.02. Corporate Authorization. Each of Stockholder and Merger
Sub has all necessary power and authority to enter into this Agreement and each
Transaction Document to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Stockholder and Merger
Sub of this Agreement and each Transaction Document to which it is a party and
the consummation by Stockholder and Merger Sub of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action, including by resolution of the Board of Directors of
Stockholder and Merger Sub, and have been adopted by Stockholder as the sole
stockholder of Merger Sub. No vote of any class or series of Stockholder's
capital stock and no further vote of any capital stock of Merger Sub is
necessary in connection with the execution of this Agreement and each
Transaction Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby. This Agreement and each
Transaction Document has been duly executed and delivered by each of Stockholder
and Merger Sub and, assuming the due authorization, execution and delivery by
the other parties hereto and thereto, constitutes a valid and binding agreement
of Stockholder and Merger Sub, enforceable against Stockholder and Merger Sub in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar Laws affecting
creditors rights generally and, by general principles of equity, including good
faith and fair dealing, regardless whether in a proceeding at equity or at Law).
34
Section 5.03. Governmental Authorization. The execution, delivery and
performance by Stockholder and Merger Sub of this Agreement and each Transaction
Document to which it is a party, and the consummation by Stockholder and Merger
Sub of the transactions contemplated hereby and thereby, require no action,
permit, license, authorization, certification, consent, approval, concession or
franchise by or in respect of, or filing with, any Governmental Authority other
than: (i) compliance with any applicable requirements of the HSR Act and any
other Antitrust Laws; (ii) such filings with and consents of the FCC as may be
required (including any notifications or other filings that do not require
consent); (iii) such other consents, approvals, orders, authorizations,
registrations, declarations, filings, notices and permits set forth in Section
3.04 of the Company Disclosure Schedule; (iv) the filing with the SEC of such
reports under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement; (v) the filing of
the Certificate of Merger with respect to the Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant authorities
of other states in which Merger Sub is qualified to do business; and (vi) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made individually or in the
aggregate would not reasonably be expected to impair the ability of Stockholder
or Merger Sub to perform their respective obligations hereunder, or prevent,
impede, interfere with or hinder or delay the consummation of the transactions
contemplated hereby.
Section 5.04. Non-Contravention. The execution, delivery and
performance by Stockholder and Merger Sub of this Agreement and each Transaction
Document to which it is a party do not, and the consummation by Stockholder and
Merger Sub of the transactions contemplated hereby or thereby will not: (i)
contravene or conflict with the Stockholder Charter Documents or Merger Sub
Charter Documents; (ii) subject to obtaining all the consents, approvals and
authorizations specified in clauses (i) - (v) of Section 5.03, contravene or
conflict with or constitute a violation of any provision of any Law or Order
binding upon or applicable to Stockholder or Merger Sub; (iii) subject to
obtaining all the consents, approvals and authorizations specified in clauses
(i) - (v) of Section 5.03, constitute a default (or an event which with notice,
the lapse of time or both would become a default) under or give rise to a right
of termination, cancellation or acceleration of any right or obligation of
Stockholder or Merger Sub under (A) any provision of any material Contract
binding upon Stockholder or Merger Sub or (B) any material license, franchise,
or permit held by Merger Sub or Stockholder; or (iv) result in the creation or
imposition of any Lien on any asset of Stockholder or Merger Sub, other than, in
the case of clauses (ii), (iii) or (iv), any such contraventions, conflicts,
violations, defaults, rights of termination, cancellation or acceleration or
Liens that would not, individually or in the aggregate, reasonably be expected
to impair the ability of Stockholder or Merger Sub to perform its obligations
hereunder or under any Transaction Document to which it is party, or prevent,
impede, interfere with or hinder or delay the consummation of the transactions
contemplated hereby or thereby.
35
Section 5.05. Information Supplied. None of the information supplied
or to be supplied by Stockholder or Merger Sub for inclusion or incorporation by
reference in the Offer Documents or any amendment or supplement thereto will
contain, in the case of the Proxy Statement or any amendment or supplement
thereto, at the date the Proxy Statement or any such amendment or supplement is
first mailed to stockholders of the Company and at the time of the Company
Stockholders' Meeting, and in the case of the Debt Offer Documents or any
amendments or supplements thereto, at the time the Debt Offer Documents are
first published, sent or given to holders of the 8.50% Senior Notes and at the
expiration of the Debt Offer, any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 5.06. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Stockholder or Merger Sub,
threatened against or affecting, Stockholder or any of its Subsidiaries or any
of their respective properties which, individually or in the aggregate, would
reasonably be expected to impair the ability of Stockholder to perform its
obligations hereunder, or prevent, impede, interfere with or hinder or delay the
consummation of the transactions contemplated hereby.
Section 5.07. Ownership and Transfer of Shares. As of the Stock
Purchase Closing Date, Stockholder or a wholly-owned Subsidiary or Subsidiaries
will be the record and beneficial owner of the Shares, free and clear of any and
all Liens. Stockholder has the corporate power and authority to sell, transfer,
assign and deliver (or cause to be sold, transferred, assigned or delivered) the
Shares as provided in this Agreement, and such delivery will convey to Purchaser
good and marketable title to the Shares, free and clear of any and all Liens.
Section 5.08. Merger Sub. Merger Sub is a direct wholly-owned
Subsidiary of Stockholder that has engaged in no business activities other than
as specifically contemplated by this Agreement.
Section 5.09. Finders' Fees. No investment banker, broker, finder,
other intermediary or other Person is entitled to any fee or commission from
Stockholder upon consummation of the transactions contemplated by this Agreement
for which the Company is liable.
ARTICLE VI
COVENANTS
Section 6.01. Conduct of the Company.
(a) Ordinary Course. During the period from the date hereof and
continuing until the earlier of the termination of this Agreement or the Stock
Purchase Closing Date, except as (x) set forth in Section 6.01 of the Company
36
Disclosure Schedule, (y) expressly contemplated by this Agreement or any
Pre-Closing Transaction or as required by applicable Law or (z) consented to in
writing by Purchaser and Stockholder (such consent not to be unreasonably
withheld or delayed), the Company shall, and shall cause each of its
Subsidiaries to, for the benefit of Purchaser and Stockholder, carry on its
business in the ordinary course consistent with past practice and, to the extent
consistent therewith, use all commercially reasonable efforts to preserve intact
its current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it,
maintain in full force and effect the satellite launch and in-orbit insurance
policies listed on Section 3.10 of the Company Disclosure Schedule until the end
of their term and consult in good faith with Purchaser and Stockholder regarding
(i) the decision whether to replace any such policy which expires prior to the
Stock Purchase Closing Date, and (ii) if replaced, the terms of the replacement
policy, and with respect to other types of insurance, maintain in full force and
effect until the Stock Purchase Closing substantially the same levels of
coverage of insurance with respect to the assets, operations and activities of
the Company and its Subsidiaries as a whole as are in effect as of the date of
this Agreement.
(b) Required Consent. Without limiting the generality of Section
6.01(a), and except as otherwise expressly permitted by this Agreement or any
Pre-Closing Transactions, or listed on Section 6.01 of the Company Disclosure
Schedule or as required by applicable Law or Contract in existence on the date
hereof, from the date hereof and continuing until the earlier of the termination
of this Agreement or the Stock Purchase Closing Date, the Company shall not, and
shall not permit or cause any of its Subsidiaries to, for the benefit of the
Purchaser and Stockholder without the prior written consent of Purchaser and
Stockholder (such consent not to be unreasonably withheld or delayed):
(i) do or effect any of the following actions with respect to
the Company's or any of its Subsidiaries' securities: (A) adjust, split,
combine, recapitalize or reclassify its capital stock; (B) make, declare or pay
any dividend or other distribution on (other than dividends to the Company or
its Subsidiaries), or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable or exercisable for any shares of its capital
stock; (C) grant any Person any right or option to acquire any shares of capital
stock; (D) issue, deliver, pledge, transfer or sell or agree to issue, deliver,
transfer or sell any Company Securities or Subsidiary Securities (except
pursuant to the exercise or vesting of Company Options, restricted stock or
restricted stock units outstanding on the date hereof or the issuance of
previously deferred restricted stock (provided such shares are included in the
number of shares reserved for issuance set forth in Section 3.02(a)(i))); (E)
enter into any agreement, understanding or arrangement with respect to the sale
or voting of its capital stock; or (F) make any adjustment to the amount of
stock underlying, or the exercise price of, any Company Options;
37
(ii) amend or cause, adopt or propose any amendments to (i) the
Company Charter Documents or any of the Subsidiary Charter Documents or (ii) any
material term of any outstanding Company Security or any Subsidiary Security;
(iii) adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its Subsidiaries (other than a
merger or consolidation between direct or indirect wholly owned Subsidiaries);
(iv) merge or consolidate with any other Person or acquire
assets or capital stock of any Person (other than the acquisition of assets in
the ordinary course of business and consistent with the Company's capital
spending budget previously provided to Purchaser);
(v) sell, transfer, license, assign, lease, pledge, mortgage,
encumber, subject to a material Lien or otherwise dispose of any amount of the
Company's or any of its Subsidiaries' property, assets or rights, other than in
the ordinary course of business consistent with past practice or with respect to
obsolete assets;
(vi) incur or assume any Indebtedness or amend the terms of any
existing material Indebtedness set forth in Section 3.02(c) of the Company
Disclosure Schedule;
(vii) (A) acquire or agree to acquire any satellite or other
spacecraft which the Company has not, on the date of this Agreement, previously
agreed in writing to acquire, or (B) make one or more investments or capital
expenditures; provided, however, that the Company may (x) continue or commence
capital programs as set forth in Section 6.01(b)(vii) of the Company Disclosure
Schedule, plus additional expenses solely for change orders of up to 10% of the
budgeted 2004 payments on each satellite shown thereon, and (y) purchase such
terrestrial equipment as necessary to supply customers in the ordinary course in
connection with leases of transponder capacity by such customers or other
services provided to such customers;
(viii) (A) enter into, establish, adopt, terminate or modify any
Company Plan or any plan, policy, trust, fund, program or other agreement or
arrangement that would be a Company Plan if it were in existence as of the date
of this Agreement or (B) grant any bonuses, salary increases, severance or
termination pay to, or otherwise increase the compensation or benefits of, any
present or former officer, director, consultant or employee of the Company or
its Subsidiaries, other than (1) increases in salary or wages in the ordinary
course of business consistent with past practice, (2) discretionary bonuses to
employees pursuant to Company Plans in an amount not to exceed $200,000 in the
aggregate, or (3) as may be required by applicable Law, the Company Plans or a
binding written contract in effect on the date of this Agreement;
38
(ix) except as may be required by applicable Law or GAAP, change
any method, policy, practice, procedure or principle of accounting;
(x) (1) enter into any Contract that if existing on the date
hereof would be a "Company Material Contract" (other than any such Company
Material Contract of the type described in clause (viii) or (ix) of the
definition thereof but, with respect to a Company Material Contract described in
clause (ix), subject to the consultation obligation set forth in Section
6.01(a)), (2) terminate, amend, supplement or modify in any material respect any
Company Material Contract to which the Company or any of its Subsidiaries is a
party except for any Company Material Contract with a Company Material Customer
with respect to which Company Material Contract the contracted cash backlog does
not exceed $5 million, or (3) waive, release, cancel, allow to lapse, convey,
encumber or otherwise transfer any material rights or claims thereunder;
(xi) make any loan, advance or capital contribution to or
investment in any Person (including any present or former officer, director,
consultant, or employee of the Company or its Subsidiaries), other than loans,
advances or capital contributions to or investments in a Subsidiary of the
Company;
(xii) settle or compromise (A) any material Action, whether
administrative, civil or criminal, in law or in equity or (B) any material claim
under any insurance policy for the benefit of the Company or any of its
Subsidiaries;
(xiii) cancel any debts or waive any claims or rights of
substantial value (including the cancellation, compromise, release or assignment
of any Indebtedness owed to, or claims held by, the Company or any its
Subsidiaries), except for cancellations made or waivers granted in the ordinary
course of business consistent with past practice which, in the aggregate, are
not material to the Company and its Subsidiaries, taken as a whole;
(xiv) make, change or rescind any material Tax election not
consistent with past practice; change any accounting period or method; or settle
or compromise any Tax liability for which Stockholder may be obligated to
indemnify the Company pursuant to the Tax Separation Agreement, assuming the
Stock Purchase Closing occurs, provided, however, that any such settlement or
compromise shall not require the consent of Purchaser unless such settlement
would have an adverse effect that would be material on the Company and its
Subsidiaries in a taxable period or periods (or portions thereof) beginning on
or after the Stock Purchase Closing Date;
(xv) take any action that would reasonably be expected to result
in any of the representations and warranties set forth in Article III becoming
false or inaccurate such that the condition set forth in Section 2.03(f)(i)
would fail to be satisfied; or
(xvi) agree or commit, in writing or otherwise, to take any of
the foregoing actions.
39
Section 6.02. Conduct of Purchaser.
(a) Conduct. Purchaser agrees that, during the period from the date
hereof and continuing until the earlier of the termination of this Agreement or
the Stock Purchase Closing, except as expressly contemplated by this Agreement,
the Pre-Closing Transactions or as required by applicable Law, and except as may
be consented to in writing by Stockholder (such consent not to be unreasonably
withheld or delayed), Purchaser shall not, and shall not permit any of its
direct or indirect Subsidiaries or any Controlled Affiliates to, (i) take any
action or agree, in writing or otherwise, to take any action that would
reasonably be likely to result in any of the representations and warranties set
forth in Article IV becoming false or inaccurate such that the conditions set
forth in Section 2.03(d)(ii) and Section 7.03(a) would fail to be satisfied or
(ii) enter into or consummate any agreements or arrangements for an acquisition
(via stock purchase, merger, consolidation, purchase of assets or otherwise) or
joint venture with respect to fixed satellite services or any agreements or
arrangements reasonably likely to impact adversely the timing or ability of the
parties to satisfy the conditions set forth in Article VII; provided, however,
that one or more Permitted Persons may contribute (through the purchase of
shares of the Company or otherwise at or after the Stock Purchase Closing) in
the aggregate less than fifty percent (50%) of the equity funding amount
contained in the Equity Letter and the parties agree that such transaction shall
not violate the restriction set forth above; and provided further that any such
acquisition shall not release Purchaser of its obligations hereunder.
(b) Financing. Purchaser shall use its commercially reasonable
efforts to obtain and effectuate the financing contemplated by the Commitment
Letters on the terms set forth therein. Purchaser agrees to notify Stockholder
and the Company promptly and, in any case, within 24 hours if, at any time prior
to the Stock Purchase Closing Date, (i) any Commitment Letter shall expire or be
terminated, modified or amended for any reason, or (ii) any of the financing
sources that is a party to the Debt Commitment Letter notifies Purchaser that
such source will not be able to provide financing substantially on the terms set
forth in the Debt Commitment Letter. Purchaser shall not, or permit any of its
Subsidiaries or affiliates to, without the prior written consent of Stockholder,
take any action or enter into any transaction, including any merger,
acquisition, joint venture, disposition, lease, contract or debt or equity
financing, that would reasonably be expected to impair, delay or prevent the
financing contemplated by the Commitment Letters. Purchaser shall not amend or
alter, or agree to amend or alter, the Commitment Letters in any manner that
could reasonably be expected to materially delay or prevent the acquisition of
the Shares without the prior written consent of Stockholder.
Section 6.03. Offer Documents; SEC Documents; Company Financial
Statements.
(a) Proxy Statement; Debt Offer. As promptly as reasonably
practicable following the date hereof, the Company shall prepare and shall file
with the SEC a preliminary Proxy Statement, together with a form of proxy, with
respect to the Company Stockholders' Meeting at which the stockholders of the
40
Company will be asked to vote upon and approve this Agreement and the Merger and
shall use its commercially reasonable efforts to have the Proxy Statement and
form of proxy cleared by the SEC and shall cause the Proxy Statement to be
mailed to the Company's stockholders. Each of Stockholder and Purchaser will
provide the Company with any information that may be reasonably requested in
order to effectuate the preparation and filing of the Proxy Statement and Debt
Offer Documents. The Company will provide each of Stockholder and Purchaser and
their respective counsel with a reasonable opportunity to review the Proxy
Statement prior to its filing. The Company will respond to, and provide each of
Purchaser and Stockholder and their respective counsel with a reasonable
opportunity to participate in the Company's response to, any comments from the
SEC and will notify Purchaser and Stockholder promptly upon the receipt of any
comments from the SEC in connection with the filing of, or amendments or
supplements to, the Proxy Statement and shall provide Purchaser and Stockholder
with all correspondence between the Company and its Representatives, on the one
hand, and the SEC and its staff, on the other hand relating to the Proxy
Statement.
(b) Information. Whenever any event occurs which is required to be
set forth in an amendment or supplement to the Proxy Statement, the Company,
Stockholder or Purchaser, as the case may be, will promptly inform the other
party of such occurrence and cooperate in filing with the SEC and/or mailing to
the stockholders of the Company such amendment or supplement. Each of
Stockholder, Purchaser and the Company shall cooperate and the Company shall
provide Stockholder and Purchaser (and their respective counsel) with a
reasonable opportunity to review and comment on the Proxy Statement and on any
amendment or supplement to the Proxy Statement prior to filing such with the SEC
and will provide Stockholder and Purchaser with a copy of all such filings made
with the SEC. The information provided and to be provided by Purchaser,
Stockholder, Merger Sub and the Company, respectively, for use in the Offer
Documents shall not contain, in the case of the Proxy Statement or any amendment
or supplement thereto, at the date the Proxy Statement or any such amendment or
supplement is first mailed to stockholders of the Company and at the time of the
Company Stockholders' Meeting, and in the case of the Debt Offer Documents or
any amendments or supplements thereto, at the time the Debt Offer Documents are
first published, sent or given to holders of the 8.50% Senior Notes and at the
expiration of the Debt Offer, any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company, Stockholder, Merger Sub and Purchaser each
agree to correct any information provided by it for use in the Offer Documents
which shall have become false or misleading in any material respect.
(c) Company SEC Documents. Each of the Company SEC Documents to be
filed by the Company after the date of this Agreement, when filed, will comply
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, each as in effect on the date so filed. None of the
Company SEC Documents (including any financial statements or schedules included
41
or incorporated by reference therein) to be filed by the Company after the date
of this Agreement, when filed, will contain any untrue statement of a material
fact or omit to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(d) Company Financial Statements. Each of the audited and unaudited
financial statements (including any related notes) included in the Company SEC
Documents to be filed by the Company after the date of this Agreement, when
filed, will comply in all material respects with all applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, will have been prepared in accordance with GAAP (except, in the
case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and will fairly present the consolidated
financial position of the Company and its Subsidiaries at the respective date
thereof and the consolidated results of its and their operations and cash flows
for the periods indicated (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments, which were not and are not
expected to be material in amount).
Section 6.04. Company Stockholders' Meeting.
(a) Company's Obligations Relating to the Stockholder Approval
Process. The Company shall, at such times as it shall reasonably determine,
consistent with its obligations under Section 6.07, following the satisfaction
or waiver of the condition set forth in Section 6.04(c) below:
(i) take all action, in accordance with the U.S. federal
securities laws, the DGCL, all other applicable Law and the Company Charter
Documents, necessary to call, hold and convene a meeting of its stockholders to
consider and vote on the adoption and approval of this Agreement and the
approval of the Merger (the "Company Stockholders' Meeting");
(ii) subject to Section 6.04(b), include in the Proxy Statement
the recommendation of its Board of Directors in favor of the adoption and
approval of this Agreement and the approval of the Merger (the "Company
Recommendation"); and
(iii) use its commercially reasonable efforts, in accordance
with the U.S. federal securities laws, the DGCL and all other applicable Law, to
solicit from its stockholders entitled to vote thereon proxies to be voted at
the Company Stockholders' Meeting sufficient under applicable Law to constitute
the Company Requisite Vote.
(b) Non-Recommendation Determination. If the Company's Board of
Directors (or any authorized committee thereof) shall have determined, in good
faith and upon advice of legal counsel, that either (i) prior to the mailing of
the Proxy Statement, it cannot or will not be able to make the Company
Recommendation, or (ii) after having made the Company Recommendation, it is
42
required to withdraw, revoke or modify such recommendation in any manner adverse
to Purchaser, in each case, in order to comply with its fiduciary duties under
applicable Law (a "Non-Recommendation Determination"), the Company shall (x)
promptly provide written notice thereof to Purchaser and (y) be permitted to
make a Non-Recommendation Determination; provided, however, that if a
Non-Recommendation Determination is in respect of a Superior Proposal, the
Company's Board of Directors (or any authorized committee thereof) may make a
Non-Recommendation Determination only if the Company shall have complied in all
respects with the applicable provisions of Section 6.06 with respect to such
Superior Proposal. Notwithstanding anything to the contrary in this Agreement,
unless this Agreement is earlier terminated in accordance with its terms, the
Company shall be required to submit this Agreement for approval by its
stockholders at the Company Stockholders' Meeting and comply with its other
obligations hereunder regardless of any Non-Recommendation Determination.
(c) Conditions to the Company's Obligations Relating to the
Stockholder Approval Process. The Company's obligation to take the actions set
forth in this Section 6.04 is subject to the receipt of all required approvals
and clearances of the Proxy Statement from the SEC and that no restraining order
shall have been entered or threatened by the SEC with respect to the Proxy
Statement.
Section 6.05. Confidentiality; Access to Information.
(a) Confidentiality. The parties acknowledge that the Company,
Purchaser and Purchaser's affiliate have previously executed a Non-Disclosure
Agreement dated February 13, 2004, as amended (the "Confidentiality Agreement"),
which Confidentiality Agreement will continue in full force and effect in
accordance with its terms, and Purchaser will hold, and will cause its
directors, officers, employees, agents and advisors (including attorneys,
accountants, consultants, bankers and financial advisors) to hold, any
Evaluation Material (as defined in the Confidentiality Agreement) confidential
in accordance with the terms of the Confidentiality Agreement; provided, that
notwithstanding anything to the contrary in the Confidentiality Agreement,
Purchaser shall be permitted to talk to and share Evaluation Material with any
potential Permitted Person that will take equity, general or limited partner or
member, voting, profit sharing or other form of co-investment interest in the
transaction so long as such person agrees to be bound by the terms of the
Confidentiality Agreement.
(b) Access to Information. To the extent permitted by applicable Law,
from the date hereof and continuing until the earlier of the termination of this
Agreement or the Stock Purchase Closing Date, the Company will and will cause
its Subsidiaries to (i) give Purchaser, its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, employee and personnel, books and
records of the Company and its Subsidiaries, (ii) will furnish to Purchaser, its
counsel, financial advisors, auditors, financing sources that executed and
delivered the Commitment Letters, potential Permitted Persons (so long as each
such Permitted Person agrees to be bound by the terms of the Confidentiality
43
Agreement) and other authorized representatives such financial and operating
data and other information as such persons may reasonably request, (iii) will
instruct the Company's employees, auditors, counsel and financial advisors to
cooperate with Purchaser in its investigation of the business of the Company and
its Subsidiaries and (iv) shall deliver to Purchaser a copy of the monthly
"Health Status Reports" at the same time that such reports are delivered to the
Company's customers in the ordinary course of business consistent with past
practice. The foregoing information shall be held in confidence by Purchaser,
its counsel, financial advisors, auditors and other authorized representatives
in accordance with the provisions of the Confidentiality Agreement.
Section 6.06. No Solicitation.
(a) Each of the Company and Stockholder agrees that, during the term
of this Agreement, it shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any of its or its Subsidiaries' officers,
directors, employees, investment bankers, attorneys, accountants, agents or
other advisors or representatives (collectively, "Representatives"), directly or
indirectly, to:
(i) solicit, initiate or otherwise take action to facilitate
(including by way of furnishing information) or encourage the making by any
Person (other than the other parties hereto) of any proposal, offer or inquiry
(including any proposal from or offer to its shareholders) that constitutes, or
could reasonably be expected to lead to, a proposal for any merger,
reorganization, share exchange, tender offer, exchange offer, consolidation,
recapitalization, liquidation, dissolution, joint venture or other business
combination involving the Company or any of its Subsidiaries, or any purchase of
10% or more of the capital stock or a material portion of the assets of the
Company or any of its Subsidiaries (in each case, a "Competing Transaction");
(ii) participate in any discussions or negotiations regarding,
or furnish or disclose to any Person any information with respect to or in
furtherance of, or take any other action to facilitate any inquiries with
respect, to any Competing Transaction; or
(iii) execute or enter into any agreement, understanding or
arrangement with respect to any Competing Transaction, or approve or recommend
or propose to approve or recommend any Competing Transaction or any agreement,
understanding or arrangement relating to any Competing Transaction (or resolve
or authorize or propose to agree to do any of the foregoing actions);
provided, however, that:
(A) at any time prior to such time, if any, that the Company
Requisite Vote shall have been received, the Company or Stockholder may take any
action described in the foregoing clause (ii) in respect of any Person, but only
if (1) such Person has delivered an unsolicited bona fide written proposal for a
Competing Transaction that, in the good faith judgment of the Company's Board of
Directors (or any authorized committee thereof), after consultation with its
44
financial advisors, is a Superior Proposal or is reasonably likely to be a
Superior Proposal and (2) the Board of Directors of the Company (or any
authorized committee thereof) determines in good faith based upon the advice of
counsel that the failure to do so would likely be a violation of its fiduciary
duties under applicable Law; provided, further, that (x) prior to the Company or
Stockholder furnishing any confidential information to such Person, such Person
shall have entered into a confidentiality agreement with the Company and
Stockholder in substance substantially similar to and no more favorable to such
Person than the Confidentiality Agreement and (y) the Company and Stockholder
shall promptly notify (but in no event later than 48 hours) Purchaser of any
such inquiries, proposals or offers received by, any such information requested
from, or any such discussions or negotiations sought to be initiated or
continued with, any of its Representatives indicating, in connection with such
notice, the name of such Person and the material terms and conditions of any
inquiries, proposals or offers, and shall keep Purchaser reasonably informed as
to the status thereof and of any modifications to such inquiries, proposals or
offers. Each of the Company and Stockholder agrees that it and its respective
Subsidiaries will not enter into any confidentiality agreement with any Person
subsequent to the date of this Agreement which prohibits the Company or
Stockholder from providing such information to Purchaser. The Company agrees
that neither it nor any of its Subsidiaries shall terminate, waive, amend or
modify any provision of any standstill or confidentiality agreement relating to
the sale of the Company to which it or any of its Subsidiaries is a party and
that it and its Subsidiaries shall enforce the provisions of any such agreement
by appropriate commercially reasonable action.
(B) the Company and Stockholder may enter into any agreement
or arrangement (other than a confidentiality agreement, which may be entered
into if the conditions of clause (A) above have been met) regarding any such
Competing Transaction, or the Company's Board of Directors (or any authorized
committee thereof) may approve or recommend to its stockholders (or resolve to
do so), or publicly propose to approve or recommend to its stockholders, an
unsolicited bona fide written proposal for a Competing Transaction or make a
Non-Recommendation Determination in connection with a Superior Proposal, but
only if (1) the Company and its Subsidiaries have complied with their
obligations under this Section 6.06, (2) the Company has first given Purchaser
at least three Business Days to respond to such Competing Transaction after the
Company has notified Purchaser that, in the absence of any further action by
Purchaser, (i) in the good faith judgment of the Company's Board of Directors
(or any authorized committee thereof), after consultation with its financial
advisors, the Company's Board of Directors (or any authorized committee thereof)
has concluded such Competing Transaction is a Superior Proposal and (ii) the
Company's Board of Directors (or any authorized committee thereof), has
determined in good faith and upon the advice of counsel, that it is required to
take such action in order to comply with its fiduciary duties under applicable
Law, and in each case given due consideration to any amendments or modifications
to this Agreement proposed by Purchaser during such three Business Days period;
and (3) in the event the Company and Stockholder intend to enter into any such
agreement or arrangement (other than a confidentiality agreement that may be
45
entered into if the conditions of clause (A) above have been met) regarding any
such Competing Transaction, the Company has previously terminated this Agreement
in accordance with Section 8.01(c)(ii) hereof and simultaneously paid the
Company Termination Fee pursuant to Section 8.03(b) hereof;
(C) nothing herein shall limit the Company's ability to
comply in good faith, to the extent applicable, with Rules 14d-9 and 14e-2 of
the Exchange Act with regard to a tender or exchange offer or to make any
disclosure required by applicable Law that the Company's Board of Directors (or
any authorized committee thereof) determines in good faith upon the advice of
counsel is required by applicable Law; provided, however, that neither the
Company nor the Company's Board of Directors (nor any committee thereof) shall
(i) recommend that the stockholders of the Company tender their Company Common
Stock in connection with any such tender or exchange offer (or otherwise approve
or recommend any Competing Transaction) or (ii) withdraw or modify the Company
Recommendation, unless in each case the requirements of this Section 6.06 shall
have been satisfied.
(b) For the purposes of this Agreement, "Superior Proposal" means a
bona fide, written proposal by a third party for a Competing Transaction not
solicited in violation of this Section 6.06 that is on terms that the Company's
Board of Directors (or any authorized committee thereof) determines in good
faith, after consultation with its counsel and financial advisors, would, if
consummated, result in a transaction that would be more favorable to the Company
and its stockholders (taking into account such factors as the Company's Board of
Directors (or any authorized committee thereof) in good ▇▇▇▇▇ ▇▇▇▇▇ relevant,
including the identity of the offeror and all legal, financial, regulatory and
other aspects of the proposal, including the terms of any financing and the
likelihood that the transaction will be consummated) than the transactions
contemplated by this Agreement; provided that to be a Superior Proposal, the
consummation of one or more steps in a Competing Transaction must result in a
third party (or the shareholders of such third party) acquiring, directly or
indirectly, more than 50% of the Company Common Stock (or the surviving or
ultimate parent entity in such transaction) or all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole.
(c) The Company and Stockholder will, and will cause their
Subsidiaries and their respective Representatives to, cease and cause to be
terminated immediately all existing discussions or negotiations with any Persons
conducted on or before the date hereof with respect to any Competing Transaction
and shall request that all confidential information previously furnished to any
such third parties be returned or destroyed promptly in accordance with
confidentiality agreements with such third parties. Purchaser acknowledges that,
prior to the date of this Agreement, the Company and Stockholder solicited or
caused to be solicited by its financial advisors indications of interest and
proposals for a Competing Transaction.
Section 6.07. Commercially Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each party will use its commercially
reasonable efforts (except where a different efforts standard is specifically
contemplated by this Agreement, in which case such different standard shall
46
apply) to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws and Orders
to consummate the transactions contemplated by this Agreement.
Section 6.08. Regulatory Matters.
(a) As soon as practicable, and in any event within twenty (20)
Business Days after the date hereof, (i) each of Purchaser and Stockholder shall
file any Notification and Report Forms and related material required to be filed
by it with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act, and Purchaser, Stockholder and
the Company shall make any similar required competition law filings under any
other applicable Antitrust Laws with respect to the transactions contemplated by
this Agreement and shall promptly make any further filings pursuant thereto that
may be necessary, proper or advisable, and (ii) the Company shall make an
application with the Department of State relating to the registration of the
Company or any of its Subsidiaries as an exporter under ITAR (which application
shall request that any related ITAR licenses relating to the Company or any of
its Subsidiaries as an exporter under ITAR be transferred to the Company or any
of its Subsidiaries upon the Stock Purchase Closing Date).
(b) As soon as practicable, and in any event within twenty (20)
Business Days after the date hereof, each of Stockholder, Purchaser and the
Company shall make, and shall cause its Subsidiaries to make, all necessary
filings with or applications to any Governmental Authority that has issued a
Company Permit with respect to the transactions contemplated by this Agreement,
including any necessary applications to the FCC for its consent to the
transactions contemplated hereby with respect to a Company Permit issued by the
FCC (the "FCC Consent Application").
(c) Purchaser, Stockholder and the Company shall: (i) use their
reasonable best efforts to obtain prompt termination of any waiting period under
the HSR Act (including any extension of the initial thirty (30) day waiting
period with respect to the transactions contemplated by this Agreement); (ii)
furnish to the other parties such information and assistance as such parties
reasonably may request in connection with the preparation of any submissions to,
or agency proceedings by, any Governmental Authority under any applicable
Antitrust Law; (iii) keep the other parties promptly apprised of any
communications with, and inquiries or requests for information from, such
Governmental Authorities in connection therewith; (iv) permit the other parties
to review any material communication given by it to, and consult with the other
parties in advance of any meeting or conference with, any such Governmental
Authority or, in connection with any proceeding by a private party, with any
other Person, and to the extent permitted by such applicable Governmental
Authority or other Person, give the other parties the opportunity to attend and
participate in such meetings and conferences; and (v) use their reasonable best
efforts to cause the condition set forth in Sections 2.03(c)(ii) to be
satisfied.
47
(d) Each of the Company, Stockholder and Purchaser shall, and shall
cause its Subsidiaries to, (i) use reasonable best efforts to diligently
prosecute all applications with the FCC, including the FCC Consent Application,
and all similar foreign Governmental Authorities for consent to the transactions
contemplated herein and to provide all appropriate filings and notifications to
foreign Governmental Authorities, (ii) furnish to the other parties such
information and assistance as such parties reasonably may request in connection
with the preparation or prosecution of any such applications, (iii) keep the
other parties promptly apprised of any communications with, and inquiries or
requests for information from, such Governmental Authorities with respect to the
transactions contemplated hereby, and (iv) use its reasonable best efforts to
cause the condition set forth in Section 2.03(c)(iii) of this Agreement to be
satisfied.
(e) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.08(a), (b), (c) and (d), each party agrees to
use its reasonable best efforts to address such objections, if any, as may be
asserted with respect to the transactions contemplated hereby under the
Communications Act of 1934, as amended, the Telecommunications Act of 1996, any
rule, regulation or policy of the FCC, and/or any statute, rule, regulation or
policy of any other Governmental Authority with respect to the operation of
channels of radio communication and/or the provision of communications services
(including the provision of direct-to-home video programming) (collectively,
"Communications Regulation") or any applicable Antitrust Law. In connection with
the foregoing, each party agrees to cooperate and use its reasonable best
efforts to assist in any defense by any other party hereto of the transactions
contemplated by this Agreement before any Governmental Authority reviewing the
transactions contemplated by this Agreement, including by promptly providing
such information as may be reasonably requested by such Governmental Authority
or such assistance as may be reasonably requested by the other party hereto in
such defense.
(f) If any objections are asserted with respect to the transactions
contemplated hereby under any applicable Antitrust Law, Communications
Regulation or any law relating to ITAR, or if any suit is instituted by any
Governmental Authority or any private party challenging any of the transactions
contemplated hereby as violative of any applicable Antitrust Law or
Communications Regulation, the parties shall use their reasonable best efforts
to resolve any such objections or challenge as such Governmental Authority or
private party may have to such transactions under such law so as to permit
consummation of the transactions contemplated by this Agreement. In furtherance
of the parties' obligations under this Section 6.08, Purchaser and the Company
shall be required to (and, to the extent required by any Governmental Authority,
shall cause, in the case of Purchaser, its current and future Controlled
Affiliates to and, in the case of the Company, its current and future affiliates
to), propose, negotiate, commit to and enter into one or more settlements,
undertakings, conditions, consent decrees, stipulations and other agreements
with or to one or more Governmental Authorities (each, a "Settlement") in
connection with the transactions contemplated by this Agreement (including
obtaining the requisite consent of such Governmental Authorities), including one
or more Settlements that require the Company or Purchaser to restructure the
operations of, and sell or otherwise divest or dispose of its assets and/or the
48
assets of, in the case of Purchaser, its current and future Controlled
Affiliates and, in the case of the Company, its current and future affiliates
(other than any requirement to divest or dispose of capital stock of the Company
owned by Stockholder); provided, however, that (A) the Company shall not take
any of the foregoing actions without the consent of Purchaser, which shall not
be unreasonably withheld, (B) the Purchaser shall not take any of the foregoing
actions without the consent of the Company and Stockholder if such actions would
bind the Company to do something irrespective of whether the Stock Purchase
Closing occurs, and neither the Purchaser nor any of its affiliates shall be
required to take (or direct the taking of) any of the foregoing actions or any
other action contemplated by this Section 6.08 that would reasonably be expected
to have a material adverse effect on the business or operations of Purchaser and
the Company and its Subsidiaries taken as a whole, or any material affiliate of
Purchaser, in each case with such Person's Subsidiaries taken as a whole, and
(C) neither the Company nor any of its affiliates shall be required to take (or
direct the taking of) any of the foregoing actions or any other action
contemplated by this Section 6.08 that would reasonably be expected to have a
material adverse effect on the business or operations of the Company and its
Subsidiaries taken as a whole.
(g) Notwithstanding anything to the contrary herein, nothing in this
Section 6.08 shall (i) limit either the Company's or Purchaser's right to
terminate this Agreement pursuant to Sections 8.01(b)(i) or 8.01(b)(ii) hereof
so long as such party has complied in all material respects with its obligations
under this Section 6.08, or (ii) require any party to amend this Agreement or to
waive or forbear from exercising any of its rights or remedies hereunder or
under this Agreement.
Section 6.09. Cooperation. Without limiting the generality of Section
6.08, Purchaser, Stockholder and the Company shall together, or pursuant to an
allocation of responsibility to be agreed between them, coordinate and cooperate
(i) in connection with the preparation of the Offer Documents, and (ii) in
seeking any actions, consents, approvals or waivers of any Governmental
Authority as contemplated hereby or making any such filings, furnishing
information required in connection therewith or with the Offer Documents and
seeking timely to obtain any such actions, consents, approvals or waivers.
Section 6.10. Public Announcements. So long as this Agreement is in
effect, Purchaser, Stockholder and the Company will consult with each other
before issuing any press release or making any SEC filing or other public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable Law (in which case the issuing
party shall use its reasonable best efforts to consult with the other party
before issuing any such press release or making any such SEC filing or public
statement), will not issue any such press release or make any such SEC filing or
other public statement prior to such consultation and providing the other party
with a reasonable opportunity to comment thereon.
49
Section 6.11. Director and Officer Liability.
(a) From and after the Stock Purchase Closing Date, the Bylaws and
Certificate of Incorporation of the Company shall contain provisions no less
favorable with respect to indemnification of present and former directors and
officers of the Company than those set forth in the Company's Bylaws and
Restated Certificate of Incorporation on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Stock Purchase Closing Date in any manner that would
adversely affect the rights thereunder of the individuals who at the Stock
Purchase Closing are present or former directors or officers of the Company,
unless such modification is required after the Stock Purchase Closing by
applicable Law. Stockholder shall obtain as of the Effective Time "tail"
insurance policies with a claims period of at least six years from the Stock
Purchase Closing with respect to the directors' and officers' liability
insurance in amount and scope at least as favorable as the coverage applicable
to the Company's director's and officers for the period from December 23, 2003
through the Stock Purchase Closing Date. For the period prior to December 23,
2003, coverage is provided pursuant to the terms of the Separation Agreement by
and between Stockholder and General Motors Corporation.
(b) Purchaser agrees that for six years after the Stock Purchase
Closing Date, it shall cause the Company and its Subsidiaries to, indemnify each
Person who is now, or has been at any time prior to the date hereof, a director
or officer of the Company or of any of its Subsidiaries, and each of their
successors and assigns (individually an "Indemnified Party" and collectively the
"Indemnified Parties"), with respect to any claim, liability, loss, damage,
judgment, fine, penalty, amount paid in settlement or compromise, cost or
expense (including reasonable fees and expenses of legal counsel), against any
Indemnified Party in his or her capacity as a officer or director of the Company
or its Subsidiaries, whenever asserted or claimed, based in whole or in part on,
or arising in whole or in part out of, any facts or circumstances occurring at
or prior to the Stock Purchase Closing Date whether commenced, asserted or
claimed before or after the Stock Purchase Closing Date, including liability
arising under the Securities Act, the Exchange Act or any other Law and
including any liability arising out of or pertaining to the transactions
contemplated by this Agreement, in each case to the same extent as provided in
the Company's Bylaws or Restated Certificate of Incorporation or any other
applicable contract or agreement in effect on the date of this Agreement. In the
event of any claim, liability, loss, damage, judgment, fine, penalty, amount
paid in settlement or compromise, cost or expense described in the preceding
sentence, Purchaser shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties promptly after statements are received in
advance of settlement, judgment or other resolution thereof to such Indemnified
Party upon request reimbursement of documented expenses reasonably incurred,
provided the applicable Indemnified Parties provide an undertaking to repay all
advanced expenses if it is finally judicially determined that such Indemnified
Parties are not entitled to indemnification.
Section 6.12. Employee Benefits. For a period of not less than twelve
(12) months following the Stock Purchase Closing Date, Purchaser shall, or shall
cause the Company and its other Subsidiaries to, maintain (i) employee benefit
50
plans, programs and arrangements, salaries and bonus programs (excluding
equity-based plans and retention bonus programs) for each individual who was an
employee (and who, after the Stock Purchase Closing Date, continues to be an
employee) or retiree of the Company or any Subsidiary of the Company immediately
prior to the Stock Purchase Closing Date, which are, in the aggregate, no less
favorable than those provided pursuant to Company Plans (excluding equity-based
plans and retention bonus programs) as of immediately before the Stock Purchase
Closing Date, (ii) employee benefit plans, programs and arrangements, salaries
and bonus programs that are triggered upon the termination of employment for
each individual who was an employee or retiree of the Company or any Subsidiary
of the Company immediately prior to the Stock Purchase Closing Date (regardless
of whether such individual continues to be an employee after the Stock Purchase
Closing Date), which are, in the aggregate, no less favorable than those
provided pursuant to Company Plans as of immediately before the Stock Purchase
Closing Date and (iii) contribution levels and loan provisions under the defined
contribution plans of the Company and its Subsidiaries, in each case, at levels
which are no less favorable than those provided as of immediately prior to the
Stock Purchase Closing Date. Each Person who is an employee or former employee
of the Company or its Subsidiaries immediately prior to the Stock Purchase
Closing Date (a "Covered Company Employee") shall be given credit for all
service with the Company or any of its Subsidiaries (and service credited by the
Company or any of its Subsidiaries) prior to the Stock Purchase Closing Date (to
the extent recognized as service under corresponding Company Plans in effect
immediately before the Stock Purchase Closing Date) for crediting service for
purposes of eligibility to participate, vesting and determination of level of
benefits, under (i) all employee benefit plans, programs and arrangements
maintained by or contributed to by Purchaser and its Subsidiaries (including,
after the Stock Purchase Closing Date, the Company) in which such Covered
Company Employees become participants, and (ii) severance plans for purposes of
calculating the amount of each Covered Company Employee's severance benefits.
After the Stock Purchase Closing Date, Purchaser and the Company shall (i) waive
all limitations as to preexisting conditions and waiting periods with respect to
participation and coverage requirements applicable to the Covered Company
Employees under any welfare benefit plans that such Covered Company Employees
may be eligible to participate in after the Stock Purchase Closing Date, to the
extent such waivers are consistent with the welfare benefit plans in which the
Covered Company Employees participated immediately prior to the Stock Purchase
Closing Date, and (ii) provide each Covered Company Employee with credit for any
co-payments and deductibles paid during the portion of the relevant plan year
prior to the Stock Purchase Closing Date in satisfying any applicable deductible
or out-of-pocket requirements under any welfare plans that such Covered Company
Employees are eligible to participate in after the Stock Purchase Closing Date.
Without limiting the generality of the foregoing, after the Stock Purchase
Closing Date, Purchaser shall cause the Company to honor those employment,
termination and severance agreements, and all similar memoranda, in each case,
to which the Company or any of its Subsidiaries is a party, set forth in Section
6.12 of the Company Disclosure Schedule.
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Section 6.13. Cooperation with Financing. Prior to the Closing, the
Company shall provide, and shall cause its Subsidiaries to, and shall use its
commercially reasonable efforts to cause the respective officers, employees,
representatives and advisors, including legal and accounting, of the Company and
its Subsidiaries to, provide all cooperation reasonably requested by Purchaser
in connection with the financing of the transactions contemplated by this
Agreement, including, without limitation, using commercially reasonable efforts
to cause (i) appropriate officers and employees to be available on a customary
basis to meet with prospective lenders and investors in presentations, meetings,
road shows and due diligence sessions, to assist with the preparation of
disclosure documents in connection therewith, to execute and deliver any pledge
and security documents, other definitive financing documents, or other
certificates, legal opinions or documents as may be reasonably requested by
Purchaser, and (ii) its independent accountants and counsel to provide
assistance to Purchaser, including providing consent to Purchaser to prepare and
use their audit reports relating to the Company and its Subsidiaries and, at the
cost of Purchaser, to provide any necessary "comfort letters".
Section 6.14. Employee Solicitation. For a period of five (5) years
from and after the Stock Purchase Closing Date, Stockholder shall not, and shall
cause its Subsidiaries not to (i) cause, solicit, induce or encourage any
executive officers of the Company or its Subsidiaries who are executive officers
as of the Stock Purchase Closing Date, or become executive officers of the
Company to leave such employment or (ii) hire any such persons after the Stock
Purchase Closing Date.
Section 6.15. Merger Sub. Stockholder will take all action necessary
to cause Merger Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement.
Merger Sub shall not engage in any business which is not in connection with the
Merger or other transactions contemplated hereby.
Section 6.16. Insurance. To the extent that (i) any insurance
policies controlled by Stockholder (the "Stockholder Insurance Policies"), cover
any loss, liability, claim, damage or expense relating to the Company or any of
its Subsidiaries (the "Subject Liabilities") and relating to or arising out of
occurrences prior to the Stock Purchase Closing Date, and (ii) claims were made
prior to the Stock Purchase Closing Date or the Stockholder Insurance Policies
permit claims to be made thereunder with respect to the Subject Liabilities
relating to or arising out of occurrences prior to the Stock Purchase Closing
Date (in either case, "Subject Claims"), Stockholder shall cooperate with the
Purchaser in submitting Subject Claims on behalf of the Company or any of its
Subsidiaries under the Stockholder Insurance Policies and Purchaser or the
Company shall reimburse the Stockholder for all out-of-pocket costs and expenses
(including out-of-pocket legal and administrative costs and attorneys' fees
under Stockholder Insurance Policies) actually incurred by the Stockholder as a
result of Subject Claims made under the Stockholder Insurance Policies.
Stockholder shall cooperate with the Company and the Purchaser to assist in the
prosecution of the Subject Claims and facilitate direct communication with the
52
insurance carriers and to have proceeds to which the Company is entitled for the
Subject Claims to be paid directly to the Company. To the extent Stockholder
receives any insurance proceeds for any Subject Claims made under the
Stockholder Insurance Policies, Stockholder will promptly pay such insurance
proceeds to the Company, net of any unreimbursed costs and expenses described
above.
Section 6.17 Debt Financing Confirmation. Purchaser hereby
acknowledges that it shall use its commercially reasonable efforts to obtain
from its financing sources under the Debt Commitment Letter a letter, dated the
Merger Closing Date, to the effect that such financing sources are unaware of
any reason they would be unable to deliver to the Company the funds provided for
in the Debt Commitment Letter on the Stock Purchase Closing Date.
Section 6.18 Satellite Failure.
(a) The Stockholder, Company and Purchaser acknowledge that as of
April 19, 2004, the Company revenue projections for the SBS 6 and PAS-5
satellites (the "Revenue Projections") are as set forth in Section 6.18 of the
Company Disclosure Schedule.
(b) It is further acknowledged that there are certain technical
issues with each of these satellites that could reduce or eliminate the ability
to use either or both of these satellites to generate the anticipated revenue.
(c) The Company shall deliver to Purchaser and Stockholder an
officers certificate signed by its Chief Operating Officer and its Chief
Financial Officer one Business Day prior to the expected Stock Purchase Closing
Date, which shall certify as to whether there has been a Total Loss of SBS 6 or
PAS-5 prior to the Stock Purchase Closing Date (such a Total Loss being a
"Pre-Close Failure"). If such officers certificate certifies that a Pre-Close
Failure has not occurred, there shall be no payment made under this Section
6.18. If such certificate identifies a Pre-Close Failure, it shall also set
forth the amount of shortfall in Revenue Projections that directly resulted from
such Pre-Close Failure as reflected in Section 6.18 of the Company Disclosure
Schedule (such aggregate revenue shortfall, the "Failure Revenue Shortfall").
The parties further agree as follows:
(i) If the aggregate amount of the Failure Revenue Shortfall
from SBS 6 and PAS-5 is projected to exceed $5 million as set forth in the
officers certificate described in paragraph (c), then Stockholder shall pay the
entire amount of that Failure Revenue Shortfall (including the first $5 million)
to the Company simultaneously with the Stock Purchase Closing (such amount, the
"Satellite Failure Amount"). If the aggregate amount of the Failure Revenue
Shortfall is less than or equal to $5 million, then no payment shall be made
under this Section 6.18; and
(ii) If a Satellite Failure Amount is paid under this Section
6.18 and subsequent to the Stock Purchase Closing the Company receives any
additional revenue with respect to the satellite or satellites that suffered a
Pre-Close Failure, the Company shall promptly deliver to the Stockholder the
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amount of any such revenue. In this connection, the Company shall use
commercially reasonable efforts in good faith to restore service on the failed
satellite or satellites and, if so restored, to lease the transponders on such
satellites for the benefit of Stockholder, consistent with customary practice
applicable to the Company's obligations to insurers in respect of insurance
payments for a Total Loss.
Section 6.19 Actual Net Debt
(a) One Business Day prior to the expected Stock Purchase Closing
Date, the Company shall deliver to Purchaser and Stockholder a certificate of
its Chief Financial Officer certifying the net debt of the Company at the close
of business on the last Business Day immediately preceding the Stock Purchase
Closing Date; provided, however, for the purposes of such certification, net
debt shall exclude all accrued interest for the period from the Merger Closing
Date through the Stock Purchase Closing Date (the "Actual Net Debt"). The Actual
Net Debt shall be determined in accordance with GAAP and, subject to the proviso
to the previous sentence, in a manner consistent with the Company's
determination of net debt on the Company Financials and Section 6.19 of the
Company Disclosure Schedule.
(b) The parties, using the Actual Net Debt amount, shall determine
whether any payment is required to be made to the Company under this Section
6.19 on the Stock Purchase Closing Date as follows: the parties shall calculate
the sum of (i) the net debt projection for the immediately preceding calendar
month, as listed on Section 6.19 of the Company Disclosure Schedule, multiplied
by a fraction, the numerator of which is the number of days remaining in the
month in which the Stock Purchase Closing Date occurs, including the Stock
Purchase Closing Date, and the denominator of which is the total number of days
in such month and (ii) the net debt projection for the month in which the Stock
Purchase Closing Date occurs, as listed on Section 6.19 of the Company
Disclosure Schedule, multiplied by a fraction, the numerator of which is the
number of days elapsed in such month through the day immediately preceding the
Stock Purchase Closing Date and the denominator of which is the total number of
days in the current month. The sum of (i) the amount calculated above and (ii)
Thirty-Five Million Dollars ($35,000,000) shall be referred to herein as the
"Target Net Debt Amount." To the extent the Actual Debt Amount exceeds the
Target Net Debt Amount (any such excess, the "Debt Adjustment Amount"),
Stockholder shall, simultaneously with the Stock Purchase Closing, pay the Debt
Adjustment Amount to the Company.
ARTICLE VII
CONDITIONS TO STOCK PURCHASE CLOSING
Section 7.01. Conditions to the Obligations of Stockholder and
Purchaser. The respective obligations of Purchaser and Stockholder to consummate
the sale and purchase of the Shares contemplated by this Agreement are subject
54
to the satisfaction (or if permitted by applicable Law waiver by each party for
whose benefit the applicable condition exists) of each of the following
conditions:
(a) No Order. No temporary restraining order, preliminary or
permanent injunction or other order or decree issued by a court of competent
jurisdiction located in the United States or in another jurisdiction outside the
United States in which the Company and its Subsidiaries, taken as a whole,
engage in substantial business activities that prevents the consummation of the
sale and purchase of the Shares as contemplated by this Agreement shall have
been issued after the Effective Date and remain in effect, and no Law enacted
after the Effective Time shall prohibit or make illegal the consummation of the
sale and purchase of the Shares as contemplated by this Agreement;
(b) Tax Separation Agreement. The Tax Separation Agreement and the
Transition Services Agreement shall have been entered into and shall be in full
force and effect;
(c) Merger. The Merger shall have occurred; and
(d) Debt Offer. At or prior to the Stock Purchase Closing Date, the
requisite consents shall have been received under the Debt Offer in order to
permit, among other things, the payment of the Repurchase Amount, and to permit
the Company and the trustee to execute and deliver the supplemental indenture
described in Section 2.02 to the indenture governing the 8.50% Senior Notes.
Section 7.02. Conditions to the Obligations of Purchaser. The
obligation of Purchaser to purchase the Shares is subject to the fulfillment, on
or prior to the Stock Purchase Closing Date, of each of the following conditions
(any or all of which may be waived by Purchaser in whole or in part to the
extent permitted by applicable Law):
(a) Representations and Warranties. The representations and
warranties of the Stockholder set forth in Article V herein shall be true and
correct as of the Effective Time and at and as of the Stock Purchase Closing
Date as though made on and as of the Stock Purchase Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except to the extent that all of the
breaches of such representations and warranties collectively (without giving
effect to any materiality or similar qualification) have not had and would not
reasonably be expected to result in a material adverse impact on Stockholder's
ability to consummate the transactions contemplated by this Agreement;
(b) Performance of Obligations of the Company and Stockholder. Each
of the Company and Stockholder shall have performed in all material respects all
of its obligations hereunder to be performed by it on or prior to the Stock
Purchase Closing Date;
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(c) Officer's Certificates. Each of the Company and Stockholder shall
have furnished Purchaser with a certificate dated the Stock Purchase Closing
Date signed on its behalf by its Chief Executive Officer or the Chief Financial
Officer to the effect that the conditions set forth in Sections 7.02(a) and (b)
have been satisfied;
(d) Stock Certificates. Stockholder shall have delivered, or caused
to be delivered, to Purchaser stock certificates representing the Shares, duly
endorsed in blank or accompanied by stock transfer powers;
(e) Director Resignations. Purchaser shall have received the written
resignations of each of the directors of the Company or Stockholder shall have
executed a written consent to remove such directors;
(f) No Company Material Adverse Effect. There shall not have occurred
after the Effective Time an event, change, circumstance or effect that has had
or is reasonably likely to have a Company Material Adverse Effect;
(g) Debt Financing. The Company shall have received the funds in the
amount contemplated by the Debt Commitment Letter to be delivered as of the
Stock Purchase Closing Date on the terms and conditions set forth therein;
(h) Debt Adjustment Amount. Stockholder shall have paid to the
Company the Debt Adjustment Amount, if any; and
(i) Satellite Failure Amounts. Stockholder shall have paid to the
Company the Satellite Failure Amount, if any.
Section 7.03. Conditions to the Obligations of Stockholder. The
obligations of Stockholder to sell the Shares to Purchaser is subject to the
fulfillment, on or prior to the Stock Purchase Closing Date, of each of the
following conditions (any or all of which may be waived by Stockholder in whole
or in part to the extent permitted by applicable Law):
(a) Representations and Warranties. The representations and
warranties of Purchaser set forth in Article IV herein shall be true and correct
as of the date of the Effective Date and at and as of the Stock Purchase Closing
Date as though made on and as of the Stock Purchase Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except to the extent that all of the
breaches of such representations and warranties collectively (without giving
effect to any materiality or similar qualification) have not had and would not
reasonably be expected to result in a material adverse impact on the Purchaser's
ability to consummate the transactions contemplated by this Agreement; provided,
however, that any and all actions required to be taken pursuant to Section 6.08
and the effects thereof on the representations and warranties of Purchaser set
forth in Article IV shall be ignored for purposes of this Section 7.03(a);
56
(b) Performance of Obligations of the Purchaser. Purchaser shall have
performed in all material respects all of its obligations hereunder to be
performed by it on or prior to the Stock Purchase Closing Date;
(c) Officer's Certificate. Purchaser shall have furnished the Company
with a certificate dated the Stock Purchase Closing Date signed on its behalf by
its Chief Executive Officer or the Chief Financial Officer to the effect that
the conditions set forth in Sections 7.03(a) and (b) have been satisfied; and
(d) Repurchase. Stockholder shall have received the Repurchase Amount
in accordance with Section 2.04; and
(e) Payment of Purchase Price. Purchaser shall have delivered, or
caused to be delivered, to Stockholder evidence of the wire transfers referred
to in Section 1.03 hereof.
ARTICLE VIII
TERMINATION
Section 8.01. Termination. This Agreement may be terminated at any
time prior to the Stock Purchase Closing (except in the case of (c)(ii),
notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent duly authorized by the respective
Boards of Directors of the Company, Purchaser and Stockholder;
(b) by either the Company, Purchaser or Stockholder if:
(i) the transactions have not been consummated by December 15,
2004 (the "Outside Date"); provided, however, that the right to terminate this
Agreement under this Section 8.01(b)(i) shall not be available to any party
whose failure to perform any material covenant or obligation under this
Agreement has been the cause of or resulted in the failure of the Stock Purchase
Closing to occur on or before such date;
(ii) (A) the FCC shall have denied or dismissed any FCC Consent
Application, or shall have designated any FCC Consent Application for hearing,
excepting any denials or designations with respect to any Company Permit issued
by the FCC that are immaterial to the assets or business of the Company and its
Subsidiaries taken as a whole; or (B) five (5) Business Days shall have elapsed
following such time as any permanent injunction or other similar order of a
court of competent jurisdiction or other competent Governmental Authority (other
than the FCC), in each case located in the United States, preventing the
consummation of the transactions contemplated by this Agreement shall have been
entered (so long as such permanent injunction or similar order is still in
effect at the expiration of such five (5) Business Day period), regardless of
whether such order is appealable or has been appealed and, prior to such
57
termination, the parties shall have used reasonable best efforts to resist,
resolve or lift, as applicable, such injunction or other similar order; or
(iii) provided that there shall have occurred a duly held
meeting of the Company's stockholders (including any adjournment or postponement
thereof) at which a vote was taken of the Company's stockholders in accordance
with the DGCL, the Company Requisite Vote shall not have been obtained at the
Company Stockholders' Meeting; or
(c) in the case of clause (i) below, by Stockholder, and, in the case
of clauses (i) and (ii) below, by the Company if:
(i) a breach by Purchaser of any representation, warranty,
covenant or agreement contained in this Agreement shall have occurred, which
breach, in the aggregate with all other such breaches, if any, would give rise
to a failure of the conditions set forth in Section 2.03(d)(ii) or Section
2.03(d)(iii) hereof and which is not cured within 30 days following written
notice to the party committing such breach; or
(ii) prior to the Company Stockholders' Meeting, the Company's
Board of Directors (or any authorized committee thereof) has resolved to approve
and recommend a Superior Proposal that caused it to effect a Non-Recommendation
Determination after having complied with the provisions of Section 6.04; or
(d) by Purchaser if:
(i) (A) a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement shall have occurred, which
breach, in the aggregate with all other such breaches, if any, would give rise
to a failure of the conditions set forth in Section 2.03(f)(i) or Section
2.03(f)(ii) hereof and which is not cured within 30 days following written
notice to the party committing such breach, or (B) a breach by Stockholder or
Merger Sub of any representation, warranty, covenant or agreement contained in
this Agreement shall have occurred, which breach, in the aggregate with all
other such breaches, if any, would give rise to a failure of the conditions set
forth in Section 2.03(f)(iv) or Section 2.03(f)(v) hereof and which is not cured
within 30 days following written notice to the party committing such breach; or
(ii) upon (A) a Non-Recommendation Determination or (B) the
Company's Board of Directors (or any authorized committee thereof) shall approve
or recommend (or resolved to do so) a Superior Proposal.
Section 8.02. Notice of Termination; Effect of Termination.
(a) Notice of Termination. The party desiring to terminate this
Agreement pursuant to Section 8.01 shall give written notice of such termination
to the other parties in accordance with Section 9.02, specifying the provision
hereof pursuant to which such termination is effected.
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(b) Effect of Termination. If this Agreement is terminated pursuant
to Section 8.01, this Agreement shall become void and of no effect with no
liability on the part of any party hereto, except that (i) the agreements
contained in Section 6.04, this Section 8.02, Section 8.03, Article IX and in
the Confidentiality Agreement shall survive the termination hereof and (ii) no
such termination shall relieve any party of any liability or damages resulting
from any breach by that party of this Agreement.
Section 8.03. Expenses; Termination Fees.
(a) Expenses. Except as otherwise specified in this Section 8.03 or
agreed in writing by the parties, all fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees, cost or expense
whether or not the transactions contemplated hereby are consummated, except that
(i) Purchaser shall bear and pay the filing fees for the premerger notification
and report forms under the HSR Act and any similar Antitrust Laws and (ii) any
filing or other fees with respect to the FCC Consent Application shall be
equally borne by Purchaser and the Company.
(b) Termination Fee. If this Agreement is terminated:
(i) by Purchaser, Stockholder or the Company pursuant to Section
8.01(b)(i), and at or prior to such time (A) a Competing Transaction involving
the Company shall have been commenced, publicly disclosed or communicated to the
Board of Directors of the Company and not abandoned, and (B) within twelve (12)
months of any such termination, the Company or any of its affiliates either
enters into a definitive agreement regarding a Competing Transaction, or
consummates a transaction that would constitute a Competing Transaction, with
the Person, or one of its affiliates, who made such Competing Transaction
proposal, then the Company shall pay to Purchaser, in cash by wire transfer in
immediately available funds to an account designated by Purchaser, on the same
day as the execution of a definitive agreement with respect to the referenced
Competing Transaction, a termination fee and expense reimbursement in an
aggregate amount equal to $100,000,000 (One Hundred Million Dollars) (the
"Company Termination Fee");
(ii) by Purchaser, Stockholder or the Company pursuant to
Section 8.01(b)(iii), and (A) at or prior to the time this Agreement is
terminable by either party pursuant to Section 8.01(b)(iii), a Competing
Transaction involving the Company shall have been commenced, publicly disclosed
or communicated to the Board of Directors (or any authorized committee thereof)
of the Company and not abandoned, (B) within twelve (12) months of any such
termination, the Company, or one of its affiliates, enters into a definitive
agreement (other than a confidentiality agreement) regarding a Competing
Transaction, or consummates a transaction that would constitute a Competing
Transaction, with the Person (which need not be the same Competing Transaction
as the Competing Transaction described in clause (A)) then the Company shall pay
to Purchaser the Company Termination Fee, in cash by wire transfer in
immediately available funds to an account designated by Purchaser, on the same
59
day as the execution of a definitive agreement or consummation as applicable
with respect to the referenced Competing Transaction;
(iii) by the Company or Stockholder pursuant to Section
8.01(c)(ii), then the Company shall pay to Purchaser the Company Termination
Fee, in cash by wire transfer in immediately available funds to an account
designated by Purchaser, concurrently with and as a condition to such
termination; or
(iv) by Purchaser, pursuant to Section 8.01(d)(ii)(A) (if such
Non-Recommendation Determination is made in connection with a Superior
Proposal), or 8.01(d)(ii)(B) then the Company shall pay to Purchaser the Company
Termination Fee, in cash by wire transfer in immediately available funds to an
account designated by Purchaser, no later than one (1) Business Day following
such termination.
(c) Remedies. Purchaser and the Company agree that the provisions
contained in this Section 8.03 are an integral part of the transactions
contemplated by this Agreement, that the damages resulting from the termination
of this Agreement as set forth in Section 8.03(b) of this Agreement are
uncertain and incapable of accurate calculation and that the amounts payable
pursuant to Section 8.03(b) hereof are reasonable forecasts of the actual
damages which may be incurred by the parties under such circumstances. The
amounts payable pursuant to Section 8.03(b) hereof constitute liquidated damages
and not a penalty and shall be the sole monetary remedy in the event a Company
Termination Fee is paid in connection with a termination of this Agreement on
the bases specified in Section 8.03 hereof. The parties acknowledge that in no
event shall the Company be responsible for paying the Company Termination Fee
more than once.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Certain Definitions. For purposes of this Agreement,
the following terms shall have the meanings specified in this Section 9.01:
(a) "Actual Satellite Operational Capability" means, as measured from
any date, the reasonable forecast of the total number of remaining 30-day
periods until the end of expected life for each transponder on such satellite
taking into account all known and reasonably likely Transponder Unit Failures.
(b) "Antitrust Law" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
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(c) "Business Day" means any day that is not a Saturday, a Sunday or
a day on which the commercial banks are required or permitted by law to be
closed in the City of New York in the State of New York.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Company Common Stock" means each share of common stock, par
value $0.01 per share, of the Company.
(f) "Company Intellectual Property" means (i) all domestic, foreign,
registered and pending applications for patents, trademarks, service marks,
copyrights, trade names, domain names and all material licenses running to or
from the Company or any of its Significant Subsidiaries relating to the
Company's or any of its Significant Subsidiaries' businesses or owned by the
Company or any of its Significant Subsidiaries, (ii) all material common law
trademarks, service marks, copyrights and copyrightable works (including
databases, software and Internet site content), trade names, brand names and
logos; and (iii) all trade secrets, inventions, formulae, data, improvements
know-how, confidential information, material computer programs (including any
source code and object code) documentation, engineering and technical drawings,
processes, methodologies, trade dress, and all other proprietary technology
utilized in or incidental to the businesses of the Company and its Significant
Subsidiaries and all common law rights relating to the foregoing.
(g) "Company Material Adverse Effect" means, when used with reference
to one or more events, changes, circumstances or effects, a material adverse
effect on the business, operations, assets, liabilities or financial condition
of the Company and its Subsidiaries taken as a whole, other than events,
changes, circumstances or effects that arise out of or result from (i) economic,
political or regulatory factors generally affecting the economy, financial
markets, industries or countries in which the Company or any of its Subsidiaries
operates (whether such change results from any outbreak of hostility, terrorist
activity, war or otherwise) (except to the extent such event, circumstance,
change or effect has had a disproportionate effect on the Company and its
Subsidiaries as compared to other persons in the industry in which the Company
and its Subsidiaries operates and which have a comparable mix of lines of
businesses), (ii) the occurrence of any of the events described in Section
9.01(g)(1) of the Company Disclosure Schedule and (iii) Excluded Satellite
Failures; provided that a Total Loss or a launch failure of a Core Satellite
shall automatically be deemed a Company Material Adverse Effect.
(h) "Company Material Contract" means:
(i) any "material contracts" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC, but excluding Company Plans) with
respect to the Company and its Subsidiaries;
61
(ii) indentures, credit agreements, security agreements,
mortgages, guarantees, promissory notes and Contracts relating to or evidencing
indebtedness for borrowed money of the Company or any of its Subsidiaries in
excess of $1,000,000;
(iii) any non-competition agreement or any other agreement or
obligation which limits or purports to limit in any material respect the manner
in which, or the localities in which, the business of the Company or any of its
Subsidiaries may be conducted;
(iv) any partnership or joint venture agreement to which the
Company or any of its Subsidiaries is a party and which is material to the
Company and its Subsidiaries, taken as a whole;
(v) any Contract which is reasonably likely to prohibit or
materially delay the consummation of the transactions contemplated by this
Agreement;
(vi) any material Contract with any present director or
executive officer of the Company or of any of its Subsidiaries or any
stockholder who owns or controls 10% or more of the Company's voting stock;
(vii) any Contract to acquire or launch any satellite (a
"Construction/Launch Contract");
(viii) any Contract for the provision of transponder capacity (a
"Customer Contract") with any customer for which all such Contracts have a
contracted cash backlog of $25,000,000 or more (each such customer, a "Company
Material Customer"); and
(ix) any launch and in-orbit satellite insurance policies with
respect to any Company Satellite.
(i) "Contract" means any agreement, contract, subcontract, lease,
binding understanding, indenture, note, option, warranty, purchase order,
license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof or
as may hereinafter be in effect.
(j) "Controlled Affiliate" means any Person that is an affiliate of
and controlled by Kohlberg Kravis ▇▇▇▇▇▇▇ & Co. L.P.
(k) "Core Satellite" means each Company Satellite listed in Section
9.01(g)(2) of the Company Disclosure Schedule.
(l) "Credit Agreement" means the Credit Agreement, dated as of
February 25, 2002, as amended, between the Company, Credit Suisse First Boston,
Bankers Trust Company, Allied Irish Banks plc, the Governor and Company of the
Bank of Scotland, Fuji Bank, Ltd., General Electric Capital Corporation,
Industrial Bank of Japan, Societe Generale, The Bank of New York, Metropolitan
Life Insurance Company and Credit Industrial et Commercial, as Lenders, Credit
62
Suisse First Boston, as administrative Agent, Credit Suisse First Boston, as
Sole Bookrunner and Sole Lead Arranger, Credit Suisse First Boston and Deutsche
Banc ▇▇▇▇ ▇▇▇▇▇, Inc., as Joint Arrangers, Deutsche Banc ▇▇▇▇ ▇▇▇▇▇, Inc., as
Syndication Agent, and Societe Generale, as Documentation Agent.
(m) "Debt Offer Documents" means all necessary and appropriate
documentation in connection with the Debt Offer, including an offer to purchase,
related letter of transmittal, related consent solicitation documents and all
exhibits, amendments or supplements thereto for the Debt Offer.
(n) "Environmental Laws" means any and all federal, state, local and
foreign Law (including common law), Order or any agreement with any Governmental
Authority or other third party, relating to human health and safety, the
environment or to pollutants, contaminants, wastes or chemicals or toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
(o) "Environmental Liabilities" means any and all liabilities of or
relating to the Company or any of its Significant Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, which (i) arise under or relate to matters covered by Environmental
Laws and (ii) arise from actions occurring or conditions existing on or prior to
the Stock Purchase Closing.
(p) "Excluded Satellite Failures" means the total communications
failure or other total loss of use with respect to any Company Satellite set
forth in Section 9.01(p) of the Company Disclosure Schedule.
(q) "Hazardous Substances" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, corrosive, reactive or otherwise hazardous
substance, waste or material, or any substance having any constituent elements
displaying any of the foregoing characteristics, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance, waste or
material regulated under any Environmental Laws.
(r) "Indebtedness" means (i) indebtedness for borrowed money, whether
secured or unsecured, (ii) obligations under conditional or installment sale or
other title retention Contracts relating to purchased property, (iii)
capitalized lease obligations and (iv) guarantees of any of the foregoing of
another person provided that incentive obligations owing under Company Material
Contracts described in clause (vii) of the definition thereof shall not be
deemed to be Indebtedness.
(s) "ITAR" means the International Traffic in Arms Regulations.
(t) "know" or "knowledge" means, with respect to any party, the
actual knowledge of such party's executive officers after due inquiry.
63
(u) "Offer Documents" means the Proxy Statement and the Debt Offer
Documents.
(v) "Operating Transponders" means a transponder that has not
experienced a Transponder Unit Failure.
(w) "Permitted Person" means any Person that (x) is not in the
business of directly or indirectly owning or operating satellites, (y) is not a
non-U.S. Person and (z) would not own, directly or indirectly, individually or
in the aggregate with all other Permitted Persons, a majority of the capital
stock of the Company after the Stock Purchase Closing.
(x) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, joint venture, association,
unincorporated organization, other entity or group (as defined in the Exchange
Act).
(y) "Proxy Statement" means the proxy or information statement
(including, without limitation a Schedule 13E-3 filing, if required to be filed
under the Exchange Act) and all amendments or supplements thereto, if any,
similarly filed and mailed with respect to the Company Stockholders' Meeting.
(z) "Significant Subsidiary" means a Subsidiary of a Person that
would constitute a "significant subsidiary" within the meaning of Rule 1-02(w)
of Regulation S-X of the Exchange Act, if such Rule were applicable to such
Person.
(aa) "Stated Satellite Operational Capability" means, for each
satellite, as measured from any date, the product of (i) the number of Operating
Transponders on such satellite, and (ii) the number of remaining 30-day periods
from such date until the end of the expected life of such satellite as at such
date.
(bb) "Subsidiary" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of
which, having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or controlled
by such entity or by any one or more of its Subsidiaries.
(cc) "Tax Return" means any report, return, document, declaration or
other filing required to be supplied to any taxing authority or jurisdiction
(foreign or domestic) with respect to Taxes.
(dd) "Tax Separation Agreement" means that certain Tax Separation
Agreement by and between Stockholder and the Company dated as of the date
hereof.
64
(ee) "Taxes" means any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
or personal property, sales, withholding, social security, retirement,
unemployment, occupation, use, goods and services, service use, license, value
added, capital, net worth, payroll, profits, franchise, transfer and recording
taxes, fees and charges, and any other taxes, assessment or similar charges
imposed by any Taxing Authority and any interest or penalties or additional
amounts, if any, attributable to, or imposed upon, or with respect to, any such
taxes, charges, fees, levies or other assessments.
(ff) "Taxing Authority" means the Internal Revenue Service or any
other taxing authority, whether domestic or foreign, including any state,
county, local or foreign government or any subdivision or taxing agency thereof.
(gg) "Total Loss" means, for any satellite, (i) such satellite is
lost or is completely destroyed or (ii) Actual Satellite Operational Capability
is reduced to less than 50% of Stated Satellite Operational Capability, each as
measured on a certain date.
(hh) "Transaction Documents" means this Agreement, the Tax Separation
Agreement, the Transition Services Agreement and each other agreement, document,
or instrument or certificate contemplated by this Agreement or to be executed by
a party hereto in connection with the consummation of the transactions
contemplated by this Agreement.
(ii) "Transponder Unit Failure" means the permanent failure
(including permanently intermittent failures) of a transponder to meet
applicable performance specifications such that, after use of all available
redundancy and spare components, it is demonstrated that the transponder cannot
or will not be able to be used for commercial communications.
(jj) The following terms are defined in the Section of this Agreement
as set forth after each such term below:
Term Section/Preamble
---- ----------------
Actions............................................................3.13
Actual Net Debt.................................................6.19(a)
Agreement......................................................Preamble
Amount.............................................................2.04
Certificates................................................2.03(l)(ii)
Certificate of Merger...........................................2.03(g)
Code............................................................2.03(r)
Commitment Letters.................................................4.08
Communications Regulation.......................................6.08(e)
Company........................................................Preamble
Company Balance Sheet...........................................3.07(a)
Company Balance Sheet Date......................................3.07(a)
65
Term Section/Preamble
---- ----------------
Company Charter Documents.......................................3.01(c)
Company Common Stock.........................................2.03(k)(i)
Company Disclosure Schedule........................Article III Preamble
Company Employee................................................3.15(a)
Company Financials..............................................3.07(a)
Company Maintained Plans........................................3.15(a)
Company Non-U.S. Plans..........................................3.15(e)
Company Option................................................. 1.04(a)
Company Option Consideration....................................1.04(a)
Company Permits.................................................3.16(b)
Company Plans...................................................3.15(a)
Company Recommendation......................................6.04(a)(ii)
Company Requisite Vote..........................................3.03(a)
Company Satellite...............................................3.17(a)
Company SEC Documents..............................................3.06
Company Stockholders' Meeting................................6.04(a)(i)
Company Securities..............................................3.02(a)
Company Subsidiary Securities...................................3.02(b)
Company Termination Fee......................................8.03(b)(i)
Competing Transaction........................................6.06(a)(i)
Confidentiality Agreement.......................................6.05(a)
Covered Company Employee...........................................6.12
CSFB.........................................................2.03(c)(v)
Debt Commitment Letters............................................4.08
Debt Offer......................................................2.02(a)
DGCL............................................................2.03(a)
Dissenting Holder...............................................2.03(o)
Dissenting Shares...............................................2.03(o)
Dividend Amount....................................................2.04
Effective Time..................................................2.03(g)
Equity Letter......................................................4.08
ERISA..........................................................3.15(a)
Exchange Act.......................................................3.04
Exchange Agent...............................................2.03(l)(i)
Exchange Fund................................................2.03(l)(i)
FCC................................................................3.04
Failure Revenue Shortfall.......................................6.18(c)
FCC Consent Application.........................................6.08(b)
GAAP............................................................3.07(a)
Governmental Authority.............................................3.04
HSR Act............................................................3.04
Indemnified Party...............................................6.11(b)
Law................................................................3.05
66
Term Section/Preamble
---- ----------------
Liens..............................................................3.05
Merger..........................................................2.03(a)
Merger Closing Date.............................................2.03(b)
Merger Closing..................................................2.03(b)
Merger Consideration.........................................2.03(k)(i)
Merger Sub.....................................................Preamble
Merger Sub Charter Documents....................................5.01(b)
Non-Recommendation Determination................................6.04(b)
Order..............................................................3.05
Other Equity....................................................1.04(b)
Outside Date.................................................8.01(b)(i)
Owned Real Property.............................................3.11(a)
Pre-Close Failure...............................................6.18(c)
Pre-Closing Transactions...........................................2.01
Preferred Stock.................................................3.02(a)
Purchase Price.....................................................1.02
Purchaser......................................................Preamble
Purchaser Formation Documents...................................4.01(b)
Real Property...................................................3.11(b)
Real Property Leases............................................3.11(b)
Representatives.................................................6.06(a)
Restricted Stock Consideration..................................1.04(b)
Revenue Projections.............................................6.18(a)
SEC................................................................3.04
Securities Act.....................................................3.06
Settlement......................................................6.08(f)
Shares.........................................................Preamble
Stockholder....................................................Preamble
Stockholder Charter Documents...................................5.01(b)
Stockholder Insurance Policies.....................................6.16
Stock Plan......................................................1.04(a)
Stock Purchase Closing..........................................1.01(b)
Stock Purchase Closing Date.....................................1.01(b)
Subject Claims.....................................................6.16
Subject Liabilities................................................6.16
Subsidiary Charter Documents....................................3.01(c)
Superior Proposal...............................................6.06(b)
Surviving Corporation...........................................2.03(a)
Section 9.02. Notices. All notices shall be in writing and shall be
deemed given (i) when delivered personally, (ii) when telecopied (which is
confirmed) or (iii) when dispatched by a nationally recognized overnight courier
67
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
if to Purchaser, to:
Constellation, LLC
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., L.P.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to Purchaser's counsel (which shall not
constitute notice to Purchaser):
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to:
PanAmSat Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Company's counsel (which shall not
constitute notice to the Company):
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
68
if to Stockholder, to:
The DIRECTV Group, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to Stockholder's counsel (which shall not
constitute notice to Stockholder):
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.03. Entire Agreement; Third Party Beneficiaries. This
Agreement, each Transaction Document (including the Company Disclosure Schedule
and any exhibits hereto), the other agreements referred to in this Agreement,
each other Transaction Document, the Confidentiality Agreement and the Voting
Agreement (i) constitute the entire agreement among the parties with respect to
the subject matter hereof and thereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to such subject matter and (ii) are not intended to confer upon any
Person (other than the parties hereto or thereto) any rights or remedies
hereunder, except only as specifically provided, following the Stock Purchase
Closing, in Section 6.10.
Section 9.04. Non-Survival of Representations and Warranties. The
representations and warranties contained herein or in any schedule, instrument
or other writing delivered pursuant hereto shall not survive the Stock Purchase
Closing. The covenants and agreements contained herein of the parties hereto
shall survive the Stock Purchase Closing without limitation (except for those
which by their terms contemplate a shorter survival time).
Section 9.05. Amendments; No Waivers. Any provision of this Agreement
may be amended or waived prior to the Stock Purchase Closing if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Purchaser and Stockholder or, in the case of a waiver, by the
party against whom the waiver is to be effective; provided, however, that after
the adoption of this Agreement by the stockholders of the Company, there shall
be made no amendment that by Law requires further approval by the Company's
stockholders without obtaining the further approval of such stockholders. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.
69
Section 9.06. Successors and Assigns. The provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective successors and assigns; provided,
however, that no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto and any attempted assignment without such consent shall
be null and void without effect; and provided, further, that (A) Purchaser may
assign its rights or obligations hereunder to a Permitted Person provided that
no such assignment shall relieve Purchaser of its obligations hereunder, and (B)
Merger Sub may assign its rights or obligations hereunder to any wholly-owned
Subsidiary of Stockholder without the prior written consent of the parties
hereto.
Section 9.07. Governing Law. This Agreement and any controversies
arising with respect hereto shall be construed in accordance with and governed
by the law of the State of Delaware (without regard to principles of conflict of
laws that would apply the law of another jurisdiction).
Section 9.08. Exclusive Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated by this
Agreement shall be brought against any of the parties in any Federal court
located in the State of Delaware, or any Delaware state court, and each of the
parties hereto hereby consents to the exclusive jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and waives any objection to venue laid therein. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or outside the State of Delaware. Without limiting the generality
of the foregoing, each party hereto agrees that service of process upon such
party at the address referred to in Section 9.02, together with written notice
of such service to such party, shall be deemed effective service of process upon
such party.
Section 9.09. Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
Section 9.10. Interpretation.
(a) For the purposes of this Agreement, (i) words in the singular
shall be held to include the plural and vice versa and words of one gender shall
be held to include the other gender as the context requires, (ii) the terms
"hereof", "herein", and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Exhibits and Schedules hereto) and not to any particular provision of
this Agreement, and Article, Section, paragraph, Exhibit and Schedule references
are to the Articles, Sections, paragraphs, Exhibits and Schedules to this
Agreement unless otherwise specified, (iii) the word "including" and words of
70
similar import when used in this Agreement shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iv) the word "or" shall not be exclusive, (v) provisions shall
apply, when appropriate, to successive events and transactions, (vi) unless
otherwise specified, all references to any period of days shall be deemed to be
to the relevant number of calendar days, (vii) "dollars" or "$" means United
States dollars and (viii) "cash" means dollars in immediately available funds.
(b) The Article, Section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
(d) This Agreement is intended to be an agreement of merger within
the meaning of Section 251 of the DGCL.
Section 9.11. Disclosure Schedules. Any matter disclosed in any
section of the Company Disclosure Schedule shall be deemed disclosed for all
purposes and all sections of the Company Disclosure Schedule, to the extent it
is readily apparent from a reading of the disclosure that such disclosure is
applicable to such other sections; provided, however, that such disclosure shall
not be deemed to be an admission or representation as to the materiality of the
item so disclosed.
Section 9.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. Upon such determination that any term,
provision, covenant or restriction of this Agreement is invalid, void,
unenforceable or against regulatory policy, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 9.13. Specific Performance. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
Accordingly, in the event of any actual or threatened default in, or breach of,
any of the terms, conditions and provisions of this Agreement, the party or
parties who are or are to be thereby aggrieved shall have the right to specific
performance and injunctive or other equitable relief of its rights under this
Agreement, in addition to any and all other rights and remedies at law or in
71
equity, and all such rights and remedies shall be cumulative. Any requirements
for the securing or posting of any bond with such remedy are waived.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CONSTELLATION, LLC
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
THE DIRECTV GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
PAS MERGER SUB, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President, General
Counsel and Secretary
PANAMSAT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Jr.
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Jr.
Title: President and Chief Executive
Officer