SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)/1/
ECHOSTAR COMMUNICATIONS CORPORATION
-------------------------------------------------------------
(Name of Issuer)
Class A Common Stock, $.01 par value
------------------------------------
(Title of Class of Securities)
282-762-109
-----------
(CUSIP Number)
Arthur M. Siskind, Esq.
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
(212) 852-7000
--------------
with copies to:
Joel I. Papernik, Esq.
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
(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 that 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. Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
Page 1 of 17 pages.
- -------------------
/1/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, as amended (the "Exchange Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Exchange Act (however, see the Notes).
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
The News Corporation Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
South Australia, Australia
- --------------------------------------------------------------------------------
Number of 7 SOLE VOTING POWER
Shares 24,030,000
Beneficially --------------------------------------------------------
Owned by 8 SHARED VOTING POWER
Each -0-
Reporting --------------------------------------------------------
Person with 9 SOLE DISPOSITIVE POWER
24,030,000
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,030,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
61.1%/1/
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- -------------------------
/1/Based on 15,268,768 shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock"), of Echostar Communications Corporation ("Echostar")
outstanding on November 30, 1998, together with the issuance to American Sky
Broadcasting, L.L.C. ("ASkyB") (or a wholly owned subsidiary of the News
Corporation Limited ("News Corporation") designated by ASkyB) of 24,030,000
shares of Class A Common Stock to be issued to the Reporting Persons pursuant to
the Purchase Agreement (as defined herein). Considering the additional 5,970,000
shares of Class A Common Stock to be issued to MCI Telecommunications
Corporation 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 53.1%. 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. Because such Class B Common Stock is convertible
on a one-for-one basis into Class A Common Stock, assuming conversion of 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 32.0%. Because each share of Class B Common Stock is
entitled to 10 votes per share, upon issuance of the Shares, the Reporting
Persons (as hereinafter defined) will beneficially own equity securities of
EchoStar representing approximately 6.9% of the voting power of EchoStar
(assuming no conversion of the Class B Common Stock).
-2-
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
K. Rupert Murdoch
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
[_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
Number of 7 SOLE VOTING POWER
Shares 24,030,000
Beneficially --------------------------------------------------------
Owned by 8 SHARED VOTING POWER
Each -0-
Reporting --------------------------------------------------------
Person with 9 SOLE DISPOSITIVE POWER
24,030,000
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,030,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
61.1%/1/
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
- -------------------------
/1/Based on 15,268,768 shares of Class A Common Stock of Echostar outstanding on
November 30, 1998, together with the issuance to ASkyB (or a wholly owned
subsidiary of News Corporation designated by ASkyB) of 24,030,000 shares of
Class A Common Stock to be issued to the Reporting Persons pursuant to the
Purchase Agreement (as defined herein). Considering the additional 5,970,000
shares of Class A Common Stock to be issued to MCI Telecommunications
Corporation 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 53.1%. 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 of EchoStar. Because such Class B
Common Stock is convertible on a one-for-one basis into Class A Common Stock,
assuming conversion of 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 32.0%. Because each share of
Class B Common Stock is entitled to 10 votes per share, upon issuance of the
Shares, the Reporting Persons will beneficially own equity securities of
EchoStar representing approximately 6.9% of the voting power of EchoStar
(assuming no conversion of the Class B Common Stock).
-3-
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
News America Incorporated/13-3249610
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
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, U.S.A.
- --------------------------------------------------------------------------------
Number of 7 SOLE VOTING POWER
Shares 24,030,000
Beneficially --------------------------------------------------------
Owned by 8 SHARED VOTING POWER
Each -0-
Reporting --------------------------------------------------------
Person with 9 SOLE DISPOSITIVE POWER
24,030,000
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,030,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
61.1%/1/
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
- -------------------------
/1/Based on 15,268,768 shares of Class A Common Stock of Echostar outstanding on
November 30, 1998, together with the issuance to ASkyB (or a wholly owned
subsidiary of News Corporation designated by ASkyB) of 24,030,000 shares of
Class A Common Stock to be issued to the Reporting Persons pursuant to the
Purchase Agreement (as defined herein). Considering the additional 5,970,000
shares of Class A Common Stock to be issued to MCI Telecommunications
Corporation 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 53.1%. 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 of EchoStar. Because such Class B
Common Stock is convertible on a one-for-one basis into Class A Common Stock,
assuming conversion of 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 32.0%. Because each share of
Class B Common Stock is entitled to 10 votes per share, upon issuance of the
Shares, the Reporting Persons will beneficially own equity securities of
EchoStar representing approximately 6.9% of the voting power of EchoStar
(assuming no conversion of the Class B Common Stock).
-4-
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
American Sky Broadcasting, L.L.C./13-3911831
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
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, U.S.A.
- --------------------------------------------------------------------------------
Number of 7 SOLE VOTING POWER
Shares 24,030,000
Beneficially --------------------------------------------------------
Owned by 8 SHARED VOTING POWER
Each -0-
Reporting --------------------------------------------------------
Person with 9 SOLE DISPOSITIVE POWER
24,030,000
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,030,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
61.1%/1/
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- --------------------------------------------------------------------------------
- -------------------------
/1/Based on 15,268,768 shares of Class A Common Stock of Echostar outstanding on
November 30, 1998, together with the issuance to ASkyB (or a wholly owned
subsidiary of News Corporation designated by ASkyB) of 24,030,000 shares of
Class A Common Stock to be issued to the Reporting Persons pursuant to the
Purchase Agreement (as defined herein). Considering the additional 5,970,000
shares of Class A Common Stock to be issued to MCI Telecommunications
Corporation 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 53.1%. 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 of EchoStar. Because such Class B
Common Stock is convertible on a one-for-one basis into Class A Common Stock,
assuming conversion of 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 32.0%. Because each share of
Class B Common Stock is entitled to 10 votes per share, upon issuance of the
Shares, the Reporting Persons will beneficially own equity securities of
EchoStar representing approximately 6.9% of the voting power of EchoStar
(assuming no conversion of the Class B Common Stock).
-5-
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
SCHEDULE 13D
PURSUANT TO SECTION 13(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
IN RESPECT OF
ECHOSTAR COMMUNICATIONS CORPORATION
INTRODUCTORY STATEMENT
- ----------------------
This statement relates to the Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), of EchoStar Communications Corporation, a
Nevada corporation ("EchoStar"). EchoStar, certain of the Reporting Persons (as
hereinafter defined) and MCI Telecommunications Corporation ("MCI") entered into
a Purchase Agreement, dated as of November 30, 1998 (the "Purchase Agreement"),
with respect to the acquisition of Class A Common Stock. The consummation of
the transactions contemplated by the Purchase Agreement is conditioned upon
receipt of any necessary regulatory or governmental consents, as well as other
material conditions. Accordingly, the filing of this Schedule 13D shall not
constitute an admission that, as of the date hereof, any of the Reporting
Persons has acquired beneficial ownership of any voting securities of EchoStar.
The summary descriptions contained in this statement of certain
agreements and documents are qualified in their entirety by reference to the
complete texts of such agreements and documents filed as Exhibits hereto and
incorporated herein by reference.
ITEM 1. SECURITY AND ISSUER.
-------------------
The title of the class of equity securities to which this statement
relates is the Class A Common Stock of EchoStar. The address of the principal
executive offices of EchoStar is 5701 South Santa Fe Drive, Littleton, Colorado
80120.
-6-
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
This statement is being filed by (i) The News Corporation Limited, a
South Australia, Australia corporation ("News Corporation"), with its principal
executive office located at 2 Holt Street, Sydney, New South Wales 2010,
Australia, (ii) K. Rupert Murdoch, a United States citizen, with his business
address at 10201 West Pico Boulevard, Los Angeles, California 90035, (iii) News
America Incorporated, a Delaware corporation ("NAI"), with its principal
executive office located at 1211 Avenue of the Americas, New York, New York,
10036 and (iv) American Sky Broadcasting, L.L.C., a Delaware limited liability
company, with an address c/o News America Publishing Incorporated, 1211 Avenue
of the Americas, New York, New York 10036 ("ASkyB"). News Corporation, K.
Rupert Murdoch, NAI and ASkyB are referred herein collectively as the "Reporting
Persons."
News Corporation is a diversified international communications company
principally engaged in the production and distribution of motion pictures and
television programming; television, satellite and cable broadcasting; the
publication of newspapers, books and magazines; the production and distribution
of promotional and advertising products and services; the development of
digital broadcasting; the development of conditional access and subscription
management systems; and the provision of computer information services.
K. Rupert Murdoch is the Chairman and Chief Executive of News
Corporation; a director of News Limited, News Corporation's principal subsidiary
in Australia; a director of News International plc, News Corporation's principal
subsidiary in the United Kingdom; a director of NAI; Chairman and a director of
Satellite Television Asian Region Limited, the Asia Pacific Region's largest
satellite television broadcaster; and a director of British Sky
-7-
Broadcasting Group plc, which operates the leading pay television broadcasting
services in the United Kingdom and the Republic of Ireland.
NAI is a holding company 100% of which is owned by News Corporation
directly and through certain intermediaries. NAI is the principal subsidiary of
News Corporation in the United States and whose affiliates and subsidiaries
conduct a substantial portion of the United States activities of News
Corporation.
ASkyB is a limited liability company, which was formed for the purpose of
developing, owning and operating a direct broadcast satellite ("DBS") television
service covering the United States. NAI and ASkyB Holdings, Inc., a subsidiary
of NAI, own 99% and 1%, respectively, of the interests in ASkyB.
Approximately 30% of the voting stock of News Corporation is owned by
Cruden Investments Pty. Limited, a subsidiary thereof, K. Rupert Murdoch,
members of his immediate family and a corporation which is controlled by
trustees of settlements and trusts set up for the benefit of the Murdoch family,
certain charities and other persons. Cruden Investments Pty. Limited is a
private Australian incorporated investment company owned by Mr. Murdoch, members
of his family and various corporations and trusts, the beneficiaries of which
include Mr. Murdoch, members of his family and charities. By virtue of shares
of News Corporation owned by corporations which are controlled by the trustees
of settlements and trusts set up for the benefit of the Murdoch family, certain
charities and other persons, and Mr. Murdoch's positions as Chairman and Chief
Executive of News Corporation, Mr. Murdoch may be deemed to control the
operations of News Corporation.
None of the Reporting Persons has, during the last five years, (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to
-8-
a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which it 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 OR AMOUNT OF FUNDS OR OTHER CONSIDERATION.
------------------------------------------------
EchoStar, News Corporation, ASkyB and MCI entered into the Purchase
Agreement with respect to the acquisition of 30,000,000 shares of Class A Common
Stock. Pursuant to the Purchase Agreement, ASkyB (or a wholly owned subsidiary
of News Corporation designated by ASkyB)/*/ shall acquire 24,030,000 shares of
Class A Common Stock (the "ASkyB Shares"), and MCI (or a wholly owned subsidiary
of MCI) shall acquire 5,970,000 shares of Class A Common Stock (the "MCI
Shares," and together with the ASkyB Shares, the "Shares")./**/ Upon
consummation of the transactions contemplated by the Purchase Agreement, the
consideration for the purchase of the Shares by the Reporting Persons and MCI
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 ASkyB, News
Corporation or MCI, include certain real property located in Gilbert, Arizona,
facilities, improvements and equipment thereon, and related contracts for
equipment and maintenance; the Federal Communications Commission ("FCC")
authorization to construct, launch and operate satellites in the DBS service
operating over 28 frequency channels at the 110(degrees)
- -------------------------
/*/Pursuant to Section 2(a)(i)(A) of the Purchase Agreement, ASkyB may designate
a direct or indirect wholly-owned subsidiary of News Corporation to acquire the
ASkyB Shares. In the event of such designation, the Reporting Persons will file
an amendment to this Schedule 13D.
/**/The amount of ASkyB Shares actually issued is subject to adjustment pursuant
to Section 2(a)(ii) of the Purchase Agreement. In the event of an adjustment,
the Reporting Persons will file an amendment to this Schedule 13D.
-9-
West Longitude orbital location; certain FCC earth station authorizations;
contracts with respect to the construction and launch of two satellites; and
intellectual property related to the foregoing.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
The Reporting Persons are acquiring beneficial ownership of the
securities for the purpose of investment.
Other than as described herein, none of the Reporting Persons has any
present plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of EchoStar or the
disposition of securities of EchoStar; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving EchoStar
or any of its subsidiaries; (c) a sale or transfer of a material amount of
assets of EchoStar or any of its subsidiaries; (d) any change in the Board of
Directors or management of EchoStar, including any plans or proposals to change
the number or terms of directors or to fill any existing vacancies on the Board
of Directors of EchoStar; (e) any material change in the present capitalization
or dividend policy of EchoStar; (f) any other material change in EchoStar's
business or corporate structure; (g) changes in EchoStar's charter, by-laws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of EchoStar by any person; (h) a class of securities of
EchoStar being delisted from a national securities exchange or ceasing to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (i) a class of equity securities of EchoStar
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (j)
any action similar to those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
-10-
Upon consummation of the transactions contemplated by the Purchase
Agreement, ASkyB (or a wholly owned subsidiary of News Corporation) will be the
direct beneficial owner of 24,030,000 shares of Class A Common Stock. Upon
issuance, the ASkyB Shares will represent approximately 61.1% of the outstanding
shares of Class A Common Stock.
Upon issuance of the ASKyB Shares and subject to the Letter Agreement
(as defined 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 ASkyB receives the ASkyB Shares, neither ASkyB, nor any of
its 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.
Neither the filing of this Schedule 13D nor any of its contents shall
be deemed to constitute an admission that any of the Reporting Persons 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.
No transactions were effected by the Reporting Persons in the Class A
Common Stock during the 60 days preceding the date hereof.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF THE ISSUER.
---------------------------
In conjunction with the purchase of the Shares, EchoStar, ASkyB, MCI,
News Corporation 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, each of News
Corporation and MCI agreed that,
- -------------------------
/***/Based on 15,268,768 shares of Class A Common Stock, par value $.01 per
share ("Class A Common Stock"), of Echostar Communications Corporation
("Echostar") outstanding on November 30, 1998, together with the issuance to
American Sky Broadcasting, L.L.C. ("ASkyB") (or a wholly owned subsidiary of
News Corporation designated by ASkyB) of 24,030,000 shares of Class A Common
Stock to be issued to the Reporting Persons pursuant to the Purchase Agreement
(as defined herein). Considering the additional 5,970,000 shares of Class A
Common Stock to be issued to MCI Telecommunications Corporation 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 53.1%.
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. Because such Class B Common Stock is convertible on a one-for-one
basis into Class A Common Stock, assuming conversion of 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
32.0%. Because each share of Class B Common Stock is entitled to 10 votes per
share, upon issuance of the Shares, the Reporting Persons will beneficially own
equity securities of EchoStar representing approximately 6.9% of the voting
power of EchoStar (assuming no conversion of the Class B Common Stock).
-11-
for a period of five years after the closing date of the transactions
contemplated by the Purchase Agreement, it will not: (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 EchoStar or its affiliates; (iv) deposit the securities of
EchoStar in a voting trust or similar arrangement; (v) initiate, or induce
another to initiate, a tender offer or shareholder proposal with respect to
EchoStar or its affiliates; or (vi) enter into any negotiation or arrangement
with any third party with respect to any of the above.
Further, each of News Corporation and MCI agreed that for a period of
five years it will: (i) with respect to the election of directors of EchoStar,
vote in the manner recommended by the board of directors of EchoStar; and (ii)
with respect to any other stockholder action, vote as recommended by the Board
of Directors, or abstain from voting. The restrictions set forth in section
(ii) in the preceding sentence shall not apply to News Corporation or MCI as to
actions which would discriminate against (A) the holders of Class A Common Stock
vis a vis holders of any other class of EchoStar's equity securities or (B) News
Corporation or MCI vis a vis any other holder of EchoStar's equity securities.
Under Section 9(m) of the Purchase Agreement, ASkyB (or a wholly owned
subsidiary of News Corporation designated by ASkyB) and MCI (or a wholly owned
subsidiary) (the "Buyers") must abide by 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 therein) have
been paid, 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 Corporation.
-12-
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
---------------------------------
Document Exhibit No.
- ---------------------------------------- -----------
Purchase Agreement, dated as of November 99.1
30, 1998, by and among American Sky
Broadcasting, LLC, The News Corporation
Limited, MCI Telecommunications
Corporation and EchoStar Communications
Corporation.
Letter Agreement, dated November 30, 1998, 99.2
by and among Charles W. Ergen, EchoStar
Communications Corporation, American Sky
Broadcasting, LLC, The News Corporation
Limited and MCI Telecommunications
Corporation.
-13-
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: December 10, 1998
THE NEWS CORPORATION LIMITED
BY: /s/ ARTHUR M. SISKIND
______________________
NAME: ARTHUR M. SISKIND
TITLE: DIRECTOR
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: December 10, 1998
/s/ K. RUPERT MURDOCH
____________________________________
K. RUPERT MURDOCH
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: December 10, 1998
NEWS AMERICA INCORPORATED
BY: /s/ NEWS AMERICA INCORPORATED
______________________________
NAME:
TITLE:
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: December 10, 1998
AMERICAN SKY BROADCASTING, LLC
BY: /s/ AMERICAN SKY BROADCASTING, LLC
__________________________________
NAME:
TITLE:
EXHIBIT 99.1
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
dated as of
November 30, 1998
by and among
AMERICAN SKY BROADCASTING, LLC,
THE NEWS CORPORATION LIMITED,
MCI TELECOMMUNICATIONS CORPORATION
and
ECHOSTAR COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
1. Definitions............................................................ 1
2. Purchase and Sale...................................................... 7
(a) Shares to be Purchased by the Transferors......................... 7
(b) Assets to be Transferred to Seller................................ 8
(c) Assumption of Liabilities......................................... 9
(d) The Closing....................................................... 9
(e) Deliveries at Closing............................................. 9
3. Representations and Warranties of Seller............................... 10
(a) Representations and Warranties True, Correct and Complete......... 10
(b) Organization of Seller and the Significant Subsidiaries........... 10
(c) Power and Authority of Seller..................................... 10
(d) Power and Authority of Significant Subsidiaries................... 11
(e) Corporate Authorization........................................... 11
(f) Governmental Authorization........................................ 11
(g) Noncontravention.................................................. 12
(h) Capitalization.................................................... 12
(i) SEC Filings....................................................... 13
(j) Absence of Certain Changes........................................ 14
(k) Brokers' Fees..................................................... 14
4. Representations and Warranties of the Transferors...................... 14
(a) Representations and Warranties True, Correct and Complete......... 14
(b) Organization of the Transferors................................... 15
(c) Power and Authority of the Transferors............................ 15
(d) Corporate Authorization........................................... 15
(e) Governmental Authorization........................................ 15
(f) Noncontravention.................................................. 16
(g) Gilbert Property.................................................. 16
(h) Assigned Contracts................................................ 19
(i) Intellectual Property............................................. 20
(j) Litigation........................................................ 20
(k) Legal Compliance.................................................. 20
(l) FCC Matters....................................................... 21
(m) Transferred Assets................................................ 22
(n) Broker's Fees..................................................... 22
(o) Resale............................................................ 22
5. Further Agreements of the Parties...................................... 23
(a) General........................................................... 23
(b) Notices and Consents.............................................. 23
(c) Operation of Business............................................. 24
(d) Assignment of the MCI FCC License................................. 25
(e) Earth Station Authorizations...................................... 26
(f) Satellites........................................................ 26
(g) Sony Contract..................................................... 28
(h) Full Access....................................................... 28
(i) Notice of Developments............................................ 29
(j) NDS Equipment..................................................... 29
(k) Abeyance of EchoStar Litigation................................... 29
(l) Transfer Taxes and Prorations..................................... 29
(m) Further Assurances................................................ 29
(n) No Solicitation................................................... 30
(o) Bundling.......................................................... 30
(p) Casualty Condemnation............................................. 30
(q) Title Insurance................................................... 31
(r) Surveys........................................................... 31
6. Conditions to Obligation to Close...................................... 31
(a) Conditions to Obligation of the Transferors....................... 31
(b) Conditions to Obligation of Seller................................ 33
7. Remedies for Breach of this Agreement.................................. 34
(a) Survival.......................................................... 35
(b) Indemnification Provisions for Benefit of the Transferors......... 35
(c) Indemnification Provisions for Benefit of Seller.................. 35
(d) Notification; Rights of Parties to Settle or Defend............... 35
(e) Exclusive Remedy.................................................. 36
(f) Limitations....................................................... 36
8. Termination............................................................ 36
(a) Termination of Agreement.......................................... 36
(b) Effect of Termination............................................. 37
9. Miscellaneous.......................................................... 39
(a) Press Releases and Announcements.................................. 39
(b) No Third-Party Beneficiaries...................................... 39
(c) Entire Agreement.................................................. 39
(d) Succession and Assignment......................................... 39
(e) Counterparts...................................................... 40
(f) Headings.......................................................... 40
(g) Notices........................................................... 40
(h) Governing Law..................................................... 41
(i) Amendments and Waivers............................................ 41
(j) Severability...................................................... 42
(k) Expenses.......................................................... 42
(l) Construction...................................................... 42
(m) Restrictions on Transfer.......................................... 42
(n) Legends........................................................... 43
(o) Specific Performance.............................................. 44
(p) Incorporation of Schedules........................................ 44
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
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of November
30, 1998, by and among American Sky Broadcasting, LLC, a limited liability
company organized under the laws of the State of Delaware ("ASkyB"); The News
Corporation Limited, a corporation organized under the laws of South Australia
("News Corporation"); MCI Telecommunications Corporation, a corporation
organized under the laws of the State of Delaware ("MCI"); and EchoStar
Communications Corporation, a corporation organized under the laws of the State
of Nevada ("Seller"). ASkyB, News Corporation and MCI are referred to
collectively herein as the "Transferors." ASkyB, News Corporation, MCI and
Seller are referred to collectively herein as the "Parties."
RECITALS
WHEREAS, the Transferors own certain assets relating to the direct
broadcast satellite ("DBS") business;
WHEREAS, the Transferors desire to dispose of such assets, and Seller
desires to acquire such assets; and
WHEREAS, the Transferors have agreed to transfer such assets to Seller (or
one or more direct or indirect wholly owned Subsidiaries of Seller) in
consideration for, among other things, shares of Seller's Class A Common Stock,
par value $.01 per share ("Class A Common Stock"), upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
-----------
"Acceptable Alternative Arrangement" means any arrangement
satisfactory to Seller and its counsel and to the Transferors and their
respective counsel that: (a) to the fullest extent feasible in light of any
regulatory constraint assures the Parties as nearly as possible the same
economic results as if the transactions contemplated by this Agreement and the
Collateral Agreements had occurred as contemplated herein and therein;
provided, however, that no Party shall be obligated to enter into any such
arrangement which would require it to make expenditures or dispose of assets in
excess of the amount of expenditures or assets contemplated by this Agreement
and the Collateral Agreements unless compensated for such arrangement; (b)
would, in the reasonable judgment of Seller and the Transferors, be reasonably
expected either not to require FCC consent or to result in such consent, if
required; and (c) would, in the reasonable judgment of Seller and the
Transferors, be reasonably expected to result in clearance of the arrangement by
the relevant antitrust enforcement agencies, if required.
"Affiliate" means any person or entity controlling, controlled by, or
under common control with, an entity. Control of any entity shall mean the
possession, direct or indirect, of the powers to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract or otherwise.
"ASkyB Buyer" has the meaning set forth in Section 2(a)(i)(A) hereof.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could reasonably form the
basis for any specified consequence.
"Bureau Order" means an order released by a bureau or other division
or subdivision of the FCC under delegated authority which conditionally grants
(and such condition is a Material Condition which is unacceptable to Seller) the
FCC's consent to the assignment of the MCI FCC License to Seller or Newco.
"Collateral Agreements" means the Registration Rights Agreement, the
Fox News Channel Affiliation Agreement, the Settlement and Mutual Release
Agreement, the Components License Agreement, the Retransmission Consent
Agreement, the Set Top Box Agreement and the Voting Agreement.
"Communications Act" means the federal Communications Act of 1934, as
amended.
"Components License Agreement" means the Components License for NDS
MPEG 2, DVB Conformant Digital Receivers, to be entered into by and between NDS
Limited and EchoStar Technologies Corporation, containing the terms and
conditions set forth in Exhibit A annexed hereto.
"Current Market Price" means the average of the daily closing prices
per share of Class A Common Stock for the 20 trading days ending on (a) with
respect to Section 2(a)(ii), the date that is two trading days prior to the
Closing Date; (b) with respect to Section 5(c)(i)(B), the date on which Seller
enters the contract governing the purchase in question; provided, however that
if such contract provides for a price which, whether or not so specified, was
based on the price reported on a national securities exchange at the time of
negotiation of the business arrangement or the execution of the agreement, then
Current Market Price means the price so provided; and provided further, that in
the case of shares issued pursuant to Seller's Employee Stock Purchase Plan,
Current Market Price means 85% of the closing price of Class A Common Stock on
the last business day of each calendar quarter in which shares were deemed sold
under such plan; and (c) with respect to 5(c)(i)(C), the date of the issuance or
grant of the rights, options or warrants in question. The closing price for each
day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the closing bid price regular way, in
either case on the principal national securities exchange (including, for
purposes hereof, The Nasdaq National Market ("Nasdaq")) on which the Class A
Common Stock is listed or admitted to trading or, if the Class A Common Stock is
not listed or admitted to trading on any national securities exchange, the
highest reported bid price for the Class A Common Stock as furnished by the
National Association of Securities Dealers, Inc. through Nasdaq or a similar
organization if Nasdaq is no longer reporting such information. If on
2
any such date the Class A Common Stock is not listed or admitted to trading on
any national securities exchange and is not quoted by Nasdaq or any similar
organization, the fair value of a share of Class A Common Stock on such date, as
determined in good faith by the Board of Directors of Seller, whose
determination shall be conclusive absent manifest error, shall be used.
"Damages" means all charges, complaints, actions, suits, proceedings,
hearings, investigations, claims, demands, judgments, orders, decrees,
stipulations, injunctions, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, diminution in value, obligations, Taxes, liens,
losses, expenses, and fees, including all attorneys' fees and court costs,
whether or not arising out of a claim by a third party.
"Earth Station Facilities" means (a) the six earth station facilities
located on the Gilbert Property and corresponding to the Earth Station
Authorizations, and (b) the six additional 6.1 meter receive-only earth station
facilities also located on the Gilbert Property, with respect to which there has
been no FCC registration.
"Environmental Laws" means all foreign, federal, state and local laws,
statutes, ordinances, rules and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any permits issued
thereunder, relating to the protection of human health and safety, the
environment, or hazardous or toxic substances or wastes, pollutants or
contaminants.
"FCC" means the Federal Communications Commission and any successor
agency thereto.
"FCC Approval" means an order released by the FCC (and not by a bureau
or other division or subdivision thereof pursuant to delegated authority) which
is in full force and effect and has not been reversed, reconsidered, stayed,
enjoined, set aside, annulled or suspended, and the thirty (30) day period for
any such action on the FCC's own motion has expired, and which grants, or
conditionally grants (other than subject to a Material Condition which is
unacceptable to Seller), the FCC's consent to the assignment of the MCI FCC
License to Seller or Newco; provided, however, that timely rejection of an FCC
order by Seller or Newco shall not affect the status of such order as an FCC
Approval.
"FCC Order" means an order released by the FCC (and not by a bureau or
other division or subdivision thereof pursuant to delegated authority) which is
in full force and effect and has not been reversed, reconsidered, stayed,
enjoined, set aside, annulled or suspended, and the thirty (30) day period for
any such action on the FCC's own motion has expired, and which conditionally
grants (and such condition is a Material Condition which is unacceptable to
Seller) or denies the FCC's consent to the assignment of the MCI FCC License to
Seller or Newco; provided, however, that timely rejection of an FCC order by
Seller or Newco shall not affect the status of such order as an FCC Order.
"Fox News Channel Affiliation Agreement" means the Fox News Channel
Affiliation Agreement, entered into by and between EchoStar Satellite
Corporation and Fox News Network, LLC as of the date hereof, annexed as Exhibit
B hereto.
3
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" means all (a) patents, patent applications,
patent disclosures and improvements thereto, (b) trademarks, service marks,
trade dress, logos, trade names and corporate names and registrations and
applications for registration thereof, (c) copyrights and registrations and
applications for registration thereof, (d) mask works and registrations and
applications for registration thereof, (e) computer software, data and
documentation, (f) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, (g) other proprietary rights, and (h) copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable inquiry and
investigation.
"Liability" means any liability or obligation of any nature (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"LIBOR Rate" means relative to any interest period, the rate of
interest determined as follows: (a) on the interest determination date, the
lending party shall obtain the offered quotation(s) that appear on the Reuter's
Screen for Dollar deposits for a period comparable to such interest period. If
at least two such offered quotations appear on the Reuter's Screen, the LIBOR
Rate shall be the arithmetic average (rounded upwards, if necessary to the
nearest 1/16th of 1%) of such offered quotations, as determined by the lending
party; or (b) if the Reuter's Screen is not available or has been discontinued,
the LIBOR Rate shall be the rate per annum which the lending party in good faith
determines to be the arithmetic average (rounded as aforesaid) of the offered
quotations for Dollar deposits in an amount comparable to the lending party's
share of the relevant amount in respect of which the LIBOR Rate is being
determined for a period comparable to the relevant LIBOR Interest Period that
lending banks in New York City selected by the lending party are quoting at
11:00 A.M. on the interest determination date in New York Interbank Market to
major international banks.
"Liens" means, with respect to any property or assets, any mortgage,
deed of trust, pledge, hypothecation, assignment, security interest, lien,
charge, easement, encumbrance, preference, priority or other security agreement
or preferential arrangement of any kind or nature with respect to such property
or assets (including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Material Condition" has the meaning set forth in Section 5(d) hereof.
4
"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 (degrees) West Longitude orbital location (FCC
DA 96-2165, released December 20, 1996).
"Newco" has the meaning set forth in Section 2(b) hereof.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, partnership, trust, corporation, joint
venture, limited liability company, association, government bureau or agency or
other entity of whatever kind or nature.
"Preliminary FCC Approval" means an order released by the FCC (and not
by a bureau or other division or subdivision thereof pursuant to delegated
authority) which grants, or conditionally grants (other than subject to a
Material Condition which is unacceptable to Seller), the FCC's consent to the
assignment of the MCI FCC License to Seller or Newco.
"Registration Rights Agreement," means the Registration Rights
Agreement to be entered into by and among Seller, MCI (or a direct or indirect
wholly-owned subsidiary of MCI) and ASkyB (or a direct or indirect wholly-owned
subsidiary of News Corporation), in the form of Exhibit C annexed hereto.
"Regulatory Provisions" means all applicable requirements of the
Communications Act and the published policies, rules, decisions, and regulations
of the FCC as amended from time to time.
"Requisite Corporate Approvals" means the approval of Seller's Board
of Directors and its stockholders and, if applicable, the Board of Directors of
any Subsidiary of Seller required pursuant to applicable law with respect to the
authorization of Seller or such Subsidiary to execute and deliver this Agreement
and the Collateral Agreements to which it is a party and to perform the
transactions contemplated hereby and thereby.
"Retransmission Consent Agreement" means the Retransmission Consent
Agreement, to be entered into by and between Fox Television Holdings, Inc. and
Seller, in the form of Exhibit D annexed hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, (b) liens on goods in transit incurred
5
pursuant to documentary letters of credit, and (c) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money, the extension of credit or default or potential default of money owed.
"Seller Material Adverse Effect" means a material adverse effect on
the business, assets, operations, prospects or condition (financial or
otherwise) of the Seller and its Subsidiaries, taken as a whole, excluding any
change or development resulting from (a) events adversely affecting any of the
principal markets served by the business of Seller or (b) general economic
conditions, including changes in the economies of any of the jurisdictions in
which Seller or any of its Subsidiaries conduct business.
"Settlement Agreement and Mutual Release" means the Settlement
Agreement and Mutual Release, to be entered into by and among Seller, Charles
W. Ergen, News Corporation and ASkyB, in the form of Exhibit E annexed hereto.
"Set Top Box Agreement" means the Development and Supply Agreement for
Set Top Boxes, to be entered into by and between Seller and a DBS company in
which News Corporation has an interest, containing the terms and conditions set
forth in Exhibit F annexed hereto.
"Significant Subsidiary" means any Subsidiary of Seller that (i) falls
within the definition of "significant subsidiary" set forth in Rule 1-02 of
Regulation S-X under the Securities Act, (ii) is subject to the periodic
reporting requirements of the Securities Exchange Act or (iii) is, or becomes, a
party to this Agreement or any of the Collateral Agreements.
"Subsidiary" of a specified Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are directly or indirectly owned by such Person.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code (S) 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
6
units and other similar uses) video and associated audio programming services
using FSS/BSS frequencies directly to the antennas or other reception equipment
of customers or subscribers of such business activity principally in the United
States, or to multiple dwelling units comprising such customers or subscribers.
"Voting Agreement" means the letter agreement entered into by and
among Charles W. Ergen, Seller, MCI, News Corporation and ASkyB, as of the date
hereof, annexed as Exhibit G hereto.
2. Purchase and Sale.
-----------------
(a) Shares to be Purchased by the Transferors.
-----------------------------------------
(i) At the Closing (as hereinafter defined), upon the terms and
subject to the conditions set forth in this Agreement, the Transferors
agree to purchase from Seller, and Seller agrees to issue and sell to the
Transferors, an aggregate of 30,000,000 shares (the "Shares") of Seller's
Class A Common Stock, subject to adjustment (x) for any stock split, stock
dividend, subdivision or combination of the Common Stock (as hereinafter
defined) or any other action having a similar effect on the Common Stock,
and (y) as set forth in Section 2(a)(ii) below, as follows:
(A) 24,030,000 shares of Class A Common Stock shall be
issued and sold to ASkyB or a direct or indirect wholly-owned Subsidiary
of News Corporation designated by ASkyB (the "ASkyB Buyer"); and
(B) 5,970,000 shares of Class A Common Stock shall be
issued and sold to MCI or a direct or indirect wholly-owned Subsidiary of
MCI designated by MCI (the "MCI Buyer").
(ii) The number of shares of Common Stock issuable to the ASkyB
Buyer and the MCI Buyer pursuant to Section 2(a)(i) shall be subject to
adjustment as follows: (A) if the Current Market Price is less than
$15.00 per share (subject to adjustment for any stock split, stock
dividend, subdivision or combination of the Common Stock or any change in
corporate structure affecting the Common Stock), then Seller shall issue
such number of additional shares of Common Stock to the ASkyB Buyer and the
MCI Buyer, on a pro rata basis, so that the total market value of the
Shares issued to them (based on such Current Market Price) is not less than
$450,000,000; provided, however, that in no event shall the Transferors
collectively own of record or vote shares corresponding to more than 49.9%
of the total outstanding voting power of Seller or more voting power of
Seller than all other shareholders of Seller; or (B) if the Current Market
Price is greater than $39.00 per share (subject to adjustment for any stock
split, stock dividend, subdivision or combination of the Common Stock or
any change in corporate structure affecting the Common Stock), then the
number of Shares issued to the ASkyB Buyer and the MCI Buyer shall be
reduced, on a pro rata basis, so that the total market value of the Shares
issued to them (based on such Current Market Price) is not greater than
$1,170,000,000.
7
(b) Assets to be Transferred to Seller. At the Closing, upon the
----------------------------------
terms and subject to the conditions set forth in this Agreement, and in
consideration for the Shares to be purchased by the Transferors hereunder, each
of the Transferors agrees to assign, transfer and convey to Seller, or, at
Seller's option, one or more direct or indirect wholly owned Subsidiaries of
Seller (collectively, "Newco") all of its right, title and interest in and to
the specified assets set forth below (collectively, the "Transferred Assets"):
(i) Gilbert Property. ASkyB shall transfer and convey to
----------------
Seller or Newco all of its right, title and interest in and to certain
real property located in Gilbert, Arizona, as more particularly described
in Section 2(b)(i)(I) of the Transferor Disclosure Schedule (as hereinafter
defined), and all improvements thereon, including, without limitation, (A)
all buildings, Earth Station Facilities and other structures, (B) the
fixtures, furniture and equipment described in Section 2(b)(i)(II) of the
Transferor Disclosure Schedule, and all instruction manuals and other
personal property (including all warranties associated therewith), and (C)
keys to such property, to the extent the foregoing are owned by the
Transferors (the "Gilbert Property").
(ii) Gilbert Contracts. ASkyB shall assign all of its right,
-----------------
title and interest in and to all maintenance and equipment contracts
entered into with respect to the Gilbert Property, including all warranties
set forth therein (collectively the "Gilbert Contracts"), as set forth in
Section 2(b)(ii) of the Transferor Disclosure Schedule including, among
others, the equipment contract with Sony Electronics, Inc. (the "Sony
Contract"), except that the Transferred Assets shall not include, and the
Transferors shall not assign to Seller, any of the Gilbert Contracts that
Seller designates as "Excluded Contracts" in accordance with Section
5(c)(iii) hereof.
(iii) MCI FCC License. MCI shall assign, transfer and convey to
---------------
Seller or Newco all of its right, title and interest to (A) the MCI FCC
License and (B) the application for minor modification and clarification of
license conditions for the MCI FCC License filed by MCI on May 5, 1997, and
to any application for modification of the MCI FCC License that may be
required to be filed hereafter until Closing.
(iv) Earth Station Authorizations. ASkyB shall assign,
----------------------------
transfer and convey to Seller or Newco all of its right, title and interest
in and to its FCC earth station authorizations in respect of the Gilbert
Property (the "Earth Station Authorizations") under Call Signs E980174,
E980178, E980180, E970394, E970395 and E970396.
(v) Satellite Contracts and Satellite Work in Process. Each
-------------------------------------------------
of the Transferors shall assign all of its respective right, title and
interest in and to the agreements and insurance policies or arrangements
set forth in Section 2(b)(v) of the Transferor Disclosure Schedule annexed
hereto, including but not limited to the satellites and launches work in
process pursuant thereto, and all deliverables pursuant to those
agreements, and including all rights to enforce such contracts
(collectively, the "Satellite Contracts" and, together with the Gilbert
Contracts, but excluding any Excluded Contracts, the "Assigned Contracts"),
in accordance with the terms of the Satellite Contracts.
8
(vi) Intellectual Property. The Transferors shall assign,
---------------------
transfer and convey all of their respective right, title and interest in
and to any Intellectual Property acquired from the U.S. government or other
parties to the Satellite Contracts in connection with the MCI FCC License,
the Earth Station Authorizations or the Assigned Contracts.
It is specifically acknowledged and agreed by the Seller that the
Transferors are not assigning, transferring and conveying to Seller any assets
pursuant to this Agreement other than the Transferred Assets.
(c) Assumption of Liabilities. Except as provided in Sections
-------------------------
5(f)(vii) and 5(g) hereof, effective as of the Closing, and upon the terms and
subject to the conditions of this Agreement, Seller agrees to assume all
liabilities and obligations of the Transferors and their Affiliates arising
under the Assigned Contracts and the other Transferred Assets, including all
obligations of the Transferors under the MCI FCC License and the Earth Station
Authorizations, including, without limitation, obligations with respect to
completion of satellite construction, system deployment and provision of
telemetry, tracking and control services.
(d) The Closing. The closing of the transactions contemplated by
-----------
this Agreement (the "Closing") shall take place at the offices of Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New York,
commencing at 9:00 a.m. local time on the fifth business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby or such other date as the
Transferors and Seller may mutually determine (the "Closing Date").
(e) Deliveries at Closing. 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.
9
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 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.
10
(ii) As of the date hereof, Seller has all governmental licenses,
authorizations, consents and approvals required to own, lease and operate
its properties as now conducted, except where the failure to have such
governmental licenses, authorizations, consents and approvals would not,
individually or in the aggregate, have a Seller Material Adverse Effect.
(d) Power and Authority of Significant Subsidiaries.
---------------------------------- ------------
(i) As of the date hereof, each Significant Subsidiary has all
requisite corporate power and authority and all governmental licenses,
authorizations, consents and approvals required to own, lease and operate
its properties as now conducted, except where the failure to have such
governmental licenses, authorizations, consents and approvals would not,
individually or in the aggregate, have a Seller Material Adverse Effect.
(ii) Each Significant Subsidiary which is, or will be, a party to
this Agreement or a Collateral Agreement has, or will have, as of the date
of execution of this Agreement or such Collateral Agreement, all requisite
corporate power and authority to execute and deliver such Collateral
Agreement and to perform its obligation thereunder.
(e) Corporate Authorization. The execution, delivery and
-----------------------
performance by Seller of this Agreement and the execution, delivery and
performance by Seller and each Significant Subsidiary of each of the Collateral
Agreements to which Seller or such Significant Subsidiary is a party, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary corporate action of Seller and such Significant
Subsidiary, as the case may be, other than shareholder approval pursuant to the
rules and regulations of Nasdaq, which shall be obtained on or prior to the
Closing Date. This Agreement and each of the Collateral Agreements to which
Seller or a Significant Subsidiary is a party, including any additional
documents contemplated by this Agreement, constitutes (or when executed, will
constitute) the valid and legally binding obligation of Seller and such
Significant Subsidiary, as the case may be, enforceable against each of Seller
and such Significant Subsidiary, as the case may be, in accordance with each
document's respective terms and conditions, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
(f) Governmental Authorization. The execution, delivery and
--------------------------
performance by Seller of this Agreement and each of the Collateral Agreements to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not require any consent, approval, authorization or
permit of, or filing with or notification to any governmental or regulatory
authority, except (A) for (i) compliance with any applicable requirements of the
Hart-Scott-Rodino Act, and the rules and regulations thereunder; (ii) compliance
with any applicable provisions of the Securities Act, and the rules and
regulations thereunder, state securities or "blue sky" laws and state takeover
laws, and approval of the inclusion of the Shares for trading on Nasdaq; (iii)
compliance with any applicable requirements of the Securities Exchange Act and
the rules and regulations thereunder; and (iv) compliance with any applicable
requirements of the Regulatory Provisions or (B) where the failure to obtain
such consents, approvals, authorizations and permits, or to make such
11
filings or notifications, would not prevent or delay in any material respect the
consummation of the transactions contemplated hereby or thereby or otherwise
prevent Seller from performing its obligations under this Agreement or any of
the Collateral Agreements to which it is a party in accordance with the terms
and subject to the conditions hereof and thereof, and would not, individually or
in the aggregate, have a Seller Material Adverse Effect.
(g) Noncontravention. Except as set forth in Section 3(g) of the
----------------
Seller Disclosure Schedule and Section 3(f) hereof, the execution, delivery and
performance of this Agreement and each of the Collateral Agreements to which
Seller or a Significant Subsidiary is a party do not, and the consummation of
the transactions contemplated hereby and thereby will not, (A) contravene or
conflict with the certificate of incorporation, by-laws or other organizational
documents of Seller, or any Significant Subsidiary; (B) contravene, conflict
with or constitute a violation of any provision of any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court binding upon or
applicable to Seller or any Significant Subsidiary or any of their respective
properties or assets, which contravention, conflict or violation could
reasonably be expected to have a Seller Material Adverse Effect; (C) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, require any notice or give rise to a loss of any benefit under, any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other arrangement to which Seller or any Significant Subsidiary is a
party or by which any of them is bound or to which any of their assets is
subject or result in the creation or imposition of any Security Interests on any
assets of Seller or any Significant Subsidiary, which contravention, violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or loss of benefit would have a Seller Material Adverse Effect or
adversely affect the ability of Seller or any Significant Subsidiary to
consummate the transactions contemplated hereby or by the Collateral Agreements;
or (D) assuming approval by Seller's shareholders in accordance with the rules
and regulations of Nasdaq, violate or conflict with the rules, regulations or
listing requirements of Nasdaq or any other exchange or trading market on which
Seller's securities may be listed or traded.
(h) Capitalization.
--------------
(i) As of the date hereof, the authorized capital stock of
Seller consists of (x) 400,000,000 shares of Common Stock, par value $.01
per share, of which 200,000,000 shares are designated Class A Common Stock,
100,000,000 shares are designated Class B Common Stock, and 100,000,000
shares are designated Class C Common Stock (the Class A Common Stock, the
Class B Common Stock and the Class C Common Stock are referred to
collectively herein as the "Common Stock"), and (y) 20,000,000 shares of
Preferred Stock. As of the date hereof, 15,268,708 shares of Class A Common
Stock, 29,804,401 shares of Class B Common Stock, no shares of Class C
Common Stock, 1,616,681 shares of Preferred Stock, which has been
designated 8% Series A Cumulative Preferred Stock, 225,301 shares of
Preferred Stock, which has been designated 121/8% Series B Senior
Redeemable Exchangeable Preferred Stock, par value $.01 per share, and
2,300,000 shares of Preferred Stock, which has been designated 6 3/4%
Series C Cumulative Convertible Preferred Stock, are issued and outstanding
and no shares of any class or series are held in treasury.
12
(ii) All of the issued and outstanding shares of capital stock
of Seller have been, and on the Closing Date will be, duly authorized,
validly issued, fully paid and nonassessable.
(iii) As of the Closing Date, the Shares will have been duly
authorized and, when issued to the ASkyB Buyer and the MCI Buyer, upon
payment of the consideration therefor, will be validly issued, fully paid
and non-assessable, and the issuance will not be subject to (x) any Liens
(other than those relating to the activities of the Transferors) or (y) any
preemptive or similar rights of any security holder of Seller.
(iv) As of the date hereof, except as set forth in Section 3(h)
of the Seller Disclosure Schedule, (A) all of the issued shares of capital
stock of each Significant Subsidiary of Seller are owned, directly or
indirectly, by Seller; (B) there are no outstanding or authorized
convertible or exchangeable securities of Seller or any Significant
Subsidiary, options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights, or agreements or commitments pursuant to
which any Person has any rights to acquire from Seller or any Significant
Subsidiary, and neither Seller nor any Significant Subsidiary has any
obligations, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of capital stock or voting securities of Seller or any
Significant Subsidiary; (C) there are no outstanding or authorized stock
appreciation, phantom stock or similar rights of Seller or any Significant
Subsidiary; and (D) there are no voting trusts, proxies or any other
agreements or understandings to which Seller or any Significant Subsidiary
is a party or of which it has Knowledge with respect to the voting of the
capital stock or voting securities of Seller or any Significant Subsidiary.
(i) SEC Filings.
-----------
(i) Seller has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission ("SEC") since
January 1, 1995, and Seller has heretofore made available to the
Transferors, in the form filed with the SEC (including any exhibits
thereto), (A) the Annual Reports on Form 10-K of Seller for the fiscal
years ended December 31, 1995, December 31, 1996 and December 31, 1997 (the
"1997 Annual Report"), respectively, and the Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1998, June 30, 1998 and September
30, 1998 (the "September Quarterly Report"), respectively; (B) all proxy
and information statements relating to meetings of stockholders of Seller
(whether annual or special) held since January 1, 1995; and (C) all other
reports and registration statements (including all Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K) filed by Seller with the SEC
since January 1, 1995 (including all amendments to each of the foregoing,
the forms, reports and other documents referred to in clauses (A) through
(C) being referred to herein, collectively, as the "Seller Disclosure
Documents"). The Seller Disclosure Documents and other forms, reports or
other documents filed by Seller with the SEC after the date of this
Agreement but prior to the Closing Date (x) were prepared, or will be
prepared, in accordance with the Securities Act or the Securities Exchange
Act, as the case may be, and the rules and regulations thereunder, and (y)
did not at the time they were filed, or will not at the time they are
filed, with the SEC contain any untrue statement of a material fact or omit
to state a material fact required to be
13
stated therein or necessary iN order to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading.
(ii) Each of the consolidated financial statements (including
any notes thereto) contained in the Annual Reports on Form 10-K of Seller
for the fiscal years ended December 31, 1995, December 31, 1996 and
December 31, 1997, and Quarterly Reports on Form 10-Q of Seller for the
quarterly periods through and including September 30, 1998, was prepared in
accordance with generally accepted accounting principles and all applicable
rules of the SEC and fairly presents in all material respects the
consolidated financial position, results of operations and cash flows of
each of Seller and its consolidated Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, subject, in the
case of unaudited statements, to normal year-end adjustments.
(iii) Except as set forth in the 1997 Annual Report and the
September Quarterly Report, or as otherwise set forth in Section 3(i) of
the Seller Disclosure Schedule, neither Seller nor its consolidated
Subsidiaries had, as of the respective dates thereof, any Liability that
(i) would be required under generally accepted accounting principles to be
reflected in such consolidated balance (including the notes thereto) or
(ii) would reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect.
(j) Absence of Certain Changes. As of the date hereof, since
--------------------------
September 30, 1998, and except as (i) set forth in the 1997 Annual Report or in
the September Quarterly Report or (ii) disclosed in Section 3(j) of the Seller
Disclosure Schedule, or as otherwise contemplated by this Agreement or the
Collateral Agreements, there has not been any event, occurrence or development
of a state of circumstances or facts which has had or reasonably would be
expected to have a Seller Material Adverse Effect.
(k) Brokers' Fees'. Neither Seller nor any Subsidiary of Seller
--------------
has any Liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement
for which any of the Transferors would be liable.
4. Representations and Warranties of the Transferors. Each of ASkyB,
-------------------------------------------------
News Corporation and MCI, jointly and severally, represents and warrants to
Seller as follows:
(a) Representations and Warranties True, Correct and Complete.
---------------------------------------------------------
Each of ASkyB, News Corporation and MCI represents and warrants to Seller that
the statements contained in this Section 4 that are qualified by reference to
materiality or a material adverse effect are true, correct and complete as of
the date of this Agreement and will be true, correct and complete as of the
Closing Date and all other statements in this Section 4 that are not so
qualified are true, correct and complete in all material respects as of the date
of this Agreement and will be true, correct and complete in all material
respects as of the Closing Date except, in each case, (i) for such
representations and warranties that are expressly made as of the date of this
Agreement, in which case such representations and warranties need only to be
true, correct and complete on and as of the date of this Agreement, (ii) for
such representations and warranties that are expressly made as of an earlier
date, in which case such representations and warranties need only to be true,
correct and complete on and as of such earlier date and (iii) as disclosed in a
document referring specifically to
14
the representations and warranties in this Section 4 which has been delivered by
the Transferors to Seller on or prior to the date hereof (the "Transferor
Disclosure Schedule"). Nothing in the Transferor Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Transferor Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty itself solely addresses the existence of the document
or other item). The Transferor Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section.
(b) Organization of the Transferors. ASkyB is a limited liability
-------------------------------
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. News Corporation is a corporation duly organized under
the laws of South Australia, Australia. MCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(c) Power and Authority of the Transferors.
--------------------------------------
(i) Each of the Transferors has all requisite corporate or
limited liability company power and authority to own, lease and operate the
Transferred Assets as now conducted and to execute and deliver this
Agreement and each Collateral Agreement to which it is a party, including
any additional documents contemplated by this Agreement, and to perform its
obligations hereunder and thereunder.
(ii) Each of the Transferors has all governmental licenses,
authorizations, consents and approvals required to own, lease and operate
the Transferred Assets being transferred by it, except where the failure to
have such governmental licenses, authorizations, consents and approvals
would not, individually or in the aggregate, have a Transferred Asset
Material Adverse Effect.
(d) Corporate Authorization. The execution, delivery and
-----------------------
performance by each of the Transferors of this Agreement and each of the
Collateral Agreements to which such Transferor is a party, and the consummation
of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary corporate action of each Transferor. This Agreement and each
of the Collateral Agreements to which each Transferor is a party, including any
additional documents contemplated by this Agreement, constitutes (or when
executed, will constitute) the valid and legally binding obligation of each
Transferor, enforceable against each Transferor, in accordance with each
document's respective terms and conditions, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
(e) Governmental Authorization. The execution, delivery and
--------------------------
performance by each Transferor of this Agreement and each of the Collateral
Agreements to which each Transferor is a party, and the consummation of the
transactions contemplated hereby and thereby, do not require any consent,
approval, authorization or permit of, or filing with or notification to any
governmental
15
or regulatory authority, except (A) for (i) compliance with any applicable
requirements of the Hart-Scott-Rodino Act, and the rules and regulations
thereunder; (ii) compliance with any applicable provisions of the Securities Act
and the rules and regulations thereunder, state securities or "blue sky" laws
and state takeover laws; (iii) compliance with any applicable requirements of
the Securities Exchange Act, and the rules and regulations thereunder; and (iv)
compliance with any applicable requirements of the Regulatory Provisions, and
(B) where the failure to obtain such consents, approvals, authorizations and
permits, or to make such filings or notifications, would not prevent or delay in
any material respect the consummation of the transactions contemplated hereby or
thereby or otherwise prevent the Transferors from performing their respective
obligations under this Agreement or any of the Collateral Agreements to which
such Transferor is a party in accordance with the terms and subject to the
conditions hereof and thereof, and would not, individually or in the aggregate,
have a Transferred Asset Material Adverse Effect.
(f) Noncontravention. Except as set forth in Section 4(f) of the
----------------
Transferor Disclosure Schedule and Section 4(e) hereof, the execution, delivery
and performance of this Agreement and each of the Collateral Agreements to which
each of the Transferors is a party do not, and the consummation of the
transactions contemplated hereby and thereby will not, (A) contravene or
conflict with the certificate of incorporation, by-laws or other organizational
or charter documents of each of the Transferors; (B) contravene or conflict with
or constitute a violation of any provision of any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court binding upon or applicable to
any of the Transferors, or any of their respective properties or assets; or (C)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, require any notice or give rise to a loss of any benefit under, any
of the Transferred Assets or any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest or other arrangement to which any
of the Transferors is a party or by which any of them is bound or to which any
of the Transferred Assets, is subject or result in the creation or imposition of
any Security Interests on any of the Transferred Assets, which contravention,
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, or loss of benefit would have a Transferred Asset Material Adverse
Effect or adversely affect the ability of any Transferor to consummate the
transactions contemplated hereby or by the Collateral Agreements.
(g) Gilbert Property.
----------------
(i) ASkyB owns good and marketable title to the Gilbert
Property, free and clear of all Liens or other matters affecting Seller's
or its Subsidiaries' title to or possession of the Gilbert Property, except
for Liens (a) for taxes and other governmental charges, assessments or fees
which are not yet due and payable or (b) set forth on Section 4(g)(i) of
the Transferor Disclosure Schedule.
(ii) There are no outstanding options or rights of first
refusal to purchase the Gilbert Property, or any portion thereof or
interest therein; and there are no leases, subleases, licenses, concessions
or other agreements, written or oral, granting to any party or parties the
right of use or occupancy of any portion of the Gilbert Property.
16
(iii) ASkyB and News Corporation shall keep and maintain the
Gilbert Property substantially in the same condition as it exists on the
date hereof and shall preserve the Gilbert Property from deterioration,
other than ordinary wear and tear; provided, however, that Seller
acknowledges and agrees that the Transferors are under no obligation to
continue construction of or make any additional improvements to any of the
structures, furniture, fixtures or equipment located at the Gilbert
Property, including, without limitation, the improvements described in
Section 4(g)(iii) of the Transferor Disclosure Schedule, other than
pursuant to the Gilbert Contracts.
(iv) With respect to the Gilbert Property:
(A) as of the date hereof, there are no pending or, to the
Knowledge of any of the Transferors, threatened condemnation proceedings
relating to the Gilbert Property;
(B) there are no parties (other than ASkyB) in possession
of the Gilbert Property who are lawfully in possession;
(C) the use and condition of and the operations on the
Gilbert Property are in compliance with Environmental Laws, except where
the failure to comply, individually or in the aggregate, would not have a
Transferred Asset Material Adverse Effect;
(D) as of the date hereof, (i) there are no judicial or
administrative actions, proceedings or investigations pending or, to the
Knowledge of any Transferor, currently threatened to revoke any
environmental permits required for the current use of and the operations on
the Gilbert Property, and (ii) ASkyB has not received any written notice
from any governmental entity or written notice from any Person to the
effect that there is lacking such permit;
(E) as of the date hereof, there are no judicial or
administrative actions, proceedings, or investigations pending or, to the
Knowledge of any Transferor, currently threatened against ASkyB alleging
the violation of, or liability pursuant to, any Environmental Law, except
for liabilities or violations which could not reasonably be expected to
have, individually or in the aggregate, a Transferred Asset Material
Adverse Effect;
(F) except as set forth in Section 4(g)(iv)(H) of the
Transferor Disclosure Schedule, neither ASkyB nor News Corporation has
Knowledge of, nor has filed any notice with respect to the Gilbert Property
under any Environmental Law indicating, past or present treatment, storage,
transfer, release, manufacture, presence or disposal of or reporting a
release or currently threatened release of hazardous material into the
environment, except for such releases that could not reasonably be expected
to have, individually or in the aggregate, a Transferred Asset Material
Adverse Effect;
17
(G) neither ASkyB nor News Corporation is subject to any
outstanding order, injunction, judgment, decree, ruling, assessment, or
arbitration award or any agreement with any governmental entity or other
Person, or to any federal, state, local or foreign investigation respecting
(i) Environmental Laws or (ii) the release or currently threatened release
of any hazardous material, except in either case for such orders,
injunctions, judgments, decrees, rulings, assessments, arbitration awards,
or agreements which could not reasonably be expected to have, individually
or in the aggregate, a Transferred Asset Material Adverse Effect;
(H) except as set forth in Section 4(g)(iv)(H) of the
Transferor Disclosure Schedule, none of the operations on the Gilbert
Property involves or, to ASkyB's Knowledge, previously involved the
generation, transportation, treatment, storage, release, use, manufacture
or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or
any state, local or foreign equivalent, except for as may be permitted by
law or as could not reasonably be expected to have, individually or in the
aggregate, a Transferred Asset Material Adverse Effect;
(I) ASkyB will provide to Seller, 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
18
shall obtain an endorsement to all such policies requiring the insurer to
notify Seller prior to any cancellation or termination thereof or amendment
thereto.
(h) Assigned Contracts.
------------------
(i) The Transferors have delivered to Seller a correct and
complete copy of each Assigned Contract, as amended to date, listed in
Sections 2(b)(ii) and (v) of the Transferor Disclosure Schedule.
(ii) Except as set forth in Section 4(h) of the Transferor
Disclosure Schedule, each of the Transferors has complied with and
performed in all material respects all of its obligations required to be
performed under each of the Assigned Contracts to which it is a party.
(iii) Except as set forth in Section 4(h) of the Transferor
Disclosure Schedule, with respect to each Assigned Contract so listed: (A)
the arrangement or agreement is legal, valid and binding obligation of the
applicable Transferor and, to the Knowledge of such Transferor, each of the
other parties thereto, enforceable against such parties in accordance with
the terms thereof, and is in full force and effect; (B) the arrangement or
agreement will continue to be legal, valid, binding and enforceable and in
full force and effect on identical terms immediately following the Closing;
(C) none of the Transferors is in breach or default under any Assigned
Contract to which it is a party, and no event has occurred which, with
notice or lapse of time, or both, would constitute a breach or default by
any of the Transferors, or permit termination, modification, or
acceleration, under the arrangement or agreement; (D) to the Knowledge of
the Transferors, no third party is in breach or default under any Assigned
Contract, and no event has occurred which, with notice or lapse of time, or
both, would constitute a breach or default by such party thereunder or
permit termination, modification, or acceleration, under the arrangement or
agreement; (E) none of the Transferors has received written notice
canceling, terminating or repudiating or exercising any option to cancel,
terminate or repudiate under any of the Assigned Contracts to which it is a
party and none of the Transferors has any Knowledge that any party has
failed to comply with or perform all of its obligations required to be
performed under any of the Assigned Contracts; (F) none of the Transferors
has any Knowledge that the validity of any of the Assigned Contracts to
which it is a party is being contested by a third party; (G) neither Sky I
nor Sky II (as hereinafter defined) have been delivered into storage; and
(H) as of the date hereof, the Transferors know of no reason why the launch
vehicle will not be available by the August 31, 1999 date with respect to
Sky I or the fourth quarter of 1999 date with respect to Sky II, specified
in Sections 5(f)(ii) and 5(f)(iii), respectively, other than as set forth
in the letter dated September 18, 1998 from James Dongog of International
Launch Services to an employee of Loral.
(iv) Subject to the receipt of necessary consents, the
execution and delivery by the Transferors of this Agreement and the
Collateral Agreements to which a Transferor is a party and the consummation
of the transactions contemplated hereby and thereby have not resulted and
will not result in a breach or default under, or permit any party
19
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.
20
(l) FCC Matters
-----------
(i) Except as set forth in Section 4(l)(i) of the Transferor
Disclosure Schedule, the MCI FCC License is valid; MCI controls and has
always controlled the MCI FCC License and the system authorized thereunder;
MCI has timely and completely performed all obligations required to date
under the MCI FCC License; MCI has timely submitted all filings and reports
required thereunder; MCI has taken all actions required of MCI to date to
achieve international coordination of the authorized system, including,
without limitation, all actions required to date to achieve (a) all
necessary modifications to the International Telecommunication Union's
Region 2 Broadcasting-Satellite Service Plan and associated feeder link
plan set forth at Appendices 30 and 30A to the International Radio
Regulations and (b) coordination of the system's Telemetry, Tracking and
Control functions; and has proceeded with the construction of the DBS
system with "diligence" (as such term is used in the Regulatory
Provisions); and such DBS system has been designed and is being constructed
to comply with, and when so constructed will be in compliance with, all
obligations required to date under the MCI FCC License and the applicable
Regulatory Provisions, including without limitation the geographic service
requirements currently imposed on DBS permittees.
(ii) Except as set forth in Section 4(l)(ii) of the Transferor
Disclosure Schedule, ASkyB's Earth Station Authorizations are valid and in
full force and effect, ASkyB has performed to date all obligations required
to be performed thereunder, and the Gilbert Property includes Earth Station
Facilities that are fully capable of operating in accordance thereto.
(iii) MCI has delivered to Seller a true, correct and complete
copy of the MCI FCC License. The MCI FCC License is in full force and
effect and is unimpaired by any materially adverse condition. MCI has
delivered to Seller true, correct and complete copies of all material
correspondence from the FCC to MCI relating to the MCI FCC License and all
material correspondence, submissions and/or other filings from MCI to the
FCC relating thereto sent to or received by MCI subsequent to the auction
of 28 frequency channels at the 110 (degrees) West Longitude orbital
location. Except as set forth in Section 4(l)(i) of the Transferor
Disclosure Schedule, no application, action or proceeding is pending for
the renewal or modification of the MCI FCC License, and no application,
complaint, action or proceeding is pending or, to the Knowledge of MCI,
threatened, that may result in the revocation, modification, non-renewal or
suspension of the license or the imposition of any administrative or
judicial sanction with respect to MCI. MCI has no Knowledge of any failure
of MCI to comply (whether or not known by or disclosed to the FCC or any
other Person) in all material respects with all Regulatory Provisions
applicable to the U.S. Satellite Business, and with the terms and
conditions of the MCI FCC License, including, but not limited to, any due
diligence obligations or reporting requirements associated with the MCI FCC
License.
(iv) Except for the Earth Station Authorizations, neither ASkyB
nor News Corporation holds or controls any license in connection with the
U.S. Satellite Business contemplated to be operated by MCI, News
Corporation and ASkyB.
21
(v) Section 4(l)(v) of the Transferor Disclosure Schedule sets
forth a listing of all insurance policies in force associated with any
satellite or other facility related to the Transferred Assets. Each such
insurance policy is in full force and effect, and the rights of the parties
thereunder will not be affected in any material respect by the transactions
contemplated by this Agreement or any Collateral Agreement.
(vi) Except as contemplated by Section 5(b) hereof, no consent,
approval, authorization, order or waiver of, or filing with, the FCC is
required under the applicable Regulatory Provisions to be obtained or made
by MCI in connection with the transactions contemplated by this Agreement,
except such as may already have been obtained and made.
(m) Transferred Assets.
------------------
(i) No Person other than the Transferors and their respective
Affiliates has any right, title or interest in, or with respect to, the MCI
FCC License, and the rights being transferred by MCI hereunder with regard
to the MCI FCC License, constitute all of the rights, including contractual
rights, held by the Transferors and their respective Affiliates with regard
to the MCI FCC License. Any rights of News Corporation or ASkyB or any of
their Affiliates relating to the MCI FCC License are either included in the
Transferred Assets or will be terminated prior to the Closing.
(ii) No Person, other than ASkyB, has any right, title or
interest in, or with respect to, the Earth Station Authorizations, and the
rights being transferred by ASkyB hereunder with regard to the Earth
Station Authorizations constitute all of the rights, including contractual
rights, held by ASkyB with regard to the Earth Station Authorizations. The
Satellite Contracts include all of the contracts, agreements,
understandings, rights, insurance policies and arrangements necessary for
the construction, launch or insurance of Sky I and Sky II. The Gilbert
Contracts include all of the maintenance and equipment contracts,
agreements, understandings, rights, warranties and arrangements of ASkyB
with respect to the Gilbert Property.
(n) Broker's Fees'. The Transferors do not have any Liability or
--------------
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which the Seller
would be liable.
(o) Resale. Each of the ASkyB Buyer and the MCI Buyer is acquiring
------
the Shares under this Agreement for its own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act. Each of the ASkyB Buyer
and the MCI Buyer has such knowledge and experience in financial and business
matters as to be capable of evaluating the risks and merits of an investment in
the Shares and is able to bear the economic risk of such investment. Each of the
ASkyB Buyer and the MCI Buyer acknowledges and agrees that none of the Shares
have been registered under the Securities Act and such Shares may be sold or
disposed of in the absence of such registration only pursuant to an exemption
from such registration and in accordance with the terms of this Agreement and
Seller's transfer agent is authorized to place stop transfer instructions on the
Seller's stock transfer records
22
and may refuse to transfer any Shares not transferred in compliance therewith or
in compliance with the restrictions on transfer set forth in Section 9(m).
5. Further Agreements of the Parties.
---------------------------------
(a) General. Each of the Parties will cooperate to its fullest
-------
extent and use its respective best efforts to take all action and to do all
things necessary, proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Section 6 below) as soon as practicable following the
date of this Agreement.
(b) Notices and Consents. Seller shall give all required notices
--------------------
to its stockholders and to third parties, and shall use its best efforts to
obtain all required consents, including, without limitation, all Requisite
Corporate Approvals and all required consents of Seller's bondholders, all
consents required by Nasdaq or any other exchange where Seller's securities may
be listed or trading and any other material third-party consents that may be
required or that the Transferors reasonably may request, in connection with the
transactions contemplated by this Agreement. Each of the Transferors shall give
all required notices to third parties, and shall use its best efforts to obtain
all required consents, including, without limitation, all consents required by
counterparties to the Satellite Contracts, regulatory authorities and any other
material third-party consents that may be required or that Seller reasonably may
request, in connection with the transactions contemplated by this Agreement.
Within five (5) calendar days following the date of this Agreement, each of the
Parties shall file any Notification and Report Forms and related materials that
it may be required to file with the Federal Trade Commission ("FTC") and the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") under the Hart-Scott-Rodino Act, and shall make any further filings
pursuant thereto that may be necessary, proper or advisable. Within five (5)
calendar days following the date of this Agreement, each of the Parties shall
make all notifications and file all applications and related materials that it
may be required to file with the FCC or any other federal, state or foreign
government or governmental agency having authority with respect to licenses,
permits or authorizations for the use of orbital slots or the provision of
communications services or other communications licenses, permits or
authorizations in connection with the transactions contemplated hereby, and
shall use its best efforts to obtain at the earliest practicable date all
necessary consents, authorizations and approvals, including FCC Approval for
assignment of the MCI FCC License. As promptly as is practicable after the date
of this Agreement, each of the Parties shall take any additional action,
including, without limitation, the implementation of an Acceptable Alternative
Arrangement, and any additional filings, submissions or applications required by
the FCC, the FTC and the Antitrust Division, that may be necessary, proper or
advisable to effect to the fullest extent feasible the consummation of the
transactions contemplated by this Agreement and the Collateral Agreements in
connection with any other notices to, filings with, and authorizations, consents
and approvals of, governments, governmental agencies and third parties that it
may be required to give, make or obtain and shall refrain from taking any action
the purpose or effect of which could reasonably be expected to make less likely
that such authorizations, consents and approvals will not be given, made or
obtained on the terms provided for in this Agreement. Without limiting the
generality of the foregoing, each party shall: (i) use all reasonable efforts to
cooperate in all respects with each other in connection with any filing,
submission, adversarial proceeding or the timing thereof; (ii) in connection
with any investigation or other inquiry, including
23
any proceeding initiated by a private party, keep the other parties informed on
a timely basis of any material communication received by such party from, or
given by such party to, the FTC, the Antitrust Division, the FCC or any other
governmental authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated by this Agreement, and permit any other party to
preview any material communication given by or to it; and (iii) consult with
each other, in advance of any meeting or conference with such governmental
authorities or, in connection with any proceeding by a private party. The
Parties will use their best efforts to obtain such approvals as promptly as
possible and, in this regard, provide all information reasonably requested,
assist and cooperate with one another to make the necessary filings and take
such steps as may be necessary to secure the non-objection of the relevant
antitrust and regulatory authorities, including FCC Approval for assignment of
the MCI FCC License.
(c) Operation of Business.
---------------------
(i) During the period between the date hereof and the Closing
Date, (A) each of the Transferors shall use commercially reasonable efforts
in the Ordinary Course of Business, (1) to preserve the value and utility
of the Transferred Assets, (2) to preserve the goodwill of its suppliers
and others having business relations with such Transferor with respect to
any Transferred Assets and (3) to perform and observe all the terms,
covenants and conditions required to be performed and observed by it under
the Satellite Contracts and all FCC and other governmental permits,
licenses and other authorizations with respect to the Transferred Assets,
in each case, except to the extent that a failure to do so would not result
in a Transferred Asset Material Adverse Effect; provided, however, that
timely requests for extension of operation or certification deadlines
applicable to Earth Station Authorizations shall be deemed to be a
commercially reasonable effort required by this paragraph; (B) except as
contemplated by this Agreement, the Transferors shall not agree to
materially modify the deliverables pursuant to, or waive any material
performance under, any of the Assigned Contracts without the consent of
Seller, which consent shall not be unreasonably withheld; (C) except for
the issuance of shares of Common Stock pursuant to the exercise of
outstanding rights, warrants, options, convertible securities or
exchangeable securities (including any of the foregoing that are assumed in
connection with the acquisition of any Person), Seller shall not issue any
shares of Common Stock (or securities convertible into or exchangeable for
Common Stock) at a price per share (or having a conversion or exchange
price per share, if a security convertible into or exchangeable for Common
Stock) less than the Current Market Price per share of Common Stock; (D)
Seller shall not issue or fix a record date for the issuance to holders of
Common Stock of rights, options, or warrants to subscribe for or purchase
Common Stock (or securities convertible into or exchangeable for Common
Stock) at a price per share (or having a conversion or exchange price per
share, if a security convertible into or exchangeable for Common Stock)
less than the Current Market Price per share of Common Stock (excluding any
of the foregoing that are assumed or issued in connection with the
acquisition of any Person); and (E) MCI shall take all actions reasonably
necessary to keep the MCI FCC License in full force and effect until the
Closing.
(ii) If it comes to the attention of any of the Transferors
that any events or circumstances regarding the Transferred Assets require
the taking of any action to
24
preserve the value and utility of the Transferred Assets, such Transferor
will (A) promptly notify Seller of such events or circumstances and of any
potential responses to such events and circumstances of which such
Transferor is aware and (B) take such actions as shall be requested by
Seller and reasonably required to preserve such value and utility.
(iii) At any time after the date hereof, until the date that is
30 days prior to the Closing Date, Seller may notify the Transferors in
writing that it does not require the assignment of one or more of the
Gilbert Contracts. In such case, the Transferors shall be permitted to
terminate any such contract, and it shall be designated an "Excluded
Contract" for purposes of this Agreement and shall no longer be included in
the Transferred Assets.
(d) Assignment of the MCI FCC License. In accordance with Section
---------------------------------
5(b), upon execution of this Agreement, ASkyB, News Corporation, MCI and Seller
shall seek FCC Approval of the assignment of the MCI FCC License to Seller or
Newco. Each of the Transferors and Seller shall take all reasonable steps
necessary, and shall supply to the other parties and/or to the FCC all
information reasonably necessary, to obtain such FCC Approval, and shall take
all reasonable steps necessary, including the implementation of an Acceptable
Alternative Arrangement, to effect to the fullest extent feasible the
consummation of the transactions contemplated in this Agreement and the
Collateral Agreements , and shall cooperate with respect to any required
submission to the FCC and/or the International Telecommunication Union,
including any submission required to allow use of the 110 (degrees) and 119
(degrees) 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 (degrees) West Longitude,
119 (degrees) West Longitude and 148 (degrees) West Longitude orbital locations,
including, without limitation, the right to use all assigned frequency channels
authorized thereunder to provide high-powered DBS services, other than any such
restrictions generally imposed on operators of high-powered DBS services, by
applicable Regulatory Provisions and restrictions of the types generally and
customarily imposed by the FCC on operators of high-powered DBS services and
such other restrictions, which, individually or in the aggregate, do not have a
Transferred Asset Material Adverse Effect or a Seller Material Adverse Effect;
(ii) any change in the management or ownership (other than as contemplated
hereunder) of Seller, or in any voting or other rights of any shareholder of
Seller other than the Transferors; or (iii) a requirement that Seller dispose of
all or any part of the 21 frequency channels at 119 (degrees) West Longitude,
the 11 frequency channels at 61.5 (degrees) West Longitude or the 24 frequency
channels at 148 (degrees) 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
25
Transferors to immediately assign the MCI FCC License to Seller, upon receipt of
FCC Approval, in which case the Acceptable Alternative Arrangement shall be
canceled concurrently with the effectiveness of such assignment. MCI shall
continue to perform all of its material obligations under the MCI FCC License
until the earlier of the Closing Date or the date of termination of this
Agreement, and shall continue to remain in "diligence" (as the term is used in
the FCC's rules and as defined in the Regulatory Provisions), and to hold a
valid authorization for its DBS System, until the earlier of the Closing Date or
the date of termination of this Agreement. If the Closing Date shall not have
occurred by December 20, 2000, MCI shall confirm to Seller completion of
construction of the first satellite on its proposed DBS system by December 20,
2000.
(e) Earth Station 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.
26
(iv) As soon as reasonably practicable following the Closing
Date, the Transferors agree to provide to Seller, at no cost to Seller, the
consulting services of Romulo Pontual with respect to the construction and
launch of Sky I and Sky II, which services shall be provided on an "as
needed" basis, up to the full time and efforts of Mr. Pontual.
(v) Prior to the Closing Date, the Transferors shall use
commercially reasonable efforts consistent with past practice to provide
that Loral will continue to perform under the Satellite Contracts in
accordance with their terms in order to achieve completion of construction
and launch of each of Sky I and Sky II at the earliest practicable date.
(vi) On or prior to the Closing Date, the Transferors shall
provide for policies of insurance covering Sky I and Sky II, which policies
shall either name Seller or a wholly owned Subsidiary of Seller designated
by Seller as the named insured, or cause such policies to be issued in the
name of Seller or such Subsidiary, providing for insurance in the amount of
$225 million per satellite and continuing for one year following launch,
regardless of the actual date of launch, and which shall otherwise contain
such customary terms and conditions as Seller reasonably requests;
provided, however, that to the extent the Transferors are able to terminate
existing policies and receive a full refund in respect thereof, Seller may
request the Transferors to procure, and if requested the Transferors shall
procure, from such insurance companies or brokers as Seller directs,
insurance ("Seller's Launch Insurance") in the amount of $225 million per
satellite, per launch plus one year in orbit, containing such customary
industry terms and conditions as Seller shall reasonably request.
(vii) Subject to Section 8(b) of this Agreement, from and after
the Closing Date, the Transferors shall continue to pay, on behalf of
Seller, as and when due, all amounts due under the Satellite Contracts, as
such obligations to pay arise pursuant to the Satellite Contacts in
existence as of the Closing Date, or, in the event of a breach or
termination of any Satellite Contract for any reason, as such obligations
to pay would reasonably be expected to have arisen pursuant to the
Satellite Contracts in existence as of the Closing Date had there been no
such breach or termination; provided, however, that if Seller agrees to a
modification of any of the Satellite Contracts and as a result is entitled
to a reduction in the purchase price therein, the Transferors shall be only
obligated to pay the purchase price as so reduced. In the event the
Transferors fail to make such payments within the time periods provided in
the Satellite Contracts, the Transferors shall either (x) pay, in addition
to the amounts due, any penalties that become due under the Satellite
Contracts as a result of such failure or (y) in the event that Seller
elects to make such payments, promptly pay to Seller an amount equal to
such payments, together with interest thereon at a rate of 17.5% per annum
from the date of Seller's payment until the date of the Transferors'
repayment.
(viii) In the event the Transferors are unable to procure the
necessary consents to assignment of any of the Satellite Contracts, from
and after the Closing Date the Transferors shall use their respective best
efforts to provide to Seller all of the benefits received or to be received
under such Satellite Contracts, and the Transferors shall assign to Seller
all of their right, title and interest in and to each of Sky I and Sky II
immediately following their receipt of title thereto from Loral pursuant to
Section 12.1 of the Loral Contract. In addition, from and after the
Closing Date, if the Transferors have not assigned
27
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
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)
28
or (ii) is required to be disclosed under any applicable law or under subpoena
or other legal process. No such investigation shall diminish in any respect any
of the representations or warranties of the Parties. The Parties shall be
entitled to seek injunctive relief or such other remedy as may be available at
law or in equity for any breach by another Party of this Section.
(i) Notice of Developments. Each Party will give prompt written
----------------------
notice to the others of any material development affecting the ability of the
Parties to consummate the transactions contemplated by this Agreement or any of
the Collateral Agreements, including, but not limited to, a breach of a
representation, warranty or covenant of this Agreement. No disclosure by any
Party pursuant to this Section 5(i) shall, however, be deemed to amend or
supplement the Seller Disclosure Schedule or Transferor Disclosure Schedule or
to prevent or cure any misrepresentation, breach of warranty or breach of
covenant.
(j) NDS Equipment. The Parties agree that all equipment previously
-------------
delivered by any Affiliate of News Corporation to Seller or its Subsidiaries
(the "NDS Equipment") at its broadcast operations center at Cheyenne, Wyoming or
elsewhere, will be removed by News Corporation or an Affiliate at the expense of
News Corporation or such Affiliate. The Parties further agree that any
agreements related to the acquisition and delivery of the NDS Equipment are
terminated as of the date of this Agreement and shall be of no further force or
effect. News Corporation, on the one hand, and the Seller, on the other hand, on
behalf of themselves and their respective Affiliates, agree to fully, finally
and forever release and discharge Seller or News Corporation, as the case may
be, and their respective Affiliates, officers, directors, employees,
representatives and agents from and against any and all claims, actions,
damages, liabilities, costs or expenses arising out of or relating to the NDS
Equipment.
(k) Abeyance of EchoStar Litigation. Seller, News Corporation and
-------------------------------
ASkyB shall promptly as practicable following the date of this Agreement file
the Stipulation annexed as Exhibit H hereto with the United States District
Court for the District of Colorado to stay all discovery, deadlines, motions and
other proceedings in EchoStar Communications Corporation v. The News
-----------------------------------------------
Corporation Limited, pending in the United States District Court for the
- -------------------
District of Colorado (the "EchoStar Litigation").
(l) Transfer Taxes and Prorations. Any sales or other transfer
-----------------------------
taxes resulting from the transfer of the Transferred Assets shall be borne one-
half by the Transferors, on the one hand, and one-half by the Seller, on the
other hand. Notwithstanding the foregoing, real estate taxes and other
customary prorations made in connection with the sale of real property in the
state of Arizona shall be made as of the Closing Date in accordance with Arizona
custom and usage.
(m) Further Assurances. In case at any time after the Closing any
------------------
further action is necessary or desirable to carry out the purposes of this
Agreement or the Collateral Agreements or the transactions contemplated hereby
or thereby, including, among other things, the orderly transfer and transition
of the Transferred Assets from the Transferors to Seller or Newco, as the case
may be, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, the costs and expenses of such actions to be borne
one-half by the Transferors, on the one hand, and one-half by the Seller, on the
other hand, except as otherwise provided in this Agreement or any of the
Collateral
29
Agreements. None of the Parties shall take any action or fail to take any action
which would reasonably be expected to frustrate the intent and purposes of this
Agreement and the Collateral Agreements or the transactions contemplated hereby
or thereby.
(n) No Solicitation. Except for the transactions contemplated by
---------------
this Agreement, from and after the date of this Agreement, until the date of an
FCC Order or, in the case of a Bureau Order, the later of October 31, 1999 or
five days from the date of such Bureau Order, none of the Transferors shall, nor
shall they authorize or permit any officer, director or employee of, or any
investment banker, attorney, accountant, or other representative retained by,
any one of them to, directly or indirectly, solicit, initiate, encourage or
entertain (including by way of furnishing information) discussions, inquiries,
offers or proposals or participate in any discussions or negotiations for the
purpose or with the intention of leading to any proposal or offer from any
Person which constitutes or concerns, or may reasonably be expected to lead to,
any proposal for a merger or other business combination involving any proposal
or offer to acquire any portion of the Transferred Assets. Each of the
Transferors shall promptly (and in any event within two business days) notify
Seller of any inquiry it receives from any Person with respect to the subject
matter of the first sentence of this Section 5(n).
(o) Bundling. Seller and MCI agree that, following the Closing, MCI
--------
shall have the non-exclusive right to bundle Seller's DBS service with MCI's
telephony service offerings on mutually agreeable terms.
(p) Casualty; Condemnation.
----------------------
(i) The Transferors, after learning of any fire or other
casualty on or to the Gilbert Property, shall promptly notify Seller
thereof, and, as soon as reasonably practicable thereafter, the Transferors
shall provide Seller with an estimate of the cost of repairs and the amount
of insurance proceeds available to undertake such repairs. Within ten (10)
days after receipt of such notices and estimates, Seller shall in turn
notify the Transferors whether Seller wants the Transferors to commence
repair of the resultant damage of the Gilbert Property. If Seller wants the
Transferors to so commence, or if Transferors, in the exercise of prudent
business judgment, decide to so commence, the Transferors shall proceed to
repair the Gilbert Property but shall not be obligated to expend more than
any collected insurance proceeds and the amount of any insurance
deductible. Should such fire or other casualty create an emergency
situation, the Transferors may elect to take such measures to protect,
secure and repair the Gilbert Property as the Transferors in their own
discretion determine. At the Closing Date, the Transferors shall pay to
Seller any proceeds they have received in respect of any such fire or other
casualty; provided, however, that if the Transferors have undertaken any
repairs in accordance with this Section 5(p)(i), the Transferors shall turn
over to Seller the balance of any unused insurance proceeds in the
Transferors' possession. At the Closing, the Transferors shall also assign
(without warranty or recourse to the Transferors) to Seller all of the
Transferors' rights to any payments to be made after the Closing Date under
any hazard insurance policy then in effect with respect to the Gilbert
Property. If it is necessary to prosecute a claim to maximize the proceeds
of insurance recovery, from and after the Closing Date the Transferors
shall diligently undertake such prosecution for the benefit of Seller. The
Transferors shall not enter into any
30
agreement to undertake repairs with a term that extends beyond the Closing
Date without the prior written consent of Seller, which consent shall not
be unreasonably withheld. Following the Closing Date, except as set forth
above, the Transferors shall have no further liability or responsibility
with respect to any such preceding fire or other casualty at the Gilbert
Property. Following the Closing Date, Seller shall reimburse the
Transferors for the cost of any repairs made by the Transferors prior to
the Closing and not reimbursed by the Transferors' hazard insurance
company, to the extent Seller receives any insurance proceeds from and
after the Closing Date.
(ii) At the Closing Date, the Transferors shall pay to Seller
any proceeds it has received in respect of any taking of any part of the
Gilbert Property, and shall assign to Seller without recourse or warranty
its right to any future proceeds in respect thereof. Following the Closing
Date, the Transferors shall have no further liability or responsibility
with respect to any such preceding taking or proceeding regarding the
Gilbert Property. If it is necessary to prosecute a claim to maximize the
proceeds of taking recovery, from and after the Closing Date the
Transferors shall diligently undertake such prosecution for the benefit of
Seller.
(q) Title Insurance. ASkyB will obtain, not later than thirty (30)
---------------
calendar days following the date of this Agreement with respect to the Gilbert
Property, a commitment for an extended coverage ALTA Owner's Policy of Title
Insurance Form 1992 issued by a Chicago Title Insurance Company or such other
title insurer reasonably satisfactory to Seller (and, if requested by Seller,
reinsured in whole or in part by one or more insurance companies and pursuant to
a direct access agreement reasonably acceptable to Seller), such amount as
Seller reasonably may determine to be the fair market value of such real
property (including all improvements located thereon), insuring title to such
real property to be in the name of Seller as of the Closing (subject only to the
title exceptions described above in Section 4(g)(i) of the Transferor Disclosure
Schedule) and containing in substance such endorsements as ASkyB obtained in
Chicago Title Insurance Company Policy No. 106 0000449, a copy of which has been
furnished to Seller. The cost of such title policy shall be borne one-half by
the Transferors, on the one hand, and one-half by Seller, on the other hand.
(r) Surveys. With respect to the Gilbert Property, ASkyB will procure
-------
in preparation for the Closing a current survey certified to Seller, prepared by
a licensed surveyor and conforming to current ATLA Minimum Detail Requirements
for Land Title Surveys, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines, and other matters shown
customarily on such surveys, and showing access affirmatively to a public street
or road (the "Survey"). The cost of the Survey shall be borne one-half by the
Transferors, on the one hand, and one-half by Seller, on the other hand.
6. Conditions to Obligation to Close.
---------------------------------
(a) Conditions to Obligation of the Transferors. The obligation of
-------------------------------------------
each of the Transferors to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions on or prior to the Closing, any of which may be waived by News
Corporation:
31
(i) The representations and warranties of Seller set forth in
Sections 3(b)(i), 3(c)(i), 3(d)(ii), 3(e), 3(g)(A), 3(g)(D) and 3(h)(iii)
that are qualified by materiality or a material adverse effect shall be
true and correct at and as of the Closing Date, and all other
representations and warranties of Seller set forth in such sections that
are not so qualified shall be true and correct in all material respects at
and as of the Closing Date, except, in each case, (i) for such
representations and warranties that are expressly made as of an earlier
date in which case such representations and warranties shall only be true
and correct on and as of such earlier date and (ii) as disclosed in the
Seller Disclosure Schedule;
(ii) Seller shall have procured all of the consents and
approvals specified in Section 6(a)(ii) of the Seller Disclosure Schedule;
(iii) There shall be no statute, law, judgment, decree,
injunction, rule or order of any federal, state, local or foreign
government, governmental authority, governmental department, commission,
administrative or regulatory agency, instrumentality, court or arbitrator
("Governmental Entities") outstanding that prohibits, restricts or delays
consummation of the transactions contemplated by this Agreement;
(iv) Seller shall have delivered to the Transferors a
certificate, dated the Closing Date, in form and substance reasonably
satisfactory to the Transferors, executed by an executive officer of
Seller, to the effect that each of the conditions specified above in
Section 6(a)(i)-(iii) is satisfied in all respects;
(v) All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise
been terminated, and the Parties shall have received the FCC Approval and
other authorizations, consents and approvals of other Governmental Entities
set forth in the Seller Disclosure Schedule and the Transferor Disclosure
Schedule;
(vi) The Transferors shall have received from counsel to
Seller an opinion addressed to the Transferors and dated as of the Closing
Date in form and substance reasonably satisfactory to the Transferors;
(vii) Seller shall have executed and delivered to the
Transferors the Registration Rights Agreement;
(viii) Seller shall have executed and delivered, and shall have
caused Charles W. Ergen to execute and deliver, to the Transferors the
Settlement Agreement and Mutual Release;
(ix) Seller shall have caused to be executed and delivered to
the Transferors the Set Top Box Agreement;
(x) Seller shall have executed and delivered to the
Transferors the Retransmission Consent Agreement; and
32
(xi) Seller shall have executed and delivered to the
Transferors an Assignment and Assumption Agreement with respect to the
Assigned Contracts, in a form to be mutually agreed upon by the parties
thereto (the "Contract Assignment and Assumption"), and the assumption of
the Assigned Contracts and the MCI FCC License shall be effective as of the
Closing Date.
In the event that one or more of the preceding conditions to the
Transferor's obligations to close have not been satisfied on or prior to the
Closing Date, the Transferors may nonetheless proceed to close (without waiving
such condition) and seek a purchase price adjustment from or pursue a cause of
action for damages against Seller for the failure of Seller to satisfy such
condition.
(b) Conditions to Obligation of Seller. The obligation of Seller
----------------------------------
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions on or prior to
the Closing, any of which may be waived by Seller:
(i) The representations and warranties of each of the
Transferors set forth in Sections 4(b) (excluding the representations and
warranties with respect to good standing status), 4(c)(i), 4(d), 4(f)(A),
4(h)(iii)(A), 4(h)(iii)(B), 4(h)(iii)(C), 4(l)(i) and 4(m)(i) that are
qualified by reference to materiality or a material adverse effect shall be
true and correct at and as of the Closing Date, and all other
representations and warranties set forth in such sections that are not so
qualified shall be true and correct in all material respects at and as of
the Closing Date except, in each case, (i) for such representations and
warranties that are expressly made as of an earlier date, in which case
such representations and warranties shall only be true and correct on and
as of such earlier date and (ii) as disclosed in the Transferor Disclosure
Schedule;
(ii) The Transferors shall have procured all of the consents
specified in Section 6(b)(ii) of the Transferor Disclosure Schedule;
provided, however, that if the Transferors are unable to procure a consent
to the assignment of an Assigned Contract, but are able to provide Seller
with all of the benefits under such Assigned Contract at no additional cost
to Seller, then Seller shall waive this condition with respect to such
Assigned Contract;
(iii) There shall be no statute, law, judgment, decree,
injunction, rule or order of any Governmental Entity which prohibits,
restricts or delays consummation of the transactions contemplated by this
Agreement;
(iv) Each of the Transferors shall have delivered to Seller a
certificate, dated the Closing Date, in form and substance reasonably
satisfactory to Seller, executed by an executive officer of each of the
Transferors, respectively, to the effect that (A) each of the conditions
specified above in Section 6(b)(i)-(iii) is satisfied in all respects and
(B) the representations and warranties set forth in Section 4(o) are true
and correct in all material respects;
33
(v) All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise
been terminated, and the Parties shall have received the FCC Approval and
other authorizations, consents and approvals of other Governmental Entities
set forth in the Seller Disclosure Schedule and the Transferor Disclosure
Schedule;
(vi) Seller shall have received from counsel to MCI, an
opinion or opinions addressed to Seller and dated as of the Closing Date in
form and substance reasonably satisfactory to Seller;
(vii) The Transferors shall have executed and delivered to
Seller the Registration Rights Agreement;
(viii) The Transferors shall have executed and delivered the
Settlement Agreement and Mutual Release;
(ix) The Transferors shall have caused to be executed and
delivered to Seller the Set Top Box Agreement;
(x) The Transferors shall have caused to be executed and
delivered to Seller the Retransmission Consent Agreement;
(xi) The Transferors shall have caused to be executed and
delivered to Seller the Components License Agreement;
(xii) The Transferors shall have delivered to Seller a Special
Warranty Deed in the form of Exhibit I annexed hereto, conveying the
Gilbert Property to Seller;
(xiii) The Transferors shall have satisfied their obligations
contained in Section 5(f)(vi) hereof; and
(xiv) The Transferors shall have executed and delivered to
Seller the Contract Assignment and Assumption, and an instrument or
instruments of transfer in form and substance reasonably satisfactory to
Seller with respect to the transfer of the Earth Station Authorizations and
the Intellectual Property set forth in Section 2(b)(vi), and the assignment
of all Assigned Contracts, the MCI FCC License, the Earth Station
Authorization and the Intellectual Property shall be effective as of the
Closing Date.
In the event that one or more of the preceding conditions to Seller's
obligations to close have not been satisfied on or prior to the Closing Date,
Seller may nonetheless proceed to close (without waiving such condition) and
seek a purchase price adjustment from or pursue a cause of action for damages
against the Transferors for the failure of the Transferors to satisfy such
condition.
7. Remedies for Breach of this Agreement.
-------------------------------------
34
(a) Survival. All covenants and agreements contained in this
--------
Agreement and the right to indemnification with respect to all representations
and warranties contained in this Agreement or in any certificate, document or
statement delivered pursuant hereto, shall survive (and not be affected in any
respect by) the Closing, any investigation conducted by any party hereto and any
information which any party may receive. Notwithstanding anything to the
contrary in the foregoing, the right to indemnification with respect to each
representation and warranty (but not the covenants and other agreements)
contained in this Agreement or made pursuant to any certificate, document or
statement delivered pursuant hereto shall terminate on the last day of the
eighteenth month after the month that includes the Closing Date (the "Survival
Date"); provided, however, that the right to indemnification with respect to
such representations and warranties, and the Liability of any party with respect
thereto, shall not terminate with respect to any claim, whether or not fixed as
to Liability or liquidated as to amount, with respect to which such party has
been given written notice prior to the Survival Date.
(b) Indemnification Provisions for Benefit of the Transferors.
---------------------------------------------------------
Seller shall indemnify each of the Transferors and their respective
shareholders, officers, directors, employees, agents and Affiliates
(collectively, "Transferor Indemnitees") and hold each of them harmless from and
against and in respect of any Damages directly or indirectly incurred by any of
them as a result of any breach of a representation, warranty, covenant or
agreement of Seller made hereunder. For purposes of determining any such
Damages incurred by the Transferor Indemnitees, no regard shall be given to the
adjustment provisions set forth in Section 2(a)(ii) hereof.
(c) Indemnification Provisions for Benefit of Seller. Each of News
------------------------------------------------
Corporation, MCI and ASkyB, jointly and severally, shall indemnify Seller, and
its shareholders, officers, directors, employees, agents and Affiliates and hold
each of them harmless from and against and in respect of any Damages directly or
indirectly incurred by any of them as a result of any breach of a
representation, warranty, covenant or agreement of News Corporation, ASkyB, the
ASkyB Buyer, MCI or the MCI Buyer made hereunder other than Section 4(g)(i), if
any Damages suffered as a result thereof are recoverable under Seller's title
insurance policy.
(d) Notification; Rights of Parties to Settle or Defend. Promptly
---------------------------------------------------
after the occurrence of any event which may give rise to a claim for
indemnification under this Section 7, the party entitled to indemnification (the
"Indemnified Party") shall notify the indemnifying party (the "Indemnitor") in
writing of such claim (the "Claims Notice"). The Claims Notice shall describe
the asserted liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Damages that have
been or may be suffered by the Indemnified Party. Failure by the Indemnified
Party to give a Claims Notice to the Indemnitor in accordance with the
provisions of this Section 7(d) shall not relieve the Indemnitor of its
obligations hereunder except to the extent that the Indemnitor has been actually
and materially prejudiced by such failure. The Indemnitor may elect to
compromise or defend, at its own expense, by its own counsel and to the extent
an election with respect to such compromise or defense is available to the
Indemnified Party, any asserted liability. If the Indemnitor elects to
compromise or defend such asserted liability, it shall within 30 calendar days
(or sooner, if the nature of the asserted liability so requires) notify the
Indemnified Party of its intent to do so, and the Indemnified Party shall
cooperate, at the expense of the Indemnitor, in the compromise of, or defense
against, such asserted liability. If the Indemnitor elects to defend any claim,
the Indemnified Party shall make available to the Indemnitor any books,
35
records or other documents within its control that are necessary or appropriate
for such defense. If the Indemnitor elects not to compromise or defend the
asserted liability, fails to notify the Indemnified Party of its election as
herein provided or contests its obligation to indemnify under this Agreement (or
if counsel to the Indemnified Party advises such party that there may be a
potential conflict of interest between the Indemnitor and the Indemnified Party,
or between the Indemnified Party and any other indemnified party, or that
different or additional defenses from those available to the Indemnified Party
may be available to any other indemnified party), the Indemnified Party may pay,
compromise or defend (at the expense of the Indemnitor) such asserted liability
as the Indemnified Party considers appropriate. The Parties agree to cooperate
fully with one another in the defense, settlement or compromise of any asserted
liability. Notwithstanding the foregoing, neither the Indemnitor nor the
Indemnified Party may settle or compromise any claim over the objection of the
other; provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnified Party and the Indemnitor
may participate, at their own expense, in the defense of such asserted
liability. For the avoidance of doubt, the rights to indemnification under this
Agreement shall arise in the event of both claims asserted directly by one Party
against the other as well as claims asserted by third parties against a Party.
(e) Exclusive Remedy. Except with respect to a termination of this
----------------
Agreement pursuant to Section 8(a)(ii) or Section 8(a)(iii) hereof, the Parties
acknowledge and agree that the indemnity rights set forth in this Section 7 are
to be their exclusive monetary remedies for breaches of the representations,
warranties and covenants contained herein; provided, however, that nothing in
this Section 7(e) shall limit in any way the availability of specific
performance, injunctive relief or other equitable remedies to which a Party may
otherwise be entitled or a cause of action for fraud.
(f) Limitations. Any indemnity amounts payable by an Indemnitor
-----------
hereunder shall be net of any tax benefit received by the Indemnified Party as a
result of the claim or event giving rise to indemnification.
8. Termination.
-----------
(a) Termination of Agreement. The Parties may terminate this
------------------------
Agreement only as provided below:
(i) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) The Transferors may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing in the event
Seller is in breach, in any material respect, of any of the representations
and warranties set forth in Section 6(a)(i), unless such breach shall be
subject to cure, in which event termination may only be effected if such
breach shall remain uncured on the 60th day following receipt of notice of
breach; provided, however, that if any such breach is incapable of cure
within 60 days and Seller acted reasonably diligently during such 60-day
period in attempting to cure such breach, this Agreement shall not be
terminated pursuant to this Section 8(a)(ii) for so long as the breach
remains subject to cure and Seller acts continuously with reasonable
diligence in attempting to cure such breach;
36
(iii) Seller may terminate this Agreement by giving written
notice to the Transferors at any time prior to the Closing in the event any
of the Transferors is in breach, in any material respect, of any of the
representations and warranties set forth in Section 6(b)(i), unless such
breach shall be subject to cure, in which event, termination may only be
effected if such breach shall remain uncured on the 60th day following
receipt of notice of breach; provided, however, that if any such breach is
incapable of cure within 60 days and the breaching party acted reasonably
diligently during such 60-day period in attempting to cure such breach,
this Agreement shall not be terminated pursuant to this Section 8(a)(iii)
for so long as the breach remains subject to cure and the breaching party
acts continuously with reasonable diligence in attempting to cure such
breach; or
(iv) Either the Transferors or Seller may terminate this
Agreement by giving written notice to Seller or the Transferors, as the
case may be:
(A) if, within the later of (x) December 31, 1999 and (y)
sixty (60) days following the date of a Bureau Order, the FCC does not
release a Preliminary FCC Approval, or if such Preliminary FCC
Approval is released within such sixty (60) day period but does not
become an FCC Approval within thirty (30) days thereafter;
(B) if, within sixty (60) days following the date of an
FCC Order, the FCC does not release a Preliminary FCC Approval, or if
such Preliminary FCC Approval is released within such sixty (60) day
period but does not become an FCC Approval within thirty (30) days
thereafter; or
(C) if within sixty (60) days following the date of an FCC
Approval or FCC Order which conditionally grants the FCC's consent to
the assignment of the MCI FCC License to Seller or Newco, the Parties
are unable to satisfy a condition other than a Material Condition.
(b) Effect of Termination.
---------------------
(i) If any Party terminates this Agreement pursuant to Section
8(a), this Agreement shall become null and void and all obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party, except for (A) any Liability of any Party then in breach and
(B) the provisions of the third sentence of Section 5(h) relating to
confidential information which shall survive termination.
(ii) Notwithstanding the foregoing, (A) if this Agreement is
terminated for any reason other than pursuant to Section 8(a)(ii) or
Section 8(a)(iii), Seller shall purchase from the Transferors, and the
Transferors shall sell to Seller, Sky II, together with all rights
associated therewith, immediately following the later of the date of
termination or the Transferors' receipt of title to Sky II from Loral
pursuant to Article 12.1 of the Loral Contract, i.e., in-orbit delivery, at
a purchase price equal to the actual direct payments made under the Loral
Contract in respect of Sky II through the date of purchase, and Seller
shall
37
assume all obligations of the Transferors with respect to Sky II under
Article 13 of the Loral Contract dealing with orbital performance
incentives; provided, however, that, as an alternative to purchasing Sky
II, Seller may, at its option, purchase Sky I, together with all rights
associated therewith, from the Transferors, immediately following the later
of the date of termination or the Transferors' receipt of title to Sky I
from Loral pursuant to Article 12.1 of the Loral Contract, i.e., in-orbit
delivery, at a purchase price equal to the actual direct payments made
under the Loral Contract in respect of Sky I through the date of purchase,
and Seller shall assume all obligations of Transferors with respect to Sky
I under Article 13 of the Loral Contract dealing with orbital performance
incentives; (B) if this Agreement is terminated by the Transferors pursuant
to Section 8 (a)(ii), the Transferors may elect to sell to Seller, and if
so elected Seller shall purchase from the Transferors, at the Transferors'
option, either Sky I or Sky II, together with all rights associated
therewith, immediately following the later of the date of termination or
the Transferors' receipt of title thereto from Loral pursuant to Article
12.1 of the Loral Contract, i.e, in-orbit delivery, at a purchase price
equal to the actual direct payments made under the Loral Contract in
respect of Sky I or Sky II, as applicable, through the date of purchase,
and Seller shall assume all obligations of the Transferors with respect to
Sky I or Sky II, as the case may be, under Article 13 of the Loral Contract
dealing with orbital performance incentives; or (C) if this Agreement is
terminated by Seller pursuant to Section 8(a)(iii), Seller may elect to
purchase from the Transferors, and if so elected the Transferors shall sell
to Seller, at Seller's option, either Sky I or Sky II, together with all
rights associated therewith, immediately following the later of the date of
termination or the Transferors' receipt of title thereto from Loral
pursuant to Article 12.1 of the Loral Contract, i.e, in-orbit delivery, at
a purchase price equal to the actual direct payments made under the Loral
Contract in respect of Sky I or Sky II, as applicable, through the date of
purchase, and Seller shall assume all obligations of the Transferors with
respect to Sky I or Sky II, as the case may be, under Article 13 of the
Loral Contract dealing with orbital performance incentives. As an
alternative to the foregoing provisions with respect to the Transferors'
sale to Seller of Sky I or Sky II, and subject to Loral's prior written
consent, Transferors may assign to Seller the Loral Contract as it relates
to the applicable satellite, together with all rights associated therewith.
In all events, Transferors may also assign Seller's Launch Insurance, if
any, relating to the applicable satellite, in which event, the purchase
price for such satellite, shall include the actual direct payments made
with respect to such satellite under Seller's Launch Insurance policy. The
purchase price for either Sky I or Sky II shall be payable in cash on or
prior to the 180th day (the "Payment Date") following the assignment of the
Loral Contract, the termination of this Agreement or the Transferors'
receipt of title thereto from Loral pursuant to Article 12.1 of the Loral
Contract (the "Transfer Date"), i.e, in-orbit delivery, as applicable,
together with interest thereon at the LIBOR rate from the Transfer Date to
the payment date of such purchase price; provided, however, that if Seller
fails to pay such purchase price, together with all accrued interest
thereon, on or prior to the Payment Date, interest will accrue on such
unpaid purchase price and accrued interest at a rate of 17.5% per annum
from the 181st day following the Transfer Date to the payment date
therefor. All representations, warranties and covenants of the Transferors
in this Agreement with respect to the Satellite Contracts shall be
applicable in connection with the purchase or assignment of either Sky I or
Sky II pursuant to this paragraph.
38
(iii) Without limiting the generality of subsection (b)(i)
above, if this Agreement is terminated pursuant to either Section 8(a)(ii)
or Section 8(a)(iv), Seller, News Corporation and ASkyB shall promptly as
practicable following the date of such termination execute and file the
Settlement Agreement and Mutual Release and the Final Stipulation of
Dismissal annexed thereto with the United States District Court for the
District of Colorado to dismiss the EchoStar Litigation with prejudice
provided, however, if this Agreement is terminated pursuant to Section
8(a)(iv)(C) because an FCC Approval or FCC Order contained a condition
that is within the control of the Transferors, and such condition is not
satisfied, even though the Seller acted in good faith in connection
therewith, the EchoStar Litigation shall not be dismissed.
.
9. Miscellaneous.
-------------
(a) Press Releases and Announcements. No Party shall issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the other Party,
which approval shall not be unreasonably withheld; provided, however, that no
Party shall be prohibited from making any public disclosure it believes in good
faith on advice of counsel is required by law or regulation, including, the
rules and regulations of any securities exchange or inter-dealer quotation
system upon which the securities of one of the Parties are listed or admitted
for trading(in which case the disclosing Party will advise the other Parties
prior to making the disclosure). Prior to the making of any disclosure required
by law or regulation, the disclosing Party shall consult with the other Parties,
to the extent feasible, as to the content of such public announcement or press
release and provide the other Party with an opportunity to review and comment
thereon.
(b) No Third-Party Beneficiaries. This Agreement shall not confer
----------------------------
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the Schedules
----------------
hereto and the Collateral Agreements referred to herein), constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, that may have
related in any way to the subject matter hereof (except for any contemporaneous
writing signed by Seller, on the one hand, and any of the Transferors, on the
other hand, which specifically refers to their Agreement).
(d) Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the Transferors and Seller, except as provided in Sections 2(a) and
(b) with respect to the designation of the ASkyB Buyer (if it is not a Party),
the MCI Buyer (if it is not a Party) and Newco and in Section 9(m)(iv) with
respect to the transfer of Shares to direct or indirect wholly-owned
Subsidiaries of News Corporation or MCI; provided, however, that as a condition
to any such designation, ASkyB, MCI Buyer and Newco, as the case may be, shall
agree in writing to be bound by all of the provisions of this Agreement
applicable to the Party making such designation; and provided further, that as a
condition to any transfer pursuant to Section 9(m)(iv),
39
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
40
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below:
If to Seller:
EchoStar Communications Corporation
5701 South Santa Fe Drive
Littleton, Colorado 80120
Attn: David K. Moskowitz, Esq.
Senior Vice President, General
Counsel and Secretary
Telecopy: (303) 723-1699
If to MCI: MCI Telecommunications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Michael Salsbury, Esq.
General Counsel
Telecopy: (202) 887-3353
If to ASkyB or News The News Corporation Limited
Corporation: c/o News America Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Senior Executive Vice
President and Group General Counsel
Telecopy: (212) 768-2029
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
(i) Amendments and Waivers. No amendment of any provisions of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Parties hereto. Any Party may waive compliance by another Party with any
provision of this Agreement, which waiver must be in writing. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
41
(j) Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(k) Expenses. Except as otherwise provided in this Agreement, each
--------
of the Parties shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(l) Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. Any reference to the "transactions contemplated
hereby," the "transactions contemplated by this Agreement," the "transactions
contemplated under this Agreement" or the "transactions contemplated pursuant to
this Agreement" shall be deemed to also refer to any other document, agreement
or certificate to be executed or delivered on or prior to the Closing. The
Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Restrictions on Transfer. Notwithstanding anything to the
------------------------
contrary set forth herein or in the Registration Rights Agreement, the ASkyB
Buyer and the MCI Buyer agree that:
(i) Until such time (the "Completion Date") as all amounts due
under the Satellite Contracts have been paid (including, at the
Transferors' option, through the payment into escrow of all amounts
scheduled to become due under the Satellite Contracts), the ASkyB Buyer and
the MCI Buyer (collectively, the "Buyers") may, directly or indirectly,
sell, assign, transfer, pledge, hypothecate or otherwise dispose of any
interest in the Shares (a "Disposition") in an amount not to exceed 10% of
the Shares issued to the Buyers on the Closing Date (subject to adjustment
for any stock split, stock dividend, subdivision or combination of the
Common Stock or any other action having a similar effect on the Common
Stock);
42
(ii) Subject to subsection (i) above, from and after the
Closing Date and during the two-year period commencing on the Closing Date,
Dispositions may be made by the ASkyB Buyer and the MCI Buyer in an amount
not to exceed for each 365-day period thereafter one-third (1/3) of the
Shares issued to the Buyers on the Closing Date (subject to adjustment for
any stock split, stock dividend, subdivision or combination of the Common
Stock or any other change in corporate structure affecting the Common
Stock); provided, however, that any Shares permitted to be sold, but not
sold during the first 365-day period, shall be added to the number of
Shares permitted to be sold during the second 365-day period; and provided,
further, that the ASkyB Buyer and the MCI Buyer shall be permitted pursuant
to a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act, to make a Disposition of
Shares in an amount not to exceed (x) the difference between 50% of the
Shares issued to the Buyers and the number of shares Disposed of by the
Buyers in accordance with this subsection (ii) during the first 365-day
period, or (y) the difference between 80% of the Shares issued to the
buyers and the number of Shares Disposed of by the buyers in accordance
with this subsection (ii) during the first and second 365-day periods;
(iii) Subject to subsection (i) above, from and after the second
anniversary of the Closing Date, Dispositions may be made by the ASkyB
Buyer and the MCI Buyer without regard to any restriction on the amount of
Shares sold, except as may be imposed by applicable law; and
(iv) Nothing contained in this Section 9(m) shall limit the
right of the ASkyB Buyer or the MCI Buyer to transfer any of its Shares to
a direct or indirect wholly-owned subsidiary of either MCI or News
Corporation.
(n) Legends. The Transferors agree to the placement on certificates
-------
representing the Shares purchased pursuant hereto, of a legend, substantially as
set forth below (except that such legend shall not be placed on any Shares that
have been registered under the Securities Act or if, in the opinion of counsel
(which opinion shall be in form and substance satisfactory to Seller), such
legend is no longer required under the Securities Act):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE
OFFERED, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF
SUCH OTHER STATE OR JURISDICTION. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PROVISIONS (INCLUDING THE PROVISIONS THAT
RESTRICT THE TRANSFER OF SUCH SECURITIES) OF A PURCHASE AGREEMENT, DATED
AS OF NOVEMBER 30, 1998, AMONG AMERICAN SKY BROADCASTING, LLC, THE NEWS
CORPORATION LIMITED, MCI TELECOMMUNICATIONS CORPORATION AND ECHOSTAR
43
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 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]
44
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
AMERICAN SKY BROADCASTING, LLC
By: __________________________________
Name:
Title:
THE NEWS CORPORATION LIMITED
By: __________________________________
Name:
Title:
MCI TELECOMMUNICATIONS CORPORATION
By: ___________________________________
Name:
Title:
ECHOSTAR COMMUNICATIONS
CORPORATION
By: ____________________________________
Name:
Title:
45
EXHIBIT 99.2
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.
American Sky Broadcasting, LLC
The News Corporation Limited
MCI Telecommunications Corporation
November 3, 1998
Page 2
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 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
American Sky Broadcasting, LLC
The News Corporation Limited
MCI Telecommunications Corporation
November 3, 1998
Page 3
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.
(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.
American Sky Broadcasting, LLC
The News Corporation Limited
MCI Telecommunications Corporation
November 3, 1998
Page 4
(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]
American Sky Broadcasting, LLC
The News Corporation Limited
MCI Telecommunications Corporation
November 3, 1998
Page 5
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: _______________________________
Title:______________________________
_____________________________
Charles W. Ergen
Accepted and agreed as of the date
first-above written:
THE NEWS CORPORATION LIMITED
By: _______________________________
Title:______________________________
MCI TELECOMMUNICATIONS CORPORATION
By:________________________________
Title:_______________________________
AMERICAN SKY BROADCASTING, LLC
By: _______________________________
Title:______________________________
