UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.__)*
EchoStar Communications Corporation
(Name of Issuer)
Class A Common Stock, par value $.01 per share
(Title of Class of Securities)
278762109
(CUSIP Number)
Scott D. Sullivan
Secretary, Treasurer and Chief Financial Officer
MCI WORLDCOM, Inc.
515 East Amite Street
Jackson, MS 39201
(601) 360-8600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 30, 1998
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
(Continued on following pages)
(Page 1 of 16 Pages)
______________________________ __________________
CUSIP No. 278762109 Schedule 13D Page 2 of 16 Pages
______________________________ __________________
____________________________________________________________________________
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
MCI WORLDCOM, INC. 58-1521612
____________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
____________________________________________________________________________
3 SEC USE ONLY
____________________________________________________________________________
4 SOURCE OF FUNDS*
00 (see item 3)
____________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
____________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
____________________________________________________________________________
7 SOLE VOTING POWER
5,970,000**
NUMBER OF ____________________________________________________________
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ____________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,970,000**
PERSON ____________________________________________________________
WITH 10 SHARED DISPOSITIVE POWER
0
____________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,970,000**
____________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
____________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.1%***
____________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
______________________________ __________________
CUSIP No. 278762109 Schedule 13D Page 3 of 16 Pages
______________________________ __________________
____________________________________________________________________________
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
MCI TELECOMMUNICATIONS CORPORATION 58-1521612
____________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
____________________________________________________________________________
3 SEC USE ONLY
____________________________________________________________________________
4 SOURCE OF FUNDS*
00 (see item 3)
____________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
____________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
____________________________________________________________________________
7 SOLE VOTING POWER
5,970,000**
NUMBER OF ____________________________________________________________
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ____________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,970,000**
PERSON ____________________________________________________________
WITH 10 SHARED DISPOSITIVE POWER
0
____________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,970,000**
____________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
____________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.1%***
____________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
____________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 16 Pages
** Neither the filing of this Schedule 13D nor any of its contents shall be
deemed to constitute an admission that either Reporting Person (as defined
herein) is the beneficial owner of any of the Class A Common Stock, par
value $.01 per share ("Class A Common Stock"), of EchoStar Communications
Corporation ("EchoStar") for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended, or for any other purpose, and such
beneficial ownership is expressly disclaimed.
*** Based on (i) 15,268,708 shares of Class A Common Stock outstanding on
November 30, 1998, and (ii) the issuance of 5,970,000 shares of
Class A Common Stock to the Reporting Persons pursuant to the Purchase
Agreement (as defined herein). Considering the additional 24,030,000
shares of Class A Common Stock to be issued to an affiliate of The News
Corporation Limited pursuant to the Purchase Agreement, the percentage
of the Class A Common Stock that the Reporting Persons may be deemed to
have beneficial ownership of would be 13.2%. As reported in the Quarterly
Report on Form 10-Q of EchoStar for the quarter ended September 30, 1998,
there were outstanding 29,804,401 shares of Class B Common Stock, par
value $.01 per share (the "Class B Common Stock"), of EchoStar as of
October 30, 1998. Such Class B Common Stock is convertible on a
one-for-one basis into Class A Common Stock. Assuming conversion of all
shares of Class B Common Stock into Class A Common Stock, the percentage
of the Class A Common Stock that the Reporting Persons may be deemed to
have beneficial ownership of would be 8.0%.
Page 5 of 16 Pages
Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Schedule 13D") relates to
shares of Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), of EchoStar Communications Corporation ("EchoStar"), a Nevada
corporation. The principal executive offices of EchoStar are located at 5701
South Santa Fe Drive, Littleton, Colorado, 80120.
Item 2. Identity and Background.
(a)-(c), (f). This Schedule 13D is being filed on behalf of MCI
WORLDCOM, Inc., a Georgia corporation ("MCI WorldCom"), and its wholly owned
subsidiary, MCI Telecommunications Corporation, a Delaware corporation ("MCI"
and, together with MCI WorldCom, the "Reporting Persons"). Neither the
filing of this Schedule 13D nor the information contained herein shall be
deemed to constitute an affirmation by MCI WorldCom or MCI that it is the
beneficial owner of the Class A Common Stock referred to herein for purposes
of Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or for any other purpose, and such beneficial ownership is
expressly disclaimed.
MCI WorldCom and its subsidiaries are principally engaged in the
provision of domestic and international voice and data communications
services. MCI WorldCom's principal executive offices are located at 515 East
Amite Street, Jackson, Mississippi 39201-2702. MCI's principal executive
offices are located at 1801 Pennsylvania Avenue, N.W., Washington, D.C.
20036.
The name, citizenship, residence or business address and principal
occupation or employment (and the name, principal business and address of any
Page 6 of 16 Pages
corporation or other organization in which such employment is conducted) of
each director, executive officer or other controlling person of MCI WorldCom
and MCI is set forth in Schedule A hereto.
(d), (e). None of MCI WorldCom, MCI, nor, to the best of their
knowledge, any of the directors or executive officers of MCI WorldCom or MCI
has, during the past five years: (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors); or (ii)
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As of November 30, 1998, MCI, American Sky Broadcasting, LLC, a
Delaware limited liability company ("ASkyB"), The News Corporation Limited, a
corporation organized under the laws of South Australia ("News"), and
EchoStar entered into a Purchase Agreement (the "Purchase Agreement")
providing for the acquisition of 30,000,000 shares of Class A Common Stock.
Pursuant to the Purchase Agreement, MCI (or a wholly owned subsidiary of
MCI) shall acquire 5,970,000 shares of Class A Common Stock (the "MCI
Shares") and ASkyB (or a wholly owned subsidiary of News designated
by ASkyB) shall acquire 24,030,000 shares of Class A Common Stock (the "ASkyB
Shares" and, together with the MCI Shares, the "Shares"). The actual
acquirors of the MCI Shares and the ASkyB Shares, whether they be MCI, ASkyB
or wholly owned subsidiaries of each of MCI and ASkyB, are hereinafter
Page 7 of 16 Pages
* Pursuant to Section 2(a)(i)(B) of the Purchase Agreement, MCI may
designate a direct or indirect wholly-owned subsidiary of MCI to acquire
the MCI Shares.
** The number of shares of Class A Common Stock actually to be issued to
MCI is subject to adjustment pursuant to Section 2(a)(ii) of the
Purchase Agreement.
Page 8 of 16 Pages
referred to as the "Buyers." Upon consummation of the transactions
contemplated by the Purchase Agreement, the consideration for the purchase of
the Shares by the Reporting Persons and ASkyB will be contributed to EchoStar
in the form of assets related to the planned digital DBS services of ASkyB.
These assets, which are owned by MCI, ASkyB or News, include the Federal
Communications Commission ("FCC") authorization to construct, launch and
operate satellites in the DBS service operating over 28 frequency channels at
the 110-West Longitude orbital location; certain real property located in
Gilbert, Arizona, facilities, improvements and equipment thereon, and related
contracts for equipment and maintenance; certain FCC earth station
authorizations; contracts with respect to the construction and launch of two
satellites; and intellectual property related to the foregoing.
The summary contained in this Schedule 13D of certain provisions of
the Purchase Agreement is not intended to be complete and is qualified in its
entirety by reference to the full text of such agreement, a copy of which is
filed as Exhibit 1 hereto, and which is incorporated herein by reference.
Item 4. Purpose of the Transaction.
The Reporting Persons are acquiring the MCI Shares for the purpose
of investment. Other than as described herein, neither of the Reporting
Persons has any plans or proposals that relate to or would result in any of
the actions described in subparagraphs (a) through (j) of Item 4 of Schedule
13D (although, subject to the provisions of the Purchase Agreement, the
Reporting Persons reserve the right to develop such plans).
Page 9 of 16 Pages
Item 5. Interest in Securities of the Issuer.
(a) and (b). As of November 30, 1998, under the definition of
"beneficial ownership" as set forth in Rule 13d-3 under the Exchange Act, the
Reporting Persons may be deemed to have beneficial ownership of 5,970,000
shares of Class A Common Stock to be issued pursuant to the Purchase
Agreement, constituting approximately 28.1% of the outstanding shares of Class
A Common Stock.
Upon issuance of the Shares and subject to the Letter Agreement (as
described herein), the Reporting Persons will have the sole power to vote
such shares of Class A Common Stock. Unless and until the Closing under the
Purchase Agreement occurs and MCI receives the MCI Shares, none of MCI
WorldCom, MCI, nor any of their designees, if any, will have any power to
vote or to direct the vote, shared power to vote or to direct the vote, sole
or shared power to dispose or to direct the disposition of any Class A Common
Stock. Because each share of Class B Common Stock is entitled to 10 votes per
share, upon issuance of the Shares at the Closing under the Purchase Agreement,
the Reporting Persons will beneficially own equity securities of EchoStar
representing approximately 1.7% of the voting power of EchoStar (assuming no
conversion of the Class B Common Stock).
Neither the filing of this Schedule 13D nor any of its contents shall be
deemed to constitute an admission that MCI WorldCom or MCI is the beneficial
owner of the Class A Common Stock referred to herein for purposes of Section
13(d) of the Exchange Act or for any other purpose, and such beneficial
ownership is expressly disclaimed.
(c) Except as set forth in this Item 5, to the best knowledge of MCI
WorldCom and MCI, neither MCI WorldCom nor MCI has, and no directors or
Page 10 of 16 Pages
*** Based on (i) 15,268,708 shares of Class A Common Stock outstanding on
November 30, 1998, and (ii) the issuance of 5,970,000 shares of
Class A Common Stock to the Reporting Persons pursuant to the Purchase
Agreement (as defined herein). Considering the additional 24,030,000
shares of Class A Common Stock to be issued to an affiliate of The News
Corporation Limited pursuant to the Purchase Agreement, the percentage
of the Class A Common Stock that the Reporting Persons may be deemed to
have beneficial ownership of would be 13.2%. As reported in the Quarterly
Report on Form 10-Q of EchoStar for the quarter ended September 30, 1998,
there were outstanding 29,804,401 shares of Class B Common Stock, par
value $.01 per share (the "Class B Common Stock"), of EchoStar as of
October 30, 1998. Such Class B Common Stock is convertible on a
one-for-one basis into Class A Common Stock. Assuming conversion of all
shares of Class B Common Stock into Class A Common Stock, the percentage
of the Class A Common Stock that the Reporting Persons may be deemed to
have beneficial ownership of would be 8.0%.
Page 11 of 16 Pages
executive officers of MCI WorldCom or MCI and no other person described in
Item 2 hereof has, beneficial ownership of, or has engaged in any transaction
during the past 60 days in, any shares of Class A Common Stock.
(d) Unless and until the Closing under the Purchase Agreement occurs
and MCI receives the Class A Common Stock, none of MCI WorldCom, MCI or any
of their designees will have any right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any shares of
Class A Common Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
In connection with the purchase of the Shares, MCI, ASkyB, News,
EchoStar and Charles W. Ergen entered into a letter agreement dated as of
November 30, 1998 (the "Letter Agreement"). Pursuant to the Letter
Agreement, Mr. Ergen agreed to vote any shares owned by him in favor of the
Purchase Agreement and the transactions contemplated thereby. Mr. Ergen also
agreed not to reduce his voting power in EchoStar to 50% or less until the
stockholders of EchoStar approve the Purchase Agreement and the transactions
contemplated thereby. Also pursuant to the Letter Agreement,
MCI agreed that, for a period of five years after the closing of the
transactions contemplated by the Purchase Agreement, neither it nor its
affiliates will: (i) attempt to influence voting of EchoStar securities
(such as through a solicitation of proxies or election contest); (ii)
participate in any way in a "group" within the meaning of section 13(d)(3) of
the Exchange Act, with respect to EchoStar securities; (iii) otherwise act to
control or influence the management, Board of Directors or affairs of
Page 12 of 16 Pages
EchoStar or its affiliates or seek to effectuate a business combination or
similar transaction with respect to EchoStar or its affiliates; (iv) deposit
the securities of EchoStar in a voting trust or similar arrangement; (v)
initiate or propose, or induce another to initiate or propose, a tender offer
or shareholder proposal with respect to EchoStar or its affiliates; or (vi)
enter into any negotiation, arrangement or understanding with any third party
with respect to any of the above.
Further, pursuant to the Letter Agreement, MCI has agreed that, for
a period of five years after the closing of the transactions contemplated by
the Purchase Agreement, it will, and will cause its subsidiaries and
affiliates to, (i) with respect to the election of directors of EchoStar,
vote as recommended by the Board of Directors of EchoStar; and (ii) with
respect to any other stockholder action, vote as recommended by the Board of
Dir restrictions set forth in section (ii) in the preceding sentence shall
not apply to actions which would discriminate against (A) the holders of
Class A Common Stock relative to holders of any other class of EchoStar's
equity securities or (B) News or MCI relative to any other holder of
EchoStar's equity securities.
The summary contained in this Schedule 13D of certain provisions of
the Letter Agreement is not intended to be complete and is qualified in its
entirety by reference to the full text of such agreement, a copy of which is
filed as Exhibit 2 hereto, and which is incorporated herein by reference.
Under Section 9(m) of the Purchase Agreement, the Buyers must abide
by certain transfer restrictions relating to the Shares purchased by each of
them. Under the terms of the Purchase Agreement, until all amounts due under
the Satellite Contracts (as defined in the Purchase Agreement) have been paid,
Page 13 of 16 Pages
the Buyers may, directly or indirectly, sell, transfer or otherwise dispose of
any interest in the Shares in an amount not to exceed 10% of such Shares.
Subject to the foregoing, during the two-year period after the closing under
the Purchase Agreement, dispositions may be made by the Buyers in an amount
not to exceed for each 365-day period thereafter one-third of the Shares;
provided, however, that any Shares permitted to be sold, but not sold, during
the first 365-day period shall be added to the number of Shares permitted to
be sold during the second 365-day period; and provided further that the Buyers,
pursuant to a firm commitment underwritten public offering pursuant to an
effective registration statement, may make a disposition of Shares in an
amount not to exceed (x) the difference between 50% of the Shares issued to
the Buyers and the number of shares disposed of by the Buyers during the
first 365-day period or (y) the difference between 80% of the Shares issued
to the Buyers and the number of shares disposed of by the Buyers during the
first and second 365-day periods. From the date that is two years after the
closing date under the Purchase Agreement, the Buyers may make dispositions
freely, subject to applicable law. Notwithstanding any of the above, the
Buyers have the right to transfer any of their Shares to a direct or indirect
wholly-owned subsidiary of either MCI or News.
Except as set forth in this Schedule 13D, to the best knowledge of
MCI WorldCom and MCI, there are no other contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named
in Item 2 and between such persons and any person with respect to any
securities of EchoStar, including but not limited to, transfer or voting of
any of the securities of EchoStar, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
Page 14 of 16 Pages
loss, or the giving or withholding of proxies, or a pledge or contingency the
occurrence of which would give another person voting power or investment
power over the securities of EchoStar.
Item 7. Material to be Filed as Exhibits.
1. Purchase Agreement, dated as of November 30, 1995, among MCI
Telecommunications Corporation, American Sky Broadcasting, LLC, The
News Corporation Limited and EchoStar Communications Corporation.
2. Letter Agreement, dated as of November 30, 1998, among MCI
Telecommunications Corporation, The News Corporation Limited and
Charles Ergen.
Page 15 of 16 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Schedule 13D is
true, complete and correct.
MCI WORLDCOM, INC.
By: /s/ Scott D. Sullivan
----------------------
Name: Scott D. Sullivan
Title: Chief Financial Officer
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ Scott D. Sullivan
----------------------
Name: Scott D. Sullivan
Title: Chief Financial Officer
DATED: December 10, 1998
SCHEDULE A
Board of Directors and Executive Officers of
MCI WORLDCOM, Inc. and MCI Telecommunications Corporation
---------------------------------------------------------
I. MCI WORLDCOM, Inc.
The directors and executive officers of MCI WORLDCOM, Inc. are
identified in the table below. All of the persons identified on
the table below are directors of MCI WORLDCOM, Inc.
Name Business Address Citizenship Principal Occupation
1. Clifford L. Alexander, Jr. Alexander & Associates, Inc. United States President, Alexander & Associates,
400 C. Street, N.E. Inc.
Washington, D.C. 20002
2. James C. Allen MCI WORLDCOM, Inc.
515 East Amite Street United States Director, Metronet Communications
Jackson, MS 39201-2702 Corp. and Verio Inc.
3. Judith Areen Georgetown University Law Center United States Executive Vice President of Law
600 New Jersey Avenue, N.W. Center Affairs and Dean of the Law
Washington, D.C. 20001 Center, Georgetown University
4. Carl J. Aycock Master Corporation United States Self-employed as a financial
123 South Railroad Avenue administrator
Brookhaven, MA 39601
5. Max E. Bobbit Metromedia China Corporation United States President and Chief Executive Officer
110 E. 42nd Street of Metromedia China Corporation
Suite 1501
New York, NY 10017
6. Stephen M. Case America Online, Inc. United States Chairman of the Board of Directors
22000 AOL Way and Chief Executive Officer of
Dulles, VA 20166-9323 America Online, Inc.
7. Bernard J. Ebbers MCI WORLDCOM, Inc. United States President and Chief Executive
515 East Amite Street Officer,
Jackson, Mississippi 39201-2702 MCI WORLDCOM, Inc.
8. Francesco Galesi The Galesi Group United States Chairman and Chief Executive Officer,
435 East 52nd Street The Galesi Group
New York, NY 10022
9. Stiles A. Kellett, Jr. Kellett Investment Corp. United States Chairman, Kellett Investment Corp.
200 Galleria Parkway
Suite 1800
Atlanta, GA 30339
10. Gordon S. Macklin White River Corporation United States Chairman, White River Corporation
Two Gannett Drive
Suite 200
White Plains, NY 10604
11. John A. Porter Integra Funding United States Chairman of the Board of Directors
295 Bay Street, Suite 2 and Chief Executive Officer,
Easton, MD 21601 Industrial Electric Manufacturing,
Inc.
12. Timothy F. Price MCI WORLDCOM, Inc. United States President and Chief Executive
Three Ravinia Drive Officer, MCI WorldCom Communications,
Atlanta, GA 30346-2102 MCI WORLDCOM, Inc.
13. Bert C. Roberts, Jr. MCI WORLDCOM, Inc. United States Chairman, MCI WORLDCOM, Inc.
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
14. John W. Sidgmore MCI WORLDCOM, Inc. United States Vice Chairman, MCI WORLDCOM, Inc.
3060 Williams Drive
Fairfax, VA 22301
15. Scott D. Sullivan MCI WORLDCOM, Inc. United States Treasurer, Chief Financial Officer
515 East Amite Street and Secretary, MCI WORLDCOM, Inc.
Jackson, MS 39201-2702
16. Gerald H. Taylor MCI WORLDCOM, Inc. United States Director, MCI WORLDCOM, Inc.
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
17. Lawrence C. Tucker Brown Brothers Harriman & Co. United States General Partner, Brown Brothers
59 Wall Street Harriman & Co.
New York, NY 10005
18. Juan Villalonga Telefonica, SA Spain Chairman and Chief Executive Officer,
28 Gran Via Telefonica, SA
28013 Madrid
Spain
II. MCI Telecommunications Corporation.
The directors and executive officers of MCI Telecommunications
Corporation are identified in the table below. Directors of MCI
Telecommunications Corporation are indicated by an asterisk.
Principal
Name Business Address Citizenship Occupation
1. Timothy F. Prize MCI WORLDCOM, Inc. United President and Chief Executive Officer, MCI
Three Ravinia Drive States WORLDCOM Communications, MCI WORLDCOM Inc.; President,
Atlanta, GA 30346-2102 MCI Telecommunications Corporation
2. Michael J. Rawny MCI WOLRDCOM, Inc. United Executive Vice President, MCI Telecommunications
1801 Penneylvania States Corporations
Ave, N.W.
Washington, D.C.
20006
3. Bert C. Roberts, Jr.(*) MCI WORLDCOM, Inc. United Chairman, MCI WORLDCOM, Inc.;
1801 Pennsylvania States Chairman, MCI Telecommunications Corporation
Avenue, N.W.
Washington, D.C.
20006
4. Michael H. Salsbury(*) MCI WORLDCOM, Inc. United General Counsel, MCI WORLDCOM, Inc.; Executive
1801 Pennsylvania States Vice President, Secretary and General Counsel,
Avenue,N.W. MCI Telecommunications Corporation
Washington, D.C.
20006
5. Scott D. Sullivan MCI WORLDCOM, Inc. United Treasurer, Chief Financial Officer and Secretary, MCI
515 East Amite Street States WORLDCOM, Inc.; Secretary, Treasurer and Chief Financial
Jackson, MS 39201-2702 Officer, MCI Telecommunications Corporation
INDEX TO EXHIBITS
Exhibit Number Description of Exhibits
1. Purchase Agreement, dated as of November 20, 1998, among MCI
Telecommunications Corporation, American Sky Broadcasting,
LLC, The News Corporation Limited and EchoStar Communications
Corporation.
2. Letter Agreement, dated as of November 30, 1998, among MCI
Telecommunications Corporation, The News Corporation Limited
and Charles Ergen.
PURCHASE AGREEMENT
dated as of
November 30, 1998
by and among
AMERICAN SKY BROADCASTING, LLC,
THE NEWS CORPORATION LIMITED,
MCI TELECOMMUNICATIONS CORPORATION
and
ECHOSTAR COMMUNICATIONS CORPORATION
Table of Contents
Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Shares to be Purchased by the Transferors . . . . . . . . . . 8
(b) Assets to be Transferred to Seller . . . . . . . . . . . . . . 9
(c) Assumption of Liabilities . . . . . . . . . . . . . . . . . . 10
(d) The Closing . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Deliveries at Closing . . . . . . . . . . . . . . . . . . . . 11
3. Representations and Warranties of Seller . . . . . . . . . . . . . 11
(a) Representations and Warranties True, Correct and Complete . . 11
(b) Organization of Seller and the Significant Subsidiaries . . . 12
(c) Power and Authority of Seller . . . . . . . . . . . . . . . . 12
(d) Power and Authority of Significant Subsidiaries . . . . . . . 12
(e) Corporate Authorization . . . . . . . . . . . . . . . . . . . 13
(f) Governmental Authorization . . . . . . . . . . . . . . . . . . 13
(g) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) Absence of Certain Changes . . . . . . . . . . . . . . . . . . 17
(k) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Representations and Warranties of the Transferors . . . . . . . . . 17
(a) Representations and Warranties True, Correct and Complete . . 17
(b) Organization of the Transferors . . . . . . . . . . . . . . . 18
(c) Power and Authority of the Transferors . . . . . . . . . . . . 18
(d) Corporate Authorization . . . . . . . . . . . . . . . . . . . 18
(e) Governmental Authorization . . . . . . . . . . . . . . . . . . 18
(f) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Gilbert Property . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Assigned Contracts . . . . . . . . . . . . . . . . . . . . . . 22
(i) Intellectual Property . . . . . . . . . . . . . . . . . . . . 24
(j) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(k) Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . 24
(l) FCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . 25
(m) Transferred Assets . . . . . . . . . . . . . . . . . . . . . . 26
(n) Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . 27
(o) Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5. Further Agreements of the Parties . . . . . . . . . . . . . . . . . 27
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Notices and Consents . . . . . . . . . . . . . . . . . . . . . 27
(c) Operation of Business . . . . . . . . . . . . . . . . . . . . 29
(d) Assignment of the MCI FCC License . . . . . . . . . . . . . . 30
(e) Earth Station Authorizations . . . . . . . . . . . . . . . . 31
-i-
(f) Satellites . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Sony Contract . . . . . . . . . . . . . . . . . . . . . . . . 34
(h) Full Access . . . . . . . . . . . . . . . . . . . . . . . . . 34
(i) Notice of Developments . . . . . . . . . . . . . . . . . . . . 35
(j) NDS Equipment . . . . . . . . . . . . . . . . . . . . . . . . 35
(k) Abeyance of EchoStar Litigation . . . . . . . . . . . . . . . 36
(l) Transfer Taxes and Prorations . . . . . . . . . . . . . . . . 36
(m) Further Assurances . . . . . . . . . . . . . . . . . . . . . . 36
(n) No Solicitation . . . . . . . . . . . . . . . . . . . . . . . 36
(o) Bundling . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(p) Casualty; Condemnation . . . . . . . . . . . . . . . . . . . . 37
(q) Title Insurance . . . . . . . . . . . . . . . . . . . . . . . 38
(r) Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6. Conditions to Obligation to Close . . . . . . . . . . . . . . . . . 39
(a) Conditions to Obligation of the Transferors . . . . . . . . . 39
(b) Conditions to Obligation of Seller . . . . . . . . . . . . . . 40
7. Remedies for Breach of this Agreement . . . . . . . . . . . . . . . 42
(a) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Indemnification Provisions for Benefit of the Transferors . . 43
(c) Indemnification Provisions for Benefit of Seller . . . . . . . 43
(d) Notification; Rights of Parties to Settle or Defend . . . . . 43
(e) Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . 44
(f) Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 44
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(a) Termination of Agreement . . . . . . . . . . . . . . . . . . . 45
(b) Effect of Termination . . . . . . . . . . . . . . . . . . . . 46
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(a) Press Releases and Announcements . . . . . . . . . . . . . . . 48
(b) No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . 48
(c) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Succession and Assignment . . . . . . . . . . . . . . . . . . 49
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 49
(f) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(g) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(h) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 50
(i) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 50
(j) Severability . . . . . . . . . . . . . . . . . . . . . . . . . 50
(k) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(l) Construction . . . . . . . . . . . . . . . . . . . . . . . . . 51
(m) Restrictions on Transfer . . . . . . . . . . . . . . . . . . . 51
(n) Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(o) Specific Performance . . . . . . . . . . . . . . . . . . . . . 53
(p) Incorporation of Schedules . . . . . . . . . . . . . . . . . . 53
-ii-
Schedules
2(b)(i)(I) Gilbert Property
2(b)(i)(II) Furniture, Fixtures and Equipment
2(b)(ii) Gilbert Contracts
2(b)(v) Satellite Contracts
3(g) Noncontravention
3(h) Capitalization
3(i) SEC Filings
3(j) Absence of Certain Changes
4(f) Noncontravention
4(g)(i) Permitted Liens
4(g)(iii) Gilbert Property Improvements
4(g)(v) Insurance Policies
4(h) Assigned Contracts
4(j) Litigation
4(k) Legal Compliance
4(l)(i) FCC Matters
4(l)(ii) Earth Station Authorizations
4(l)(v) Insurance Policies
6(a)(ii) Consents
6(b)(ii) Consents
Exhibits
A Components License Agreement
B Fox News Channel Affiliation Agreement
C Registration Rights Agreement
D Retransmission Consent Agreement
E Settlement Agreement and Mutual Release
F Set Top Box Agreement
G Voting Agreement
H Abeyance Stipulation
I Special Warranty Deed
-iii-
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of
November 30, 1998, by and among American Sky Broadcasting, LLC, a limited
liability company organized under the laws of the State of Delaware
("ASkyB"); The News Corporation Limited, a corporation organized under the
laws of South Australia ("News Corporation"); MCI Telecommunications
Corporation, a corporation organized under the laws of the State of Delaware
("MCI"); and EchoStar Communications Corporation, a corporation organized
under the laws of the State of Nevada ("Seller"). ASkyB, News Corporation
and MCI are referred to collectively herein as the "Transferors." ASkyB,
News Corporation, MCI and Seller are referred to collectively herein as the
"Parties."
RECITALS
WHEREAS, the Transferors own certain assets relating to the direct
broadcast satellite ("DBS") business;
WHEREAS, the Transferors desire to dispose of such assets, and Seller
desires to acquire such assets; and
WHEREAS, the Transferors have agreed to transfer such assets to Seller
(or one or more direct or indirect wholly owned Subsidiaries of Seller) in
consideration for, among other things, shares of Seller's Class A Common
Stock, par value $.01 per share ("Class A Common Stock"), upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows:
1. Definitions.
"Acceptable Alternative Arrangement" means any arrangement
satisfactory to Seller and its counsel and to the Transferors and their
respective counsel that: (a) to the fullest extent feasible in light of any
regulatory constraint assures the Parties as nearly as possible the same
economic results as if the transactions contemplated by this Agreement and
the Collateral Agreements had occurred as contemplated herein and therein;
provided, however, that no Party shall be obligated to enter into any such
arrangement which would require it to make expenditures or dispose of assets
in excess of the amount of expenditures or assets contemplated by this
Agreement and the Collateral Agreements unless compensated for such
arrangement; (b) would, in the reasonable judgment of Seller and the
Transferors, be reasonably expected either not to require FCC consent or to
result in such consent, if required; and (c) would, in the reasonable
judgment of Seller and the Transferors, be reasonably expected to result in
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clearance of the arrangement by the relevant antitrust enforcement agencies,
if required.
"Affiliate" means any person or entity controlling, controlled by,
or under common control with, an entity. Control of any entity shall mean
the possession, direct or indirect, of the powers to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"ASkyB Buyer" has the meaning set forth in Section 2(a)(i)(A)
hereof.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could reasonably form
the basis for any specified consequence.
"Bureau Order" means an order released by a bureau or other
division or subdivision of the FCC under delegated authority which
conditionally grants (and such condition is a Material Condition which is
unacceptable to Seller) the FCC's consent to the assignment of the MCI FCC
License to Seller or Newco.
"Collateral Agreements" means the Registration Rights Agreement,
the Fox News Channel Affiliation Agreement, the Settlement and Mutual Release
Agreement, the Components License Agreement, the Retransmission Consent
Agreement, the Set Top Box Agreement and the Voting Agreement.
"Communications Act" means the federal Communications Act of 1934,
as amended.
"Components License Agreement" means the Components License for NDS
MPEG 2, DVB Conformant Digital Receivers, to be entered into by and between
NDS Limited and EchoStar Technologies Corporation, containing the terms and
conditions set forth in Exhibit A annexed hereto.
"Current Market Price" means the average of the daily closing
prices per share of Class A Common Stock for the 20 trading days ending on
(a) with respect to Section 2(a)(ii), the date that is two trading days prior
to the Closing Date; (b) with respect to Section 5(c)(i)(B), thich, whether
or not so specified, was based on the price reported on a national securities
exchange at the time of negotiation of the business arrangement or the
execution of the agreement, then Current Market Price means the price so
provided; and provided further, that in the case of shares issued pursuant to
Seller's Employee Stock Purchase Plan, Current Market Price means 85% of the
closing price of Class A Common Stock on the last business day of each
calendar quarter in which shares were deemed sold under such plan; and (c)
with respect to 5(c)(i)(C), the date of the issuance or grant of the rights,
options or warrants in question. The closing price for each day shall be the
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last reported sales price regular way or, in case no such reported sale takes
place on such day, the closing bid price regular way, in either case on the
principal national securities exchange (including, for purposes hereof, The
Nasdaq National Market ("Nasdaq")) on which the Class A Common Stock is
listed or admitted to trading or, if the Class A Common Stock is not listed
or admitted to trading on any national securities exchange, the highest
reported bid price for the Class A Common Stock as furnished by the National
Association of Securities Dealers, Inc. through Nasdaq or a similar
organization if Nasdaq is no longer reporting such information. If on any
such date the Class A Common Stock is not listed or admitted to trading on
any national securities exchange and is not quoted by Nasdaq or any similar
organization, the fair value of a share of Class A Common Stock on such date,
as determined in good faith by the Board of Directors of Seller, whose
determination shall be conclusive absent manifest error, shall be used.
"Damages" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, diminution in value, obliges, and
fees, including all attorneys' fees and court costs, whether or not arising
out of a claim by a third party.
"Earth Station Facilities" means (a) the six earth station
facilities located on the Gilbert Property and corresponding to the Earth
Station Authorizations, and (b) the six additional 6.1 meter receive-only
earth station facilities also located on the Gilbert Property, with respect
to which there has been no FCC registration.
"Environmental Laws" means all foreign, federal, state and local
laws, statutes, ordinances, rules and regulations, now or hereafter in
effect, and in each case as amended or supplemented from time to time, and
any permits issued thereunder, relating to the protection of human health and
safety, the environment, or hazardous or toxic substances or wastes,
pollutants or contaminants.
"FCC" means the Federal Communications Commission and any successor
agency thereto.
"FCC Approval" means an order released by the FCC (and not by a
bureau or other division or subdivision thereof pursuant to delegated
authority) which is in full force and effect and has not been reversed,
reconsidered, stayed, enjoined, set aside, annulled or suspended, and the
thirty (30) day period for any such action on the FCC's own motion has
expired, and which grants, or conditionally grants (other than subject to a
Material Condition which is unacceptable to Seller), the FCC's consent to the
assignment of the MCI FCC License to Seller or Newco; provided, however, that
timely rejection of an FCC order by Seller or Newco shall not affect the
status of such order as an FCC Approval.
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"FCC Order" means an order released by the FCC (and not by a bureau
or other division or subdivision thereof pursuant to delegated authority)
which is in full force and effect and has not been reversed, reconsidered,
stayed, enjoined, set aside, annulled or suspended, and the thirty (30) day
period for any such actional Condition which is unacceptable to Seller) or
denies the FCC's consent to the assignment of the MCI FCC License to Seller
or Newco; provided, however, that timely rejection of an FCC order by Seller
or Newco shall not affect the status of such order as an FCC Order.
"Fox News Channel Affiliation Agreement" means the Fox News Channel
Affiliation Agreement, entered into by and between EchoStar Satellite
Corporation and Fox News Network, LLC as of the date hereof, annexed as
Exhibit B hereto.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" means all (a) patents, patent applications,
patent disclosures and improvements thereto, (b) trademarks, service marks,
trade dress, logos, trade names and corporate names and registrations and
applications for registration thereof, (c) copyrights and registrations and
applications for registration thereof, (d) mask works and registrations and
applications for registration thereof, (e) computer software, data and
documentation, (f) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, (g) other proprietary rights, and (h) copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable inquiry and
investigation.
"Liability" means any liability or obligation of any nature
(whether known or unknown, whether absolute or contingent, whether liquidated
or unliquidated, and whether due or to become due), including any liability
for Taxes.
"LIBOR Rate" means relative to any interest period, the rate of
interest determined as follows: (a) on the interest determination date, the
lending party shall obtain the offered quotation(s) that appear on the
Reuter's ScrReuter's Screen, the LIBOR Rate shall be the arithmetic average
(rounded upwards, if necessary to the nearest 1/16th of 1%) of such offered
quotations, as determined by the lending party; or (b) if the Reuter's
Screen is not available or has been discontinued, the LIBOR Rate shall be the
-4-
rate per annum which the lending party in good faith determines to be the
arithmetic average (rounded as aforesaid) of the offered quotations for
Dollar deposits in an amount comparable to the lending party's share of the
relevant amount in respect of which the LIBOR Rate is being determined for a
period comparable to the relevant LIBOR Interest Period that lending banks in
New York City selected by the lending party are quoting at 11:00 A.M. on the
interest determination date in New York Interbank Market to major
international banks.
"Liens" means, with respect to any property or assets, any
mortgage, deed of trust, pledge, hypothecation, assignment, security
interest, lien, charge, easement, encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature with
respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material Condition" has the meaning set forth in Section 5(d)
hereof.
"MCI Buyer" has the meaning set forth in Section 2(a)(i)(B) hereof.
"MCI FCC License" means MCI's FCC authorization to construct,
launch and operate satellites in the Direct Broadcast Satellite Service
operating over 28 frequency channels at the 110 West Longitude orbital
location (FCC DA 96-2165, released December 20, 1996).
"Newco" has the meaning set forth in Section 2(b) hereof.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Person" means an individual, partnership, trust, corporation, joint
venture, limited liability company, association, government bureau or agency or
other entity of whatever kind or nature.
"Preliminary FCC Approval" means an order released by the FCC (and
not by a bureau or other division or subdivision thereof pursuant to
delegated authority) which grants, or conditionally grants (other than
subject to a Material Condition which is unacceptable to Seller), the FCC's
consent to the assignment of the MCI FCC License to Seller or Newco.
"Registration Rights Agreement," means the Registration Rights
Agreement to be entered into by and among Seller, MCI (or a direct or
indirect wholly-owned subsidiary of MCI) and ASkyB (or a direct or indirect
wholly-owned subsidiary of News Corporation), in the form of Exhibit C
annexed hereto.
"Regulatory Provisions" means all applicable requirements of the
Communications Act and the published policies, rules, decisions, and
regulations of the FCC as amended from time to time.
-5-
"Requisite Corporate Approvals" means the approval of Seller's
Board of Directors and its stockholders and, if applicable, the Board of
Directors of any Subsidiary of Seller required pursuant to applicable law
with respect to the authorization of Seller or such Subsidiary to execute and
deliver this Agreement and the Collateral Agreements to which it is a party
and to perform the transactions contemplated hereby and thereby.
"Retransmission Consent Agreement" means the Retransmission Consent
Agreement, to be entered into by and between Fox Television Holdings, Inc.
and Seller, in the form of Exhibit D annexed hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens arising under
worker's compensation, unemployment insurance, social security, retirement,
and similar legislation, (b) liens on goods in transit incurred pursuant to
documentary letters of credit, and (c) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of
money, the extension of credit or default or potential default of money owed.
"Seller Material Adverse Effect" means a material adverse effect on
the business, assets, operations, prospects or condition (financial or
otherwise) of the Seller and its Subsidiaries, taken as a whole, excluding
any change or development resulting from (a) events adversely affecting any
of the principal markets served by the business of Seller or (b) general
economic conditions, including changes in the economies of any of the
jurisdictions in which Seller or any of its Subsidiaries conduct business.
"Settlement Agreement and Mutual Release" means the Settlement
Agreement and Mutual Release, to be entered into by and among Seller,
Charles W. Ergen, News Corporation and ASkyB, in the form of Exhibit E
annexed hereto.
"Set Top Box Agreement" means the Development and Supply Agreement
for Set Top Boxes, to be entered into by and between Seller and a DBS company
in which News Corporation has an interest, containing the terms and
conditions set forth in Exhibit F annexed hereto.
"Significant Subsidiary" means any Subsidiary of Seller that (i)
falls within the definition of "significant subsidiary" set forth in Rule
1-02 of Regulation S-X under the Securities Act, (ii) is subject to the
periodic reporting requirements of the Securities Exchange Act or (iii) is,
or becomes, a party to this Agreement or any of the Collateral Agreements.
"Subsidiary" of a specified Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are directly or indirectly owned by such Person.
-6-
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, however denominated, including any interest, penalty, or addition
thereto, whether disputed or not.
"Transferred Asset Material Adverse Effect" means a material
adverse effect on the use by or benefit to Seller of any of the Transferred
Assets, excluding any change or development resulting from (a) events
adversely affecting any of the principal markets served by the businesses of
Seller or any of its Subsidiaries, or (b) general economic conditions,
including changes in the economies of any of the jurisdictions in which
Seller or any of its Subsidiaries conduct business.
"U.S. Satellite Business" means any proposed or ongoing uses of
communications satellites to provide direct-to-home (including hotels,
motels, bars, restaurants, multiple dwelling units and other similar uses)
video and associated audio programming services using FSS/BSS frequencies
directly to the antennas or other reception equipment of customers or
subscribers of such business activity principally in the United States, or to
multiple dwelling units comprising such customers or subscribers.
"Voting Agreement" means the letter agreement entered into by and
among Charles W. Ergen, Seller, MCI, News Corporation and ASkyB, as of the
date hereof, annexed as Exhibit G hereto.
2. Purchase and Sale.
(a) Shares to be Purchased by the Transferors.
(i) At the Closing (as hereinafter defined), upon the terms
and subject to the conditions set forth in this Agreement, the
Transferors agree to purchase from Seller, and Seller agrees to issue
and sell to the Transferors, an aggregate of 30,000,000 shares (the
"Shares") of Seller's Class A Common Stock, subject to adjustment (x)
for any stock split, stock dividend, subdivision or combination of the
Common Stock (as hereinafter defined) or any other action having a
similar effect on the Common Stock, and (y) as set forth in Section
2(a)(ii) below, as follows:
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(A) 24,030,000 shares of Class A Common Stock shall be
issued and sold to ASkyB or a direct or indirect wholly-owned Subsidiary
of News Corporation designated by ASkyB (the "ASkyB Buyer"); and
(B) 5,970,000 shares of Class A Common Stock shall be
issued and sold to MCI or a direct or indirect wholly-owned Subsidiary
of MCI designated by MCI (the "MCI Buyer").
(ii) The number of shares of Common Stock issuable to the ASkyB
Buyer and the MCI Buyer pursuant to Section 2(a)(i) shall be subject to
adjustment as follows: (A) if the Current Market Price is less than $15.00
per share (subject to adjustment for any stock split, stock dividend,
subdivision or combination of the Common Stock or any change in corporate
structure affecting the Common Stock), then Seller shall issue such number of
additional shares of Common Stock to the ASkyB Buyer and the MCI Buyer, on a
pro rata basis, so that the total market value of the Shares issued to them
(based on such Current Market Price) is not less than $450,000,000; provided,
however, that in no event shall the Transferors collectively own of record or
vote shares corresponding to more than 49.9% of the total outstanding voting
power of Seller or more voting power of Seller than all other shareholders of
Seller; or (B) if the Current Market Price is greater than $39.00 per share
(subject to adjustment for any stock split, stock dividend, subdivision or
combination of the Common Stock or any change in corporate structure
affecting the Common Stock), then the number of Shares issued to the ASkyB
Buyer and the MCI Buyer shall be reduced, on a pro rata basis, so that the
total market value of the Shares issued to them (based on such Current Market
Price) is not greater than $1,170,000,000.
(b) Assets to be Transferred to Seller. At the Closing, upon the
terms and subject to the conditions set forth in this Agreement, and in
consideration for the Shares to be purchased by the Transferors hereunder,
each of the Transferors agrees to assign, transfer and convey to Seller, or,
at Seller's option, one or more direct or indirect wholly owned Subsidiaries
of Seller (collectively, "Newco") all of its right, title and interest in and
to the specified assets set forth below (collectively, the "Transferred
Assets"):
(i) Gilbert Property. ASkyB shall transfer and convey to
Seller or Newco all of its right, title and interest in and to certain
real property located in Gilbert, Arizona, as more particularly
described in Section 2(b)(i)(I) of the Transferor Disclosure Schedule
(as hereinafter defined), and all improvements thereon, including,
without limitation, (A) all buildings, Earth Station Facilities and
other structures, (B) the fixtures, furniture and equipment described
in Section 2(b)(i)(II) of the Transferor Disclosure Schedule, and all
instruction manuals and other personal property (including all
warranties associated therewith), and (C) keys to such property, to the
extent the foregoing are owned by the Transferors (the "Gilbert
Property").
-8-
(ii) Gilbert Contracts. ASkyB shall assign all of its right,
title and interest in and to all maintenance and equipment contracts
entered into with respect to the Gilbert Property, including all
warranties set forth therein (collectively the "Gilbert Contracts"), as
set forth in Section 2(b)(ii) of the Transferor Disclosure Schedule
including, among others, the equipment contract with Sony Electronics,
Inc. (the "Sony Contract"), except that the Transferred Assets shall not
include, and the Transferors shall not assign to Seller, any of the
Gilbert Contracts that Seller designates as "Excluded Contracts" in
accordance with Section 5(c)(iii) hereof.
(iii) MCI FCC License. MCI shall assign, transfer and
convey to Seller or Newco all of its right, title and interest to (A)
the MCI FCC License and (B) the application for minor modification and
clarification of license conditions for the MCI FCC License filed by MCI
on May 5, 1997, and to any application for modification of the MCI FCC
License that may be required to be filed hereafter until Closing.
(iv) Earth Station Authorizations. ASkyB shall assign,
transfer and convey to Seller or Newco all of its right, title and
interest in and to its FCC earth station authorizations in respect of
the Gilbert Property (the "Earth Station Authorizations") under Call
Signs E980174, E980178, E980180, E970394, E970395 and E970396.
(v) Satellite Contracts and Satellite Work in Process. Each
of the Transferors shall assign all of its respective right, title and
interest in and to the agreements and insurance policies or arrangements
set forth in Section 2(b)(v) of the Transferor Disclosure Schedule
annexed hereto, including but not limited to the satellites and launches
work in process pursuant thereto, and all deliverables pursuant to those
agreements, and including all rights to enforce such contracts
(collectively, the "Satellite Contracts" and, together with the Gilbert
Contracts, but excluding any Excluded Contracts, the "Assigned
Contracts"), in accordance with the terms of the Satellite Contracts.
(vi) Intellectual Property. The Transferors shall assign,
transfer and convey all of their respective right, title and interest in
and to any Intellectual Property acquired from the U.S. government or
other parties to the Satellite Contracts in connection with the MCI FCC
License, the Earth Station Authorizations or the Assigned Contracts.
It is specifically acknowledged and agreed by the Seller that the
Transferors are not assigning, transferring and conveying to Seller any
assets pursuant to this Agreement other than the Transferred Assets.
(c) Assumption of Liabilities. Except as provided in Sections
5(f)(vii) and 5(g) hereof, effective as of the Closing, and upon the terms
and subject to the conditions of this Agreement, Seller agrees to assume all
liabilities and obligations of the Transferors and their Affiliates arising
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under the Assigned Contracts and the other Transferred Assets, including all
obligations of the Transferors under the MCI FCC License and the Earth
Station Authorizations, including, without limitation, obligations with
respect to completion of satellite construction, system deployment and
provision of telemetry, tracking and control services.
(d) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York,
commencing at 9:00 a.m. local time on the fifth business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby or such other date as the
Transferors and Seller may mutually determine (the "Closing Date").
(e) Deliveries at Closing. At the Closing, (i) Seller shall
deliver to the Transferors the various certificates, instruments, agreements
and documents referred to in Section 6(a) below, (ii) the Transferors shall
deliver to Seller the various certificates, instruments, agreements and
documents referred to in Section 6(b) below and (iii) Seller shall deliver to
the Transferors duly executed and authenticated stock certificates,
representing all of the Shares to be purchased by the MCI Buyer and the ASkyB
Buyer pursuant hereto. The certificates representing the Shares shall
initially bear the legend set forth in Section 9(n) hereto.
3. Representations and Warranties of Seller. Seller represents and
warrants to the Transferors as follows:
(a) Representations and Warranties True, Correct and Complete.
Seller represents and warrants to each of the Transferors that the statements
contained in this Section 3 that are qualified by reference to materiality or
a material adverse effect are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date,
and that all of the other statements made in this Section 3 that are not so
qualified are true, correct and complete in all material respects as of the
date of this Agreement and will be true, correct and complete in all material
respects as of the Closing Date, except, in each case, (i) for such
representations and warranties that are expressly made as of the date of this
Agreement, in which case such representations and warranties need only to be
true, correct and complete on and as of the date of this Agreement, (ii) for
such representations and warranties that are expressly made as of an earlier
date, in which case such representations and warranties need only to be true,
correct and complete on and as of such earlier date and (iii) as disclosed in
a document referring specifically to the representations and warranties in
this Section 3 which has been delivered by Seller to each of the Transferors
on or prior to the date hereof (the "Seller Disclosure Schedule"). Nothing
in the Seller Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Seller
Disclosure Schedule identifies the exception with reasonable particularity
and describes the relevant facts in reasonable detail. Without limiting the
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generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception
to a representation or warranty made herein (unless the representation or
warranty itself solely addresses the existence of the document or other
item). The Seller Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section.
(b) Organization of Seller and the Significant Subsidiaries.
(i) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada, and each of
the Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.
(ii) As of the date hereof, Seller and each of the Significant
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation and is in good standing, in each jurisdiction where the
character of the property owned or leased by it, or the nature of its
activities, makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed and
in good standing would not, individually or in the aggregate, have a
Seller Material Adverse Effect.
(c) Power and Authority of Seller.
(i) Seller has all requisite corporate power and authority to
own, lease and operate its properties as now conducted and to execute
and deliver this Agreement and each Collateral Agreement to which it is
a party, including any additional documents contemplated by this
Agreement, and to perform its obligations hereunder and thereunder.
(ii) As of the date hereof, Seller has all governmental
licenses, authorizations, consents and approvals required to own, lease
and operate its properties as now conducted, except where the failure to
have such governmental licenses, authorizations, consents and approvals
would not, individually or in the aggregate, have a Seller Material
Adverse Effect.
(d) Power and Authority of Significant Subsidiaries.
(i) As of the date hereof, each Significant Subsidiary has
all requisite corporate power and authority and all governmental
licenses, authorizations, consents and approvals required to own, lease
and operate its properties as now conducted, except where the failure to
have such governmental licenses, authorizations, consents and approvals
would not, individually or in the aggregate, have a Seller Material
Adverse Effect.
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(ii) Each Significant Subsidiary which is, or will be, a party
to this Agreement or a Collateral Agreement has, or will have, as of the
date of execution of this Agreement or such Collateral Agreement, all
requisite corporate power and authority to execute and deliver such
Collateral Agreement and to perform its obligation thereunder.
(e) Corporate Authorization. The execution, delivery and
performance by Seller of this Agreement and the execution, delivery and
performance by Seller and each Significant Subsidiary of each of the
Collateral Agreements to which Seller or such Significant Subsidiary is a
party, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action of
Seller and such Significant Subsidiary, as the case may be, other than
shareholder approval pursuant to the rules and regulations of Nasdaq, which
shall be obtained on or prior to the Closing Date. This Agreement and each
of the Collateral Agreements to which Seller or a Significant Subsidiary is a
party, including any additional documents contemplated by this Agreement,
constitutes (or when executed, will constitute) the valid and legally binding
obligation of Seller and such Significant Subsidiary, as the case may be,
enforceable against each of Seller and such Significant Subsidiary, as the
case may be, in accordance with each document's respective terms and
conditions, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equitable
principles.
(f) Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement and each of the Collateral Agreements
to which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not require any consent, approval, authorization or
permit of, or filing with or notification to any governmental or regulatory
authority, except (A) for (i) compliance with any applicable requirements of
the Hart-Scott-Rodino Act, and the rules and regulations thereunder; (ii)
compliance with any applicable provisions of the Securities Act, and the
rules and regulations thereunder, state securities or "blue sky" laws and
state takeover laws, and approval of the inclusion of the Shares for trading
on Nasdaq; (iii) compliance with any applicable requirements of the
Securities Exchange Act and the rules and regulations thereunder; and (iv)
compliance with any applicable requirements of the Regulatory Provisions or
(B) where the failure to obtain such consents, approvals, authorizations and
permits, or to make such filings or notifications, would not prevent or delay
in any material respect the consummation of the transactions contemplated
hereby or thereby or otherwise prevent Seller from performing its obligations
under this Agreement or any of the Collateral Agreements to which it is a
party in accordance with the terms and subject to the conditions hereof and
thereof, and would not, individually or in the aggregate, have a Seller
Material Adverse Effect.
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(g) Noncontravention. Except as set forth in Section 3(g) of the
Seller Disclosure Schedule and Section 3(f) hereof, the execution, delivery
and performance of this Agreement and each of the Collateral Agreements to
which Seller or a Significant Subsidiary is a party do not, and the
consummation of the transactions contemplated hereby and thereby will not,
(A) contravene or conflict with the certificate of incorporation, by-laws or
other organizational documents of Seller, or any Significant Subsidiary; (B)
contravene, conflict with or constitute a violation of any provision of any
statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or court
binding upon or applicable to Seller or any Significant Subsidiary or any of
their respective properties or assets, which contravention, conflict or
violation could reasonably be expected to have a Seller Material Adverse
Effect; (C) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, require any notice or give rise to a loss of any
benefit under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which Seller or any
Significant Subsidiary is a party or by which any of them is bound or to
which any of their assets is subject or result in the creation or imposition
of any Security Interests on any assets of Seller or any Significant
Subsidiary, which contravention, violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or loss of benefit
would have a Seller Material Adverse Effect or adversely affect the ability
of Seller or any Significant Subsidiary to consummate the transactions
contemplated hereby or by the Collateral Agreements; or (D) assuming approval
by Seller's shareholders in accordance with the rules and regulations of
Nasdaq, violate or conflict with the rules, regulations or listing
requirements of Nasdaq or any other exchange or trading market on which
Seller's securities may be listed or traded.
(h) Capitalization.
(i) As of the date hereof, the authorized capital stock of
Seller consists of (x) 400,000,000 shares of Common Stock, par value
$.01 per share, of which 200,000,000 shares are designated Class A
Common Stock, 100,000,000 shares are designated Class B Common Stock,
and 100,000,000 shares are designated Class C Common Stock (the Class A
Common Stock, the Class B Common Stock and the Class C Common Stock are
referred to collectively herein as the "Common Stock"), and (y)
20,000,000 shares of Preferred Stock. As of the date hereof, 15,268,708
shares of Class A Common Stock, 29,804,401 shares of Class B Common
Stock, no shares of Class C Common Stock, 1,616,681 shares of Preferred
Stock, which has been designated 8% Series A Cumulative Preferred Stock,
225,301 shares of Preferred Stock, which has been designated 121/8%
Series B Senior Redeemable Exchangeable Preferred Stock, par value $.01
per share, and 2,300,000 shares of Preferred Stock, which has been
designated 6 3/4% Series C Cumulative Convertible Preferred Stock, are
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issued and outstanding and no shares of any class or series are held in
treasury.
(ii) All of the issued and outstanding shares of capital stock
of Seller have been, and on the Closing Date will be, duly authorized,
validly issued, fully paid and nonassessable.
(iii) As of the Closing Date, the Shares will have been
duly authorized and, when issued to the ASkyB Buyer and the MCI Buyer,
upon payment of the consideration therefor, will be validly issued,
fully paid and non-assessable, and the issuance will not be subject to
(x) any Liens (other than those relating to the activities of the
Transferors) or (y) any preemptive or similar rights of any security
holder of Seller.
(iv) As of the date hereof, except as set forth in Section
3(h) of the Seller Disclosure Schedule, (A) all of the issued shares of
capital stock of each Significant Subsidiary of Seller are owned,
directly or indirectly, by Seller; (B) there are no outstanding or
authorized convertible or exchangeable securities of Seller or any
Significant Subsidiary, options, warrants, rights, contracts, calls,
puts, rights to subscribe, conversion rights, or agreements or
commitments pursuant to which any Person has any rights to acquire from
Seller or any Significant Subsidiary, and neither Seller nor any
Significant Subsidiary has any obligations, contingent or otherwise, to
repurchase, redeem or otherwise acquire any shares of capital stock or
voting securities of Seller or any Significant Subsidiary; (C) there are
no outstanding or authorized stock appreciation, phantom stock or
similar rights of Seller or any Significant Subsidiary; and (D) there
are no voting trusts, proxies or any other agreements or understandings
to which Seller or any Significant Subsidiary is a party or of which it
has Knowledge with respect to the voting of the capital stock or voting
securities of Seller or any Significant Subsidiary.
(i) SEC Filings.
(i) Seller has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission
("SEC") since January 1, 1995, and Seller has heretofore made available
to the Transferors, in the form filed with the SEC (including any
exhibits thereto), (A) the Annual Reports on Form 10-K of Seller for the
fiscal years ended December 31, 1995, December 31, 1996 and December 31,
1997 (the "1997 Annual Report"), respectively, and the Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 31, 1998, June 30, 1998
and September 30, 1998 (the "September Quarterly Report"), respectively;
(B) all proxy and information statements relating to meetings of
stockholders of Seller (whether annual or special) held since January 1,
1995; and (C) all other reports and registration statements (including
all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K)
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filed by Seller with the SEC since January 1, 1995 (including all
amendments to each of the foregoing, the forms, reports and other
documents referred to in clauses (A) through (C) being referred to
herein, collectively, as the "Seller Disclosure Documents"). The Seller
Disclosure Documents and other forms, reports or other documents filed
by Seller with the SEC after the date of this Agreement but prior to the
Closing Date (x) were prepared, or will be prepared, in accordance with
the Securities Act or the Securities Exchange Act, as the case may be,
and the rules and regulations thereunder, and (y) did not at the time
they were filed, or will not at the time they are filed, with the SEC
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(ii) Each of the consolidated financial statements (including
any notes thereto) contained in the Annual Reports on Form 10-K of
Seller for the fiscal years ended December 31, 1995, December 31, 1996
and December 31, 1997, and Quarterly Reports on Form 10-Q of Seller for
the quarterly periods through and including September 30, 1998, was
prepared in accordance with generally accepted accounting principles and
all applicable rules of the SEC and fairly presents in all material
respects the consolidated financial position, results of operations and
cash flows of each of Seller and its consolidated Subsidiaries as at the
respective dates thereof and for the respective periods indicated
therein, subject, in the case of unaudited statements, to normal
year-end adjustments.
(iii) Except as set forth in the 1997 Annual Report and
the September Quarterly Report, or as otherwise set forth in Section
3(i) of the Seller Disclosure Schedule, neither Seller nor its
consolidated Subsidiaries had, as of the respective dates thereof, any
Liability that (i) would be required under generally accepted accounting
principles to be reflected in such consolidated balance (including the
notes thereto) or (ii) would reasonably be expected to have,
individually or in the aggregate, a Seller Material Adverse Effect.
(j) Absence of Certain Changes. As of the date hereof, since
September 30, 1998, and except as (i) set forth in the 1997 Annual Report or
in the September Quarterly Report or (ii) disclosed in Section 3(j) of the
Seller Disclosure Schedule, or as otherwise contemplated by this Agreement or
the Collateral Agreements, there has not been any event, occurrence or
development of a state of circumstances or facts which has had or reasonably
would be expected to have a Seller Material Adverse Effect.
(k) Brokers' Fees. Neither Seller nor any Subsidiary of Seller
has any Liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this
Agreement for which any of the Transferors would be liable.
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4. Representations and Warranties of the Transferors. Each of ASkyB,
News Corporation and MCI, jointly and severally, represents and warrants to
Seller as follows:
(a) Representations and Warranties True, Correct and Complete.
Each of ASkyB, News Corporation and MCI represents and warrants to Seller
that the statements contained in this Section 4 that are qualified by
reference to materiality or a material adverse effect are true, correct and
complete as of the date of this Agreement and will be true, correct and
complete as of the Closing Date and all other statements in this Section 4
that are not so qualified are true, correct and complete in all material
respects as of the date of this Agreement and will be true, correct and
complete in all material respects as of the Closing Date except, in each
case, (i) for such representations and warranties that are expressly made as
of the date of this Agreement, in which case such representations and
warranties need only to be true, correct and complete on and as of the date
of this Agreement, (ii) for such representations and warranties that are
expressly made as of an earlier date, in which case such representations and
warranties need only to be true, correct and complete on and as of such
earlier date and (iii) as disclosed in a document referring specifically to
the representations and warranties in this Section 4 which has been delivered
by the Transferors to Seller on or prior to the date hereof (the "Transferor
Disclosure Schedule"). Nothing in the Transferor Disclosure Schedule shall
be deemed adequate to disclose an exception to a representation or warranty
made herein unless the Transferor Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty
made herein (unless the representation or warranty itself solely addresses
the existence of the document or other item). The Transferor Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section.
(b) Organization of the Transferors. ASkyB is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Delaware. News Corporation is a corporation duly organized
under the laws of South Australia, Australia. MCI is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware.
(c) Power and Authority of the Transferors.
(i) Each of the Transferors has all requisite corporate or
limited liability company power and authority to own, lease and operate
the Transferred Assets as now conducted and to execute and deliver this
Agreement and each Collateral Agreement to which it is a party,
including any additional documents contemplated by this Agreement, and
to perform its obligations hereunder and thereunder.
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(ii) Each of the Transferors has all governmental licenses,
authorizations, consents and approvals required to own, lease and
operate the Transferred Assets being transferred by it, except where the
failure to have such governmental licenses, authorizations, consents and
approvals would not, individually or in the aggregate, have a
Transferred Asset Material Adverse Effect.
(d) Corporate Authorization. The execution, delivery and
performance by each of the Transferors of this Agreement and each of the
Collateral Agreements to which such Transferor is a party, and the
consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action of each Transferor. This
Agreement and each of the Collateral Agreements to which each Transferor is a
party, including any additional documents contemplated by this Agreement,
constitutes (or when executed, will constitute) the valid and legally binding
obligation of each Transferor, enforceable against each Transferor, in
accordance with each document's respective terms and conditions, except to
the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of
creditors' rights generally or by general equitable principles.
(e) Governmental Authorization. The execution, delivery and
performance by each Transferor of this Agreement and each of the Collateral
Agreements to which each Transferor is a party, and the consummation of the
transactions contemplated hereby and thereby, do not require any consent,
approval, authorization or permit of, or filing with or notification to any
governmental or regulatory authority, except (A) for (i) compliance with any
applicable requirements of the Hart-Scott-Rodino Act, and the rules and
regulations thereunder; (ii) compliance with any applicable provisions of the
Securities Act and the rules and regulations thereunder, state securities or
"blue sky" laws and state takeover laws; (iii) compliance with any applicable
requirements of the Securities Exchange Act, and the rules and regulations
thereunder; and (iv) compliance with any applicable requirements of the
Regulatory Provisions, and (B) where the failure to obtain such consents,
approvals, authorizations and permits, or to make such filings or
notifications, would not prevent or delay in any material respect the
consummation of the transactions contemplated hereby or thereby or otherwise
prevent the Transferors from performing their respective obligations under
this Agreement or any of the Collateral Agreements to which such Transferor
is a party in accordance with the terms and subject to the conditions hereof
and thereof, and would not, individually or in the aggregate, have a
Transferred Asset Material Adverse Effect.
(f) Noncontravention. Except as set forth in Section 4(f) of the
Transferor Disclosure Schedule and Section 4(e) hereof, the execution,
delivery and performance of this Agreement and each of the Collateral
Agreements to which each of the Transferors is a party do not, and the
consummation of the transactions contemplated hereby and thereby will not,
(A) contravene or conflict with the certificate of incorporation, by-laws or
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other organizational or charter documents of each of the Transferors; (B)
contravene or conflict with or constitute a violation of any provision of any
statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or court
binding upon or applicable to any of the Transferors, or any of their
respective properties or assets; or (C) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, require any
notice or give rise to a loss of any benefit under, any of the Transferred
Assets or any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which any of the
Transferors is a party or by which any of them is bound or to which any of
the Transferred Assets, is subject or result in the creation or imposition of
any Security Interests on any of the Transferred Assets, which contravention,
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or loss of benefit would have a Transferred Asset
Material Adverse Effect or adversely affect the ability of any Transferor to
consummate the transactions contemplated hereby or by the Collateral
Agreements.
(g) Gilbert Property.
(i) ASkyB owns good and marketable title to the Gilbert
Property, free and clear of all Liens or other matters affecting
Seller's or its Subsidiaries' title to or possession of the Gilbert
Property, except for Liens (a) for taxes and other governmental charges,
assessments or fees which are not yet due and payable or (b) set forth
on Section 4(g)(i) of the Transferor Disclosure Schedule.
(ii) There are no outstanding options or rights of first
refusal to purchase the Gilbert Property, or any portion thereof or
interest therein; and there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any party
or parties the right of use or occupancy of any portion of the Gilbert
Property.
(iii) ASkyB and News Corporation shall keep and maintain
the Gilbert Property substantially in the same condition as it exists on
the date hereof and shall preserve the Gilbert Property from
deterioration, other than ordinary wear and tear; provided, however,
that Seller acknowledges and agrees that the Transferors are under no
obligation to continue construction of or make any additional
improvements to any of the structures, furniture, fixtures or equipment
located at the Gilbert Property, including, without limitation, the
improvements described in Section 4(g)(iii) of the Transferor Disclosure
Schedule, other than pursuant to the Gilbert Contracts.
(iv) With respect to the Gilbert Property:
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(A) as of the date hereof, there are no pending or, to
the Knowledge of any of the Transferors, threatened condemnation
proceedings relating to the Gilbert Property;
(B) there are no parties (other than ASkyB) in
possession of the Gilbert Property who are lawfully in possession;
(C) the use and condition of and the operations on the
Gilbert Property are in compliance with Environmental Laws, except where
the failure to comply, individually or in the aggregate, would not have
a Transferred Asset Material Adverse Effect;
(D) as of the date hereof, (i) there are no judicial or
administrative actions, proceedings or investigations pending or, to the
Knowledge of any Transferor, currently threatened to revoke any
environmental permits required for the current use of and the operations
on the Gilbert Property, and (ii) ASkyB has not received any written
notice from any governmental entity or written notice from any Person to
the effect that there is lacking such permit;
(E) as of the date hereof, there are no judicial or
administrative actions, proceedings, or investigations pending or, to
the Knowledge of any Transferor, currently threatened against ASkyB
alleging the violation of, or liability pursuant to, any Environmental
Law, except for liabilities or violations which could not reasonably be
expected to have, individually or in the aggregate, a Transferred Asset
Material Adverse Effect;
(F) except as set forth in Section 4(g)(iv)(H) of the
Transferor Disclosure Schedule, neither ASkyB nor News Corporation has
Knowledge of, nor has filed any notice with respect to the Gilbert
Property under any Environmental Law indicating, past or present
treatment, storage, transfer, release, manufacture, presence or disposal
of or reporting a release or currently threatened release of hazardous
material into the environment, except for such releases that could not
reasonably be expected to have, individually or in the aggregate, a
Transferred Asset Material Adverse Effect;
(G) neither ASkyB nor News Corporation is subject to any
outstanding order, injunction, judgment, decree, ruling, assessment, or
arbitration award or any agreement with any governmental entity or other
Person, or to any federal, state, local or foreign investigation
respecting (i) Environmental Laws or (ii) the release or currently
threatened release of any hazardous material, except in either case for
such orders, injunctions, judgments, decrees, rulings, assessments,
arbitration awards, or agreements which could not reasonably be expected
to have, individually or in the aggregate, a Transferred Asset Material
Adverse Effect;
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(H) except as set forth in Section 4(g)(iv)(H) of the
Transferor Disclosure Schedule, none of the operations on the Gilbert
Property involves or, to ASkyB's Knowledge, previously involved the
generation, transportation, treatment, storage, release, use,
manufacture or disposal of hazardous waste, as defined under 40 C.F.R.
Parts 260-270 or any state, local or foreign equivalent, except for as
may be permitted by law or as could not reasonably be expected to have,
individually or in the aggregate, a Transferred Asset Material Adverse
Effect;
(I) ASkyB will provide to Seller, as promptly as
practicable, all environmental reports the existence of which it is
aware concerning the Gilbert Property;
(J) as of the date hereof, ASkyB has expended to date in
respect of the Gilbert Property not less than $109 million, excluding
capitalized interest;
(K) as of the date hereof, (1) the buildings and
improvements are located within the boundary lines of the Gilbert
Property, and do not encroach on any easement which may burden the land,
(2) the land does not serve any adjoining property for any purpose
inconsistent with the use of the land, and (3) the Gilbert Property is
not located within any flood plain, wetland, or subject to any similar
type of restriction for which any permits or licenses necessary for the
use thereof have not been obtained, except where such encroachment or
restriction would not, individually or in the aggregate, have a
Transferred Asset Material Effect;
(L) as of the date hereof, all facilities located on the
Gilbert Property are supplied with utilities and other services
necessary for the current use and operation of such facilities; and
(M) as of the date hereof, the Gilbert Property abuts on
and has direct vehicular access to a public road.
(v) Section 4(g)(v) of the Transferor Disclosure Schedule sets
forth a listing of all insurance policies (other than title insurance) in
force associated with the Gilbert Property and the amount of coverage
thereunder. Each such insurance policy is in full force and effect, and the
rights of the parties thereunder will not be affected in any material respect
by the transactions contemplated by this Agreement and the Collateral
Agreements. ASkyB shall maintain all such insurance policies or similar
coverages until the Closing Date, and shall obtain an endorsement to all such
policies requiring the insurer to notify Seller prior to any cancellation or
termination thereof or amendment thereto.
(h) Assigned Contracts.
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(i) The Transferors have delivered to Seller a correct and
complete copy of each Assigned Contract, as amended to date, listed in
Sections 2(b)(ii) and (v) of the Transferor Disclosure Schedule.
(ii) Except as set forth in Section 4(h) of the Transferor
Disclosure Schedule, each of the Transferors has complied with and
performed in all material respects all of its obligations required to be
performed under each of the Assigned Contracts to which it is a party.
(iii) Except as set forth in Section 4(h) of the
Transferor Disclosure Schedule, with respect to each Assigned Contract
so listed: (A) the arrangement or agreement is legal, valid and binding
obligation of the applicable Transferor and, to the Knowledge of such
Transferor, each of the other parties thereto, enforceable against such
parties in accordance with the terms thereof, and is in full force and
effect; (B) the arrangement or agreement will continue to be legal,
valid, binding and enforceable and in full force and effect on identical
terms immediately following the Closing; (C) none of the Transferors is
in breach or default under any Assigned Contract to which it is a party,
and no event has occurred which, with notice or lapse of time, or both,
would constitute a breach or default by any of the Transferors, or
permit termination, modification, or acceleration, under the arrangement
or agreement; (D) to the Knowledge of the Transferors, no third party is
in breach or default under any Assigned Contract, and no event has
occurred which, with notice or lapse of time, or both, would constitute
a breach or default by such party thereunder or permit termination,
modification, or acceleration, under the arrangement or agreement;
(E) none of the Transferors has received written notice canceling,
terminating or repudiating or exercising any option to cancel, terminate
or repudiate under any of the Assigned Contracts to which it is a party
and none of the Transferors has any Knowledge that any party has failed
to comply with or perform all of its obligations required to be
performed under any of the Assigned Contracts; (F) none of the
Transferors has any Knowledge that the validity of any of the Assigned
Contracts to which it is a party is being contested by a third party;
(G) neither Sky I nor Sky II (as hereinafter defined) have been
delivered into storage; and (H) as of the date hereof, the Transferors
know of no reason why the launch vehicle will not be available by the
August 31, 1999 date with respect to Sky I or the fourth quarter of 1999
date with respect to Sky II, specified in Sections 5(f)(ii) and
5(f)(iii), respectively, other than as set forth in the letter dated
September 18, 1998 from James Dongog of International Launch Services to
an employee of Loral.
(iv) Subject to the receipt of necessary consents, the
execution and delivery by the Transferors of this Agreement and the
Collateral Agreements to which a Transferor is a party and the
consummation of the transactions contemplated hereby and thereby have
not resulted and will not result in a breach or default under, or permit
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any party to modify any obligation under, or cause or permit any
termination, cancellation or loss of benefits under, any of the Assigned
Contracts.
(i) Intellectual Property. Each of the Transferors owns or has
the right to use pursuant to license, sublicense, agreement or permission all
Intellectual Property currently necessary for the construction, use or
operation of the Transferred Assets. The Transferors have no Knowledge of
any condition or event that would prevent Seller from obtaining in a timely
manner all Intellectual Property necessary to complete the construction and
launch of Sky I and Sky II at no cost to Seller, or to use or operate any of
the Transferred Assets.
(j) Litigation. Sections 4(j), 4(l)(i) and 4(l)(ii) of the
Transferor Disclosure Schedule sets forth each instance in which any
Transferor (i) is subject to any unsatisfied judgment, order, decree,
stipulation, injunction, or charge or (ii) is a party or, to the Knowledge of
such Transferor and the directors and officers (and employees with
responsibility for litigation matters) of such Transferor or any Subsidiary
of such Transferor, is threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator, other than any
judgment, order, decree, stipulation, injunction, charge, complaint, action,
suit, proceeding, hearing or investigation that, individually or in the
aggregate, would not reasonably be expected to have a Transferred Asset
Material Adverse Effect.
(k) Legal Compliance. Except as set forth in Sections 4(k),
4(l)(i) and 4(l)(ii) of the Transferor Disclosure Schedule, as of the date
hereof, and, with respect to the Satellite Contracts and the MCI FCC License,
as of the Closing Date as well, each of the Transferors has complied in all
material respects, and the Transferred Assets, including the operations
thereof, are in compliance in all material respects, with all laws
(including, without limitation, all Environmental Laws), including rules and
regulations thereunder, of federal, state, local and foreign governments (and
all agencies thereof), except for failures which would not, individually or
in the aggregate, reasonably be expected to have a Transferred Asset Material
Adverse Effect or a material adverse effect on the consummation of the
transactions contemplated by this Agreement and the Collateral Agreements,
and no charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against any Transferor
alleging any failure to comply with any such law or regulation which,
individually or in the aggregate, could reasonably be expected to have a
Transferred Asset Material Adverse Effect.
(l) FCC Matters
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(i) Except as set forth in Section 4(l)(i) of the Transferor
Disclosure Schedule, the MCI FCC License is valid; MCI controls and has
always controlled the MCI FCC License and the system authorized
thereunder; MCI has timely and completely performed all obligations
required to date under the MCI FCC License; MCI has timely submitted all
filings and reports required thereunder; MCI has taken all actions
required of MCI to date to achieve international coordination of the
authorized system, including, without limitation, all actions required
to date to achieve (a) all necessary modifications to the International
Telecommunication Union's Region 2 Broadcasting-Satellite Service Plan
and associated feeder link plan set forth at Appendices 30 and 30A to
the International Radio Regulations and (b) coordination of the system's
Telemetry, Tracking and Control functions; and has proceeded with the
construction of the DBS system with "diligence" (as such term is used in
the Regulatory Provisions); and such DBS system has been designed and is
being constructed to comply with, and when so constructed will be in
compliance with, all obligations required to date under the MCI FCC
License and the applicable Regulatory Provisions, including without
limitation the geographic service requirements currently imposed on DBS
permittees.
(ii) Except as set forth in Section 4(l)(ii) of the Transferor
Disclosure Schedule, ASkyB's Earth Station Authorizations are valid and
in full force and effect, ASkyB has performed to date all obligations
required to be performed thereunder, and the Gilbert Property includes
Earth Station Facilities that are fully capable of operating in
accordance thereto.
(iii) MCI has delivered to Seller a true, correct and
complete copy of the MCI FCC License. The MCI FCC License is in full
force and effect and is unimpaired by any materially adverse condition.
MCI has delivered to Seller true, correct and complete copies of all
material correspondence from the FCC to MCI relating to the MCI FCC
License and all material correspondence, submissions and/or other
filings from MCI to the FCC relating thereto sent to or received by MCI
subsequent to the auction of 28 frequency channels at the 110 West
Longitude orbital location. Except as set forth in Section 4(l)(i) of
the Transferor Disclosure Schedule, no application, action or proceeding
is pending for the renewal or modification of the MCI FCC License, and
no application, complaint, action or proceeding is pending or, to the
Knowledge of MCI, threatened, that may result in the revocation,
modification, non-renewal or suspension of the license or the imposition
of any administrative or judicial sanction with respect to MCI. MCI has
no Knowledge of any failure of MCI to comply (whether or not known by or
disclosed to the FCC or any other Person) in all material respects with
all Regulatory Provisions applicable to the U.S. Satellite Business, and
with the terms and conditions of the MCI FCC License, including, but not
limited to, any due diligence obligations or reporting requirements
associated with the MCI FCC License.
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(iv) Except for the Earth Station Authorizations, neither
ASkyB nor News Corporation holds or controls any license in connection
with the U.S. Satellite Business contemplated to be operated by MCI,
News Corporation and ASkyB.
(v) Section 4(l)(v) of the Transferor Disclosure Schedule
sets forth a listing of all insurance policies in force associated with
any satellite or other facility related to the Transferred Assets. Each
such insurance policy is in full force and effect, and the rights of the
parties thereunder will not be affected in any material respect by the
transactions contemplated by this Agreement or any Collateral Agreement.
(vi) Except as contemplated by Section 5(b) hereof, no
consent, approval, authorization, order or waiver of, or filing with,
the FCC is required under the applicable Regulatory Provisions to be
obtained or made by MCI in connection with the transactions contemplated
by this Agreement, except such as may already have been obtained and
made.
(m) Transferred Assets.
(i) No Person other than the Transferors and their respective
Affiliates has any right, title or interest in, or with respect to, the
MCI FCC License, and the rights being transferred by MCI hereunder with
regard to the MCI FCC License, constitute all of the rights, including
contractual rights, held by the Transferors and their respective
Affiliates with regard to the MCI FCC License. Any rights of News
Corporation or ASkyB or any of their Affiliates relating to the MCI FCC
License are either included in the Transferred Assets or will be
terminated prior to the Closing.
(ii) No Person, other than ASkyB, has any right, title or
interest in, or with respect to, the Earth Station Authorizations, and
the rights being transferred by ASkyB hereunder with regard to the Earth
Station Authorizations constitute all of the rights, including
contractual rights, held by ASkyB with regard to the Earth Station
Authorizations. The Satellite Contracts include all of the contracts,
agreements, understandings, rights, insurance policies and arrangements
necessary for the construction, launch or insurance of Sky I and Sky II.
The Gilbert Contracts include all of the maintenance and equipment
contracts, agreements, understandings, rights, warranties and
arrangements of ASkyB with respect to the Gilbert Property.
(n) Broker's Fees. The Transferors do not have any Liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which the
Seller would be liable.
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(o) Resale. Each of the ASkyB Buyer and the MCI Buyer is
acquiring the Shares under this Agreement for its own account solely for the
purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act.
Each of the ASkyB Buyer and the MCI Buyer has such knowledge and experience
in financial and business matters as to be capable of evaluating the risks
and merits of an investment in the Shares and is able to bear the economic
risk of such investment. Each of the ASkyB Buyer and the MCI Buyer
acknowledges and agrees that none of the Shares have been registered under
the Securities Act and such Shares may be sold or disposed of in the absence
of such registration only pursuant to an exemption from such registration and
in accordance with the terms of this Agreement and Seller's transfer agent is
authorized to place stop transfer instructions on the Seller's stock transfer
records and may refuse to transfer any Shares not transferred in compliance
therewith or in compliance with the restrictions on transfer set forth in
Section 9(m).
5. Further Agreements of the Parties.
(a) General. Each of the Parties will cooperate to its fullest
extent and use its respective best efforts to take all action and to do all
things necessary, proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Section 6 below) as soon as practicable following the
date of this Agreement.
(b) Notices and Consents. Seller shall give all required notices
to its stockholders and to third parties, and shall use its best efforts to
obtain all required consents, including, without limitation, all Requisite
Corporate Approvals and all required consents of Seller's bondholders, all
consents required by Nasdaq or any other exchange where Seller's securities
may be listed or trading and any other material third-party consents that may
be required or that the Transferors reasonably may request, in connection
with the transactions contemplated by this Agreement. Each of the
Transferors shall give all required notices to third parties, and shall use
its best efforts to obtain all required consents, including, without
limitation, all consents required by counterparties to the Satellite
Contracts, regulatory authorities and any other material third-party consents
that may be required or that Seller reasonably may request, in connection
with the transactions contemplated by this Agreement. Within five (5)
calendar days following the date of this Agreement, each of the Parties shall
file any Notification and Report Forms and related materials that it may be
required to file with the Federal Trade Commission ("FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust
Division") under the Hart-Scott-Rodino Act, and shall make any further
filings pursuant thereto that may be necessary, proper or advisable. Within
five (5) calendar days following the date of this Agreement, each of the
Parties shall make all notifications and file all applications and related
materials that it may be required to file with the FCC or any other federal,
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state or foreign government or governmental agency having authority with
respect to licenses, permits or authorizations for the use of orbital slots
or the provision of communications services or other communications licenses,
permits or authorizations in connection with the transactions contemplated
hereby, and shall use its best efforts to obtain at theble date all necessary
consents, authorizations and approvals, including FCC Approval for assignment
of the MCI FCC License. As promptly as is practicable after the date of this
Agreement, each of the Parties shall take any additional action, including,
without limitation, the implementation of an Acceptable Alternative
Arrangement, and any additional filings, submissions or applications required
by the FCC, the FTC and the Antitrust Division, that may be necessary, proper
or advisable to effect to the fullest extent feasible the consummation of the
transactions contemplated by this Agreement and the Collateral Agreements in
connection with any other notices to, filings with, and authorizations,
consents and approvals of, governments, governmental agencies and third
parties that it may be required to give, make or obtain and shall refrain
from taking any action the purpose or effect of which could reasonably be
expected to make less likely that such authorizations, consents and approvals
will not be given, made or obtained on the terms provided for in this
Agreement. Without limiting the generality of the foregoing, each party
shall: (i) use all reasonable efforts to cooperate in all respects with each
other in connection with any filing, submission, adversarial proceeding or
the timing thereof; (ii) in connection with any investigation or other
inquiry, including any proceeding initiated by a private party, keep the
other parties informed on a timely basis of any material communication
received by such party from, or given by such party to, the FTC, the
Antitrust Division, the FCC or any other governmental authority and of any
material communication received or given in connection with any proceeding by
a private party, in each case regarding any of the transactions contemplated
by this Agreement, and permit any other party to preview any material
communication given by or to it; and (iii) consult with each other, in
advance of any meeting or conference with such governmental authorities or,
in any proceeding by a private party. The Parties will use their best
efforts to obtain such approvals as promptly as possible and, in this regard,
provide all information reasonably requested, assist and cooperate with one
another to make the necessary filings and take such steps as may be necessary
to secure the non-objection of the relevant antitrust and regulatory
authorities, including FCC Approval for assignment of the MCI FCC License.
(c) Operation of Business.
(i) During the period between the date hereof and the Closing
Date, (A) each of the Transferors shall use commercially reasonable
efforts in the Ordinary Course of Business, (1) to preserve the value
and utility of the Transferred Assets, (2) to preserve the goodwill of
its suppliers and others having business relations with such Transferor
with respect to any Transferred Assets and (3) to perform and observe
all the terms, covenants and conditions required to be performed and
observed by it under the Satellite Contracts and all FCC and other
-26-
governmental permits, licenses and other authorizations with respect to
the Transferred Assets, in each case, except to the extent that a
failure to do so would not result in a Transferred Asset Material
Adverse Effect; provided, however, that timely requests for extension of
operation or certification deadlines applicable to Earth Station
Authorizations shall be deemed to be a commercially reasonable effort
required by this paragraph; (B) except as contemplated by this
Agreement, the Transferors shall not agree to materially modify the
deliverables pursuant to, or waive any material performance under, any
of the Assigned Contracts without the consent of Seller, which consent
shall not be unreasonably withheld; (C) except for the issuance of
shares of Common Stock pursuant to the exercise of outstanding rights,
warrants, options, convertible securities or exchangeable securities
(including any of the foregoing that are assumed in connection with the
acquisition of any Person), Seller shall not issue any shares of Common
Stock (or securities convertible into or exchangeable for Common Stock)
at a price per share (or having a conversion or exchange price per
share, if a security convertible into or exchangeable for Common Stock)
less than the Current Market Price per share of Common Stock; (D) Seller
shall not issue or fix a record date for the issuance to holders of
Common Stock of rights, options, or warrants to subscribe for or
purchase Common Stock (or securities convertible into or exchangeable
for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or exchangeable
for Common Stock) less than the Current Market Price per share of Common
Stock (excluding any of the foregoing that are assumed or issued in
connection with the acquisition of any Person); and (E) MCI shall take
all actions reasonably necessary to keep the MCI FCC License in full
force and effect until the Closing.
(ii) If it comes to the attention of any of the Transferors
that any events or circumstances regarding the Transferred Assets
require the taking of any action to preserve the value and utility of
the Transferred Assets, such Transferor will (A) promptly notify Seller
of such events or circumstances and of any potential responses to such
events and circumstances of which such Transferor is aware and (B) take
such actions as shall be requested by Seller and reasonably required to
preserve such value and utility.
(iii) At any time after the date hereof, until the date
that is 30 days prior to the Closing Date, Seller may notify the
Transferors in writing that it does not require the assignment of one or
more of the Gilbert Contracts. In such case, the Transferors shall be
permitted to terminate any such contract, and it shall be designated an
"Excluded Contract" for purposes of this Agreement and shall no longer
be included in the Transferred Assets.
(d) Assignment of the MCI FCC License. In accordance with
Section 5(b), upon execution of this Agreement, ASkyB, News Corporation, MCI
-27-
and Seller shall seek FCC Approval of the assignment of the MCI FCC License
to Seller or Newco. Each of the Transferors and Seller shall take all
reasonable steps necessary, and shall supply to the other parties and/or to
the FCC all information reasonably necessary, to obtain such FCC Approval,
and shall take all reasonable steps necessary, including the implementation
of an Acceptable Alternative Arrangement, to effect to the fullest extent
feasible the consummation of the transactions contemplated in this Agreement
and the Collateral Agreements , and shall cooperate with respect to any
required submission to the FCC and/or the International Telecommunication
Union, including any submission required to allow use of the 110 and 119
West Longitude orbital locations in conjunction with a single consumer
satellite receive antenna; provided, however, that nothing contained in this
Agreement shall create any obligation on the part of Seller to accept (as a
condition to receipt of such FCC Approval or otherwise): (i) any restriction
(other than a restriction imposed in respect of the identity of the owners of
Seller's outstanding voting securities) on the right of Seller to operate
pursuant to the MCI FCC License or the DBS authorizations held by
Subsidiaries of Seller with respect to frequency channels at 61.5 West
Longitude, 119 West Longitude and 148 West Longitude orbital locations,
including, without limitation, the right to use all assigned frequency
channels authorized thereunder to provide high-powered DBS services, other
than any such restrictions generally imposed on operators of high-powered DBS
services, by applicable Regulatory Provisions and restrictions of the types
generally and customarily imposed by the FCC on operators of high-powered DBS
services and such other restrictions, which, individually or in the
aggregate, do not have a Transferred Asset MaterialAdverse Effect; (ii) any
change in the management or ownership (other than as contemplated hereunder)
of Seller, or in any voting or other rights of any shareholder of Seller
other than the Transferors; or (iii) a requirement that Seller dispose of all
or any part of the 21 frequency channels at 119 West Longitude, the 11
frequency channels at 61.5 West Longitude or the 24 frequency channels at
148 West Longitude owned by Subsidiaries of Seller, other than any such
restrictions generally imposed on operators of high-powered DBS services, by
applicable regulatory provisions and restrictions of the types generally and
customarily imposed by the FCC on operators of high-powered DBS services and
such other restrictions, which, individually or in the aggregate, do not have
a Seller Material Adverse Effect (each of the conditions contained in the
foregoing Sections 5(d)(i), (ii) and (iii), which Seller is under no
obligation to accept, are referred to herein as a "Material Condition"). If
the parties implement an Acceptable Alternative Arrangement in lieu of
assigning the MCI FCC License to Seller as provided herein, Seller shall have
the continuing right and option, exercisable in its sole discretion, and for
no additional consideration to the Transferors beyond that contemplated by
this Agreement, to require the Transferors to immediately assign the MCI FCC
License to Seller, upon receipt of FCC Approval, in which case the Acceptable
Alternative Arrangement shall be canceled concurrently with the effectiveness
of such assignment. MCI shall continue to perform all of its material
obligations under the MCI FCC License until the earlier of the Closing Date
or the date of termination of this Agreement, and shall continue to remain in
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"diligence" (as the term is used in the FCC's rules and as defined in the
Regulatory Provisions), and to hold a valid authorization for its DBS System,
until the earlier of the Closing Date or the date of termination of this
Agreement. If the Closing Date shallember 20, 2000, MCI shall confirm to
Seller completion of construction of the first satellite on its proposed DBS
system by December 20, 2000.
(e) Earth Station Authorizations. Subject to Section 4(l)(ii) of
the Transferor Disclosure Schedule, until the earlier of the Closing Date or
termination date of this Agreement, ASkyB shall continue to perform all of
its obligations under its Earth Station Authorizations and to hold valid
authorizations (including through seeking the extension of deadlines for
construction and certification contained in the existing authorizations).
(f) Satellites.
(i) From the date of this Agreement until the Closing Date,
the Transferors agree to continue to perform their respective
obligations under the Satellite Contracts.
(ii) The Transferors hereby confirm that, pursuant to the
Contract dated February 26, 1996 between MCI and Space Systems Loral,
Inc. ("Loral"), as amended by Amendment No. 1 dated March 26, 1996, and
Amendment No. 2 dated as of November 25, 1998 (as amended, the "Loral
Contract"), the acceptance on-orbit of Satellite No. 1 (as defined in
the Loral Contract) ("Sky I") is scheduled to occur no later than August
31, 1999 (subject to launch vehicle availability, as set forth in
Amendment No. 2 to said Contract). The Transferors agree to attempt to
integrate satellite construction and launch preparation as expeditiously
as possible so as to provide for the potential to move up the launch
dates for each of Sky I and Sky II in the event that earlier launch
dates become available. Notwithstanding anything to the contrary in
this Section 5(f)(ii), the Transferors shall have no obligation to
approve the launch of Sky I for a date prior to the Closing Date;
provided, however, that the Transferors shall use their best efforts to
ensure that the launch shall occur at the earliest practicable date
following the Closing in accordance with the terms and provisions of the
Loral Contract, including, to the extent permitted under the Loral
Contract, delaying the launch date for the shortest incremental periods
of time possible which are consistent with the then reasonably
anticipated Closing Date.
(iii) Transferors hereby agree to direct Loral to resume
work immediately after the date hereof on Satellite No. 2 (as defined in
the Loral Contract) ("Sky II") by exercising Option No. 3 of the Loral
Contract (as defined in Amendment No. 2 of the Loral Contract).
Transferors hereby confirm that Loral has agreed to use its best efforts
to ship and launch Sky II by the fourth quarter of 1999.
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(iv) As soon as reasonably practicable following the Closing
Date, the Transferors agree to provide to Seller, at no cost to Seller,
the consulting services of Romulo Pontual with respect to the
construction and launch of Sky I and Sky II, which services shall be
provided on an "as needed" basis, up to the full time and efforts of Mr.
Pontual.
(v) Prior to the Closing Date, the Transferors shall use
commercially reasonable efforts consistent with past practice to provide
that Loral will continue to perform under the Satellite Contracts in
accordance with their terms in order to achieve completion of
construction and launch of each of Sky I and Sky II at the earliest
practicable date.
(vi) On or prior to the Closing Date, the Transferors shall
provide for policies of insurance covering Sky I and Sky II, which
policies shall either name Seller or a wholly owned Subsidiary of Seller
designated by Seller as the named insured, or cause such policies to be
issued in the name of Seller or such Subsidiary, providing for insurance
in the amount of $225 million per satellite and continuing for one year
following launch, regardless of the actual date of launch, and which
shall otherwise contain such customary terms and conditions as Seller
reasonably requests; provided, however, that to the extent the
Transferors are able to terminate existing policies and receive a full
refund in respect thereof, Seller may request the Transferors to
procure, and if requested the Transferors shall procure, from such
insurance companies or brokers as Seller directs, insurance ("Seller's
Launch Insurance") in the amount of $225 million per satellite, per
launch plus one year in orbit, containing such customary industry terms
and conditions as Seller shall reasonably request.
(vii) Subject to Section 8(b) of this Agreement, from and
after the Closing Date, the Transferors shall continue to pay, on behalf
of Seller, as and when due, all amounts due under the Satellite
Contracts, as such obligations to pay arise pursuant to the Satellite
Contacts in existence as of the Closing Date, or, in the event of a
breach or termination of any Satellite Contract for any reason, as such
obligations to pay would reasonably be expected to have arisen pursuant
to the Satellite Contracts in existence as of the Closing Date had there
been no such breach or termination; provided, however, that if Seller
agrees to a modification of any of the Satellite Contracts and as a
result is entitled to a reduction in the purchase price therein, the
Transferors shall be only obligated to pay the purchase price as so
reduced. In the event the Transferors fail to make such payments within
the time periods provided in the Satellite Contracts, the Transferors
shall either (x) pay, in addition to the amounts due, any penalties that
become due under the Satellite Contracts as a result of such failure or
(y) in the event that Seller elects to make such payments, promptly pay
to Seller an amount equal to such payments, together with interest
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thereon at a rate of 17.5% per annum from the date of Seller's payment
until the date of the Transferors' repayment.
(viii) In the event the Transferors are unable to procure
the necessary consents to assignment of any of the Satellite Contracts,
from and after the Closing Date the Transferors shall use their
respective best efforts to provide to Seller all of the benefits
received or to be received under such Satellite Contracts, and the
Transferors shall assign to Seller all of their right, title and
interest in and to each of Sky I and Sky II immediately following their
receipt of title thereto from Loral pursuant to Section 12.1 of the
Loral Contract. In addition, from and after the Closing Date, if the
Transferors have not assigned all of the Satellite Contracts pursuant to
this Agreement, Seller shall have the right to direct all actions to be
taken in connection with such unassigned Satellite Contracts.
(g) Sony Contract.
(i) From and after the Closing Date, the Transferors shall
continue to pay, on behalf of Seller, as and when due, all amounts due
under the Sony Contract as such obligations to pay arise pursuant to the
Sony Contract in existence as of the Closing Date, or, in the event of a
breach or termination of the Sony Contract for any reason, as such
obligations to pay would reasonably be expected to have arisen pursuant
to the Sony Contract in existence as of the Closing Date hereof had
there been no such breach or termination; provided, however, if Seller
agrees to a modification of the Sony Contract and as a result is
entitled to a reduction in the purchase price therein, the Transferors
shall be only obligated to pay the purchase price as so reduced. In the
event the Transferors fail to make such payments within the time periods
provided in the Sony Contract, the Transferors shall either (x) pay, in
addition to the amounts due, any penalties that become due under the
Sony Contract as a result of such failure or (y) in the event that
Seller elects to make such payments, promptly pay to Seller an amount
equal to such payments, together with interest thereon at a rate of
17.5% per annum from the date of Seller's payment until the date of the
Transferors' repayment.
(ii) In the event the Transferors are unable to procure the
necessary consents to assignment of the Sony Contract, from and after
the Closing Date the Transferors shall use their respective best efforts
to provide to Seller all of the benefits received or to be received
under the Sony Contract. In addition, from and after the Closing Date,
if the Transferors have not assigned the Sony Contract pursuant to this
Agreement, Seller shall have the right to direct all actions to be taken
in connection with the Sony Contract.
(h) Full Access. From the date of this Agreement through the
Closing, each of the Transferors, on the one hand, and Seller, on the other
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hand, shall afford to the other party and its representatives free and full
access at all reasonable times to the properties, personnel, books and
records relating to the Transferred Assets or of the Seller, as the case may
be (such access not to unreasonably interfere with the business of such
party), subject to compliance with all export control restrictions, to the
extent applicable, in order that the other party may have full opportunity to
make such investigations as it may reasonably desire to make of all matters
relating to the transactions contemplated hereunder. Notwithstanding the
foregoing, Seller shall not be obligated to disclose any information that is
competitively sensitive or strategically sensitive, and if Seller shall
determine to withhold any information on such grounds, a reasonable summary
of the portions thereof that are not competitively or strategically sensitive
shall be provided to the party requesting information pursuant to this
Section 5(h). Any information provided pursuant to this Section 5(h) shall
be kept confidential by the Transferors and Seller, as applicable, and shall
not be revealed to any Person other than the respective officers, directors,
employees, agents and representatives of such parties (it being agreed that
the Transferors, on the one hand, and Seller, on the other hand, shall be
liable for any breach of this Section 5(h) by any of their respective
officers, directors, employees, agents and representatives), except to the
extent such information (i) is or becomes generally available to the public
(other than as a result of a breach of this Section 5(h) by the recipient of
such information) or (ii) is required to be disclosed under any applicable
law or under subpoena or other legal process. No such investigation shall
diminish in any respect any of the representations or warranties of the
Parties. The Parties shall be entitled to seek injunctive relief or such
other remedy as may be available at law or in equity for any breach by
another Party of this Section.
(i) Notice of Developments. Each Party will give prompt written
notice to the others of any material development affecting the ability of the
Parties to consummate the transactions contemplated by this Agreement or any
of the Collateral Agreements, including, but not limited to, a breach of a
representation, warranty or covenant of this Agreement. No disclosure by any
Party pursuant to this Section 5(i) shall, however, be deemed to amend or
supplement the Seller Disclosure Schedule or Transferor Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty or breach of
covenant.
(j) NDS Equipment. The Parties agree that all equipment
previously delivered by any Affiliate of News Corporation to Seller or its
Subsidiaries (the "NDS Equipment") at its broadcast operations center at
Cheyenne, Wyoming or elsewhere, will be removed by News Corporation or an
Affiliate at the expense of News Corporation or such Affiliate. The Parties
further agree that any agreements related to the acquisition and delivery of
the NDS Equipment are terminated as of the date of this Agreement and shall
be of no further force or effect. News Corporation, on the one hand, and the
Seller, on the other hand, on behalf of themselves and their respective
Affiliates, agree to fully, finally and forever release and discharge Seller
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or News Corporation, as the case may be, and their respective Affiliates,
officers, directors, employees, representatives and agents from and against
any and all claims, actions, damages, liabilities, costs or expenses arising
out of or relating to the NDS Equipment.
(k) Abeyance of EchoStar Litigation. Seller, News Corporation and
ASkyB shall promptly as practicable following the date of this Agreement file
the Stipulation annexed as Exhibit H hereto with the United States District
Court for the District of Colorado to stay all discovery, deadlines, motions
and other proceedings in EchoStar Communications Corporation v. The News
Corporation Limited, pending in the United States District Court for the
District of Colorado (the "EchoStar Litigation").
(l) Transfer Taxes and Prorations. Any sales or other transfer
taxes resulting from the transfer of the Transferred Assets shall be borne
one-half by the Transferors, on the one hand, and one-half by the Seller, on
the other hand. Notwithstanding the foregoing, real estate taxes and other
customary prorations made in connection with the sale of real property in the
state of Arizona shall be made as of the Closing Date in accordance with
Arizona custom and usage.
(m) Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement or the Collateral Agreements or the transactions contemplated
hereby or thereby, including, among other things, the orderly transfer and
transition of the Transferred Assets from the Transferors to Seller or Newco,
as the case may be, each of the Parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, the costs and expenses
of such actions to be borne one-half by the Transferors, on the one hand, and
one-half by the Seller, on the other hand, except as otherwise provided in
this Agreement or any of the Collateral Agreements. None of the Parties
shall take any action or fail to take any action which would reasonably be
expected to frustrate the intent and purposes of this Agreement and the
Collateral Agreements or the transactions contemplated hereby or thereby.
(n) No Solicitation. Except for the transactions contemplated by
this Agreement, from and after the date of this Agreement, until the date of
an FCC Order or, in the case of a Bureau Order, the later of October 31, 1999
or five days from the date of such Bureau Order, none of the Transferors
shall, nor shall they authorize or permit any officer, director or employee
of, or any investment banker, attorney, accountant, or other representative
retained by, any one of them to, directly or indirectly, solicit, initiate,
encourage or entertain (including by way of furnishing information)
discussions, inquiries, offers or proposals or participate in any discussions
or negotiations for the purpose or with the intention of leading to any
proposal or offer from any Person which constitutes or concerns, or may
reasonably be expected to lead to, any proposal for a merger or other
business combination involving any proposal or offer to acquire any portion
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of the Transferred Assets. Each of the Transferors shall promptly (and in any
event within two business days) notify Seller of any inquiry it receives from
any Person with respect to the subject matter of the first sentence of this
Section 5(n).
(o) Bundling. Seller and MCI agree that, following the Closing,
MCI shall have the non-exclusive right to bundle Seller's DBS service with
MCI's telephony service offerings on mutually agreeable terms.
(p) Casualty; Condemnation.
(i) The Transferors, after learning of any fire or other
casualty on or to the Gilbert Property, shall promptly notify Seller
thereof, and, as soon as reasonably practicable thereafter, the
Transferors shall provide Seller with an estimate of the cost of repairs
and the amount of insurance proceeds available to undertake such
repairs. Within ten (10) days after receipt of such notices and
estimates, Seller shall in turn notify the Transferors whether Seller
wants the Transferors to commence repair of the resultant damage of the
Gilbert Property. If Seller wants the Transferors to so commence, or if
Transferors, in the exercise of prudent business judgment, decide to so
commence, the Transferors shall proceed to repair the Gilbert Property
but shall not be obligated to expend more than any collected insurance
proceeds and the amount of any insurance deductible. Should such fire
or other casualty create an emergency situation, the Transferors may
elect to take such measures to protect, secure and repair the Gilbert
Property as the Transferors in their own discretion determine. At the
Closing Date, the Transferors shall pay to Seller any proceeds they have
received in respect of any such fire or other casualty; provided,
however, that if the Transferors have undertaken any repairs in
accordance with this Section 5(p)(i), the Transferors shall turn over to
Seller the balance of any unused insurance proceeds in the Transferors'
possession. At the Closing, the Transferors shall also assign (without
warranty or recourse to the Transferors) to Seller all of the
Transferors' rights to any payments to be made after the Closing Date
under any hazard insurance policy then in effect with respect to the
Gilbert Property. If it is necessary to prosecute a claim to maximize
the proceeds of insurance recovery, from and after the Closing Date the
Transferors shall diligently undertake such prosecution for the benefit
of Seller. The Transferors shall not enter into any agreement to
undertake repairs with a term that extends beyond the Closing Date
without the prior written consent of Seller, which consent shall not be
unreasonably withheld. Following the Closiet forth above, the
Transferors shall have no further liability or responsibility with
respect to any such preceding fire or other casualty at the Gilbert
Property. Following the Closing Date, Seller shall reimburse the
Transferors for the cost of any repairs made by the Transferors prior to
the Closing and not reimbursed by the Transferors' hazard insurance
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company, to the extent Seller receives any insurance proceeds from and
after the Closing Date.
(ii) At the Closing Date, the Transferors shall pay to Seller
any proceeds it has received in respect of any taking of any part of the
Gilbert Property, and shall assign to Seller without recourse or
warranty its right to any future proceeds in respect thereof. Following
the Closing Date, the Transferors shall have no further liability or
responsibility with respect to any such preceding taking or proceeding
regarding the Gilbert Property. If it is necessary to prosecute a claim
to maximize the proceeds of taking recovery, from and after the Closing
Date the Transferors shall diligently undertake such prosecution for the
benefit of Seller.
(q) Title Insurance. ASkyB will obtain, not later than thirty
(30) calendar days following the date of this Agreement with respect to the
Gilbert Property, a commitment for an extended coverage ALTA Owner's Policy
of Title Insurance Form 1992 issued by a Chicago Title Insurance Company or
such other title insurer reasonably satisfactory to Seller (and, if requested
by Seller, reinsured in whole or in part by one or more insurance companies
and pursuant to a direct access agreement reasonably acceptable to Seller),
such amount as Seller reasonably may determine to be the fair market value of
such real property (including all improvements located thereon), insuring
title to such real property to be in the name of Seller as of the Closing
(subject only to the title exceptions described above in Section 4(g)(i) of
the Transferor Disclosure Schedule) and containing in substance such
endorsements as ASkyB obtained in Chicago Title Insurance Company Policy No.
106 0000449, a copy of which has been furnished to Seller. The cost of such
title policy shall be borne one-half by the Transferors, on the one hand, and
one-half by Seller, on the other hand.
(r) Surveys. With respect to the Gilbert Property, ASkyB will
procure in preparation for the Closing a current survey certified to Seller,
prepared by a licensed surveyor and conforming to current ATLA Minimum Detail
Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters shown customarily on such surveys, and showing access
affirmatively to a public street or road (the "Survey"). The cost of the
Survey shall be borne one-half by the Transferors, on the one hand, and
one-half by Seller, on the other hand.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Transferors. The obligation
of each of the Transferors to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions on or prior to the Closing, any of which may be waived by News
Corporation:
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(i) The representations and warranties of Seller set forth in
Sections 3(b)(i), 3(c)(i), 3(d)(ii), 3(e), 3(g)(A), 3(g)(D) and
3(h)(iii) that are qualified by materiality or a material adverse effect
shall be true and correct at and as of the Closing Date, and all other
representations and warranties of Seller set forth in such sections that
are not so qualified shall be true and correct in all material respects
at and as of the Closing Date, except, in each case, (i) for such
representations and warranties that are expressly made as of an earlier
date in which case such representations and warranties shall only be
true and correct on and as of such earlier date and (ii) as disclosed in
the Seller Disclosure Schedule;
(ii) Seller shall have procured all of the consents and
approvals specified in Section 6(a)(ii) of the Seller Disclosure
Schedule;
(iii) There shall be no statute, law, judgment, decree,
injunction, rule or order of any federal, state, local or foreign
government, governmental authority, governmental department, commission,
administrative or regulatory agency, instrumentality, court or
arbitrator ("Governmental Entities") outstanding that prohibits,
restricts or delays consummation of the transactions contemplated by
this Agreement;
(iv) Seller shall have delivered to the Transferors a
certificate, dated the Closing Date, in form and substance reasonably
satisfactory to the Transferors, executed by an executive officer of
Seller, to the effect that each of the conditions specified above in
Section 6(a)(i)-(iii) is satisfied in all respects;
(v) All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise
been terminated, and the Parties shall have received the FCC Approval
and other authorizations, consents and approvals of other Governmental
Entities set forth in the Seller Disclosure Schedule and the Transferor
Disclosure Schedule;
(vi) The Transferors shall have received from counsel to
Seller an opinion addressed to the Transferors and dated as of the
Closing Date in form and substance reasonably satisfactory to the
Transferors;
(vii) Seller shall have executed and delivered to the
Transferors the Registration Rights Agreement;
(viii) Seller shall have executed and delivered, and shall
have caused Charles W. Ergen to execute and deliver, to the Transferors
the Settlement Agreement and Mutual Release;
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(ix) Seller shall have caused to be executed and delivered to
the Transferors the Set Top Box Agreement;
(x) Seller shall have executed and delivered to the
Transferors the Retransmission Consent Agreement; and
(xi) Seller shall have executed and delivered to the
Transferors an Assignment and Assumption Agreement with respect to the
Assigned Contracts, in a form to be mutually agreed upon by the parties
thereto (the "Contract Assignment and Assumption"), and the assumption
of the Assigned Contracts and the MCI FCC License shall be effective as
of the Closing Date.
In the event that one or more of the preceding conditions to the
Transferor's obligations to close have not been satisfied on or prior to the
Closing Date, the Transferors may nonetheless proceed to close (without
waiving such condition) and seek a purchase price adjustment from or pursue a
cause of action for damages against Seller for the failure of Seller to
satisfy such condition.
(b) Conditions to Obligation of Seller. The obligation of Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions on or prior to
the Closing, any of which may be waived by Seller:
(i) The representations and warranties of each of the
Transferors set forth in Sections 4(b) (excluding the representations
and warranties with respect to good standing status), 4(c)(i), 4(d),
4(f)(A), 4(h)(iii)(A), 4(h)(iii)(B), 4(h)(iii)(C), 4(l)(i) and 4(m)(i)
that are qualified by reference to materiality or a material adverse
effect shall be true and correct at and as of the Closing Date, and all
other representations and warranties set forth in such sections that are
not so qualified shall be true and correct in all material respects at
and as of the Closing Date except, in each case, (i) for such
representations and warranties that are expressly made as of an earlier
date, in which case such representations and warranties shall only be
true and correct on and as of such earlier date and (ii) as disclosed in
the Transferor Disclosure Schedule;
(ii) The Transferors shall have procured all of the consents
specified in Section 6(b)(ii) of the Transferor Disclosure Schedule;
provided, however, that if the Transferors are unable to procure a
consent to the assignment of an Assigned Contract, but are able to
provide Seller with all of the benefits under such Assigned Contract at
no additional cost to Seller, then Seller shall waive this condition
with respect to such Assigned Contract;
(iii) There shall be no statute, law, judgment, decree,
injunction, rule or order of any Governmental Entity which prohibits,
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restricts or delays consummation of the transactions contemplated by
this Agreement;
(iv) Each of the Transferors shall have delivered to Seller a
certificate, dated the Closing Date, in form and substance reasonably
satisfactory to Seller, executed by an executive officer of each of the
Transferors, respectively, to the effect that (A) each of the
conditions specified above in Section 6(b)(i)-(iii) is satisfied in all
respects and (B) the representations and warranties set forth in Section
4(o) are true and correct in all material respects;
(v) All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise
been terminated, and the Parties shall have received the FCC Approval
and other authorizations, consents and approvals of other Governmental
Entities set forth in the Seller Disclosure Schedule and the Transferor
Disclosure Schedule;
(vi) Seller shall have received from counsel to MCI, an
opinion or opinions addressed to Seller and dated as of the Closing Date
in form and substance reasonably satisfactory to Seller;
(vii) The Transferors shall have executed and delivered to
Seller the Registration Rights Agreement;
(viii) The Transferors shall have executed and delivered
the Settlement Agreement and Mutual Release;
(ix) The Transferors shall have caused to be executed and
delivered to Seller the Set Top Box Agreement;
(x) The Transferors shall have caused to be executed and
delivered to Seller the Retransmission Consent Agreement;
(xi) The Transferors shall have caused to be executed and
delivered to Seller the Components License Agreement;
(xii) The Transferors shall have delivered to Seller a
Special Warranty Deed in the form of Exhibit I annexed hereto, conveying
the Gilbert Property to Seller;
(xiii) The Transferors shall have satisfied their
obligations contained in Section 5(f)(vi) hereof; and
(xiv) The Transferors shall have executed and delivered to
Seller the Contract Assignment and Assumption, and an instrument or
instruments of transfer in form and substance reasonably satisfactory to
Seller with respect to the transfer of the Earth Station Authorizations
and the Intellectual Property set forth in Section 2(b)(vi), and the
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assignment of all Assigned Contracts, the MCI FCC License, the Earth
Station Authorization and the Intellectual Property shall be effective
as of the Closing Date.
In the event that one or more of the preceding conditions to Seller's
obligations to close have not been satisfied on or prior to the Closing Date,
Seller may nonetheless proceed to close (without waiving such condition) and
seek a purchase price adjustment from or pursue a cause of action for damages
against the Transferors for the failure of the Transferors to satisfy such
condition.
7. Remedies for Breach of this Agreement.
(a) Survival. All covenants and agreements contained in this
Agreement and the right to indemnification with respect to all
representations and warranties contained in this Agreement or in any
certificate, document or statement delivered pursuant hereto, shall survive
(and not be affected in any respect by) the Closing, any investigation
conducted by any party hereto and any information which any party may
receive. Notwithstanding anything to the contrary in the foregoing, the right
to indemnification with respect to each representation and warranty (but not
the covenants and other agreements) contained in this Agreement or made
pursuant to any certificate, document or statement delivered pursuant hereto
shall terminate on the last day of the eighteenth month after the month that
includes the Closing Date (the "Survival Date"); provided, however, that the
right to indemnification with respect to such representations and warranties,
and the Liability of any party with respect thereto, shall not terminate with
respect to any claim, whether or not fixed as to Liability or liquidated as
to amount, with respect to which such party has been given written notice
prior to the Survival Date.
(b) Indemnification Provisions for Benefit of the Transferors.
Seller shall indemnify each of the Transferors and their respective
shareholders, officers, directors, employees, agents and Affiliates
(collectively, "Transferor Indemnitees") and hold each of them harmless from
and against and in respect of any Damages directly or indirectly incurred by
any of them as a result of any breach of a representation, warranty, covenant
or agreement of Seller made hereunder. For purposes of determining any such
Damages incurred by the Transferor Indemnitees, no regard shall be given to
the adjustment provisions set forth in Section 2(a)(ii) hereof.
(c) Indemnification Provisions for Benefit of Seller. Each of
News Corporation, MCI and ASkyB, jointly and severally, shall indemnify
Seller, and its shareholders, officers, directors, employees, agents and
Affiliates and hold each of them harmless from and against and in respect of
any Damages directly or indirectly incurred by any of them as a result of any
breach of a representation, warranty, covenant or agreement of News
Corporation, ASkyB, the ASkyB Buyer, MCI or the MCI Buyer made hereunder
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other than Section 4(g)(i), if any Damages suffered as a result thereof are
recoverable under Seller's title insurance policy.
(d) Notification; Rights of Parties to Settle or Defend. Promptly
after the occurrence of any event which may give rise to a claim for
indemnification under this Section 7, the party entitled to indemnification
(the "Indemnified Party") shall notify the indemnifying party (the
"Indemnitor") in writing of such claim (the "Claims Notice"). The Claims
Notice shall describe the asserted liability in reasonable detail, and shall
indicate the amount (estimated, if necessary and to the extent feasible) of
the Damages that have been or may be suffered by the Indemnified Party.
Failure by the Indemnified Party to give a Claims Notice to the Indemnitor in
accordance with the provisions of this Section 7(d) shall not relieve the
Indemnitor of its obligations hereunder except to the extent that the
Indemnitor has been actually and materially prejudiced by such failure. The
Indemnitor may elect to compromise or defend, at its own expense, by its own
counsel and to the extent an election with respect to such compromise or
defense is available to the Indemnified Party, any asserted liability. If
the Indemnitor elects to compromise or defend such asserted liability, it
shall within 30 calendar days (or sooner, if the nature of the asserted
liability so requires) notify the Indemnified Party of its intent to do so,
and the Indemnified Party shall cooperate, at the expense of the Indemnitor,
in the compromise of, or defense against, such asserted liability. If the
Indemnitor elects to defend any claim, the Indemnified Party shall make
available to the Indemnitor any books, records or other documents within its
control that are necessary or appropriate for such defense. If the
Indemnitor elects not to compromise or defend the asserted liability, fails
to notify the Indemnified Party of its election as herein provided or
contests its obligation to indemnify under this Agreement (or if counsel to
the Indemnified Party advises such party that there may be a potential
conflict of interest between the Indemnitor and the Indemnified Party, or
between the Indemnifieder indemnified party, or that different or additional
defenses from those available to the Indemnified Party may be available to
any other indemnified party), the Indemnified Party may pay, compromise or
defend (at the expense of the Indemnitor) such asserted liability as the
Indemnified Party considers appropriate. The Parties agree to cooperate
fully with one another in the defense, settlement or compromise of any
asserted liability. Notwithstanding the foregoing, neither the Indemnitor
nor the Indemnified Party may settle or compromise any claim over the
objection of the other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld. In any event, the Indemnified
Party and the Indemnitor may participate, at their own expense, in the
defense of such asserted liability. For the avoidance of doubt, the rights
to indemnification under this Agreement shall arise in the event of both
claims asserted directly by one Party against the other as well as claims
asserted by third parties against a Party.
(e) Exclusive Remedy. Except with respect to a termination of
this Agreement pursuant to Section 8(a)(ii) or Section 8(a)(iii) hereof, the
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Parties acknowledge and agree that the indemnity rights set forth in this
Section 7 are to be their exclusive monetary remedies for breaches of the
representations, warranties and covenants contained herein; provided,
however, that nothing in this Section 7(e) shall limit in any way the
availability of specific performance, injunctive relief or other equitable
remedies to which a Party may otherwise be entitled or a cause of action for
fraud.
(f) Limitations. Any indemnity amounts payable by an Indemnitor
hereunder shall be net of any tax benefit received by the Indemnified Party
as a result of the claim or event giving rise to indemnification.
8. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement only as provided below:
(i) The Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) The Transferors may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing in the event
Seller is in breach, in any material respect, of any of the
representations and warranties set forth in Section 6(a)(i), unless such
breach shall be subject to cure, in which event termination may only be
effected if such breach shall remain uncured on the 60th day following
receipt of notice of breach; provided, however, that if any such breach
is incapable of cure within 60 days and Seller acted reasonably
diligently during such 60-day period in attempting to cure such breach,
this Agreement shall not be terminated pursuant to this Section 8(a)(ii)
for so long as the breach remains subject to cure and Seller acts
continuously with reasonable diligence in attempting to cure such
breach;
(iii) Seller may terminate this Agreement by giving
written notice to the Transferors at any time prior to the Closing in
the event any of the Transferors is in breach, in any material respect,
of any of the representations and warranties set forth in Section
6(b)(i), unless such breach shall be subject to cure, in which event,
termination may only be effected if such breach shall remain uncured on
the 60th day following receipt of notice of breach; provided, however,
that if any such breach is incapable of cure within 60 days and the
breaching party acted reasonably diligently during such 60-day period in
attempting to cure such breach, this Agreement shall not be terminated
pursuant to this Section 8(a)(iii) for so long as the breach remains
subject to cure and the breaching party acts continuously with
reasonable diligence in attempting to cure such breach; or
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(iv) Either the Transferors or Seller may terminate this
Agreement by giving written notice to Seller or the Transferors, as the
case may be:
(A) if, within the later of (x) December 31, 1999 and
(y) sixty (60) days following the date of a Bureau Order, the FCC
does not release a Preliminary FCC Approval, or if such Preliminary
FCC Approval is released within such sixty (60) day period but does
not become an FCC Approval within thirty (30) days thereafter;
(B) if, within sixty (60) days following the date of an
FCC Order, the FCC does not release a Preliminary FCC Approval, or
if such Preliminary FCC Approval is released within such sixty (60)
day period but does not become an FCC Approval within thirty (30)
days thereafter; or
(C) if within sixty (60) days following the date of an
FCC Approval or FCC Order which conditionally grants the FCC's
consent to the assignment of the MCI FCC License to Seller or
Newco, the Parties are unable to satisfy a condition other than a
Material Condition.
(b) Effect of Termination.
(i) If any Party terminates this Agreement pursuant to
Section 8(a), this Agreement shall become null and void and all
obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party, except for (A) any Liability
of any Party then in breach and (B) the provisions of the third sentence
of Section 5(h) relating to confidential information which shall survive
termination.
(ii) Notwithstanding the foregoing, (A) if this Agreement is
terminated for any reason other than pursuant to Section 8(a)(ii) or
Section 8(a)(iii), Seller shall purchase from the Transferors, and the
Transferors shall sell to Seller, Sky II, together with all rights
associated therewith, immediately following the later of the date of
termination or the Transferors' receipt of title to Sky II from Loral
pursuant to Article 12.1 of the Loral Contract, i.e., in-orbit delivery,
at a purchase price equal to the actual direct payments made under the
Loral Contract in respect of Sky II through the date of purchase, and
Seller shall assume all obligations of the Transferors with respect to
Sky II under Article 13 of the Loral Contract dealing with orbital
performance incentives; provided, however, that, as an alternative to
purchasing Sky II, Seller may, at its option, purchase Sky I, together
with all rights associated therewith, from the Transferors, immediately
following the later of the date of termination or the Transferors'
receipt of title to Sky I from Loral pursuant to Article 12.1 of the
Loral Contract, i.e., in-orbit delivery, at a purchase price equal to
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the actual direct payments made under the Loral Contract in respect of
Sky I through the date of purchase, and Seller shall assume all
obligations of Transferors with respect to Sky I under Article 13 of the
Loral Contract dealing with orbital performance incentives; (B) if this
Agreement is terminated by the Transferors pursuant to Section 8
(a)(ii), the Transferors may elect to sell to Seller, and if so elected
Seller shall purchase from the Transferors, at the Transferors' option,
either Sky I or Sky II, together with all rights associated therewith,
immediately following the later of the date of termination or the
Transferors' receipt of title thereto from Loral pursuant to Article
12.1 of the Loral Contract, i.e, in-orbit delivery, at a purchase price
equal to the actual direct payments made under the Loral Contract in
relicable, through the date of purchase, and Seller shall assume all
obligations of the Transferors with respect to Sky I or Sky II, as the
case may be, under Article 13 of the Loral Contract dealing with orbital
performance incentives; or (C) if this Agreement is terminated by Seller
pursuant to Section 8(a)(iii), Seller may elect to purchase from the
Transferors, and if so elected the Transferors shall sell to Seller, at
Seller's option, either Sky I or Sky II, together with all rights
associated therewith, immediately following the later of the date of
termination or the Transferors' receipt of title thereto from Loral
pursuant to Article 12.1 of the Loral Contract, i.e, in-orbit delivery,
at a purchase price equal to the actual direct payments made under the
Loral Contract in respect of Sky I or Sky II, as applicable, through the
date of purchase, and Seller shall assume all obligations of the
Transferors with respect to Sky I or Sky II, as the case may be, under
Article 13 of the Loral Contract dealing with orbital performance
incentives. As an alternative to the foregoing provisions with respect
to the Transferors' sale to Seller of Sky I or Sky II, and subject to
Loral's prior written consent, Transferors may assign to Seller the
Loral Contract as it relates to the applicable satellite, together with
all rights associated therewith. In all events, Transferors may also
assign Seller's Launch Insurance, if any, relating to the applicable
satellite, in which event, the purchase price for such satellite, shall
include the actual direct payments made with respect to such satellite
under Seller's Launch Insurance policy. The purchase price for either
Sky I or Sky II shall be payable in cash on or prior to the 180th day
(the "Payment Date") following the assignment of the Loral Contract, the
termination of this Agreement or the Transferors' receipt of title
thereto from Loral pursuant to Article 12.1 of the Loral Contract (the
"Transfer Date"), i.e, in-orbit delivery, as applicable, togetheron at
the LIBOR rate from the Transfer Date to the payment date of such
purchase price; provided, however, that if Seller fails to pay such
purchase price, together with all accrued interest thereon, on or prior
to the Payment Date, interest will accrue on such unpaid purchase price
and accrued interest at a rate of 17.5% per annum from the 181st day
following the Transfer Date to the payment date therefor. All
representations, warranties and covenants of the Transferors in this
Agreement with respect to the Satellite Contracts shall be applicable in
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connection with the purchase or assignment of either Sky I or Sky II
pursuant to this paragraph.
(iii) Without limiting the generality of subsection (b)(i)
above, if this Agreement is terminated pursuant to either Section
8(a)(ii) or Section 8(a)(iv), Seller, News Corporation and ASkyB shall
promptly as practicable following the date of such termination execute
and file the Settlement Agreement and Mutual Release and the Final
Stipulation of Dismissal annexed thereto with the United States District
Court for the District of Colorado to dismiss the EchoStar Litigation
with prejudice provided, however, if this Agreement is terminated
pursuant to Section 8(a)(iv)(C) because an FCC Approval or FCC Order
contained a condition that is within the control of the Transferors, and
such condition is not satisfied, even though the Seller acted in good
faith in connection therewith, the EchoStar Litigation shall not be
dismissed.
9. Miscellaneous.
(a) Press Releases and Announcements. No Party shall issue any
press release or announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the
other Party, which approval shall not be unreasonably withheld; provided,
however, that no Party shall be prohibited from making any public disclosure
it believes in good faith on advice of counsel is required by law or
regulation, including, the rules and regulations of any securities exchange
or inter-dealer quotation system upon which the securities of one of the
Parties are listed or admitted for trading (in which case the disclosing
Party will advise the other Parties prior to making the disclosure). Prior
to the making of any disclosure required by law or regulation, the disclosing
Party shall consult with the other Parties, to the extent feasible, as to the
content of such public announcement or press release and provide the other
Party with an opportunity to review and comment thereon.
(b) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the Schedules
hereto and the Collateral Agreements referred to herein), constitutes the
entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, that
may have related in any way to the subject matter hereof (except for any
contemporaneous writing signed by Seller, on the one hand, and any of the
Transferors, on the other hand, which specifically refers to their
Agreement).
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
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respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of the Transferors and Seller, except as provided
in Sections 2(a) and (b) with respect to the designation of the ASkyB Buyer
(if it is not a Party), the MCI Buyer (if it is not a Party) and Newco and in
Section 9(m)(iv) with respect to the transfer of Shares to direct or indirect
wholly-owned Subsidiaries of News Corporation or MCI; provided, however,
that as a condition to any such designation, ASkyB, MCI Buyer and Newco, as
the case may be, shall agree in writing to be bound by all of the provisions
of this Agreement applicable to the Party making such designation; and
provided further, that as a condition to any transfer pursuant to Section
9(m)(iv), the transferee shall agree in writing to be bound by the
restrictions set forth in Section 9(m).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Seller: EchoStar Communications Corporation
5701 South Santa Fe Drive
Littleton, Colorado 80120
Attn: David K. Moskowitz, Esq.
Senior Vice President, General
Counsel and Secretary
Telecopy: (303) 723-1699
If to MCI: MCI Telecommunications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Michael Salsbury, Esq.
General Counsel
Telecopy: (202) 887-3353
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If to ASkyB or News The News Corporation Limited
Corporation: c/o News America Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Senior Executive Vice
President and Group General Counsel
Telecopy: (212) 768-2029
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(i) Amendments and Waivers. No amendment of any provisions of
this Agreement shall be valid unless the same shall be in writing and signed
by the Parties hereto. Any Party may waive compliance by another Party with
any provision of this Agreement, which waiver must be in writing. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final judgment
of a court of competent jurisdiction declares that any term or provision
hereof is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be appealed.
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(k) Expenses. Except as otherwise provided in this Agreement,
each of the Parties shall bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(l) Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any
Party. Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Any reference to the
"transactions contemplated hereby," the "transactions contemplated by this
Agreement," the "transactions contemplated under this Agreement" or the
"transactions contemplated pursuant to this Agreement" shall be deemed to
also refer to any other document, agreement or certificate to be executed or
delivered on or prior to the Closing. The Parties intend that each
representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Restrictions on Transfer. Notwithstanding anything to the
contrary set forth herein or in the Registration Rights Agreement, the ASkyB
Buyer and the MCI Buyer agree that:
(i) Until such time (the "Completion Date") as all amounts
due under the Satellite Contracts have been paid (including, at the
Transferors' option, through the payment into escrow of all amounts
scheduled to become due under the Satellite Contracts), the ASkyB Buyer
and the MCI Buyer (collectively, the "Buyers") may, directly or
indirectly, sell, assign, transfer, pledge, hypothecate or otherwise
dispose of any interest in the Shares (a "Disposition") in an amount not
to exceed 10% of the Shares issued to the Buyers on the Closing Date
(subject to adjustment for any stock split, stock dividend, subdivision
or combination of the Common Stock or any other action having a similar
effect on the Common Stock);
(ii) Subject to subsection (i) above, from and after the
Closing Date and during the two-year period commencing on the Closing
Date, Dispositions may be made by the ASkyB Buyer and the MCI Buyer in
an amount not to exceed for each 365-day period thereafter one-third
(1/3) of the Shares issued to the Buyers on the Closing Date (subject to
adjustment for any stock split, stock dividend, subdivision or
combination of the Common Stock or any other change in corporate
structure affecting the Common Stock); provided, however, that any
Shares permitted to be sold, but not sold during the first 365-day
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period, shall be added to the number of Shares permitted to be sold
during the second 365-day period; and provided, further, that the ASkyB
Buyer and the MCI Buyer shall be permitted pursuant to a firm commitment
underwritten public offering pursuant to an effective registration
statement under the Securities Act, to make a Disposition of Shares in
an amount not to exceed (x) the difference between 50% of the Shares
issued to the Buyers and the number of shares Disposed of by the Buyers
in accordance with this subsection (ii) during the first 365-day period,
or (y) the difference between 80% of the Shares issued to the buyers and
the number of Shares Disposed of by the buyers in accordance with this
subsection (ii) during the first and second 365-day periods;
(iii) Subject to subsection (i) above, from and after the
second anniversary of the Closing Date, Dispositions may be made by the
ASkyB Buyer and the MCI Buyer without regard to any restriction on the
amount of Shares sold, except as may be imposed by applicable law; and
(iv) Nothing contained in this Section 9(m) shall limit the
right of the ASkyB Buyer or the MCI Buyer to transfer any of its Shares
to a direct or indirect wholly-owned subsidiary of either MCI or News
Corporation.
(n) Legends. The Transferors agree to the placement on
certificates representing the Shares purchased pursuant hereto, of a legend,
substantially as set forth below (except that such legend shall not be placed
on any Shares that have been registered under the Securities Act or if, in
the opinion of counsel (which opinion shall be in form and substance
satisfactory to Seller), such legend is no longer required under the
Securities Act):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE
OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF
SUCH OTHER STATE OR JURISDICTION. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PROVISIONS (INCLUDING THE PROVISIONS THAT
RESTRICT THE TRANSFER OF SUCH SECURITIES) OF A PURCHASE AGREEMENT, DATED
AS OF NOVEMBER 30, 1998, AMONG AMERICAN SKY BROADCASTING, LLC, THE NEWS
CORPORATION LIMITED, MCI TELECOMMUNICATIONS CORPORATION AND ECHOSTAR
COMMUNICATIONS CORPORATION (THE "COMPANY"), COPIES OF WHICH ARE ON FILE
AT THE OFFICES OF THE SECRETARY OF THE COMPANY. THE HOLDER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS."
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event of
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any of the provisions of this Agreement are not performed in accordance with
their specific terms or are otherwise breached. Accordingly, each of the
Parties agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of the Agreement and to
enforce specifically this Agreement and the terms and Agreement and the terms
and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled, at law
or in equity.
(p) Incorporation of Schedules. The Schedules identified in this
Agreement, including the Seller Disclosure Schedule and the Transferor
Disclosure Schedule, are incorporated herein by reference in their entirety
and made a part hereof.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
MERICAN SKY BROADCASTING, LLC
By: /s/ Lawrence A. Jacobs
----------------------------
Name: Lawrence A. Jacobs
Title: Senior Vice President
THE NEWS CORPORATION LIMITED
By: /s/ Arthur M. Siskind
----------------------------
Name: Arthur M. Siskind
Title: Director
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ William S. Armistead
----------------------------
Name: William S. Armistead
Title: Vice President
ECHOSTAR COMMUNICATIONS CORPORATION
By: /s/ David K. Moskowitz
----------------------------
Name: David K. Moskowitz
Title: Senior Vice President
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Charles W. Ergen
EchoStar Communications Corporation
5701 South Santa Fe Drive
Littleton, Colorado 80120
November 30, 1998
American Sky Broadcasting, LLC
c/o The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
MCI Telecommunications Corporation
1800 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Ladies and Gentlemen:
Reference is made to the Purchase Agreement (the "Purchase Agreement"),
dated as of November 30, 1998, by and among American Sky Broadcasting, LLC
("ASkyB"), The News Corporation Limited ("News Corporation"), MCI
Telecommunications Corporation ("MCI") and EchoStar Communications
Corporation (the "Seller"). Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Purchase
Agreement.
1. As a further inducement for the News Corporation, MCI and ASkyB to
enter into the Purchase Agreement, Charles W. Ergen hereby agrees that he
shall:
(i) vote any and all shares of Seller owned, directly or
indirectly, of record or beneficially, by him, in favor of the Purchase
Agreement and the transactions contemplated thereby at any meeting of
stockholders of Seller, held in connection therewith; and
(ii) until such time as the stockholders of Seller approve the
Purchase Agreement and the transactions contemplated thereby, not sell,
dispose of, transfer or encumber or grant any proxies or any other rights of
any nature whatsoever in or to any shares or other securities of Seller such
that his percentage of the voting power of Seller decreases to a percentage
of 50% or less.
2. As a further inducement for Seller to enter into the Purchase
Agreement, News Corporation and MCI agree that, for a period of five years
from the Closing Date, neither News Corporation or MCI nor any Affiliate of
News Corporation or MCI (regardless of whether such Person is an Affiliate on
the date hereof), except as provided herein, shall, directly or indirectly,
acting alone or in concert with others, undertake any of the following
actions unless expressly requested or consented to in writing in advance by
the Board of Directors of Seller to so act:
(i) make, or in any way "participate" in, directly or indirectly,
any "solicitation" of "proxies" or consents to vote, become a "participant"
in any "election contest" (as such terms are defined or used in the proxy
rules of the Securities and Exchange Commission), or seek to advise or
influence any person or entity with respect to the voting of any securities
of Seller or any Affiliate of Seller:
(ii) form, join or in any way participate in a "group" within the
meaning of section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, with respect to any securities of Seller or any Affiliate of Seller
or any securities carrying the right or option to acquire such securities;
(iii) otherwise act, directly or indirectly, alone or in
concert with others, to seek to control or influence in any manner, the
management, board of directors, policies or affairs of Seller or any
Affiliate of Seller or propose to seek to effectuate any combination or
merger with Seller or any Affiliate of Seller or any restructuring,
recapitalization or similar transaction with respect to Seller or any
Affiliate of Seller;
(iv) have any securities of Seller or any Affiliate of Seller on
deposit in a voting trust or subject any securities of Seller or any
Affiliate of Seller to any arrangements with respect to the voting of such
securities or other agreement having similar effect;
(v) initiate or propose, or induce or attempt to induce, advise,
assist or otherwise encourage any other Person to initiate or propose, (a)
any tender offer for any securities of Seller or any Affiliate of Seller (b)
any shareholder proposal with respect to Seller or any Affiliate of Seller,
or (c) any other action described in this paragraph 2; or
(vi) enter in any negotiation, arrangement or understanding with
any third party with respect to any of the foregoing.
3. As further inducement for Seller to enter into the Purchase
Agreement, each of News Corporation and MCI agrees that, for a period of five
years from the Closing Date, each of News Corporation and MCI will, and will
cause its respective Subsidiaries and Affiliates (regardless of whether such
Person is a Subsidiary or an Affiliate on the date hereof) to, at any regular
or special meeting of stockholders or by consent of stockholders at or by
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which News Corporation, MCI or its respective Subsidiaries or Affiliates
(regardless of whether such Person is a Subsidiary or an Affiliate on the
date hereof) are entitled to vote or consent, (i) with respect to the
election of directors of Seller, vote or consent in the manner recommended by
the Board of Directors of Seller, and (ii) with respect to any other action
to be taken by stockholders, either vote in the manner recommended by the
Board of Directors of Seller, or abstain from such vote; provided, however,
that the restrictions set forth in clause (ii) shall not apply to News
Corporation or MCI in the event that the outcome of any such action would
have the effect of discriminating against (x) the holders of Class A Common
Stock vis a vis holders of any other class of the Company's equity securities
or (y) News Corporation or MCI vis a vis any other holder of the Company's
equity securities.
4. Miscellaneous.
(i) Remedies. Any Person having rights under any provision of
this agreement shall be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
agreement and to exercise all other rights granted by law. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this agreement and that any party may in
its sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this agreement. Failure of any party to
exercise any right or remedy under this agreement or otherwise, or delay by a
party in exercising such right or remedy, shall not operate as a waiver
thereof.
(ii) Governing Law; Severability. This agreement shall be
enforced, governed by and construed in accordance with the laws of New York
applicable to agreements made and to be performed entirely within such State.
In the event that any provision of this agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision hereof.
(iii) Merger Clause. This agreement, the Purchase Agreement and
the other Collateral Agreements (as defined in the Purchase Agreement)
(including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
and thereof. There are no restrictions, promises, warranties or undertakings
other than those set forth or referred to herein and therein. This agreement
and the Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
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(iv) Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This agreement, once executed
by a party, may be delivered to any other party hereto by facsimile
transmission of a copy of this agreement bearing the signature of the party
so delivering this agreement.
(v) Amendment. The provisions of this agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by an instrument in
writing executed by each of the parties hereto.
(vi) Notices. Any notices required or permitted to be given under
the terms hereof shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a
nationally recognized overnight delivery service) or by facsimile and shall
be effective five days after being placed in the mail, if mailed by regular
U.S. mail, or upon receipt, if delivered personally or by courier (including
a nationally recognized overnight delivery service) or by facsimile, in each
case addressed to a party. The addresses and facsimile numbers for such
communications shall be as set forth in Section 9(g) of the Purchase
Agreement.
[Signature Page Follows]
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If the foregoing accurately reflects our agreement with respect to
the foregoing matters, please sign a copy of this letter in the space
provided below and return it to the undersigned.
Very truly yours,
ECHOSTAR COMMUNICATIONS CORPORATION
By: /s/ David K. Moskowitz
-----------------------------
Title: Senior Vice President
/s/ Charles W. Ergen
---------------------
Charles W. Ergen
Accepted and agreed as of the date
first-above written:
THE NEWS CORPORATION LIMITED
By: /s/ Arthur M. Siskind
---------------------
Title: Director
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ William S. Armistead
------------------------
Title: Vice President
AMERICAN SKY BROADCASTING, LLC
By: /s/ Lawrence A. Jacobs
-----------------------
Title: Senior Vice President
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