0000950131-01-503937.txt : 20011101
0000950131-01-503937.hdr.sgml : 20011101
ACCESSION NUMBER: 0000950131-01-503937
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20011028
ITEM INFORMATION: Other events
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011031
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: GENERAL MOTORS CORP
CENTRAL INDEX KEY: 0000040730
STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711]
IRS NUMBER: 380572515
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-00143
FILM NUMBER: 1772174
BUSINESS ADDRESS:
STREET 1: 300 RENAISSANCE CTR
STREET 2: MAIL CODE: 482-C34-D71
CITY: DETROIT
STATE: MI
ZIP: 48265-3000
BUSINESS PHONE: 3135565000
MAIL ADDRESS:
STREET 1: 300 RENAISSANCE CTR
STREET 2: MAIL CODE: 482-C34-D71
CITY: DETROIT
STATE: MI
ZIP: 48265-3000
8-K
1
d8k.txt
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) October 28, 2001
----------------
GENERAL MOTORS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-143 38-0572515
---------------------------- ----------------------- -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
300 Renaissance Center, Detroit, Michigan 48265-3000
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
--------------
ITEM 5. OTHER EVENTS.
On October 28, 2001, General Motors Corporation and its subsidiary Hughes
Electronics Corporation, together with EchoStar Communications Corporation,
announced the signing of definitive agreements that provide for the spin-off of
Hughes from GM and the subsequent merger of Hughes with EchoStar. See the press
release and selected transaction documents attached as exhibits hereto.
# # #
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors, and its directors and executive officers, and Hughes, and
certain of its officers, may be deemed to be participants in GM's solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Michael J. Gaines Corporate VP and CFO, Hughes
Mr. Devine beneficially owns 139,204.80 GM $1-2/3 shares and 27,177 GM
Class H shares. Mr. Shaw beneficially owns 3,604 GM $1-2/3 shares and 1,415,915
GM Class H shares. Ms. Austin beneficially owns 2,804 GM $1-2/3 shares and
860,454 GM Class H shares. Mr. Hartenstein beneficially owns 2,622 GM $1-2/3
shares and 1,138,899 GM Class H shares. Mr. Gaines beneficially owns 337 GM
$1-2/3 shares and 165,329 GM Class H shares. The above ownership information
includes shares that are purchasable under options that are exercisable within
60 days of October 15, 2001. In addition, Mr. Devine holds options to acquire
shares of GM $1-2/3 common stock that are not exercisable within 60 days of
October 15, 2001, and each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr.
Gaines holds options to acquire shares of GM Class H common stock that are not
exercisable within 60 days of October 15, 2001.
Each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr. Gaines has a
severance agreement with Hughes that provides for severance in the event of an
involuntary termination after a change in control, and each also has a retention
agreement that provides for certain payments in the event of a change in
control.
EchoStar and certain of its executive officers may be deemed to be
"participants" in GM's solicitation of consents from the holders of GM $1-2/3
and GM Class H shares in connection with the proposed transactions. Information
about the executive officers of EchoStar is set forth in the proxy statement for
EchoStar's 2001 annual meeting of shareholders. As of Oct. 28, 2001, EchoStar
held approximately 1,000 shares of GM $1-2/3 common stock and 185,000 shares of
GM Class H common stock. Mr. Ergen beneficially owns approximately 1,000 shares
of GM $1-2/3 common stock and approximately 10,000 of GM Class H common stock.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available. This communication shall not constitute an
offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Materials included in this filing contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of
General Motors Corp. ("GM"), EchoStar Communications Corporation ("EchoStar"),
Hughes Electronics Corp. ("Hughes"), or a combined EchoStar and Hughes to differ
materially, many of which are beyond the control of EchoStar, Hughes or GM
include, but are not limited to, the following: (1) the businesses of EchoStar
and Hughes may not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected benefits and
synergies from the combination may not be realized within the expected time
frame or at all; (3) revenues following the transaction may be lower than
expected; (4) operating costs, customer loss and business disruption including,
without limitation, difficulties in maintaining relationships with employees,
customers, clients or suppliers, may be greater than expected following the
transaction; (5) generating the incremental growth in the subscriber base of the
combined company may be more costly or difficult than expected; (6) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (7) the effects of legislative
and regulatory changes; (8) an inability to obtain certain retransmission
consents; (9) an inability to retain necessary authorizations from the FCC; (10)
an increase in competition from cable as a result of digital cable or otherwise,
direct broadcast satellite, other satellite system operators, and other
providers of subscription television services; (11) the introduction of new
technologies and competitors into the subscription television business; (12)
changes in labor, programming, equipment and capital costs; (13) future
acquisitions, strategic partnership and divestitures; (14) general business and
economic conditions; and (15) other risks described from time to time in
periodic reports filed by 1EchoStar, Hughes or GM with the Securities and
Exchange Commission. You are urged to consider statements that include the words
"may," "will," "would," "could," "should," "believes," "estimates," "projects,"
"potential," "expects," "plans," "anticipates," "intends," "continues,"
"forecast," "designed," "goal," or the negative of those words or other
comparable words to be uncertain and forward-looking. This cautionary statement
applies to all forward-looking statements included in this filing.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
EXHIBITS
Designation Description Method of Filing
----------- ----------- ----------------
99.1 Press Release, dated October 28, 2001 Filed with this Report
99.2 Agreement and Plan of Merger, dated October 28, 2001, by and Filed with this Report
between EchoStar Communications Corporation and Hughes
Electronics Corporation
99.3 Implementation Agreement, dated October 28, 2001, by and Filed with this Report
among General Motors Corporation, Hughes Electronics
Corporation and EchoStar Communications Corporation
99.4 Separation Agreement, dated October 28, 2001, by and between Filed with this Report
General Motors Corporation and Hughes Electronics Corporation
99.5 Stock Purchase Agreement, dated October 28, 2001, by and Filed with this Report
among EchoStar Communications Corporation, Hughes Electronics
Corporation, Hughes Communications Galaxy, Inc., Hughes
Communications Satellite Services, Inc. and Hughes
Communications, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS CORPORATION
--------------------------
(Registrant)
Date October 31, 2001
----------------
By /s/ Peter R. Bible
-----------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 2 -
EX-99.1
3
dex991.txt
PRESS RELEASE DATED 10-28-2001
Exhibit 99.1
For Release: Sunday, Oct. 28, 2001 Contacts:
---------
GM: Toni Simonetti 212-418-6380
Hughes: George Jamison 310-662-9986
EchoStar: Judianne Atencio 303-723-2010
GM'S HUGHES ELECTRONICS TO MERGE WITH ECHOSTAR COMMUNICATIONS
. Stockholders and Consumers Benefit As Combined Hughes-EchoStar
Provides Meaningful Competitor To Cable TV Companies
NEW YORK -- General Motors Corp. and its subsidiary Hughes Electronics
(NYSE: GM, GMH) together with EchoStar Communications Corporation (NASDAQ:
DISH), today announced the signing of definitive agreements that provide for the
spin-off of Hughes from GM and the merger of Hughes with EchoStar.
The combined company would use the EchoStar name and adopt the DIRECTV
brand for its services and related products. The merger would create the
nation's second-largest pay television platform with more than 16.7 million
subscribers, of which 1.8 million subscribers are National Rural
Telecommunications Cooperative (NRTC) and affiliates, and 14.9 million
subscribers are owned-and-operated by the combined company. Cable TV companies
presently control more than 80 percent of the U.S. pay television market, while
a combined EchoStar-Hughes would provide service to about 17 percent of the
market.
The spin-off of Hughes from GM would result in current holders of Class H
common stock receiving one share of new Hughes Class C common stock in exchange
for each share of Class H stock held prior to the spin-off. The merger of Hughes
and EchoStar would result in Hughes being the surviving entity and taking the
name EchoStar Communications Corp. Holders of Class A EchoStar common stock
prior to the merger would receive 1.3699 shares of the new EchoStar in exchange
for each share of Class A EchoStar common stock held prior to the merger. Based
on the closing price of EchoStar common stock of $25.26 on Oct. 26, 2001, the
transaction would provide a value of approximately $18.44 per GMH share,
representing a 20-percent premium. As of Oct. 26, 2001, the implied market
capitalization of Hughes was approximately $21.3 billion and the market
capitalization of EchoStar was approximately $12.1 billion.
The transaction is expected to require approximately $5.5 billion of total
financing, which EchoStar expects to fund in the capital markets prior to
closing. Completion of this financing has been backstopped by a bridge
commitment of approximately $2.75 billion from Deutsche Bank, and a bridge
commitment of approximately $2.75 billion from General Motors, the latter of
which the parties plan to replace with a commitment from one or more other
leading financial institutions in the near future. The GM bridge commitment is
secured by a pledge of $2.75 billion of EchoStar stock held by a trust
controlled by EchoStar Chairman and Chief Executive Officer Charles Ergen.
The transaction is subject to a number of conditions, including approval by
a majority of each class of GM shareholders - GM $1-2/3 and GM Class H - voting
both separately as distinct classes, and also together as a single class.
Approval of the majority of EchoStar's voting shares has already been given by
written consent. The proposed transaction also is subject to regulatory
clearance under the Hart-Scott-Rodino Act and approval by the Federal
Communications Commission. The transaction is also contingent upon the receipt
of a favorable ruling from the Internal Revenue Service that the separation of
Hughes from GM will qualify as a tax-free spin-off for U.S. Federal Income Tax
purposes. The transaction is currently expected to close in the second half of
2002.
"This transaction provides significant benefits to Hughes, EchoStar,
millions of present and future DIRECTV customers, and shareholders of both GM
and EchoStar," said GM President and Chief Executive Officer Rick Wagoner.
"We've said all along that we wanted to structure an agreement that would
provide continued strong growth at Hughes and maximum value for both GM and GM
Class H shareholders. This transaction achieves these objectives."
Strong Growth Prospects and Significant Synergies
"This is an extremely compelling combination for GM, GMH and EchoStar
shareholders," Ergen said. "The combination of EchoStar and Hughes is expected
to generate very substantial synergies utilizing the advantages of
direct-broadcast satellite television, cost savings from the elimination of
costly duplicate satellite bandwidth and infrastructure, and strong management
offering more effective fundamental business practices. The new company would
also have enhanced scale to compete more effectively against the dominant U.S.
cable and broadband providers - a critical factor given increasing consolidation
in the cable industry."
"U.S. consumers also would benefit from the combined company's ability to
increase significantly the number of markets served with local channels via
satellite, provide additional channel offerings, increase high-definition TV
(HDTV) offerings and accelerate the introduction of next-generation high-speed
Internet services," Ergen continued. "Together, EchoStar's DISH Network and
Hughes' DIRECTV also can provide a range of services that would bridge the
`digital divide' - providing high-speed broadband solutions to consumers and
businesses. Importantly, these services would be available in rural areas
otherwise far from the information superhighway at rates which the company is
prepared to assure regulators would be competitive."
"Hughes and its operating companies would be well positioned to thrive as
part of this merged company," said Jack A. Shaw, chief executive officer of
Hughes. "DIRECTV would enjoy significant cost efficiencies and better use of its
assets. Hughes Network Systems would play a key strategic part in the growth of
satellite-delivered broadband. PanAmSat would have continued growth
opportunities. And DIRECTV Latin America would benefit from the synergies of the
larger combined company," Shaw said.
The new company, which would retain the EchoStar name but would use the
DIRECTV brand for consumer offerings, would be based in Littleton, Colo., and
would employ approximately 20,000 people and serve more than approximately 14.9
million direct-broadcast satellite TV customers. EchoStar and Hughes have
pledged that the merger would not cause disruption of service or additional
expense to existing customers of either DIRECTV or DISH Network service.
The new EchoStar would be led by Ergen as chairman and chief executive
officer. The board of directors would consist of nine members, five of whom
would be independent directors.
Ergen added, "I think it is significant that EchoStar and Hughes have
agreed to a fair and balanced process for identifying the most qualified people
from both companies in order to select the best person for every job, regardless
where they worked prior to the merger. This is a key provision that Hughes
management felt strongly about and to which EchoStar readily agreed."
A transition team made up of Shaw and DIRECTV Chairman and CEO Eddy
Hartenstein from Hughes, as well as Ergen and EchoStar President Michael Dugan
will assure a smoother and orderly process.
Significant Proceeds for GM
As part of the transaction, General Motors would receive up to $4.2 billion
in cash for redemption of part of its economic interest in Hughes. Pro forma for
the cash redemption (assuming illustratively a price of $18.44 based on the
implied deal value), GM Class H shareholder would own approximately 53 percent
of the combined company, EchoStar's shareholders would own approximately 36
percent, and GM would own approximately 11 percent. In addition, prior to the
transaction, GM would seek to exchange up to 100 million shares of GM Class H
common stock (or after the transaction 100 million shares of EchoStar common
stock) for GM outstanding debt, which would further improve GM's net liquidity
position.
"This transaction offers substantial financial benefits now and over the
long term for GM $1-2/3 and GM Class H shareholders," Wagoner said. "GM Class H
shareholders would receive a significant premium on their investment. For GM
$1-2/3 shareholders, GM expects to receive $4.2 billion in cash, and would
retain a significant investment in the merged company."
GM intends to file a registration statement in connection with the
transaction and mail a proxy statement/prospectus to both GM and GM Class H
stockholders in connection with the transaction. Investors are urged to read the
proxy statement/prospectus when it becomes available because it will contain
important information about GM, Hughes and the transaction.
EchoStar Communications Corp. and its DISH Network provide state-of-the-art
direct-broadcast satellite TV service that is capable of offering over 500
channels of digital video and CD-quality audio programming, as well as advanced
satellite TV receiver hardware and installation. EchoStar is included in the
Nasdaq-100 Index (NDX). DISH Network currently serves over 6.43 million
customers. For more information, visit www.dishnetwork.com.
HUGHES is the world's leading provider of digital television entertainment,
broadband services, satellite-based private business networks and global video
and data broadcasting.
Hughes Network Systems, a unit of Hughes Electronics Corporation, is the
world's leading provider of broadband satellite network solutions for businesses
and consumers, with over 400,000 one- and two-way systems installed in more than
85 countries. Headquartered in Germantown, Maryland, USA, HNS maintains sales
and support offices worldwide. To learn more about HNS and DIRECWAY, please
visit www.hns.com or www.direcway.com.
DIRECTV is the nation's leading digital satellite television service
provider with more than 10 million customers. DIRECTV and the Cyclone Design
logo are trademarks of DIRECTV, Inc., a unit of Hughes Electronics Corporation.
Visit DIRECTV on the World Wide Web at DIRECTV.com.
General Motors, the world's largest vehicle manufacturer, designs, builds
and markets cars and trucks worldwide. In 2000, GM earned $5 billion on sales of
$183.3 billion, excluding special items. It employs about 372,000 people
globally. GM also operates one of the largest and most successful financial
services companies, General Motors Acceptance Corp. (GMAC), which offers
automotive, mortgage and business financing and insurance services to customers
worldwide. GM is investing aggressively in digital technology and e-business
within its global automotive operations and through
such initiatives as e-GM, GM BuyPower, and OnStar. More information on General
Motors can be found at www.gm.com.
# # #
In connection with the proposed transactions, General Motors, Hughes and
EchoStar intend to file relevant materials with the Securities and Exchange
Commission, including one or more Registration Statement(s) on Form S-4 that
contain a prospectus and proxy/consent solicitation statement. Because those
documents will contain important information, holders of GM $1-2/3 and GM Class
H common stock are urged to read them, if and when they become available. When
filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from General Motors.
Such documents are not currently available.
General Motors, and its directors and executive officers, and Hughes, and
certain of its officers, may be deemed to be participants in GM's solicitation
of proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2001 annual meeting of shareholders.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2001 annual meeting:
John M. Devine Vice Chairman and CFO, General Motors
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Michael J. Gaines Corporate VP and CFO, Hughes
Mr. Devine beneficially owns 139,204.80 GM $1-2/3 shares and 27,177 GM
Class H shares. Mr. Shaw beneficially owns 3,604 GM $1-2/3 shares and 1,415,915
GM Class H shares. Ms. Austin beneficially owns 2,804 GM $1-2/3 shares and
860,454 GM Class H shares. Mr. Hartenstein beneficially owns 2,622 GM $1-2/3
shares and 1,138,899 GM Class H shares. Mr. Gaines beneficially owns 337 GM
$1-2/3 shares and 165,329 GM Class H shares. The above ownership information
includes shares that are purchasable under options that are exercisable within
60 days of October 15, 2001. In addition, Mr. Devine holds options to acquire
shares of GM $1-2/3 common stock that are not exercisable within 60 days of
October 15, 2001, and each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr.
Gaines holds options to acquire shares of GM Class H common stock that are not
exercisable within 60 days of October 15, 2001.
Each of Mr. Shaw, Ms. Austin, Mr. Hartenstein and Mr. Gaines has a
severance agreement with Hughes that provides for severance in the event of an
involuntary termination after a change in control, and each also has a retention
agreement that provides for certain payments in the event of a change in
control.
EchoStar and certain of its executive officers may be deemed to be
"participants" in GM's solicitation of consents from the holders of GM $1-2/3
and GM Class H shares in connection with the proposed transactions. Information
about the executive officers of EchoStar is set forth in the proxy statement for
EchoStar's 2001 annual meeting of shareholders. As of Oct. 28, 2001, EchoStar
held approximately 1,000 shares of GM $1-2/3 common stock and 185,000 shares of
GM Class H common stock. Mr. Ergen beneficially owns approximately 1,000 shares
of GM $1-2/3 common stock and approximately 10,000 of GM Class H common stock.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available. This communication shall not constitute an
offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Materials included in this filing contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of
General Motors Corp. ("GM"), EchoStar Communications Corporation ("EchoStar"),
Hughes Electronics Corp. ("Hughes"), or a combined EchoStar and Hughes to differ
materially, many of which are beyond the control of EchoStar, Hughes or GM
include, but are not limited to, the following: (1) the businesses of EchoStar
and Hughes may not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected benefits and
synergies from the combination may not be realized within the expected time
frame or at all; (3) revenues following the transaction may be lower than
expected; (4) operating costs, customer loss and business disruption including,
without limitation, difficulties in maintaining relationships with employees,
customers, clients or suppliers, may be greater than expected following the
transaction; (5) generating the incremental growth in the subscriber base of the
combined company may be more costly or difficult than expected; (6) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (7) the effects of legislative
and regulatory changes; (8) an inability to obtain certain retransmission
consents; (9) an inability to retain necessary authorizations from the FCC; (10)
an increase in competition from cable as a result of digital cable or otherwise,
direct broadcast satellite, other satellite system operators, and other
providers of
subscription television services; (11) the introduction of new technologies and
competitors into the subscription television business; (12) changes in labor,
programming, equipment and capital costs; (13) future acquisitions, strategic
partnership and divestitures; (14) general business and economic conditions; and
(15) other risks described from time to time in periodic reports filed by
EchoStar, Hughes or GM with the Securities and Exchange Commission. You are
urged to consider statements that include the words "may," "will," "would,"
"could," "should," "believes," "estimates," "projects," "potential," "expects,"
"plans," "anticipates," "intends," "continues," "forecast," "designed," "goal,"
or the negative of those words or other comparable words to be uncertain and
forward-looking. This cautionary statement applies to all forward-looking
statements included in this filing.
Note to editors:
SCHEDULE OF ACTIVITIES REGARDING
GM/HUGHES/ECHOSTAR ANNOUNCEMENT
The following events regarding the General Motors-Hughes-EchoStar announcement
are scheduled for Monday, Oct. 29, 2001. (Note: all times are Eastern Standard):
10:15 a.m. Investor-Media conference:
Equitable Building
787 7/th/ Ave., (between 50th and 51st Streets)
New York City
The event will take place in the auditorium, located in the basement.
Media or investors who are unable to attend may listen to this meeting and
participate in the question-and-answer session by dialing 888-827-9992 (U.S.) or
978-633-6740 (international). This event will be webcast live on the Internet
via a hot link from the "Investor News" page of GM's Investor Information Web
site (http://investor.gm.com ) and also available via a hot link on GM Media
----------------------
OnLine (http://media.gm.com).
-------------------
Broadcast media can view the event on satellite at the following coordinates:
C- Band
Galaxy 3RC
Transponder 3
95 Degrees West Longitude
Downlink Frequency 3760
Audio 6.2 - 6.8
A b-roll feed will be broadcast through the same coordinates at 12:15 p.m.
-12:30 p.m. and at 2:00 p.m. -2:15 p.m.
2:30 p.m. GMH analyst teleconference with Hughes Chief Executive Officer Jack
Shaw, EchoStar Chief Executive Officer Charlie Ergen and Hughes Chief Operating
Officer Eddy Hartenstein.
Investors may participate by calling 719-457-2640. Media may participate in a
listen-only mode by calling the same number. This event will be webcast live on
the Internet at Hughes' web site (http://www.hughes.com ). A taped replay will
be available at 888-203-1112 (U.S) and 719-457-0820 (international). The access
code for both phone numbers is 793356.
3:00 p.m. GM $1-2/3 analyst teleconference with GM Vice Chairman and Chief
Financial Officer John Devine.
Media may participate in a listen-only mode by dialing 212-896-6119 or through a
live webcast via a hot link from the "Investor News" page of GM's Investor
Information Web site (http://investor.gm.com )A hot link will also be available
on GM Media OnLine (http://media.gm.com ). A taped replay will be available at
877-519-4471 (U.S) and 973-341-5080 (international). The access code for both
phone numbers is 2928158.
EX-99.2
4
dex992.txt
AGREEMENT AND PLAN OF MERGER
Exhibit 99.2
Execution Copy
AGREEMENT AND PLAN OF MERGER
by and between
ECHOSTAR COMMUNICATIONS CORPORATION
AND
HUGHES ELECTRONICS CORPORATION
Dated as of October 28, 2001
TABLE OF CONTENTS
ARTICLE 1 THE MERGER...................................................... 5
Section 1.1. The Merger................................................ 5
Section 1.2. Merger Effective Time; Closing............................ 5
Section 1.3. Effects of the Merger..................................... 5
Section 1.4. Certificate of Incorporation and By-laws.................. 5
Section 1.5. Surviving Corporation Board and Officers.................. 6
Section 1.6. Management Transition Committee........................... 6
Section 1.7. Additional Actions........................................ 6
ARTICLE 2 CONVERSION OF SECURITIES........................................ 6
Section 2.1. Conversion of Capital Stock............................... 6
Section 2.2. Exchange of Certificates.................................. 7
Section 2.3. No Fractional Share Certificates.......................... 9
Section 2.4. Exchange Fund Matters..................................... 9
Section 2.5. Treatment of EchoStar Stock Options....................... 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ECHOSTAR...................... 12
Section 3.1. Organization and Standing................................. 12
Section 3.2. Subsidiaries.............................................. 12
Section 3.3. Corporate Power and Authority............................. 13
Section 3.4. Capitalization of EchoStar................................ 13
Section 3.5. Conflicts, Consents and Approvals......................... 14
Section 3.6. EchoStar SEC Documents.................................... 15
Section 3.7. Financial Statements; Liabilities......................... 15
Section 3.8. Absence of Certain Changes................................ 16
Section 3.9. Compliance with Law....................................... 16
Section 3.10. Litigation................................................ 16
Section 3.11. Taxes..................................................... 17
Section 3.12. Environmental and Safety Matters.......................... 17
Section 3.13. Employee Benefit Plans.................................... 18
Section 3.14. Intellectual Property..................................... 19
Section 3.15. Contracts................................................. 20
Section 3.16. Brokerage and Finder's and Other Fees; Opinion of
Financial Advisor......................................... 20
Section 3.17. Board and Stockholder Approval............................ 20
Section 3.18. Takeover Laws............................................. 21
i
TABLE OF CONTENTS
(continued)
Section 3.19. Restrictive Agreements.................................... 21
Section 3.20. Permits................................................... 21
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF HUGHES....................... 22
Section 4.1. Organization and Standing................................. 22
Section 4.2. Subsidiaries.............................................. 23
Section 4.3. Corporate Power and Authority............................. 23
Section 4.4. Capitalization of Hughes.................................. 23
Section 4.5. Conflicts, Consents and Approvals......................... 24
Section 4.6. Hughes SEC Documents...................................... 25
Section 4.7. Financial Statements; Liabilities......................... 25
Section 4.8. Absence of Certain Changes................................ 26
Section 4.9. Compliance with Law....................................... 26
Section 4.10. Litigation................................................ 26
Section 4.11. Taxes..................................................... 26
Section 4.12. Environmental and Safety Matters.......................... 27
Section 4.13. Employee Benefit Plans.................................... 27
Section 4.14. Intellectual Property..................................... 28
Section 4.15. Contracts................................................. 29
Section 4.16. Brokerage and Finder's and Other Fees; Opinions of
Financial Advisors........................................ 29
Section 4.17. Board and Stockholder Approval............................ 30
Section 4.18. Takeover Laws............................................. 30
Section 4.19. Restrictive Agreements.................................... 30
Section 4.20. Permits................................................... 30
Section 4.21. Indian Entities........................................... 31
ARTICLE 5 COVENANTS OF THE PARTIES....................................... 31
Section 5.1. Mutual Covenants.......................................... 31
Section 5.2. Covenants of EchoStar..................................... 38
Section 5.3. Covenants of Hughes....................................... 41
ARTICLE 6 CONDITIONS..................................................... 46
Section 6.1. Mutual Conditions......................................... 46
Section 6.2. Conditions to Obligations of Hughes....................... 49
Section 6.3. Conditions to Obligations of EchoStar..................... 50
ARTICLE 7 TERMINATION AND AMENDMENT...................................... 51
ii
TABLE OF CONTENTS
(continued)
Section 7.1. Termination................................................ 51
Section 7.2. Effect of Termination; Fees and Expenses upon Termination.. 55
Section 7.3. Amendment.................................................. 56
Section 7.4. Extension; Waiver.......................................... 56
ARTICLE 8 MISCELLANEOUS.................................................. 56
Section 8.1. No Survival of Representations and Warranties.............. 56
Section 8.2. Notices.................................................... 56
Section 8.3. Interpretation; Absence of Presumption..................... 57
Section 8.4. Knowledge.................................................. 58
Section 8.5. Counterparts............................................... 58
Section 8.6. Entire Agreement; Severability............................. 58
Section 8.7. Third Party Beneficiaries.................................. 58
Section 8.8. Governing Law.............................................. 59
Section 8.9. Jurisdiction............................................... 59
Section 8.10. Specific Performance....................................... 59
Section 8.11. Assignment................................................. 59
iii
INDEX OF DEFINED TERMS
Action.................................................................... 17
Affiliate List............................................................ 37
Agreement................................................................. 1
Antitrust Law............................................................. 32
Applicable Law............................................................ 16
Articles of Merger........................................................ 5
Assumed PanAmSat Minority Share Consideration............................. 47
Certificate of Merger..................................................... 5
Certificates.............................................................. 7
Class A Exchange Ratio.................................................... 7
Closing................................................................... 5
Closing Date.............................................................. 5
Code...................................................................... 4
Combined Companies Material Adverse Effect................................ 46
Competing Transaction..................................................... 35
Confidentiality Agreement................................................. 34
Consent Solicitation Failure.............................................. 52
Delaware Certificate of Merger............................................ 5
Delaware Secretary of State............................................... 5
DGCL...................................................................... 5
EchoStar.................................................................. 1
EchoStar 10-K............................................................. 12
EchoStar 10-Q............................................................. 12
EchoStar Class A Common Stock............................................. 7
EchoStar Class B Common Stock............................................. 7
EchoStar Class C Common Stock............................................. 14
EchoStar Controlling Stockholder.......................................... 3
EchoStar Disclosure Schedule.............................................. 12
EchoStar ERISA Affiliate.................................................. 18
EchoStar FCC Licenses..................................................... 21
EchoStar Indemnified Parties.............................................. 44
EchoStar Indentures....................................................... 40
EchoStar Intellectual Property............................................ 19
EchoStar Material Adverse Effect.......................................... 12
EchoStar Notes............................................................ 40
EchoStar Permit Entities.................................................. 21
EchoStar Permits.......................................................... 21
EchoStar Plans............................................................ 18
EchoStar SEC Documents.................................................... 12
EchoStar Series A Preferred Stock......................................... 14
EchoStar Series B Preferred Stock......................................... 14
EchoStar Series C Preferred Stock......................................... 14
EchoStar Shares........................................................... 7
EchoStar Stockholder Consent.............................................. 3
EchoStar Transaction Agreements........................................... 13
Employee Matters Agreement................................................ 3
Environmental and Safety Requirements..................................... 17
ERISA..................................................................... 18
iv
INDEX OF DEFINED TERMS
(continued)
Exchange Act.............................................................. 11
Exchange Agent............................................................ 7
Exchange Debt............................................................. 2
Exchange Fund............................................................. 7
Exchange Shares........................................................... 1
FCC....................................................................... 21
FCC Consent Application................................................... 32
FCC Regulation............................................................ 33
GM $1-2/3 Common Stock.................................................... 2
GM Certificate of Incorporation........................................... 1
GM Debt/Equity Exchange................................................... 2
GM Series H Preference Stock.............................................. 2
GM Transactions........................................................... 2
GM/Hughes Intellectual Property Agreement................................. 4
GM/Hughes Separation Agreement............................................ 3
Governmental Authority.................................................... 7
HCG....................................................................... 1
HCI....................................................................... 1
HCSS...................................................................... 1
HSR Act................................................................... 15
HSSL...................................................................... 31
HTIL...................................................................... 31
Hughes.................................................................... 1
Hughes 10-K............................................................... 22
Hughes 10-Q............................................................... 22
Hughes Amended and Restated By-laws....................................... 6
Hughes Amended and Restated Certificate of Incorporation.................. 6
Hughes Class A Common Stock............................................... 7
Hughes Class B Common Stock............................................... 7
Hughes Class C Common Stock............................................... 1
Hughes Common Stock....................................................... 7
Hughes Disclosure Schedule................................................ 23
Hughes ERISA Affiliate.................................................... 28
Hughes Exchange Option.................................................... 11
Hughes FCC Licenses....................................................... 30
Hughes Intellectual Property.............................................. 28
Hughes Material Adverse Effect............................................ 22
Hughes Permit Entities.................................................... 30
Hughes Permits............................................................ 30
Hughes Plans.............................................................. 27
Hughes Preference Stock................................................... 2
Hughes Recapitalization................................................... 1
Hughes SEC Documents...................................................... 22
Hughes Transaction Agreements............................................. 23
Implementation Agreement.................................................. 4
Intellectual Property..................................................... 19
Interim EchoStar Stock.................................................... 48
Merger.................................................................... 1
Merger Commitment Letter.................................................. 2
v
INDEX OF DEFINED TERMS
(continued)
Merger Effective Time..................................................... 5
Merger Financing.......................................................... 2
Merger Financing Agreement................................................ 3
Minimum Amount............................................................ 48
Nasdaq.................................................................... 12
Nevada Secretary of State................................................. 5
Notice of Non-Recommendation.............................................. 53
NRS....................................................................... 5
NYSE...................................................................... 9
Option.................................................................... 10
Outside Date.............................................................. 51
PanAmSat.................................................................. 1
PanAmSat Financing Agreement.............................................. 3
PanAmSat Purchase Financing............................................... 3
PanAmSat Stock Purchase Agreement......................................... 1
PanAmSat Stock Sale....................................................... 1
Permits................................................................... 21
Permitted Equity Issuances................................................ 38
Person.................................................................... 7
Plan...................................................................... 40
Release................................................................... 18
Representatives........................................................... 35
SEC....................................................................... 11
Securities Act............................................................ 14
Series A Preferred Stock.................................................. 23
Settlement................................................................ 33
Significant Subsidiary.................................................... 13
Spin-Off.................................................................. 2
Subsidiary................................................................ 13
Surviving Corporation..................................................... 5
tax....................................................................... 17
Tax Certificates.......................................................... 34
Tax Opinions.............................................................. 34
Termination Fee........................................................... 55
vi
EXHIBITS
Exhibit A -- Terms of Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of Hughes
Exhibit B -- Form of EchoStar Tax Opinion
Exhibit C -- Form of Hughes Tax Opinion
Exhibit D -- Form of EchoStar Tax Letter
Exhibit E -- Form of Hughes Tax Letter
Exhibit F -- Form of EchoStar Controlling Stockholder Tax Letter
Exhibit G -- Form of Affiliate Agreement
Exhibit H -- Directors, Officers and Committees of Hughes
Exhibit I -- Employee Matters Agreement
vii
SCHEDULES
---------
EchoStar Disclosure Schedule
-----------------------------
Section 3.2 Subsidiaries
Section 3.4 Capitalization of EchoStar
Section 3.5 Conflicts, Consents and Approvals
Section 3.7 Financial Statements; Liabilities
Section 3.8 Absence of Certain Changes
Section 3.9 Compliance with Law
Section 3.10 Litigation
Section 3.12 Environmental and Safety Matters
Section 3.13 Employee Benefit Plans
Section 3.14 Intellectual Property
Section 3.15 Contracts
Section 3.19 Restrictive Agreements
Section 3.20 Permits
Section 5.2(a) Covenants of EchoStar (Conduct of EchoStar's Operations)
Section 5.2(e) EchoStar Notes
Section 5.3(g) Supplemental Indentures and Registration Rights Regarding
Certain EchoStar Notes
viii
Hughes Disclosure Schedule
---------------------------
Section 4.2 Subsidiaries
Section 4.4(c) Outstanding Subscriptions, Options, etc.
Section 4.5 Conflicts, Consents and Approvals
Section 4.7 Financial Statements; Liabilities
Section 4.8 Absence of Certain Changes
Section 4.9 Compliance with Law
Section 4.10 Litigation
Section 4.12 Environmental and Safety Matters
Section 4.13 Employee Benefit Plans
Section 4.14 Intellectual Property
Section 4.15 Contracts
Section 4.19 Restrictive Agreements
Section 4.20 Permits
Section 5.3(a) Covenants of Hughes (Conduct of Hughes' Operations)
ix
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered into as
of October 28, 2001, by and between EchoStar Communications Corporation, a
Nevada corporation ("EchoStar"), and Hughes Electronics Corporation, a Delaware
corporation ("Hughes").
WHEREAS, Hughes and EchoStar desire to combine the business of
EchoStar with the Hughes Business (as defined in the Implementation Agreement
(as defined below)), following the separation of Hughes from GM, pursuant to a
merger of EchoStar with and into Hughes, with Hughes as the surviving
corporation (the "Merger"), as more fully provided herein; and
WHEREAS, it is a condition to the Merger that, at the time of the
consummation of the Merger, the Hughes Recapitalization (as defined below) and
the Spin-Off (as defined below) be completed and that Hughes be an independent,
publicly owned company comprising the Hughes Business, separate from and no
longer wholly owned by GM; and
WHEREAS, subject to the terms and conditions set forth in the Stock
Purchase Agreement (the "PanAmSat Stock Purchase Agreement"), entered into by
and among Hughes, Hughes Communications Galaxy, Inc., a California corporation
and an indirect wholly owned subsidiary of Hughes ("HCG"), Hughes Communications
Satellite Services, Inc., a California corporation and an indirect wholly owned
subsidiary of Hughes ("HCSS"), and Hughes Communications, Inc. a California
corporation and an indirect wholly owned subsidiary of Hughes ("HCI"),
concurrently with the execution and delivery of this Agreement, in the form
attached to the Implementation Agreement as Exhibit A, HCI, HCG and HCSS have
agreed to sell to EchoStar, and EchoStar has agreed to purchase from HCI, HCG
and HCSS (such transaction, the "PanAmSat Stock Sale"), all of the shares of
capital stock of PanAmSat Corporation, a Delaware corporation ("PanAmSat"),
owned by HCI, HCG and HCSS, in accordance with the terms and conditions set
forth in the PanAmSat Stock Purchase Agreement; and
WHEREAS, immediately prior to the Spin-Off, Hughes shall distribute to
GM, in respect of GM's ownership interest in Hughes, the Cash Dividend (as
defined in the GM/Hughes Separation Agreement (as defined below)) and, if and to
the extent of any shortfall in funds available to Hughes to pay in full the Cash
Dividend, the Demand Note (as defined in the GM/Hughes Separation Agreement),
and in connection with such dividend the denominator (the "Denominator") of the
fraction described in Article Fourth, Division I, Section (a)(4) of the Amended
and Restated Certificate of Incorporation of GM, as amended (the "GM Certificate
of Incorporation"), will be reduced as contemplated by the GM/Hughes Separation
Agreement (the "Hughes Recapitalization"); and
WHEREAS, at any time after the date of this Agreement and prior to the
date that is six (6) months after the Spin-Off Effective Time (as defined in the
Implementation Agreement), GM may, pursuant to one or more transactions, issue
shares of GM Class H Common Stock or distribute shares of Class C common stock
of Hughes, par value $0.01 per share (the "Hughes Class C Common Stock") (any
such shares of GM Class H Common Stock or Hughes Class C Common Stock
distributed by GM, the "Exchange Shares"), up to an aggregate of one hundred
million (100,000,000) Exchange Shares (subject to reduction pursuant to the
provisions of the GM/Hughes Separation Agreement) and subject to increase by up
to an additional fifty million (50,000,000) Exchange Shares (but in no event
shall such increase exceed
One Billion Dollars ($1,000,000,000.00) in accordance with Section 5.1(h) of the
Implementation Agreement to holders of certain outstanding debt obligations of
GM ("Exchange Debt") in exchange for such Exchange Debt (any such exchange, a
"GM Debt/Equity Exchange"); and
WHEREAS, immediately following the Hughes Recapitalization, (i) GM,
pursuant to provisions to be implemented by means of an amendment of the GM
Certificate of Incorporation, shall distribute to the holders of record of GM
Class H Common Stock shares of Hughes Class C Common Stock in exchange for all
of the outstanding shares of GM Class H Common Stock in accordance with the GM
Certificate of Incorporation, as amended in connection with the Hughes
Recapitalization, and the GM Class H Common Stock will be redeemed and canceled,
(ii) in connection therewith, GM shall distribute to holders of record, if any,
of GM's Series H 6.25% Automatically Convertible Preference Stock, par value
$0.10 per share (the "GM Series H Preference Stock"), shares of Preference
Stock, par value $0.10 per share, of Hughes (the "Hughes Preference Stock"), in
exchange for all of the outstanding shares of GM Series H Preference Stock in
accordance with the Certificate of Designations relating to the GM Series H
Preference Stock and the GM Series H Preference Stock will be canceled, and
(iii) GM shall, subject to Section 5.2(h) of the Implementation Agreement,
either retain, or, immediately following the redemption of shares of GM Class H
Common Stock in exchange for shares of Hughes Class C Common Stock as described
in clause (i) above, distribute by means of a dividend to the holders of record
of GM's Common Stock, par value $1-2/3 per share (the "GM $1-2/3 Common Stock"),
in respect of all outstanding shares of GM $1-2/3 Common Stock, the remaining
shares of Hughes Class C Common Stock held by GM and not previously distributed
to the holders of record of GM Class H Common Stock, in each case as provided in
the Implementation Agreement (the transactions described in clauses (i) through
(iii) above are referred to herein collectively as the "Spin-Off"); and
WHEREAS, consummation of the Hughes Recapitalization and the Spin-Off
is conditioned on, among other things, the approval by the holders of a majority
of the outstanding shares of GM $1-2/3 Common Stock and GM Class H Common Stock,
each voting as a separate class and both voting together as a single class based
on their respective per share voting power, of the Implementation Agreement, the
GM/Hughes Separation Agreement and the transactions contemplated thereby,
including the GM Charter Amendment (as defined in the Implementation Agreement),
the Hughes Recapitalization and the Spin-Off (collectively, the "GM
Transactions"); and
WHEREAS, a certain lender has delivered a commitment letter to Hughes
and EchoStar pursuant to which it has committed to lend to Hughes (prior to the
Merger Effective Time) and the Surviving Corporation (as defined below)
(immediately after the Merger Effective Time) up to Five Billion Five Hundred
Twenty Five Million Dollars ($5,525,000,000.00) for the purpose of financing the
Recapitalization Amount (as defined in the GM/Hughes Separation Agreement),
refinancing certain outstanding indebtedness in connection with the consummation
of the Merger and financing the combined business of Hughes and EchoStar
following the Merger (the "Merger Financing") on the terms set forth in the
commitment letter attached to the Implementation Agreement as Exhibit B, or on
the terms set forth in any similar commitment or financing letter or other
agreement replacing, and having substantially the same effect as, the commitment
letter attached to the Implementation Agreement and reasonably acceptable to
Hughes (in either case, the "Merger Commitment Letter"); and
WHEREAS, GM, Hughes, EchoStar and The Samburu Warrior Revocable Trust,
a trust to which Charles W. Ergen is the sole trustee (the "EchoStar Controlling
Stockholder") are
2
concurrently entering into that certain Supplemental Agreement & Guaranty (the
"Supplemental Agreement"), in the form attached to the Implementation Agreement
as Exhibit C, relating to the commitment of EchoStar to use its best efforts to
assist Deutsche Bank, A.G., New York, in obtaining commitments from nationally
recognized banking institutions to provide for an additional amount of financing
such that the aggregate amount of financing to be obtained pursuant to the
Merger Financing (including financing arranged pursuant to any co-arrangements
with co-arrangers as contemplated by the provisions of the Merger Commitment
Letter) shall be in the amount of at least Five Billion Five Hundred Twenty Five
Million Dollars ($5,525,000,000.00), and, in connection therewith, the EchoStar
Controlling Stockholder has pledged certain shares of EchoStar stock to GM
pursuant to that certain Pledge Agreement (the "Pledge Agreement"), executed by
the EchoStar Controlling Stockholder and GM concurrently with the Supplemental
Agreement, in the form attached to the Implementation Agreement as Exhibit D;
and
WHEREAS, the Merger Financing will be consummated (i) in accordance
with one or more credit agreements (collectively, the "Merger Financing
Agreement") to be entered into by and among Hughes, EchoStar and the lender
parties thereto as soon as reasonably practicable following the date hereof
based on the terms set forth in the Merger Commitment Letter and/or (ii) with
the proceeds from one or more private placements or public offerings of debt or
equity securities of EchoStar; and
WHEREAS, pursuant to the Merger Commitment Letter, a certain lender
has committed to lend to EchoStar, up to One Billion Nine Hundred Million
Dollars ($1,900,000,000.00) for the purpose of consummating the PanAmSat Stock
Sale (the "PanAmSat Purchase Financing"), and
WHEREAS, the PanAmSat Purchase Financing will be consummated (i) in
accordance with a credit agreement (the "PanAmSat Financing Agreement") to be
entered into by and among EchoStar and the lender parties thereto as soon as
reasonably practicable following the date hereof based on the terms set forth in
the Merger Commitment Letter and/or (ii) with the proceeds from one or more
private placements or public offerings of debt or equity securities of EchoStar;
and
WHEREAS, the EchoStar Controlling Stockholder, acting by written
consent immediately after the execution of this Agreement, shall have executed
and delivered to EchoStar a written consent as the controlling stockholder of
EchoStar (the "EchoStar Stockholder Consent"), in the form attached to the
Implementation Agreement as Exhibit E, adopting and approving this Agreement,
and, as a result of the EchoStar Stockholder Consent, no further approval of
this Agreement by the EchoStar Board of Directors or EchoStar stockholders will
be required in order to consummate the Merger; and
WHEREAS, the Hughes Recapitalization will occur pursuant to the
Separation Agreement (the "GM/Hughes Separation Agreement") entered into by and
between GM and Hughes concurrently with the execution and delivery of this
Agreement, in the form attached to the Implementation Agreement as Exhibit F,
and certain other matters relating to the separation of Hughes from GM will be
implemented pursuant to certain other agreements contemplated therein, including
(i) the GM/Hughes Tax Agreements previously entered into by and among GM, Hughes
and certain other parties thereto, or to be entered into by and between GM and
Hughes concurrently with the execution and delivery of this Agreement, as
applicable, (ii) the Employee Matters Agreement (the "Employee Matters
Agreement") entered into by and between
3
EchoStar and Hughes concurrently with the execution and delivery of this
Agreement, in the form attached as Exhibit J of this Agreement, and (iii) the
Intellectual Property Agreement (the "GM/Hughes Intellectual Property
Agreement") entered into by and between GM and Hughes concurrently with the
execution and delivery of this Agreement, in the form attached as Exhibit B to
the GM/Hughes Separation Agreement; and
WHEREAS, GM, Hughes and EchoStar have entered into an Implementation
Agreement, dated as of the date hereof (the "Implementation Agreement"), setting
forth, among other things, the rights and obligations of GM with respect to the
consummation of the GM Transactions; and
WHEREAS, the Spin-Off will occur pursuant to the terms and conditions
of the Implementation Agreement; and
WHEREAS, the parties intend the Spin-Off to qualify as a distribution
of Hughes stock to GM stockholders with respect to which no gain or loss will be
recognized pursuant to Section 355 and related provisions of the Internal
Revenue Code of 1986, as amended, together with the rules and regulations
promulgated thereunder (the "Code"), by GM, Hughes and their respective
stockholders; and
WHEREAS, the parties intend the Merger to qualify as a reorganization
described in Section 368(a) of the Code; and
WHEREAS, (i) the respective Boards of Directors of GM, Hughes and
EchoStar have determined that the Merger is advisable, desirable and in the best
interests of their respective stockholders, (ii) the respective Boards of
Directors of Hughes and EchoStar have approved this Agreement and the other
agreements referred to herein to which each is a party, as applicable, (iii) the
respective Boards of Directors of GM, Hughes and EchoStar have approved the
Implementation Agreement, the PanAmSat Stock Purchase Agreement and the other
agreements referred to herein to which each is a party, as applicable, (iv) the
respective Boards of Directors of GM and Hughes have approved the GM/Hughes
Separation Agreement and the other agreements referred to therein to which each
is a party, (v) the Board of Directors of GM has approved the GM Transactions,
including the GM Charter Amendment, and has determined, subject to its fiduciary
duties under Applicable Law (as defined below), to recommend that its
stockholders approve and adopt the GM Transactions as contemplated herein, (vi)
the Board of Directors of Hughes has recommended that its sole stockholder
approve and adopt this Agreement and GM, in its capacity as the sole stockholder
of Hughes shall have, at a meeting to be held immediately after the execution of
this Agreement, adopted and approved this Agreement, (vii) the Board of
Directors of EchoStar has recommended that its stockholders approve and adopt
this Agreement and the EchoStar Controlling Stockholder, in his capacity as
controlling stockholder of EchoStar, shall have, acting by written consent,
immediately after the execution of this Agreement, adopted and approved this
Agreement and (viii) the Board of Directors of Hughes has approved the Hughes
Charter Amendments (as defined in the Implementation Agreement) and GM shall, in
its capacity as the sole stockholder of Hughes, at a meeting to be held
immediately after the execution of this Agreement, adopt and approve the
amendment of the Hughes Certificate of Incorporation constituting a part of the
Hughes Charter Amendments.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable
4
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the provisions of the General
Corporation Law of the State of Delaware (as amended from time to time, the
"DGCL") and the Nevada Revised Statutes (as amended from time to time, the
"NRS"), EchoStar shall merge with and into Hughes as soon as practicable
following the satisfaction or waiver of the conditions set forth in Article 6.
Following the Merger, the separate corporate existence of EchoStar shall cease,
and Hughes shall continue its existence under the laws of the State of Delaware.
Hughes, in its capacity as the corporation surviving the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation."
Section 1.2. Merger Effective Time; Closing. The Merger shall be
consummated by filing with (a) the Secretary of State of the State of Delaware
(the "Delaware Secretary of State") a certificate of merger (the "Delaware
Certificate of Merger") in such form as is required by and executed in
accordance with the DGCL, and (b) the Secretary of State of the State of Nevada
(the "Nevada Secretary of State") articles of merger (the "Articles of Merger")
in such form as is required by and executed in accordance with the NRS. The
Certificate of Merger and the Articles of Merger shall be referred to herein as
the "Certificate of Merger." The Merger shall become effective when the Delaware
Certificate of Merger has been filed with the Delaware Secretary of State and
the Articles of Merger have been filed with the Nevada Secretary of State, or at
such later time as shall be specified in each Certificate of Merger (the "Merger
Effective Time"). Prior to the filings referred to in this Section 1.2, a
closing (the "Closing") shall be held at the offices of Weil, Gotshal & Manges
LLP, 767 Fifth Avenue, New York, New York, or such other place as the parties
hereto may agree, on a date to be mutually agreed to by the parties hereto,
which shall in any event be no later than the later to occur of (A) the earlier
to occur of sixteen (16) Business Days (as defined in the Implementation
Agreement) after (x) the date on which the condition set forth in Section 6.1(b)
shall have been satisfied and (y) the date on which the Department of Justice or
the Federal Trade Commission (as the case may be) and the parties shall have
executed a consent decree or other settlement permitting the consummation of the
Merger, provided that EchoStar shall have the right to reduce the time period
from sixteen (16) to as little as five (5) Business Days in the case of (x) and
(y) upon prior written notification to Hughes and (B) if the time periods in
Section 1.2(A)(x) or (y) have expired, but all of the other conditions set forth
in Article VI have not been fulfilled or waived, one (1) business day after the
day on which the last to be fulfilled or waived of the conditions set forth in
Article 6 hereof shall have been fulfilled or waived (other than any of such
conditions that by their nature are to be fulfilled at the Closing, but subject
to the fulfillment or waiver of such conditions) (the "Closing Date").
Section 1.3. Effects of the Merger. From and after the Merger
Effective Time, the Merger shall have the effects set forth in this Agreement,
the Certificate of Merger, the DGCL and the NRS.
Section 1.4. Certificate of Incorporation and By-laws. The
Certificate of Merger shall provide that, at the Merger Effective Time (a) the
Certificate of Incorporation of Hughes shall be amended and restated to provide
that the name of the Surviving Corporation shall
5
be EchoStar Communications Corporation and to embody the terms set forth on
Exhibit A hereto, with such changes as shall be mutually agreed between the
parties prior to the Mailing Date (as so amended, the "Hughes Amended and
Restated Certificate of Incorporation") and, as so amended, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with the terms thereof and the DGCL and (b) the Amended
and Restated By-laws of Hughes shall be amended and restated to embody the
relevant terms set forth on Exhibit A hereto, with such changes as shall be
mutually agreed between the parties prior to the Mailing Date (as so amended,
the "Hughes Amended and Restated By-laws") and, as so amended, shall be the By-
laws of the Surviving Corporation until thereafter amended in accordance with
the terms thereof and the DGCL.
Section 1.5. Surviving Corporation Board and Officers. From and
after the Merger Effective Time the directors and certain officers of the
Surviving Corporation shall be determined as provided in Section 5.3(c) of this
Agreement until their respective successors are duly elected or appointed and
qualified in accordance with Applicable Law.
Section 1.6. Management Transition Committee. The parties agree
promptly to establish a Management Transition Committee comprised of the Chief
Executive Officer of EchoStar, one other EchoStar senior executive, the Chief
Executive Officer of Hughes and one other Hughes senior executive (and with such
other members as may be appointed by the unanimous approval of such four (4)
members) to assure a smooth and fair transition of the two companies'
managements to a combined management team. This committee will, among other
functions, make recommendations regarding the post-Merger Effective Time
officers and other key management team members of the Surviving Corporation, and
the respective responsibilities of such persons, with the objective of choosing
the best person for each position while also achieving a fair balance of
personnel selected from EchoStar and Hughes. This committee will continue for at
least one year after the Merger Effective Time to make recommendations to the
Board of Directors of the Surviving Corporation on such matters and such other
matters as the Board of Directors of the Surviving Corporation may request;
provided that the Board of Directors of the Surviving Corporation at and after
the Merger Effective Time shall have the ultimate decision-making authority with
respect to all matters referred to or discussed by the Management Transition
Committee.
Section 1.7. Additional Actions. If, at any time after the Merger
Effective Time, the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are necessary
or desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of EchoStar, (b) comply with any filing, recording
or other requirement of any Applicable Law in connection with the Merger or (c)
otherwise carry out the provisions of this Agreement, the directors and officers
of the Surviving Corporation are authorized in the name of EchoStar or Hughes,
as the case may be, or otherwise to take any and all such action.
ARTICLE 2
CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock. At and as of the Merger
Effective Time, by virtue of the Merger and without any action on the part of
Hughes, EchoStar, any holder of Class A common stock, par value $0.01 per share
of EchoStar (the "EchoStar Class A
6
Common Stock"), any holder of Class B common stock, par value $0.01 per share,
of EchoStar (the "EchoStar Class B Common Stock" and, together with the EchoStar
Class A Common Stock, the "EchoStar Shares"), any holder of Hughes Class A
Common Stock, or any foreign, federal, state or local governmental or regulatory
body, agency, instrumentality or authority (a "Governmental Authority") or any
other individual, corporation, limited liability company, partnership, trust or
unincorporated organization (each, a "Person"):
(a) subject to Section 2.3 below, each share of EchoStar Class A
Common Stock that is issued and outstanding immediately prior to the Merger
Effective Time shall be converted into and represent 1/.73 shares of Class A
common stock, par value $0.01 per share (the "Class A Exchange Ratio"), of
Hughes (the "Hughes Class A Common Stock");
(b) subject to Section 2.3 below, each share of EchoStar Class B
Common Stock that is issued and outstanding immediately prior to the Merger
Effective Time shall be converted into and represent 1/.73 shares of Class B
common stock, par value $0.01 per share (the "Class B Exchange Ratio" and
together with the Class A Exchange Ratio, the "Exchange Ratios"), of Hughes (the
"Hughes Class B Common Stock" and, together with the Hughes Class A Common Stock
and the Hughes Class C Common Stock, the "Hughes Common Stock");
(c) each share of Hughes Class C Common Stock that is issued and
outstanding immediately prior to the Merger Effective Time shall remain
outstanding;
(d) each other share of Hughes capital stock, including the Hughes
Preference Stock if any, that is issued and outstanding immediately prior to the
Merger Effective Time shall remain outstanding; and
(e) each share of capital stock of EchoStar held in the treasury of
EchoStar shall be cancelled and retired and no payment shall be made in respect
thereof.
Section 2.2. Exchange of Certificates.
(a) Exchange Agent. Following the Merger Effective Time, Hughes
shall deposit with the exchange agent designated by Hughes with EchoStar's prior
approval, which shall not be unreasonably withheld (the "Exchange Agent"), as
required for exchange in accordance with this Section 2.2, certificates (in a
form to be determined in EchoStar's sole discretion) representing (or other
evidence of ownership of) shares of Hughes Class A Common Stock and Hughes Class
B Common Stock issuable pursuant to Section 2.1(a) and (b) in exchange for
shares of EchoStar Class A Common Stock and EchoStar Class B Common Stock,
respectively, outstanding immediately prior to the Merger Effective Time upon
due surrender of the Certificates (as defined below) (or affidavits of loss in
lieu thereof) pursuant to the provisions of this Article 2 (such shares of
Hughes Common Stock, together with any cash deposited with the Exchange Agent,
being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as practicable after the Merger
Effective Time, the Exchange Agent, pursuant to the terms of an exchange agent
agreement on terms and conditions acceptable to EchoStar and Hughes, shall mail
to each holder of record of a certificate or certificates (or other evidence of
ownership) (the "Certificates") which immediately prior to the Merger Effective
Time represented outstanding shares of EchoStar Class A Common Stock or EchoStar
Class B Common Stock whose shares were converted into shares of Hughes Class A
Common Stock or Hughes Class B Common Stock pursuant to Section 2.1(a) or (b)
above: (i) a
7
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits in lieu thereof) to the Exchange Agent and shall be
in such form and have such other provisions as Hughes may specify and which are
reasonably acceptable to EchoStar), and (ii) instructions for effecting the
surrender of the Certificates in exchange for certificates representing (or
other evidence of ownership of) shares of Hughes Class A Common Stock or Hughes
Class B Common Stock, as applicable, and cash in lieu of fractional shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
a duly executed letter of transmittal, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing (or
other evidence of ownership of) that number of shares of Hughes Class A Common
Stock or Hughes Class B Common Stock, as applicable, which such holder has the
right to receive pursuant to Section 2.1(a) or (b) above and (y) a check
representing the amount of unpaid dividends and distributions, if any, which
such holder has the right to receive pursuant to the provisions of this Article
2, and the amount of cash payable to such holder in lieu of fractional shares
pursuant to Section 2.3, in each case after giving effect to any required
withholding tax pursuant to Section 2.4(c) below, and the shares represented by
the Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on cash in lieu of fractional shares, unpaid dividends and
distributions, if any, payable to holders of EchoStar Shares. In the event of a
transfer of ownership of EchoStar Shares which is not registered on the transfer
records of EchoStar, a certificate representing (or other evidence of ownership
of) the proper number of shares of Hughes Class A Common Stock or Hughes Class B
Common Stock, as applicable, together with a check for the cash to be paid in
lieu of unpaid dividends and distributions, if any, and in lieu of fractional
shares, in each case without interest, may be issued to such transferee if the
Certificate formerly representing such EchoStar Shares held by such transferee
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Merger Effective
Time to represent that number of whole shares of Hughes Class A Common Stock or
Hughes Class B Common Stock into which the shares of EchoStar Class A Common
Stock or EchoStar Class B Common Stock formerly represented by such Certificates
shall have been converted in the Merger, together with the right to receive any
unpaid dividends and distributions and cash in lieu of fractional shares. At the
option of Hughes, shares of Hughes Class A Common Stock and Hughes Class B
Common Stock to be issued in the Merger need not be certificated, but may be
evidenced on the books and records of Hughes or its transfer agent, but Hughes'
stockholders will be given the opportunity to receive certificates upon request
in accordance with Applicable Law.
(c) Distributions With Respect to Unexchanged Shares. Notwithstanding
any other provisions of this Agreement, no dividends or other distributions
declared or made after the Merger Effective Time with respect to shares of
Hughes Class A Common Stock or Hughes Class B Common Stock having a record date
after the Merger Effective Time shall be paid to the holder of any unsurrendered
Certificate, until the holder shall surrender such Certificate as provided in
this Section 2.2. Subject to the effect of Applicable Law, following surrender
of any such Certificate, there shall be paid to the holder of the certificates
representing (or other evidence of ownership of) shares of Hughes Class A Common
Stock or Hughes Class B Common Stock, as applicable, issued in exchange
therefor, without interest, (i) promptly following such surrender, the amount of
dividends or other distributions with a record date after the Merger Effective
Time theretofore payable with respect to such shares of Hughes Common Stock and
not paid, less the amount of any withholding taxes which may be required thereon
pursuant to
8
Section 2.4(c) below, and (ii) at the appropriate payment date subsequent to
surrender, the amount of dividends or other distributions with a record date
after the Merger Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such shares of Hughes Common
Stock, less the amount of any withholding taxes which may be required thereon.
(d) No Further Ownership Rights in EchoStar Shares. All shares of
Hughes Class A Common Stock and Hughes Class B Common Stock issued upon
surrender of Certificates in accordance with the terms hereof (including any
cash paid pursuant to this Article 2) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of EchoStar Class A
Common Stock or EchoStar Class B Common Stock represented thereby, and from and
after the Merger Effective Time there shall be no further registration of
transfers of shares of EchoStar Class A Common Stock or EchoStar Class B Common
Stock on the stock transfer books of EchoStar. If, after the Merger Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section 2.2.
(e) Fees and Expenses of Exchange Agent. The Surviving Corporation
shall pay all fees and expenses of the Exchange Agent.
Section 2.3. No Fractional Share Certificates. No fractional shares
of Hughes Class A Common Stock or Hughes Class B Common Stock shall be issued in
the Merger, no dividend or distribution with respect to Hughes Class A Common
Stock or Class B Common Stock shall be payable on or with respect to any such
fractional share interest, and such fractional share interest shall not entitle
the owner thereof to any rights as a stockholder of Hughes. In lieu thereof, the
Surviving Corporation shall pay to the Exchange Agent promptly after the Merger
Effective Time cash sufficient as to allow the Exchange Agent to pay each owner
of such fractional share interest an amount in cash equal to the fraction of a
share of Hughes Class A Common Stock or Hughes Class B Common Stock, as
applicable, to which such owner would have been otherwise entitled multiplied by
the closing price of a share of Hughes Class A Common Stock, as reported on the
New York Stock Exchange, Inc. ("NYSE") composite transactions reporting system
as reported in the New York City edition of the Wall Street Journal, or if not
reported therein, another authoritative source, for the trading day immediately
following the day on which the Merger Effective Time occurs, without interest
and net of any required withholding, subject to and in accordance with the terms
of this Agreement. For purposes of determining whether a Person holds a
fractional share of Hughes Class A Common Stock or Hughes Class B Common Stock,
all shares of Hughes Class A Common Stock that a holder of shares of EchoStar
Class A Common Stock would otherwise be entitled to receive as a result of the
Merger shall be aggregated and all shares of Hughes Class B Common Stock that a
holder of shares of EchoStar Class B Common Stock would otherwise be entitled to
receive as a result of the Merger shall be aggregated.
Section 2.4. Exchange Fund Matters.
(a) No Liability. None of the parties hereto, the Exchange Agent or
the Surviving Corporation shall be liable to any Person in respect of any shares
of Hughes Class A Common Stock or Hughes Class B Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to seven
years after the Merger Effective Time (or immediately prior to such earlier date
on
9
which any cash, any dividends or distributions with respect to whole shares of
Hughes Class A Common Stock or Hughes Class B Common Stock in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Authority), any such cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by Applicable Law, become the
property of Hughes, free and clear of all claims or interest of any Person
previously entitled thereto.
(b) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by the Surviving Corporation, on
a daily basis. Any interest and other income resulting from such investments
shall be paid to the Surviving Corporation upon termination of the Exchange Fund
pursuant to Section 2.4(d).
(c) Withholding Rights. The Exchange Agent, on behalf of the Surviving
Corporation, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of EchoStar Class A
Common Stock or EchoStar Class B Common Stock such amounts as may be required to
be deducted and withheld with respect to the making of such payment under the
Code, or under any provision of state, local or foreign tax law. To the extent
that amounts are so withheld and paid over to the appropriate taxing authority,
such withheld amounts will be treated for all purposes of this Agreement as
having been paid to the holder of EchoStar Class A Common Stock or EchoStar
Class B Common Stock in respect of which such deduction and withholding was
made.
(d) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in customary amount as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the shares of
Hughes Class A Common Stock or Hughes Class B Common Stock, as the case may be,
and any cash payable and any unpaid dividends or other distributions in respect
thereof pursuant to Article 2 upon due surrender of and deliverable in respect
of the EchoStar Shares represented by such Certificate pursuant to this
Agreement.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed for six months after the Merger Effective Time shall
be delivered to the Surviving Corporation, and any holders of fractional
interests in Hughes Class A Common Stock or Hughes Class B Common Stock or any
holders of EchoStar Class A Common Stock or EchoStar Class B Common Stock
representing Hughes Class A Common Stock or Hughes Class B Common Stock who have
not theretofore complied with the provisions of this Article 2 shall thereafter
look only to the Surviving Corporation, as a general creditor thereof, for
satisfaction of their claims for Hughes Class A Common Stock or Hughes Class B
Common Stock, respectively, dividends and other distributions, if any, and any
cash in lieu of fractional shares thereof, as the case may be.
Section 2.5. Treatment of EchoStar Stock Options.
(a) Prior to the Merger Effective Time, Hughes and EchoStar shall take
all such actions as may be necessary to cause each unexpired and unexercised
option, whether or not vested or exercisable, under stock option plans of
EchoStar with respect to EchoStar Class A Common Stock and EchoStar Class B
Common Stock, if any (each, an "Option"), to be
10
automatically converted at the Merger Effective Time into an option (a "Hughes
Exchange Option") to purchase, on the same terms and conditions as were
applicable to each such Option immediately before the Merger Effective Time
(except for any changes in vesting rights or permitted time of exercise pursuant
to the terms of the stock option plans and stock option agreements in existence
on the date of this Agreement which result from the occurrence of the Merger),
the number of shares of Hughes Class A Common Stock or Hughes Class B Common
Stock equal to (x) the number of shares of EchoStar Class A Common Stock or
EchoStar Class B Common Stock, if any, as the case may be, subject to such
Option multiplied by (y) the Exchange Ratio (rounded up to the nearest whole
number) (that is, for each unexpired Option granted to an employee, the number
of shares under the Hughes Exchange Option will be equal to the number of shares
of EchoStar Class A Common Stock or EchoStar Class B Common Stock, if any,
underlying such Option multiplied by the number of shares of Hughes Class A
Common Stock or Hughes Class B Common Stock referenced in Section 2.1(a)), at a
price per share (rounded down to the nearest cent) equal to (A) the exercise
price for the EchoStar Class A Common Stock or EchoStar Class B Common Stock, if
any, purchasable pursuant to such Option immediately prior to the Merger
Effective Time divided by (y) the Exchange Ratio (that is, for each Option
converted under this Section 2.5(a), the exercise price per share of the Hughes
Exchange Option will equal the exercise price per share of the Option divided by
the number of shares of Hughes Class A Common Stock or Hughes Class B Common
Stock, as the case may be, referenced in Section 2.1(a)); provided, however,
that in the case of any Option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code, the conversion
formula shall be adjusted, if necessary, to comply with Section 424(a) of the
Code. In connection with the issuance of Hughes Exchange Options, Hughes shall
(i) reserve for issuance the number of shares of Hughes Class A Common Stock and
Hughes Class B Common Stock that will become subject to Hughes Exchange Options
pursuant to this Section 2.5 and (ii) from and after the Merger Effective Time,
upon exercise of Hughes Exchange Options, make available for issuance all shares
of Hughes Class A Common Stock and Hughes Class B Common Stock covered thereby,
subject to the terms and conditions applicable thereto.
(b) If and to the extent required by the terms of any applicable stock
option plans or pursuant to the terms of any applicable Options or restricted
stock units, EchoStar shall use commercially reasonable efforts to obtain the
consent of each holder of outstanding Options or restricted stock units to the
treatment of such Options and restricted stock units in accordance with this
Section 2.5.
(c) Prior to the Merger Effective Time, the Board of Directors of
Hughes, or an appropriate committee of non-employee directors thereof, shall
adopt a resolution consistent with the interpretive guidance of the U.S.
Securities and Exchange Commission (the "SEC"), so that the disposition of the
Options and the acquisition of any shares of Hughes Class A Common Stock and
Hughes Class B Common Stock, any Hughes Exchange Options or any other equity
securities or derivative securities of Hughes pursuant to this Agreement by each
officer or director of EchoStar who may become subject to Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), with respect to Hughes, shall be
exempt for purposes of Section 16 of the Exchange Act.
(d) Within thirty (30) days after the Merger Effective Time, Hughes
shall file a registration statement or registration statements on Form S-8 or
another appropriate form with respect to the shares of Hughes Common Stock
subject to the Hughes Exchange Options, and shall use its commercially
reasonable efforts to maintain the effectiveness of such registration
11
statement(s) and maintain the current status of the prospectus(es) contained
therein for so long as such Hughes Exchange Options remain outstanding. Hughes
shall use commercially reasonable efforts to cause the shares of Hughes Class A
Common Stock subject to such Hughes Exchange Options to be approved for listing
on the NYSE or approved for quotation on the Nasdaq Stock Market ("Nasdaq")
within thirty (30) days after the Merger Effective Time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
ECHOSTAR
In order to induce Hughes to enter into this Agreement, EchoStar
hereby represents and warrants to Hughes as follows, except as specifically
described in EchoStar's annual report on Form 10-K for the fiscal year ended
December 31, 2000 (the "EchoStar 10-K"), EchoStar's quarterly report on Form 10-
Q for the fiscal quarter ended September 30, 2001 (the "EchoStar 10-Q") and all
other reports, filings, registration statements and other documents
(collectively with the EchoStar 10-K and EchoStar 10-Q, the "EchoStar SEC
Documents") filed with the SEC after September 30, 2001 and prior to the date
hereof (as such documents have been amended since the time of their filing and
prior to the date hereof), all of which are of public record.
Section 3.1. Organization and Standing. Each of EchoStar and
EchoStar's Significant Subsidiaries (as defined below) is a corporation validly
existing and is in good standing under the laws of the State of Nevada, with
respect to EchoStar, and (to the extent such concepts or equivalent concepts are
recognized in such jurisdictions) under the laws of its state or other
jurisdiction of incorporation, with respect to EchoStar's Significant
Subsidiaries, in each case with all corporate power to carry on its business as
now conducted. Each of EchoStar and EchoStar's Subsidiaries is duly qualified to
do business and is in good standing (to the extent such concepts or equivalent
concepts are recognized in such jurisdictions) in each jurisdiction in which the
nature of the business conducted by it or the property it owns, leases or
operates makes such qualification necessary, except where the failure to be so
qualified or in good standing in such jurisdiction could not reasonably be
expected to have a EchoStar Material Adverse Effect or have a material adverse
impact on its ability to consummate the transactions contemplated by the
EchoStar Transaction Agreements (as defined below). For the purposes of this
Agreement, a "EchoStar Material Adverse Effect" means an event, change,
circumstance or effect that has had or is reasonably likely to have a material
adverse effect on the business, operations, assets, liabilities or financial
condition of EchoStar and its Subsidiaries, taken as a whole, other than events,
changes, circumstances or effects that arise out of or result from (x) economic
factors affecting the economy or financial markets as a whole or generally
affecting the direct broadcast satellite industry (other than those that
materially disproportionately affect EchoStar and its Subsidiaries taken as a
whole) and (y) the announcement of the execution of this Agreement or the other
agreements contemplated hereby or the compliance by the parties with their
respective obligations hereunder and thereunder (including any cancellations of
or delays in customer orders, any reduction in sales, any disruption in
supplier, distributor, partner or similar relationships or any loss of
employees).
Section 3.2. Subsidiaries. Section 3.2 of the disclosure schedule
delivered by EchoStar to Hughes and dated as of the date hereof (the "EchoStar
Disclosure Schedule") sets forth a list of all of the Subsidiaries (as defined
below) that are Significant Subsidiaries (as defined below), of EchoStar. Each
of the outstanding shares of capital stock of each of
12
EchoStar's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by EchoStar free and clear
of all Encumbrances (as defined below) and has not been issued in violation of
any preemptive or similar rights. Other than as set forth in Section 3.2 of the
EchoStar Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, transfer or voting of any
securities of any Significant Subsidiary of EchoStar, nor are there outstanding
any securities which are convertible into or exchangeable for any shares of
capital stock of any Significant Subsidiary of EchoStar; and no Significant
Subsidiary of EchoStar has any obligation of any kind to issue any additional
securities or to pay for securities of EchoStar or any Significant Subsidiary of
EchoStar or any predecessor of any of the foregoing.
For the purposes of this Agreement, (x) the term "Subsidiary", with
respect to a Person, means any corporation, limited liability company,
partnership, trust or unincorporated organization of which securities or
interests having by the terms thereof ordinary voting power to elect at least a
majority of the board of directors or others performing similar functions with
respect to such corporation, limited liability company, partnership, trust or
unincorporated organization are directly or indirectly owned or controlled by
such Person or by any one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries, and (y) the term "Significant Subsidiary" means a
Subsidiary of a Person that would constitute a "significant subsidiary" within
the meaning of Rule 1-02 of Regulation S-X of the Exchange Act, if such Rule
were applicable to such Person.
Section 3.3. Corporate Power and Authority. EchoStar has (or will have
prior to execution thereof) all requisite corporate power and authority to enter
into the EchoStar Transaction Agreements (as defined below) and to consummate
the transactions contemplated thereby. The execution and delivery of the
EchoStar Transaction Agreements by EchoStar and the consummation of the
transactions contemplated thereby to be effected by EchoStar have been (or will
be prior to execution and delivery thereof) duly authorized by all necessary
corporate action on the part of EchoStar. Each of the EchoStar Transaction
Agreements has been (or will be) duly executed and delivered by EchoStar and,
assuming the due authorization, execution and delivery by the other parties
thereto, constitutes (or will constitute when executed) the legal, valid and
binding obligations of EchoStar, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, similar laws of
debtor relief and general principles of equity.
For the purposes of this Agreement, "EchoStar Transaction Agreements"
means this Agreement, the Implementation Agreement, the Merger Commitment
Letter, the Merger Financing Agreement, the PanAmSat Financing Agreement, the
PanAmSat Stock Purchase Agreement, the Registration Rights Letter Agreement (as
defined in the Implementation Agreement), the EchoStar Controlling Stockholder
Registration Rights Agreement (as defined in the Implementation Agreement), the
Supplemental Agreement and the Pledge Agreement and all other agreements
contemplated hereby or thereby to which EchoStar is (or will be) a party.
Section 3.4. Capitalization of EchoStar.
(a) As of the date of this Agreement, EchoStar's authorized capital
stock consists of (i) 1,600,000,000 shares of common stock, par value $0.01 per
share, of which (x) 800,000,000 shares have been designated EchoStar Class A
Common Stock, (y) 400,000,000 shares have been designated EchoStar Class B
Common Stock and (z) 400,000,000 shares have
13
been designated EchoStar Class C common stock, par value $0.01 per share (the
"EchoStar Class C Common Stock") and (ii) 20,000,000 shares of preferred stock,
par value $0.01 per share, of which (x) 1,616,681 shares have been designated
Series A Cumulative Preferred Stock, par value $0.01 per share ("EchoStar Series
A Preferred Stock"), (y) 900,000 shares have been designated Series B Senior
Redeemable Exchangeable Preferred Stock, par value $0.01 per share ("EchoStar
Series B Preferred Stock") and (z) 2,300,000 shares have been designated Series
C Cumulative Convertible Preferred Stock, par value $0.01 per share ("EchoStar
Series C Preferred Stock"). As of October 19, 2001 (i) 240,770,601 shares of
EchoStar Class A Common Stock (excluding shares held by EchoStar as treasury
shares) were issued and outstanding, (ii) 238,435,208 shares of EchoStar Class B
Common Stock (excluding shares held by EchoStar as treasury shares) were issued
and outstanding, (iii) no shares of EchoStar Class C Common Stock were issued
and outstanding, (iv) no shares of EchoStar Class A Common Stock or EchoStar
Class B Common Stock, respectively, were held by EchoStar as treasury shares and
(v) no shares of EchoStar Series A Preferred Stock, EchoStar Series B Preferred
Stock or EchoStar Series C Preferred Stock were issued and outstanding. Prior to
the Merger Effective Time, EchoStar will file a certificate with the Secretary
of State of Nevada withdrawing the designation of the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock.
(b) Each outstanding share of EchoStar capital stock is duly
authorized and validly issued, fully paid and nonassessable, and has not been
issued in violation of any preemptive or similar rights. Except as set forth in
Section 3.4(b) of the EchoStar Disclosure Schedule, EchoStar has no authorized
or outstanding bonds, debentures, notes or other obligations or securities, the
holders of which have the right to vote with the stockholders of EchoStar on any
matter.
(c) Other than as contemplated by the EchoStar Transaction Agreements
or as set forth in Section 3.4(c) of the EchoStar Disclosure Schedule, there are
no outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale or transfer of any securities of EchoStar, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of EchoStar; and EchoStar has no obligation of any kind
to issue any additional securities or to pay for securities of EchoStar or any
predecessor or affiliate. The issuance and sale of all of the shares of
EchoStar's capital stock described in this Section 3.4 have been in compliance
with federal and state securities laws. Except as set forth in Section 3.4(c) of
the EchoStar Disclosure Schedule, EchoStar has not agreed to register any of its
securities under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") or under any state
securities law or granted registration rights with respect to any securities of
EchoStar to any Person.
Section 3.5. Conflicts, Consents and Approvals. Except as set forth in
Section 3.5 of the EchoStar Disclosure Schedule, the execution and delivery by
EchoStar of the EchoStar Transaction Agreements and the consummation of the
transactions contemplated thereby will not:
(a) violate any provision of the certificate of incorporation or by-
laws (or equivalent organizational documents) of EchoStar or any of its
Significant Subsidiaries;
(b) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with the giving of notice, the
passage of time or both, would constitute a default) under, require the consent
of any party under, or entitle any party
14
(with the giving of notice, the passage of time or both) to terminate,
accelerate, modify or call a default under, or result in the creation of any
Encumbrance upon any of the properties or assets of EchoStar or any of its
Significant Subsidiaries under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, intellectual property or
other license, contract, undertaking, agreement, lease or other instrument or
obligation to which EchoStar or any of its Significant Subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to EchoStar or any of its Subsidiaries; or
(d) except as contemplated by the EchoStar Transaction Agreements,
require any consent or approval of or registration or filing by EchoStar or any
of its affiliates with, any third party or any Governmental Authority, other
than (i) FCC approvals, (ii) actions required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), and any similar laws of foreign jurisdictions and
(iii) registrations or other actions required under federal, state and foreign
securities laws as are contemplated by this Agreement;
except in the case of (b), (c) and (d) for any of the foregoing that, in the
aggregate, could not reasonably be expected to have a EchoStar Material Adverse
Effect or have a material adverse impact on the ability of EchoStar to
consummate the transactions contemplated by the EchoStar Transaction Agreements.
Section 3.6. EchoStar SEC Documents.
(a) EchoStar has timely filed with the SEC all required reports,
filings, registration statements and other documents to be filed by them with
the SEC since January 1, 2000.
(b) As of its filing date, or as amended or supplemented prior to the
date hereof, each EchoStar SEC Document complied (and each EchoStar SEC Document
filed after the date of this Agreement will comply) as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act.
(c) No EchoStar SEC Document, as of its filing date, contained any
untrue statement of a material fact or omitted to state any material fact (and
no EchoStar SEC Document filed after the date of this Agreement will contain any
untrue statement of a material fact or omit to state any material fact)
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 3.7. Financial Statements; Liabilities.
(a) The audited financial statements and unaudited interim financial
statements of EchoStar included in the EchoStar 10-K and the EchoStar 10-Q
(including any related notes or schedules) fairly present in all material
respects (and the audited financial statements and unaudited interim financial
statements of EchoStar included in EchoStar SEC Documents filed after the date
of this Agreement will fairly present in all material respects), in accordance
with GAAP (except as may be indicated in the notes thereto), the consolidated
financial position of EchoStar and its consolidated Subsidiaries as of the dates
thereof and its consolidated results of operations and changes in financial
position for the respective periods then
15
ended (subject to normal year-end adjustments and lack of footnote disclosure in
the case of any unaudited interim financial statements).
(b) EchoStar and its Subsidiaries have no liabilities or obligations
of any kind whatsoever, whether known or unknown, asserted or unasserted,
accrued, contingent, absolute, determined, determinable or otherwise, in each
case, other than:
(i) liabilities or obligations disclosed or provided for in the
balance sheet of EchoStar included in the EchoStar 10-K or 10-Q or
disclosed in the notes thereto;
(ii) liabilities incurred since September 30, 2001 in the
ordinary course of business;
(iii) liabilities or obligations under the EchoStar Transaction
Agreements or incurred in connection with the transactions contemplated
thereby;
(iv) obligations of EchoStar or its Subsidiaries under the
agreements, contracts, leases, licenses to which it is a party that would
be required by GAAP to be reflected on or reserved against on the balance
sheet of EchoStar included in the EchoStar 10-Q and which are so reflected
or reserved against thereon;
(v) as set forth in Section 3.7 of the EchoStar Disclosure
Schedule; and
(vi) other liabilities or obligations which, in the aggregate,
could not reasonably be expected to have a EchoStar Material Adverse
Effect, or have a material adverse impact on the ability of EchoStar to
consummate the transactions contemplated by the EchoStar Transaction
Agreements.
Section 3.8. Absence of Certain Changes. Except as set forth in
Section 3.8 of the EchoStar Disclosure Schedule and except as contemplated by
the EchoStar Transaction Agreements, since September 30, 2001, there has been no
(i) EchoStar Material Adverse Effect or (ii) development that has had or could
reasonably be expected to have a material adverse impact on the ability of
EchoStar to consummate the transactions contemplated by the EchoStar Transaction
Agreements.
Section 3.9. Compliance with Law. Except as set forth in Section 3.9
of the EchoStar Disclosure Schedule and except for the Environmental and Safety
Requirements (as defined below) which are addressed separately in Section 3.12
below, EchoStar and its Significant Subsidiaries are in compliance with, and at
all times since January 1, 1998 have been in compliance with, all applicable
laws, statutes, orders, rules, regulations, policies or guidelines promulgated,
or judgments, decisions or orders entered by any Governmental Authority
(collectively, "Applicable Law") relating to them or their businesses or
properties, except where the failure to be in compliance therewith could not, in
the aggregate, reasonably be expected to have a EchoStar Material Adverse Effect
or have a material adverse impact on the ability of EchoStar to consummate the
transactions contemplated by the EchoStar Transaction Agreements.
Section 3.10. Litigation. Except as set forth in Section 3.10 of the
EchoStar Disclosure Schedule, there is no suit, claim, action, proceeding or, to
its knowledge, investigation
16
("Action") pending or, to the knowledge of EchoStar, threatened against EchoStar
or any of its Subsidiaries or its or their properties which could reasonably be
expected to (a) have a EchoStar Material Adverse Effect or (b) have a material
adverse impact on the ability of EchoStar to consummate the transactions
contemplated by the EchoStar Transaction Agreements; provided, that with respect
to this Section 3.10(b), the foregoing representation is made as of the date of
this Agreement.
Section 3.11. Taxes. Each of EchoStar and its Subsidiaries has duly
filed (or there have been filed on their behalf) all federal and material state,
local and foreign income, franchise, excise, real and personal property and
other tax returns and reports (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by it prior
to the date hereof (taking into account extensions). All of the foregoing
returns and reports are true and correct in all material respects, and EchoStar
and its Subsidiaries have paid, or adequately reserved for, all taxes required
to be paid in respect of all periods covered by such returns and reports. For
the purposes of this Agreement, the term "tax" shall include all federal, state,
local and foreign taxes, including interest and penalties thereon.
Section 3.12. Environmental and Safety Matters. Except as set forth
in Section 3.12 of the EchoStar Disclosure Schedule, and except for any facts,
conditions or circumstances that, in the aggregate, could not reasonably be
expected to have a EchoStar Material Adverse Effect: (i) EchoStar and its
Subsidiaries are and have been in compliance with all applicable Environmental
and Safety Requirements; (ii) no property currently or, to the knowledge of
EchoStar, formerly owned or operated by EchoStar or any Subsidiary has been
contaminated with any substance that could reasonably be expected to require
investigation or remediation pursuant to any Environmental and Safety
Requirements; (iii) neither EchoStar nor any of its Subsidiaries is subject to
any liability for any waste disposal or contamination on any third party
property; (iv) neither EchoStar nor any of its Subsidiaries has received any
notice, demand, letter, claim or request for information indicating that it may
be in violation of or subject to liability with respect to any Environmental and
Safety Requirements; (v) neither EchoStar nor any Subsidiary is subject to any
outstanding order, decree, injunction or other arrangement with any Governmental
Authority or any indemnity or other agreement with any other party relating to
any Environmental and Safety Requirements and for which EchoStar or the
Subsidiary retains any liability or obligation; (vi) to the knowledge of
EchoStar there are no other circumstances or conditions involving EchoStar or
any Subsidiary that could reasonably be expected to result in any claims,
liability, investigations or costs by or for EchoStar or any Subsidiary of
EchoStar in connection with any Environmental and Safety Requirements; and (vii)
EchoStar has made available to EchoStar copies of all material environmental
reports, studies, assessments and sampling data relating to EchoStar and its
Subsidiaries or that relates to the current EchoStar business or for which
indemnification does not exist and which are in the possession, custody or
control of EchoStar. For the purposes of this Agreement, the term "Environmental
and Safety Requirements" means all applicable federal, state, local and foreign
statutes, regulations, ordinances and other provisions having the force or
effect of law, all judicial and administrative orders and determinations and all
common law in each case concerning public health and safety, worker health and
safety, and pollution or protection of the environment (including all those
relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, Release or threatened Release (whether onsite or offsite), control,
or cleanup of any hazardous materials, substances or wastes, chemical substances
or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise or
radiation). For the purposes
17
of this Agreement, the term "Release" has the meaning set forth in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or similar Environmental and Safety Requirements.
Section 3.13. Employee Benefit Plans. All benefit and compensation
plans, contracts, policies or arrangements covering current or former United
States employees of EchoStar and its Subsidiaries and current or former
directors of EchoStar, including "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and deferred compensation, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans (the "EchoStar
Plans"), are listed in Section 3.13 of the EchoStar Disclosure Schedule. Except
as set forth in Section 3.13 of the EchoStar Disclosure Schedule, all EchoStar
Plans are in compliance with, and have been administered and operated in
accordance with, the terms of such EchoStar Plans and Applicable Law, except for
any failure to so comply, operate or administer the EchoStar Plans that could
not reasonably be expected to have a EchoStar Material Adverse Effect. With
respect to each EchoStar Plan, a complete and correct copy of the most recent
plan document or agreement, all related trust and funding documents, and all
amendments thereto; the most recent summary plan description, and all related
summaries of material modifications; and all actuarial and financial reports for
the last three plan years, where applicable, have been provided or made
available to Hughes. The Internal Revenue Service has issued a determination
letter to the effect that each such EchoStar Plan which is intended to be
qualified within the meaning of Section 401(a) or 501(c)(9) of the Code is so
qualified. Neither EchoStar nor any of its Subsidiaries has engaged in a
transaction with respect to any EchoStar Plan that, assuming the taxable period
of such transaction expired as of the date hereof, could subject EchoStar or any
Subsidiary to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA, except for any tax or penalty which could not
reasonably be expected to have an EchoStar Material Adverse Effect. No liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by EchoStar or any of its Subsidiaries with respect to any ongoing,
frozen or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
EchoStar under Section 4001 of ERISA or Section 414 of the Code (a "EchoStar
ERISA Affiliate"), except for any liability that could not reasonably be
expected to have a EchoStar Material Adverse Effect. EchoStar and the
Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of a EchoStar ERISA
Affiliate), except for any liability that could not reasonably be expected to
have a EchoStar Material Adverse Effect. No event which constitutes a
"reportable event" as defined in Section 4043 of ERISA has occurred with respect
to any EchoStar Plan subject to Title IV of ERISA which presents a material risk
of the termination of any such EchoStar Plan and could reasonably be expected to
result in a EchoStar Material Adverse Effect. Except as set forth in Section
3.13 of the EchoStar Disclosure Schedule, no audit, claim, action or litigation
has been made, commenced or, to the knowledge of EchoStar, threatened with
respect to any EchoStar Plan that, if adversely determined, could reasonably be
expected to have a EchoStar Material Adverse Effect. Neither EchoStar nor any of
its Subsidiaries has any obligations for continuing coverage for retiree health
and life benefits (other than as required under Part 6 of Title I of ERISA or
other similar obligations under Applicable Law) under any EchoStar Plan, except
as listed in Section 3.13 of the EchoStar Disclosure Schedule. EchoStar or the
Subsidiaries may amend or terminate any such retiree plan at any time without
incurring any liability thereunder except for any liability which could not
reasonably be expected to have a EchoStar Material
18
Adverse Effect. Except as set forth in Section 3.13 of the EchoStar Disclosure
Schedule, there has been no amendment to, announcement by EchoStar or any of its
Subsidiaries relating to, or change in employee participation or coverage under,
any EchoStar Plan which would increase materially the expense of maintaining
such plan above the level of the expense incurred therefor for the most recent
fiscal year. Except as set forth in Section 3.13 of the EchoStar Disclosure
Schedule, neither the execution of this Agreement, shareholder approval of this
Agreement nor the consummation of the transactions contemplated hereby will (w)
entitle any employees of EchoStar or any of the Subsidiaries to severance pay or
any increase in severance pay upon any termination of employment after the date
hereof, (x) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to the terms of, any of the EchoStar Plans, (y) limit or restrict the
right of EchoStar or, after the consummation of the transactions contemplated
hereby, Hughes to merge, amend or terminate any of the EchoStar Plans, or (z)
cause EchoStar or any of its Subsidiaries or, after the consummation of the
transactions contemplated hereby, Hughes to record additional compensation
expense on its income statement with respect to any outstanding stock option or
other equity-based award. EchoStar does not have any labor unions and is not a
party to any collective bargaining agreements, in each case within the United
States.
Section 3.14. Intellectual Property.
(a) EchoStar and its Subsidiaries own or have a valid right to use
and shall own or have a valid right to use as of the Closing Date, all EchoStar
Intellectual Property, except where the failure to own or have a valid right to
use could not reasonably be expected to have a EchoStar Material Adverse Effect.
For the purposes of this Agreement, "Intellectual Property" means:
(i) all patents and patent applications, trademarks, service
marks, trade names (whether registered or unregistered) and pending
applications for registration of any of the foregoing, domain names,
copyrights and registrations and applications therefor, mask works and any
applications for registration thereof, trade secrets, inventions, know-how,
confidential and other intellectual property and proprietary rights arising
from or in respect of the foregoing; and
(ii) any and all computer programs, including any and all
software implementations (whether in source code or object code),
databases, including any and all data and collections of data, whether
machine readable or otherwise, and any other work product used to design
and develop any of the foregoing and all documentation relating to the
foregoing.
For the purposes of this Agreement, "EchoStar Intellectual Property" means all
Intellectual Property (x) owned by EchoStar or any of its Subsidiaries; or (y)
used or held for use by EchoStar or any of its Subsidiaries in their business
pursuant to a valid license agreement. Except as set forth in Section 3.14(a)
of the EchoStar Disclosure Schedule, each material item of EchoStar Intellectual
Property is owned or licensed by the respective businesses of EchoStar and its
Subsidiaries to no less advantageous extent in all material respects as during
the twelve (12) months prior to the date hereof. EchoStar and its Subsidiaries
have taken commercially reasonable action to maintain and protect their rights
in and to each material item of EchoStar Intellectual Property.
19
(b) Except as set forth in Section 3.14(b) of the EchoStar Disclosure
Schedule, neither EchoStar nor any of its Subsidiaries has received any written
claim or notice of infringement or misappropriation of, or conflict with, the
Intellectual Property rights of others, other than such as could not reasonably
be expected to have a EchoStar Material Adverse Effect. Except as set forth in
Section 3.14(b) of the EchoStar Disclosure Schedule, neither EchoStar nor any of
its Subsidiaries has provided any third party any written claim or notice that
such third party has infringed upon, misappropriated, or otherwise come into
conflict with, any EchoStar Intellectual Property. Except as set forth in
Section 3.14(b) of the EchoStar Disclosure Schedule, EchoStar and its
Subsidiaries possess all right, title, and interest in and to, or have a legal,
valid, binding and enforceable right to use, each material item of Intellectual
Property used by EchoStar or any of its Subsidiaries, free and clear of all
Encumbrances.
(c) The EchoStar Intellectual Property is sufficient to conduct, in
all material respects, the respective businesses of EchoStar and its
Subsidiaries after the Merger Effective Time as such businesses were conducted
immediately prior to the Merger Effective Time.
Section 3.15. Contracts. Except as set forth in Section 3.15 of the
EchoStar Disclosure Schedule, each material lease, license, contract, agreement
or obligation to which EchoStar or any of its Subsidiaries is a party or by
which any of them or any of their properties may be bound is valid, binding and
enforceable and in full force and effect, except where such failures to be
valid, binding and enforceable and in full force and effect could not, in the
aggregate, reasonably be expected to have a EchoStar Material Adverse Effect or
have a material adverse impact on the ability of EchoStar to consummate the
transactions contemplated by the EchoStar Transaction Agreements, and neither
EchoStar nor any of its Subsidiaries is in breach of or default thereunder, and,
to EchoStar's knowledge, no other party thereto is in breach of or default
thereunder, except for those breaches and defaults that could not reasonably be
expected to have a EchoStar Material Adverse Effect or have a material adverse
impact on the ability of EchoStar to consummate the transactions contemplated by
the EchoStar Transaction Agreements.
Section 3.16. Brokerage and Finder's and Other Fees; Opinion of
Financial Advisor.
(a) Except for EchoStar's obligations to UBS Warburg LLC and Deutsche
Banc Alex. Brown Inc., neither EchoStar nor any of its affiliates, stockholders,
directors, officers or employees has incurred or will incur on behalf of
EchoStar or any affiliate of EchoStar, any brokerage, finder's or similar fee in
connection with the transactions contemplated by the EchoStar Transaction
Agreements.
(b) The Board of Directors of EchoStar has received the opinion of
Deutsche Bank Alex. Brown Inc. to the effect that, as of the date of this
Agreement, the Class A Exchange Ratio is fair, from a financial point of view,
to the holders of EchoStar Class A Common Stock. EchoStar will provide a copy
thereof to Hughes, for information purposes only, and Hughes acknowledges that
it has no right to rely on such opinion.
Section 3.17. Board and Stockholder Approval. The Board of Directors
of EchoStar, at a meeting duly called and held, has duly determined that the
EchoStar Transaction Agreements and the transactions contemplated thereby are
advisable, fair to and in the best interests of EchoStar and its stockholders
and has authorized the EchoStar Transaction Agreements to be executed, delivered
and performed. Immediately following the execution of this Agreement and such
determinations, the Controlling Stockholder shall have executed and
20
delivered to EchoStar, in accordance with the provisions of the NRS, a written
consent approving and adopting this Agreement and the other EchoStar Transaction
Agreements and approving the transactions contemplated hereby and thereby. No
other vote or consent of the holders of any class or series of EchoStar capital
stock is necessary to approve and adopt this Agreement and the transactions
contemplated by the EchoStar Transaction Agreements.
Section 3.18. Takeover Laws. Prior to the date hereof, the Board of
Directors of EchoStar has taken all action necessary to exempt (a) the execution
of the EchoStar Transaction Agreements, (b) the Merger and (c) the transactions
contemplated thereby under or make the foregoing actions not subject to (i) any
takeover law or law that purports to limit or restrict business combinations or
the ability to acquire or vote shares and (ii) any stockholder rights plan or
any similar anti-takeover plan or device.
Section 3.19. Restrictive Agreements. Except as set forth in Section
3.19 of the EchoStar Disclosure Schedule, none of EchoStar, EchoStar's
Subsidiaries or any employee, officer, director or consultant of either EchoStar
or EchoStar's Subsidiaries is party to or bound by any agreement, contract,
policy, license, Permit, document, instrument, arrangement or commitment that
materially limits, or would materially limit after the Merger Effective Time,
the ability of either EchoStar or EchoStar's Subsidiaries or, to EchoStar's
knowledge, Hughes or its Subsidiaries, to compete in any line of business or
with any Person or in any geographic area.
Section 3.20. Permits. For the purposes of this Agreement, the
"EchoStar Permits" shall mean all permits, approvals, authorizations,
certificates, consents, franchises, licenses, concessions and rights ("Permits")
issued or authorized by any Governmental Authority (as amended or modified) to,
or held by, EchoStar or any of its Subsidiaries (together, the "EchoStar Permit
Entities") including (a) all Permits issued by the FCC to any EchoStar Permit
Entity ("EchoStar FCC Licenses") and (b) all Permits issued to any EchoStar
Permit Entity by a Governmental Authority (other than the FCC) authorizing such
entity to provide broadcasting or other communications services (including the
provision of direct-to-home video programming). Set forth on Section 3.20 of the
EchoStar Disclosure Schedule is a true and complete list of (a) all EchoStar
Permits, (b) all pending applications for Permits that would be EchoStar
Permits, if issued or granted and (c) all pending applications by any EchoStar
Permit Entity for modification, extension or renewal of EchoStar Permits, except
that Section 3.20 of the EchoStar Disclosure Schedule need not list such
EchoStar Permits, applications therefor or applications in respect thereof that
are immaterial to the assets or business of EchoStar and its Subsidiaries taken
as a whole. The EchoStar Permits are all of the Permits required to be issued to
or held by the EchoStar Permit Entities in order to allow such entities to
conduct their respective businesses as currently conducted and the EchoStar
Permits are in full force and effect, except where the failure to possess any
such Permit or the failure of any such Permit to be in full force and effect
could not reasonably be expected to have a EchoStar Material Adverse Effect.
Without limiting the general provisions of Section 3.9, except as set forth on
Section 3.20 of the EchoStar Disclosure Schedule, each of the EchoStar Permit
Entities is in compliance with (i) its obligations under each of the EchoStar
Permits owned, held or possessed by it, and (ii) the rules and regulations of
the Governmental Authority issuing such EchoStar Permit, except in each case
where the failure to so comply could not reasonably be expected to have a
EchoStar Material Adverse Effect. Except as set forth on Section 3.20 of the
EchoStar Disclosure Schedule and except for proceedings affecting the satellite
industry in general, to EchoStar's knowledge, there is not pending or threatened
before the Federal Communications Commission or any successor agency ("FCC") or
any other Governmental Authority any proceeding, notice of violation, order of
forfeiture or
21
complaint, or investigation against any EchoStar Permit Entity relating to any
of the EchoStar Permits that could reasonably be expected to have a EchoStar
Material Adverse Effect. Without limiting the general provisions of Section 3.5,
Section 3.5(d) of the EchoStar Disclosure Schedule lists all of the consents or
approvals of, or registrations or filings by any EchoStar Permit Entity with,
any Governmental Authority necessary for EchoStar to transfer the EchoStar
Permits by consummating the transactions contemplated hereby.
Section 3.21. Amendment to By-Laws. EchoStar has amended its By-laws
to provide that the stockholders of EchoStar may act by written consent of the
holders of that number of shares required to take such action in order to be
effective and such By-laws, as so amended, remain in full force and effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HUGHES
In order to induce EchoStar to enter into this Agreement, Hughes
hereby represents and warrants to EchoStar as follows, except as specifically
described in Hughes' annual report on Form 10-K for the fiscal year ended
December 31, 2000 (the "Hughes 10-K"), Hughes' quarterly report on Form 10-Q for
the fiscal quarter ended September 30, 2001 (the "Hughes 10-Q") and all other
reports, filings, registration statements and other documents (collectively with
the Hughes 10-K and Hughes 10-Q, the "Hughes SEC Documents") filed by Hughes
with the SEC after September 30, 2001 and prior to the date hereof (as such
documents have been amended since the time of their filing and prior to the date
hereof), all of which are of public record.
Section 4.1. Organization and Standing. Each of Hughes and Hughes'
Significant Subsidiaries is a corporation validly existing and in good standing
under the laws of the State of Delaware, with respect to Hughes, and (to the
extent such concepts or equivalent concepts are recognized in such
jurisdictions) under the laws of its state or other jurisdiction of
incorporation, with respect to Hughes' Significant Subsidiaries, in each case,
with all corporate (and other) power to carry on its business as now conducted.
Each of Hughes and Hughes' Subsidiaries is duly qualified to do business and is
in good standing (to the extent that such concepts or equivalent concepts are
recognized in such jurisdictions) in each jurisdiction in which the nature of
the business conducted by it or the property it owns, leases or operates makes
such qualification necessary, except where the failure to be so qualified or in
good standing in such jurisdiction could not reasonably be expected to have a
Hughes Material Adverse Effect (as defined below) or have a material adverse
impact on its ability to consummate the transactions contemplated by the Hughes
Transaction Agreements (as defined below). For the purposes of this Agreement, a
"Hughes Material Adverse Effect" means an event, change, circumstance or effect
that has had or is reasonably likely to have a material adverse effect on the
business, operations, assets, liabilities or financial condition of Hughes and
its Subsidiaries taken as a whole, other than events, changes, circumstances or
effects that arise out of or result from (x) economic factors affecting the
economy or financial markets as a whole or generally affecting the direct
broadcast satellite industry (other than those that materially
disproportionately affect Hughes and its Subsidiaries taken as a whole), (y) the
Hughes Recapitalization or the Spin-Off and (z) the announcement of the
execution of the this Agreement and the agreements contemplated hereby or the
compliance by the parties with their respective obligations hereunder and
thereunder (including any cancellations of or delays in customer orders, any
reduction in
22
sales, any disruption in supplier, distributor, partner or similar relationships
or any loss of employees).
Section 4.2. Subsidiaries. Section 4.2 of the disclosure schedule
delivered by Hughes to EchoStar and dated as of the date hereof (the "Hughes
Disclosure Schedule") sets forth a list of all of the Significant Subsidiaries
of Hughes. Each of the outstanding shares of capital stock of each of Hughes'
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned, directly or indirectly, by Hughes free and clear of all
Encumbrances and has not been issued in violation of any preemptive or similar
rights. Other than as set forth in Section 4.2 of the Hughes Disclosure
Schedule, there are no outstanding subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments or rights of any
type relating to the issuance, sale, transfer or voting of any securities of any
Significant Subsidiary of Hughes, nor are there outstanding any securities which
are convertible into or exchangeable for any shares of capital stock of any
Significant Subsidiary of Hughes; and no Significant Subsidiary of Hughes has
any obligation of any kind to issue any additional securities or to pay for
securities of Hughes or any Significant Subsidiary of Hughes or any predecessor
of any of the foregoing.
Section 4.3. Corporate Power and Authority. Hughes has (or will have
prior to execution thereof) all requisite corporate power and authority to enter
into the Hughes Transaction Agreements (as defined below) and to consummate the
transactions contemplated thereby. The execution and delivery of each of the
Hughes Transaction Agreements by Hughes and the consummation of the transactions
contemplated thereby to be effected by Hughes have been (or will be prior to
execution and delivery thereof) duly authorized by all necessary corporate
action on the part of Hughes. Each of the Hughes Transaction Agreements has been
(or will be) duly executed and delivered by Hughes and assuming the due
authorization, execution and delivery by the other parties thereto, constitutes
(or will constitute when executed) the legal, valid and binding obligation of
Hughes, enforceable against Hughes in accordance with its terms, except as
enforceability may be limited by bankruptcy, similar laws of debtor relief and
general principles of equity. For the purposes of this Agreement, "Hughes
Transaction Agreements" means this Agreement, the Implementation Agreement, the
PanAmSat Stock Purchase Agreement, the Merger Financing Agreement, the
Supplemental Agreement, the Pledge Agreement, the Stockholders Agreement, the GM
Registration Rights Agreement (as defined in the Implementation Agreement), the
GM/Hughes Separation Agreement, the GM/Hughes Tax Agreements, the GM/Hughes
Intellectual Property Agreement, the Employee Matters Agreement, the GM/Hughes
Special Employee Items Agreement, the Registration Rights Letter Agreement (as
defined in the Implementation Agreement), the Pension Plans Registration Rights
Agreement (as defined in the Implementation Agreement), the GM Registration
Rights Agreement (as defined in the Implementation Agreement), the EchoStar
Controlling Stockholder Registration Rights Agreement (as defined in the
Implementation Agreement) and all other agreements contemplated thereby to which
Hughes is (or will be) a party.
Section 4.4. Capitalization of Hughes.
(a) As of the date of this Agreement, Hughes' authorized capital
stock consists of 1,000,000 shares of common stock, par value $0.01 per share,
and 10,000,000 shares of Series A Preferred Stock, of which 2,669,633 shares
have been designated Series A Preferred Stock, par value $0.10 per share
("Series A Preferred Stock"). As of the date hereof (i) 200 shares of common
stock (excluding shares held by Hughes as treasury shares) were issued and
23
outstanding, (ii) 81,649,203 shares of common stock were held by Hughes as
treasury shares and (iii) 2,669,633 shares of Series A Preferred Stock were
issued and outstanding.
(b) Each outstanding share of Hughes capital stock is duly
authorized and validly issued, fully paid and nonassessable, and has not been
issued in violation of any preemptive or similar rights. As of the date of this
Agreement, each outstanding share of Hughes capital stock is owned by GM free
and clear of all Encumbrances. Hughes has no authorized or outstanding bonds,
debentures, notes or other obligations or securities, the holders of which have
the right to vote with the stockholders of Hughes on any matter.
(c) Other than as contemplated by the GM Transaction Agreements or
the Hughes Transaction Agreements, or as set forth in Section 4.4(c) of the
Hughes Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale or transfer of any
securities of Hughes, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of Hughes; and
Hughes has no obligation of any kind to issue any additional securities or to
pay for securities of Hughes or any predecessor or affiliate. The issuance and
sale of all of the shares of capital stock described in this Section 4.4 have
been in compliance with federal and state securities laws. Section 4.4(c) of the
Hughes Disclosure Schedule accurately sets forth, as of September 30, 2001, the
number of shares of GM Class H Common Stock issuable upon exercise of options to
purchase shares of GM Class H Common Stock, and the exercise prices with respect
thereto, along with a list of the options to purchase shares of GM Class H
Common Stock held by each corporate officer of Hughes and any of its
Subsidiaries. Except as set forth in Section 4.4(c) of the Hughes Disclosure
Schedule or as contemplated by the GM/Hughes Separation Agreement, Hughes has
not agreed to register any securities under the Securities Act, or under any
state securities law or granted registration rights with respect to any
securities of Hughes to any Person.
Section 4.5. Conflicts, Consents and Approvals. Except as set forth
in Section 4.5 of the Hughes Disclosure Schedule, the execution and delivery of
the Hughes Transaction Agreements by Hughes and the GM Transaction Agreements
(as defined in the Implementation Agreement) by GM and the consummation of the
transactions contemplated thereby will not:
(a) violate any provision of the certificate of incorporation or by-
laws (or equivalent organizational documents) of Hughes or any of its
Significant Subsidiaries;
(b) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or both, would constitute a default) under, require the consent
of any party under, or entitle any party (with the giving of notice, the passage
of time or both) to terminate, accelerate, modify or call a default under, or
result in the creation of any Encumbrance upon any of the properties or assets
of Hughes or any of its Significant Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
intellectual property or other license, contract, undertaking, agreement, lease
or other instrument or obligation to which Hughes or any of its Significant
Subsidiaries is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Hughes or any of its Subsidiaries; or
24
(d) except as contemplated by the Hughes Transaction Agreements,
require any consent or approval of, or registration or filing by Hughes or any
of its affiliates with, any third party or Governmental Authority, other than
(i) authorization for listing or quotation of the shares of Hughes Class A
Common Stock to be issued in the Merger and Hughes Class C Common Stock to be
outstanding immediately prior to the Merger Effective Time on the NYSE or
Nasdaq, subject to official notice of issuance, (ii) actions required by the HSR
Act and any similar laws of foreign jurisdictions and (iii) registrations or
other actions required under federal, state and foreign securities laws as are
contemplated by this Agreement;
except in the case of (b), (c) and (d) for any of the foregoing that, in the
aggregate, could not reasonably be expected to have a Hughes Material Adverse
Effect or have a material adverse impact on the ability of Hughes to consummate
the transactions contemplated by the Hughes Transaction Agreements.
Section 4.6. Hughes SEC Documents.
(a) Hughes has timely filed with the SEC all required reports,
filings, registration statements and other documents to be filed by them with
the SEC since January 1, 2000.
(b) As of its filing date, or as amended or supplemented prior to
the date hereof, each Hughes SEC Document complied (and each Hughes SEC Document
filed after the date of this Agreement will comply) as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act.
(c) No Hughes SEC Document, as of its filing date, contained any
untrue statement of a material fact or omitted to state any material fact (and
no Hughes SEC Document filed after the date of this Agreement will contain any
untrue statement of a material fact or omit to state any material fact)
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.7. Financial Statements; Liabilities.
(a) The audited financial statements and unaudited interim
financial statements of Hughes included in the Hughes 10-K and the Hughes 10-Q
(including any related notes or schedules) fairly present in all material
respects (and the audited financial statements and unaudited interim financial
statements of Hughes included in Hughes SEC Documents filed after the date of
this Agreement will fairly present in all material respects), in accordance with
GAAP (except as may be indicated in the notes thereto), the consolidated
financial position of Hughes and its consolidated Subsidiaries as of the dates
thereof and its consolidated results of operations and changes in financial
position for the respective periods then ended (subject to normal year-end
adjustments and lack of footnote disclosure in the case of any unaudited interim
financial statements).
(b) Hughes and its Subsidiaries have no liabilities or obligations
of any kind whatsoever, whether known or unknown, asserted or unasserted,
accrued, contingent, absolute, determined, determinable or otherwise, in each
case, other than:
(i) liabilities or obligations disclosed or provided for in the
balance sheet of Hughes included in the Hughes 10-K or 10-Q or disclosed in
the notes thereto;
25
(ii) liabilities incurred since September 30, 2001 in the
ordinary course of business;
(iii) liabilities or obligations under the Hughes Transaction
Agreements or incurred in connection with the transactions contemplated
thereby;
(iv) obligations of Hughes or its Subsidiaries under the
agreements, contracts, leases, licenses to which it is a party that would
be required by GAAP to be reflected on or reserved against on the balance
sheet of Hughes included in the Hughes 10-Q and which are so reflected or
reserved against thereon;
(v) as set forth in Section 4.7 of the Hughes Disclosure
Schedule; and
(vi) other liabilities or obligations which, in the aggregate,
could not reasonably be expected to have a Hughes Material Adverse Effect,
or have a material adverse impact on the ability of Hughes to consummate
the transactions contemplated by the Hughes Transaction Agreements.
Section 4.8. Absence of Certain Changes. Except as set forth in
Section 4.8 of the Hughes Disclosure Schedule and except as contemplated by the
Hughes Transaction Agreements, since September 30, 2001, there has been no (i)
Hughes Material Adverse Effect or (ii) development that has had or could
reasonably be expected to have a material adverse impact on the ability of
Hughes to consummate the transactions contemplated by the Hughes Transaction
Agreements.
Section 4.9. Compliance with Law. Except as set forth in Section 4.9
of the Hughes Disclosure Schedule, Hughes and its Significant Subsidiaries are
in compliance with, and at all times since January 1, 1998 have been in
compliance with, all Applicable Law relating to them or their businesses or
properties, except where the failure to be in compliance therewith could not, in
the aggregate, reasonably be expected to have a Hughes Material Adverse Effect
or have a material adverse impact on the ability of Hughes to consummate the
transactions contemplated by the Hughes Transaction Agreements.
Section 4.10. Litigation. Except as set forth in Section 4.10 of the
Hughes Disclosure Schedule, there is no Action pending or, to the knowledge of
Hughes, threatened against Hughes or any of its Subsidiaries or its or their
properties which could reasonably be expected to (a) have a Hughes Material
Adverse Effect or (b) have a material adverse impact on the ability of Hughes to
consummate the transactions contemplated by the Hughes Transaction Agreements;
provided, that with respect to Section 4.10(b), the foregoing representation is
made as of the date of this Agreement.
Section 4.11. Taxes. Each of Hughes and its Subsidiaries have duly
filed (or there have been filed on their behalf) all federal and material state,
local and foreign income, franchise, excise, real and personal property and
other tax returns and reports (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by it prior
to the date hereof (taking into account extensions). All of the foregoing
returns and reports, to the extent they relate to the income, assets or business
of Hughes and its Subsidiaries, are true and correct in all material respects,
and Hughes and its Subsidiaries have paid (or
26
payment has been made on its behalf), or adequately reserved for, all taxes
required to be paid in respect of all periods covered by such returns and
reports.
Section 4.12. Environmental and Safety Matters. Except as set forth
in Section 4.12 of the Hughes Disclosure Schedule, and except for any facts,
conditions or circumstances that, in the aggregate, could not reasonably be
expected to have a Hughes Material Adverse Effect: (i) Hughes and its
Subsidiaries are and have been in compliance with all applicable Environmental
and Safety Requirements; (ii) no property currently or, to the knowledge of
Hughes, formerly owned or operated by Hughes or any Subsidiary has been
contaminated with any substance that could reasonably be expected to require
investigation or remediation pursuant to any Environmental and Safety
Requirements; (iii) neither Hughes nor any of its Subsidiaries is subject to any
liability for any waste disposal or contamination on any third party property;
(iv) neither Hughes nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information indicating that it may be in violation
of or subject to liability with respect to any Environmental and Safety
Requirements; (v) neither Hughes nor any Subsidiary is subject to any
outstanding order, decree, injunction or other arrangement with any Governmental
Authority or any indemnity or other agreement with any other party relating to
any Environmental and Safety Requirements and for which Hughes or the Subsidiary
retains any liability or obligation; (vi) to the knowledge of Hughes there are
no other circumstances or conditions involving Hughes or any Subsidiary that
could reasonably be expected to result in any claims, liability, investigations
or costs by or for Hughes or any Subsidiary of Hughes in connection with any
Environmental and Safety Requirements; and (vii) Hughes has made available to
EchoStar copies of all material environmental reports, studies, assessments and
sampling data relating to Hughes and its Subsidiaries or that relates to the
current Hughes business or for which indemnification does not exist and which
are in the possession, custody or control of Hughes.
Section 4.13. Employee Benefit Plans. All benefit and compensation
plans, contracts, policies or arrangements covering current or former United
States employees of Hughes and its Subsidiaries and current or former directors
of Hughes, including "employee benefit plans" within the meaning of Section 3(3)
of ERISA, and deferred compensation, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans (the "Hughes
Plans"), are listed in Section 4.13 of the Hughes Disclosure Schedule. Except as
set forth in Section 4.13 of the Hughes Disclosure Schedule, no Hughes Plans
cover, or provide benefits to, employees of GM or its Subsidiaries (other than
Hughes). Except as set forth in Section 4.13 of the Hughes Disclosure Schedule,
all Hughes Plans are in compliance with, and have been administered and operated
in accordance with, the terms of such Hughes Plans and Applicable Law, except
for any failure to so comply, operate or administer the Hughes Plans that could
not reasonably be expected to have a Hughes Material Adverse Effect. With
respect to each Hughes Plan, a complete and correct copy of the most recent plan
document or agreement, all related trust and funding documents, and all
amendments thereto; the most recent summary plan description, and all related
summaries of material modifications; and all actuarial and financial reports for
the last three plan years, where applicable, have been provided or made
available to EchoStar. The Internal Revenue Service has issued a determination
letter to the effect that each such Hughes Plan which is intended to be
"qualified" within the meaning of Section 401(a) or 501(c)(9) of the Code is so
qualified. Neither Hughes nor any of its Subsidiaries has engaged in a
transaction with respect to any Hughes Plan that, assuming the taxable period of
such transaction expired as of the date hereof, could subject Hughes or any
Subsidiary to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of
27
ERISA, except for any tax or penalty which could not reasonably be expected to
have a Hughes Material Adverse Effect. No liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by Hughes or any of its
Subsidiaries with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with Hughes under Section 4001 of ERISA or Section 414
of the Code (a "Hughes ERISA Affiliate"), except for any liability that could
not reasonably be expected to have a Hughes Material Adverse Effect. Hughes and
the Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of a Hughes ERISA
Affiliate), except for any liability that could not reasonably be expected to
have a Hughes Material Adverse Effect. No event which constitutes a "reportable
event" as defined in Section 4043 of ERISA has occurred with respect to any
Hughes Plan subject to Title IV of ERISA which presents a material risk of the
termination of any such Hughes Plan and could reasonably be expected to result
in a Hughes Material Adverse Effect. Except as set forth in Section 4.13 of the
Hughes Disclosure Schedule, no audit, claim, action or litigation has been made,
commenced or, to the knowledge of Hughes, threatened with respect to any Hughes
Plan that, if adversely determined, could reasonably be expected to have a
Hughes Material Adverse Effect. Neither Hughes nor any of its Subsidiaries has
any obligations for continuing coverage for retiree health and life benefits
(other than as required under Part 6 of Title I of ERISA or other similar
obligations under Applicable Law) under any Hughes Plan, except as listed in
Section 4.13 of the Hughes Disclosure Schedule. Hughes or the Subsidiaries may
amend or terminate any such retiree plan at any time without incurring any
liability thereunder except for any liability which could not reasonably be
expected to have a Hughes Material Adverse Effect. Except as set forth in
Section 4.13 of the Hughes Disclosure Schedule, there has been no amendment to,
announcement by Hughes or any of its Subsidiaries relating to, or change in
employee participation or coverage under, any Hughes Plan which would increase
materially the expense of maintaining such plan above the level of the expense
incurred therefor for the most recent fiscal year. Except as set forth in
Section 4.13 of the Hughes Disclosure Schedule, neither the execution of this
Agreement, stockholder approval of this Agreement nor the consummation of the
transactions contemplated hereby will (w) entitle any employees of Hughes or any
of the Subsidiaries to severance pay or any increase in severance pay upon any
termination of employment after the date hereof, (x) accelerate the time of
payment or vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to the terms of, any of the
Hughes Plans, (y) limit or restrict the right of Hughes to merge, amend or
terminate any of the Hughes Plans, or (z) cause Hughes or any of its
Subsidiaries to record additional compensation expense on its income statement
with respect to any outstanding stock option or other equity-based award. Hughes
does not have any labor unions and is not a party to any collective bargaining
agreements, in each case within the United States.
Section 4.14. Intellectual Property.
(a) Hughes and its Subsidiaries own or have a valid right to use and
shall own or have a valid right to use as of the Closing Date, all Hughes
Intellectual Property, except where the failure to own or have a valid right to
use could not reasonably be expected to have a Hughes Material Adverse Effect.
For the purposes of this Agreement, "Hughes Intellectual Property" means all
Intellectual Property (i) owned by Hughes or any of its Subsidiaries or (ii)
used or held for use by Hughes or any of its Subsidiaries in their business
pursuant to a valid
28
license agreement. Except as set forth in Section 4.14(a) of the Hughes
Disclosure Schedule, each material item of Hughes Intellectual Property is owned
or licensed by the respective businesses of Hughes and its Subsidiaries to no
less advantageous extent in all material respects as during the twelve (12)
months prior to the date hereof. Hughes and its Subsidiaries have taken
commercially reasonable action to maintain and protect their rights in and to
each material item of Hughes Intellectual Property.
(b) Except as set forth in Section 4.14(b) of the Hughes Disclosure
Schedule, neither Hughes nor any of its Subsidiaries has received any written
claim or notice of infringement or misappropriation of, or conflict with, the
Intellectual Property rights of others, other than such as could not reasonably
be expected to have a Hughes Material Adverse Effect. Except as set forth in
Section 4.14(b) of the Hughes Disclosure Schedule, none of GM, Hughes or any of
Hughes' Subsidiaries has provided any third party any written claim or notice
that such third party has infringed upon, misappropriated, or otherwise come
into conflict with, any Hughes Intellectual Property. Except as set forth in
Section 4.14(b) of the Hughes Disclosure Schedule, Hughes and its Subsidiaries
possess all right, title, and interest in and to, or have a legal, valid,
binding and enforceable right to use, each material item of Intellectual
Property used by Hughes or any of its Subsidiaries, free and clear of all
Encumbrances.
(c) The Hughes Intellectual Property is sufficient to conduct, in all
material respects, the respective businesses of Hughes and its Subsidiaries
after the Merger Effective Time as such businesses were conducted immediately
prior to the Merger Effective Time.
Section 4.15. Contracts. Except as set forth in Section 4.15 of the
Hughes Disclosure Schedule, each material lease, license, contract, agreement or
obligation to which Hughes or any of its Subsidiaries is a party or by which any
of them or any of their properties may be bound is valid, binding and
enforceable and in full force and effect, except where such failures to be
valid, binding and enforceable and in full force and effect could not, in the
aggregate, reasonably be expected to have a Hughes Material Adverse Effect or
have a material adverse impact on the ability of Hughes to consummate the
transactions contemplated by the Hughes Transaction Agreements, and neither
Hughes nor any of its Subsidiaries is in breach of or default thereunder, and,
to Hughes' knowledge, no other party thereto is in breach of or default
thereunder, except for those breaches and defaults that could not reasonably be
expected to have a Hughes Material Adverse Effect or have a material adverse
impact on the ability of Hughes to consummate the transactions contemplated by
the Hughes Transaction Agreements.
Section 4.16. Brokerage and Finder's and Other Fees; Opinions of
Financial Advisors.
(a) Except for obligations to Goldman, Sachs & Co. and Credit Suisse
First Boston Corporation, neither Hughes nor any of its affiliates,
stockholders, directors, officers or employees (in each case, other than GM) has
incurred or will incur on behalf of Hughes or any affiliate of Hughes, any
brokerage, finder's or similar fee in connection with the transactions
contemplated by the Hughes Transaction Agreements. A copy of all agreements
relating to any such fee payable by Hughes or any Subsidiary of Hughes to
Goldman, Sachs & Co. and Credit Suisse First Boston Corporation have been (or
upon request will be) delivered to EchoStar.
(b) Each of Goldman, Sachs & Co. and Credit Suisse First Boston
Corporation has provided its written opinion, dated as of the date of this
Agreement and addressed to the Board of Directors of GM and to the Board of
Directors of Hughes, to the effect
29
that, as of such date and based on current market conditions, the Exchange
Ratios in the Merger are fair, from a financial point of view, to the holders of
Hughes Common Stock immediately prior to the Merger, including GM and the
holders of GM $1-2/3 Common Stock and GM Class H Common Stock, as applicable. GM
and Hughes have heretofore provided a copy of such opinions to EchoStar, for
information purposes only, and EchoStar acknowledges that it has no right to
rely on such opinions.
Section 4.17. Board and Stockholder Approval. The Board of Directors
of Hughes, at a meeting duly called and held, has duly determined that the
Hughes Transaction Agreements and the transactions contemplated thereby are
advisable, fair to and in the best interests of Hughes and its stockholders and
has authorized the Hughes Transaction Agreements to be executed, delivered and
performed. Immediately following the execution of this Agreement and such
determinations, GM, in its capacity as sole stockholder of Hughes, shall have,
at a meeting of the sole stockholder, adopted and approved this Agreement (and
the execution, delivery and performance thereof) and the other Hughes
Transaction Agreements and the transactions contemplated hereby and thereby.
Other than the approvals of Hughes and GM as described in the immediately
preceding sentence and the approval of the Hughes Transaction Agreements by GM,
no other vote or consent of the holders of any class or series of Hughes capital
stock is necessary to approve and adopt this Agreement and the transactions
contemplated by the Hughes Transaction Agreements (it being expressly
understood, however, that the Requisite Stockholder Approval is necessary to
approve the GM Transactions).
Section 4.18. Takeover Laws. Prior to the date hereof, the Board of
Directors of Hughes has taken all action necessary to exempt (a) the execution
of the Hughes Transaction Agreements, (b) the Merger and (c) the transactions
contemplated thereby under, or make the foregoing actions not subject to (i) any
takeover law or law that purports to limit or restrict business combinations or
the ability to acquire or vote shares and (ii) any stockholder rights plan or
any similar anti-takeover plan or device.
Section 4.19. Restrictive Agreements. Except as set forth in Section
4.19 of the Hughes Disclosure Schedules, none of Hughes, its Subsidiaries or any
employee, officer, director or consultant of Hughes or its Subsidiaries is party
to or bound by any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment that materially limits, or would
materially limit after the Merger Effective Time, the ability of either Hughes
or any of its Subsidiaries or, to Hughes' knowledge, EchoStar or any of
EchoStar's Subsidiaries, to compete in any line of business or with any Person
or in any geographic area.
Section 4.20. Permits. For the purposes of this Agreement, the
"Hughes Permits" shall mean all Permits issued or authorized by any Governmental
Authority (as amended or modified) to, or held by, Hughes or any of its
Subsidiaries (together, "Hughes Permit Entities"), including (a) all Permits
issued by the FCC to any Hughes Permit Entity ("Hughes FCC Licenses") and (b)
all Permits issued to any Hughes Permit Entity by a Governmental Authority
(other than the FCC) authorizing such entity to provide broadcasting or other
communications services (including the provision of direct-to-home video
programming). Set forth on Section 4.20 of the Hughes Disclosure Schedule is a
true and complete list of (i) all Hughes Permits, (ii) all pending applications
for Permits that would be Hughes Permits, if issued or granted, and (iii) all
pending applications by any Hughes Permit Entity for modification, extension or
renewal of Hughes Permits, except that Section 4.20 of the Hughes Disclosure
Schedule need not list such Hughes Permits, applications therefor or
applications in respect thereof that are immaterial to the assets or business of
Hughes and its Subsidiaries taken as a
30
whole. The Hughes Permits are all of the Permits required to be issued to or
held by the Hughes Permit Entities in order to allow such entities to conduct
their respective businesses as currently conducted and the Hughes Permits are in
full force and effect, except where the failure to possess any such Permit or
the failure of any such Permit to be in full force and effect could not
reasonably be expected to have a Hughes Material Adverse Effect. Without
limiting the general provisions of Section 4.9, except as set forth on Section
4.20 of the Hughes Disclosure Schedule, each of the Hughes Permit Entities is in
compliance with (i) its obligations under each of the Hughes Permits owned, held
or possessed by it, and (ii) the rules and regulations of the Governmental
Authority issuing such Hughes Permit, except, in each case, where the failure to
so comply could not reasonably be expected to have a Hughes Material Adverse
Effect. Except as set forth on Section 4.20 of the Hughes Disclosure Schedule
and except for proceedings affecting the satellite industry in general, to
Hughes' knowledge, there is not pending or threatened before the FCC or any
other Governmental Authority any proceeding, notice of violation, order of
forfeiture or complaint, or investigation against any Hughes Permit Entity
relating to any of the Hughes Permits that could reasonably be expected to have
a Hughes Material Adverse Effect. Without limiting the general provisions of
Section 4.5, Section 4.5(d) of the Hughes Disclosure Schedule lists all of the
consents or approvals of, or registrations or filings by any Hughes Permit
Entity with, any Governmental Authority necessary for Hughes to transfer the
Hughes Permits by consummating the transactions contemplated hereby.
Section 4.21. Indian Entities. The consummation by Hughes of the
transactions contemplated by the Hughes Transaction Agreements does not require
action to be taken by Hughes Software Systems Limited ("HSSL") or Hughes
Tele.com (India) Limited ("HTIL") or any of their respective Affiliates pursuant
to the Securities and Exchange Board of India (Substantial Acquisition of Shares
& Takeovers) Regulations 1997).
ARTICLE 5
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from
and after the execution of this Agreement.
Section 5.1. Mutual Covenants.
(a) General. Subject to Section 5.1(b)(v) below, each of the parties
hereto shall use commercially reasonable efforts (except where a different
efforts standard is specifically contemplated by the Hughes Transaction
Agreements or the EchoStar Transaction Agreements, in which case such different
standard shall apply) to take all action and to do all things necessary, proper
or advisable to consummate the Merger and the transactions contemplated by this
Agreement (including using commercially reasonable efforts to cause the
conditions set forth in Article 6 for which such party is responsible to be
satisfied as soon as practicable and to prepare, execute and deliver such
further instruments and take or cause to be taken such other and further action
as any other party hereto shall reasonably request).
(b) Regulatory Matters.
(i) As soon as practicable, and in any event within twenty (20)
business days after the date hereof, each of the parties hereto shall file
any Notification and Report Forms and related material required to be filed
by it with the Federal Trade
31
Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act and any similar required notifications under the
laws of any foreign jurisdiction with respect to the Merger and the
transactions contemplated by this Agreement and shall promptly make any
further filings pursuant thereto that may be necessary, proper or
advisable.
(ii) As soon as practicable after the date hereof, each of the
parties hereto shall make, and shall cause their Subsidiaries to make, all
necessary filings with or applications to any Governmental Authority that
has issued either a EchoStar Permit or a Hughes Permit, as the case may be,
with respect to the transactions contemplated by the GM Transaction
Agreements, the Hughes Transaction Agreements and the EchoStar Transaction
Agreements, including any necessary applications to the FCC for consent to
the transfer of the EchoStar FCC Licenses and/or the Hughes FCC Licenses
pursuant to the transactions contemplated hereby (the "FCC Consent
Application").
(iii) The parties shall, subject to Section 5.1(b)(v) below: (A)
use their best efforts to obtain prompt termination of any waiting period
under the HSR Act (including any extension of the initial thirty (30) day
waiting period with respect to the Merger), and neither party shall,
without the prior consent of the other, agree with any Governmental
Authority not to consummate the Merger for a period of time beyond the
expiration of the waiting period applicable to the consummation of the
Merger under the HSR Act or to extend the Closing Date to a date within the
ninety (90)-day period prior to the Outside Date (as defined below); (B)
furnish to the other party such information and assistance as such party
reasonably may request in connection with the preparation of any
submissions to, or agency proceedings by, any Governmental Authority under
any Antitrust Law; (C) keep the other party promptly apprised of any
communications with, and inquiries or requests for information from, such
Governmental Authorities; (D) permit the other party to review any material
communication given by it to, and consult with the other party in advance
of any meeting or conference with, any Governmental Authority or, in
connection with any proceeding by a private party, with any other Person,
and to the extent permitted by such applicable Governmental Authority or
other Person, give the other party the opportunity to attend and
participate in such meetings and conferences; and (E) use their best
efforts to cause the condition set forth in Section 6.1(b) of this
Agreement to be satisfied; provided that no action shall be taken which
would be reasonably likely to (1) prevent delivery of the Tax Opinions (as
defined below) or the Ruling (as defined in the GM/Hughes Separation
Agreement), or (2) cause the representations and assumptions underlying the
Tax Opinions or the Ruling not to be true and correct in all material
respects. For purposes of this Agreement, "Antitrust Law" means the Sherman
Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal
Trade Commission Act, as amended, and all other federal, state and foreign
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization
or restraint of trade or lessening of competition through merger or
acquisition.
(iv) Subject to Section 5.1(b)(v) below, each party shall, and
shall cause its Subsidiaries to, (i) use their best efforts to diligently
prosecute all applications with the FCC, including the FCC Consent
Application, and all similar foreign Governmental Authorities for consent
to the transactions contemplated herein, (ii) use
32
their best efforts to resist or resolve any administrative proceeding or
suit, including appeals, that is instituted to challenge the grant of any
such applications, (iii) furnish to the other party such information and
assistance as such party reasonably may request in connection with the
preparation or prosecution of any such applications, (iv) keep the other
party promptly apprised of any communications with, and inquiries or
requests for information from, such Governmental Authorities with respect
to the transactions contemplated hereby and (v) use their best efforts to
cause the condition set forth in Section 6.1(c) of this Agreement to be
satisfied.
(v) Notwithstanding the covenants of the parties in Section
5.1(a), and Sections 5.1(b)(i), (ii), (iii) and (iv), nothing in this
Agreement shall require, or be deemed to require, (i) the parties to agree
to or effect any divestiture, hold separate any business or assets or take
any other similar action if doing so would result in the expected synergies
of the Merger being reduced to an amount that is no longer meaningful or
(ii) the parties to agree to or effect any divestiture, hold separate any
business or assets or take any other similar action that is not conditional
on the consummation of the Merger. No party shall take or agree to take any
action identified in clause (i) or (ii) of the immediately preceding
sentence without the prior consent of the other party.
(vi) In furtherance and not in limitation of the covenants of
the parties contained in Sections 5.1(b)(i), (ii), (iii) and (iv), each
party shall use its best efforts to resolve such objections if any, as may
be asserted with respect to the transactions contemplated hereby under any
rules and regulations of the FCC ("FCC Regulation") or any Antitrust Law.
In connection with the foregoing, if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted
(or threatened to be instituted) challenging any transaction contemplated
by this Agreement as violative of any Antitrust Law or any FCC Regulation,
the parties shall, subject to Section 5.1(b)(v), use their best efforts to
avoid the institution of any such action or proceeding and to contest and
resist any such action or proceeding and to have vacated, lifted, reversed
or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement.
(vii) If any objections are asserted with respect to the
transactions contemplated hereby under any Antitrust Law or any FCC
Regulation or if any suit is instituted by any Governmental Authority or
any private party challenging any of the transactions contemplated hereby
as violative of any Antitrust Law or FCC Regulations, the parties shall,
subject to Section 5.1(b)(v) above, use their best efforts to resolve any
such objections or challenge as such Governmental Authority or private
party may have to such transactions under such law so as to permit
consummation of the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, the parties (and, to
the extent required by any Governmental Authority, their Subsidiaries and
affiliates over which they exercise control) shall be required, subject to
Section 5.1(b)(v) above, to enter into a settlement, undertaking, consent
decree, stipulation or other agreement (each, a "Settlement") with a
Governmental Authority regarding antitrust or FCC matters in connection
with the transactions contemplated by this Agreement, including any
Settlement that requires any party to hold separate (including by
33
establishing a trust or otherwise) or to sell or otherwise dispose of any
of its assets or its Subsidiaries' assets.
(viii) Notwithstanding anything to the contrary herein, nothing
in this Section 5.1(b) shall limit (a) either party's right to terminate
this Agreement pursuant to Sections 7.1(b)(i) or 7.1(b)(ii), or (b) Hughes'
right to terminate this Agreement pursuant to 7.1(c)(iv).
(c) Tax-Free Treatment. The parties intend the Merger to constitute a
reorganization described in Section 368(a) of the Code. All of the parties and
their respective affiliates shall use commercially reasonable efforts (x) to
cause the Merger to qualify as a reorganization described in Section 368(a) of
the Code as aforesaid, and (y) to obtain, as of the Merger Effective Time and,
if required, as of the filing of the GM Proxy/Consent Solicitation Statement,
the opinions (the "Tax Opinions") of Sullivan & Cromwell, special counsel to
EchoStar, and Weil, Gotshal & Manges LLP, counsel to Hughes substantially, in
the form attached as Exhibits B and C, respectively, in each case to the effect
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code, it being understood that in rendering such Tax Opinion, such
tax counsel shall be entitled to rely upon, among other things, representations
of officers of EchoStar and Hughes and of the EchoStar Controlling Stockholder
contained in the tax certificates substantially in the form of Exhibits D, E and
F attached hereto (collectively, the "Tax Certificates") and other assumptions
as such tax counsel may reasonably require. No party hereto nor any of its
affiliates shall take any action that, or fail to take any action the failure of
which, would cause any of the representations in the Tax Certificates to be
untrue. The parties shall take the position for all purposes that the Merger
constitutes a reorganization within the meaning of Section 368(a) of the Code.
(d) NYSE Listing or Nasdaq Quotation. The parties hereto shall use
commercially reasonable efforts to cause the shares of Hughes Class A Common
Stock to be issued pursuant to the Merger and the shares of Hughes Class C
Common Stock to be approved for listing on the NYSE or to be approved for
quotation on Nasdaq, subject to official notice of issuance, prior to the
Closing Date; provided that the exchange on which application is first made for
listing shall be determined in EchoStar's sole discretion.
(e) Access. Except as required by any confidentiality agreement to
which GM, Hughes or any of their Subsidiaries, on the one hand, or EchoStar or
any of its Subsidiaries, on the other hand, is a party or pursuant to Applicable
Law, from and after the date of this Agreement until the Merger Effective Time
(or the termination of this Agreement), the parties hereto shall (i) permit
representatives of the other parties to have reasonable access to the
properties, books, records, contracts, tax records and documents of the parties
and their respective Subsidiaries, to the extent related to the businesses of
Hughes and its Subsidiaries and EchoStar and its Subsidiaries, as the case may
be, at all reasonable times, and in a manner so as not to interfere with the
normal operation of such party's and its Subsidiaries' premises and (ii) furnish
promptly such information concerning such party's and its Subsidiaries'
businesses as the other party or its representatives may reasonably request.
Such access shall be limited to the extent that antitrust counsel to either
party determines that such limitation is advisable under applicable Antitrust
Law. Information obtained by each party pursuant to this Section 5.1(e) shall be
subject to the provisions of the confidentiality agreement among GM, Hughes and
EchoStar, dated October 20, 2001, as amended (the "Confidentiality Agreement"),
which agreement remains in full force and effect.
34
(f) Expenses. Except as otherwise provided in the EchoStar
Transaction Agreements or the Hughes Transaction Agreements, whether or not the
Merger is consummated, each party hereto shall pay its own costs and expenses
associated with the EchoStar Transaction Agreements and the Hughes Transaction
Agreements and the transactions contemplated thereby.
(g) No Solicitation.
(i) Each of the parties agrees that, during the term of this
Agreement, it shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or knowingly permit any of its or its Subsidiaries'
officers, directors, employees, investment bankers, attorneys, accountants,
agents or other advisors or representatives (collectively,
"Representatives"), directly or indirectly, to:
(A) solicit, initiate or knowingly facilitate or encourage
the making by any Person (other than the other party hereto) of any
proposal, offer or inquiry that constitutes, or could be expected to lead
to, a proposal for any merger, consolidation or other business combination
involving EchoStar, on the one hand, or Hughes, on the other hand, or any
acquisition of any capital stock or any material portion of the assets
(except for (1) acquisitions of assets in the ordinary course of business
consistent with past practice and permitted by Section 5.3(a)(v) of this
Agreement and (2) consummation of the transactions contemplated by the
EchoStar Transaction Agreements, the GM Transaction Agreements and the
Hughes Transaction Agreements) of EchoStar or any of its Subsidiaries, on
the one hand, or Hughes or any of its Subsidiaries, on the other hand, or
any GM Class H Common Stock or any combination of the foregoing (in each
case, a "Competing Transaction");
(B) participate in any discussions or negotiations
regarding, or furnish or disclose to any Person any information with
respect to or in furtherance of, or take any other action knowingly to
facilitate any inquiries with respect to any Competing Transaction;
(C) grant any waiver or release under any standstill or
similar agreement with respect to EchoStar or any of its Subsidiaries, on
the one hand, or Hughes or any of its Subsidiaries, on the other hand; or
(D) execute or enter into any agreement, understanding or
arrangement (other than a confidentiality agreement) with respect to any
Competing Transaction or approve or recommend or propose to approve or
recommend, any Competing Transaction or any agreement, understanding or
arrangement relating to any Competing Transaction (or resolve or authorize
or propose to agree to any of the foregoing actions);
provided, however, that at any time prior to such time, if any, that the
Requisite Stockholder Approval (as defined in the GM/Hughes Separation
Agreement) shall have been received with respect to the GM Transactions, Hughes
may take any action described in the foregoing clauses (B) or (C) (in the case
of (C), only to the extent necessary to permit the discussions or negotiations
contemplated by clause (B)) or (D) in respect of any Person, but only if and to
the extent GM is so permitted under Section 5.1(j) of the Implementation
Agreement.
35
(ii) Each party agrees that it will, and will cause its
Representatives to, cease and cause to be terminated immediately all
existing discussions or negotiations with any Persons conducted on or
before the date hereof with respect to any Competing Transaction. EchoStar
acknowledges that prior to the date of this Agreement, GM and Hughes have
solicited or caused to be solicited by their respective financial advisors
indications of interest and proposals for a Competing Transaction.
(h) Additional Agreements. Each of the parties hereto will comply in
all material respects with Applicable Law in connection with its execution,
delivery and performance of the Hughes Transaction Agreements and the EchoStar
Transaction Agreements and the transactions contemplated thereby.
(i) Blue Sky. Each of the parties hereto will use commercially
reasonable efforts to obtain prior to the Merger Effective Time all necessary
United States or foreign blue sky or similar securities law permits and
approvals required to permit the distribution of the shares of Hughes Class A
Common Stock and Hughes Class B Common Stock to be issued in accordance with the
provisions of this Agreement.
(j) Stock Options. Other than grants of stock options (i) to
individuals who are hired or are promoted on or after the date hereof, (ii)
after prior notice by EchoStar or Hughes to the chief executive officer of the
other party describing special circumstances, to employees affected by such
circumstances, and (iii) to acquire not more than 3,000,000 shares of PanAmSat's
common stock, in each case which are made in the ordinary course of business
consistent with past practice and which will not accelerate in vesting or
exercisability as a result of or in connection with the transactions
contemplated by this Agreement as a result of a termination of employment of
such person), none of the parties hereto shall grant or cause to be granted any
options to acquire any GM Class H Common Stock or any capital stock of EchoStar,
Hughes, PanAmSat or their respective Subsidiaries to any Person from and after
the date of this Agreement until the Merger Effective Time.
(k) The Merger Financing. As soon as reasonably practicable following
the date of this Agreement, EchoStar and Hughes shall use commercially
reasonable efforts to (i) finalize and enter into a Merger Financing Agreement
which reflects, in all material respects, the terms and conditions in the Merger
Commitment Letter, and (ii) at or immediately prior to the Spin-Off Effective
Time (as defined in the Implementation Agreement), consummate the Merger
Financing in accordance with the Merger Financing Agreement and/or, subject to
the limitation set forth in Section 5.2(a)(i), with the proceeds from one or
more private placements or public offerings of debt or equity securities of
EchoStar. Subject to the remainder of this Section 5.1(k), EchoStar shall
control the terms and negotiation of the Merger Financing Agreement.
Notwithstanding anything to the contrary contained herein, the parties agree
that all material terms of the Merger Financing Agreement shall be reasonably
acceptable to Hughes (and Hughes agrees not to object to the commercial pricing
terms of such Merger Financing Agreement or to any other terms that are
consistent with the terms of the Merger Commitment Letter). EchoStar shall (x)
keep Hughes apprised of all material developments in respect of the Merger
Financing, and (y) promptly provide Hughes with copies of all drafts of
documents or other material correspondence related to the Merger Financing and,
with respect to such draft documents, provide Hughes and its advisors with a
reasonable opportunity to comment on all drafts of such documents. Each of
Hughes and EchoStar shall use commercially reasonable efforts to assist in
obtaining the Merger Financing, including by (1) making available to the other
party and the lenders in the Merger Financing and their representatives,
personnel, documents and information
36
of such party and its Subsidiaries, as may be reasonably requested by the other
party to facilitate the negotiation and consummation of the Merger Financing
(including in connection with the due diligence investigation by such lenders
and the preparation of business plans and the development of covenants) and (2)
cooperating with the other party in the negotiation of the Merger Financing
Agreement and, in connection with the closing of the Merger or the GM
Transactions, as the case may be, entering into security, guarantee and similar
agreements, effective prior to or upon the Spin-Off Effective Time as may be
required by the Merger Financing Agreement or reasonably requested by the other
party for purposes of consummating the Merger Financing in accordance with the
Merger Financing Agreement; provided, that nothing in this Section 5.1(k) shall
require Hughes to modify its business plans or otherwise alter in any material
respect the manner in which it conducts its business.
(l) DirecTV Name. From and after the Merger Effective Time, the
DirecTV name shall be the brand adopted by the Surviving Corporation and those
of its Subsidiaries which are in the direct-to-home satellite television
business.
(m) Non-Disparagement. From and after the date of this Agreement, each
party hereto agrees that it and its Subsidiaries and affiliates shall not
disparage or in any way portray the other party or the other party's
Subsidiaries or affiliates or any of such Person's products, services or trade
names, either directly or indirectly, in the form of oral statements, written
statements, electronic communications or otherwise, in a negative light. In
furtherance thereof, neither party nor any of such party's Subsidiaries or
affiliates shall make, direct others to make, suggest to others to make or
otherwise directly or indirectly cause or assist others to make disparaging,
false or misleading statements (whether in the form of oral statements, written
statements, electronic or other communications), or engage in misleading conduct
regarding the other party or the other party's Subsidiaries or affiliates or any
of such Person's products, services or trade names. Notwithstanding the
foregoing, nothing in this Section 5.1(m) shall limit any party's ability to
continue to compete with the other party.
(n) No Announcement Regarding Surviving Platform. From and after the
date of this Agreement, without the prior written consent of the other party,
each party hereto agrees that it and its Subsidiaries and affiliates shall not
make, nor shall any of them direct others to make or suggest to others to make,
directly or indirectly, any public statements regarding which party's direct-to-
home platform will be utilized following consummation of the Merger. In any
case, the parties agree that the surviving platform will be MPEG2/DirecTV
compatible .
(o) Affiliates. Prior to the Merger Effective Time, each party shall
deliver to the other party a list (the "Affiliate List") identifying all Persons
who are, in the good faith judgment of such party, "affiliates" of such party
for purposes of Rule 145 of the Securities Act. Each party shall use
commercially reasonable efforts to deliver or cause to be delivered to the other
party, prior to the Merger Effective Time, an agreement (in the form of Exhibit
G attached hereto) executed by each Person listed on the Affiliate List and
executed by each Person who becomes an "affiliate" of such party for purposes of
Rule 145 of the Securities Act after delivery of the Affiliate List.
(p) Employment Agreement. EchoStar and the Chief Executive Officer of
EchoStar shall enter into an Employment Agreement, to become effective at the
Merger Effective Time, on terms to be agreed upon by such Chief Executive
Officer and the Chief Executive Officer of Hughes, provided that the terms shall
be ratified by the independent directors of the Board of Directors of the
Surviving Corporation.
37
Section 5.2. Covenants of EchoStar.
(a) Conduct of EchoStar's Operations. During the period from the date
of this Agreement to the Merger Effective Time, except as expressly contemplated
by the EchoStar Transaction Agreements and the transactions expressly
contemplated thereby, EchoStar shall, and shall cause its Subsidiaries to,
conduct their respective businesses and operations in the ordinary course,
consistent with past practices, and use commercially reasonable efforts to
maintain and preserve their business organizations and their material rights and
franchises and to retain the services of the officers and key employees and
maintain relationships with customers, suppliers, lessees, licensees and other
third parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect, including by continuing to compete with Hughes
and its Subsidiaries. Without limiting the generality of the foregoing, during
the period from the date of this Agreement to the Merger Effective Time, except
as expressly contemplated by the EchoStar Transaction Agreements, EchoStar shall
not and shall cause its Subsidiaries not to, except as otherwise set forth in
Section 5.2(a) of the EchoStar Disclosure Schedule, without the prior written
consent of Hughes:
(i) do or effect any of the following actions with respect to
EchoStar's or any of its Subsidiaries securities: (A) adjust, split,
combine, recapitalize or reclassify its capital stock, (B) make, declare or
pay any dividend or distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares
of its capital stock, (C) grant any Person any right or option to acquire
any shares of its capital stock other than grants permitted pursuant to
Section 5.1(j) hereof, (D) issue, deliver or sell or agree to issue,
deliver or sell any additional shares of its capital stock or any
securities, instruments or obligations convertible into or exchangeable or
exercisable for any shares of its capital stock or such securities (except
pursuant to the exercise of outstanding options and options issued after
the date hereof in accordance with the terms of Section 5.1(j) of this
Agreement) or (E) enter into any agreement, understanding or arrangement
with respect to the sale or voting of its capital stock; provided, however,
EchoStar and its Subsidiaries shall be permitted to issue debt securities,
equity securities or convertible/exchangeable securities up to an aggregate
amount of net proceeds to EchoStar of One Billion Five Hundred Million
($1,500,000,000.00) or, if the Internal Revenue Service issues to GM an AOL
Section 355(e) Ruling (as defined in the Implementation Agreement), Two
Billion Five Hundred Million ($2,500,000,000.00) (collectively, "Permitted
Equity Issuances"); provided, further, however, that the entire net
proceeds of any and all Permitted Equity Issuances shall be held directly
by EchoStar (rather than any Subsidiaries of EchoStar) at the Merger
Effective Time;
(ii) take any action to intentionally and improperly interfere
with Hughes' or its Subsidiaries' existing contractual or economic
relationships or with their suppliers, equipment manufacturers, dealers and
retailers by encouraging or inducing such Persons not to perform their
existing contracts with or otherwise conduct business with Hughes or its
Subsidiaries;
(iii) sell, transfer, lease, pledge, mortgage, encumber or
otherwise dispose of any amount of EchoStar's or any of its Subsidiaries
property or assets that is material to EchoStar and its Subsidiaries, taken
as a whole, other than in the ordinary course of business, consistent with
past practice;
38
(iv) make or propose any changes in its certificate of
incorporation or by-laws (or equivalent organizational documents);
(v) merge or consolidate with any other Person, or acquire
assets or capital stock of any other Person which are material to EchoStar
and its Subsidiaries taken as a whole, or enter into any confidentiality
agreement with any Person with respect to any such transaction;
(vi) create any Subsidiaries which are material to EchoStar
and its Subsidiaries taken as a whole and which are not, directly or
indirectly, wholly-owned by EchoStar;
(vii) except for the adoption of a Plan providing for grants of
options to acquire EchoStar Class B Common Stock and the entering into an
employment agreement with the EchoStar Controlling Stockholder pursuant to
Section 5.1(p) hereof, enter into or modify any EchoStar Plan or other
employment, severance, change in control, termination or similar agreements
or arrangements with, or grant any bonuses, salary increases, severance or
termination pay to, or otherwise increase the compensation or benefits of,
any officer, director, consultant or employee of EchoStar or its
Subsidiaries, other than entering into or extending any employment
agreement, payment of severance or termination benefits or increases in
salary, bonus, compensation or benefits granted in the ordinary course of
business consistent with past practice, except as may be required by
Applicable Law or a binding written contract in effect on the date of this
Agreement;
(viii) except as may be required by Applicable Law or by
accounting principles, change any method or principle of accounting in a
material manner that is inconsistent with past practice;
(ix) take any action that would reasonably be expected to
result in the representations and warranties set forth in Article 3
becoming false or inaccurate such that the condition set forth in Section
6.2(a) would fail to be satisfied;
(x) enter into or carry out any other transaction which is
material to EchoStar and its Subsidiaries, taken as a whole, other than in
the ordinary and usual course of business;
(xi) take any action which could reasonably be expected to
adversely affect or delay the ability of any parties hereto to obtain any
approval of any Governmental Authority required to consummate the
transactions contemplated hereby;
(xii) except as specifically permitted in the Implementation
Agreement, amend the EchoStar Transaction Agreements to which Hughes is not
a party; or
(xiii) agree in writing or otherwise to take any of the
foregoing actions.
(b) Notification of Certain Matters. EchoStar shall give prompt
notice to Hughes of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of
39
which would cause any representation or warranty of EchoStar contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Merger Effective Time, (ii) any material failure of EchoStar to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder and (iii) any EchoStar Material Adverse Effect; provided, however,
that the delivery of any notice pursuant to this Section 5.2(b) shall not limit
or otherwise affect the remedies available hereunder to Hughes.
(c) Preparation and Filing of the EchoStar Information Statement.
EchoStar shall comply with Section 14(c) of the Exchange Act with respect to the
EchoStar Information Statement (as defined in the Implementation Agreement) in
accordance with the provisions of the Implementation Agreement.
(d) Permit Matters. During the period from the date of this
Agreement to the Merger Effective Time, EchoStar shall and shall cause its
Subsidiaries to (i) take all actions necessary to maintain and preserve the
EchoStar Permits and (ii) refrain from taking any action that would give the FCC
or any other Governmental Authority with jurisdiction reasonable grounds to
institute proceedings for the suspension, revocation or adverse modification of
any EchoStar Permits, except where the failure to take such action, or the
taking of such action, as the case may be, could not reasonably be expected to
have a EchoStar Material Adverse Effect.
(e) EchoStar Notes. EchoStar shall, on or prior to the date that
is 210 days after the date hereof either (i) use commercially reasonable efforts
to cause the indentures (the "EchoStar Indentures") relating to the debt
instruments of EchoStar and its Subsidiaries listed on Section 5.2(e) of the
EchoStar Disclosure Schedule (the "EchoStar Notes") to be amended to provide
that the consummation of the Merger and the other transactions contemplated by
the EchoStar Transaction Agreements will not constitute a "Change in Control"
under such EchoStar Indentures, or (ii) obtain additional committed financing,
on terms and conditions reasonably acceptable to Hughes, sufficient in amount to
refinance all of the indebtedness outstanding under those EchoStar Indentures to
which an amendment to the "Change in Control" provision was not obtained.
Notwithstanding the foregoing, in lieu of soliciting such consent or obtaining
such additional financing, EchoStar may, not later than 210 days after the date
hereof, present to Hughes a plan (a "Plan"), taking into account the prevailing
market for the EchoStar Notes, designed so that at and after the Merger
Effective Time, the Surviving Corporation and its Subsidiaries would not be in
breach of their obligations under the EchoStar Indentures and would be able to
comply with their obligations under the terms of each EchoStar Indenture. Hughes
agrees to consider the Plan in good faith and notify EchoStar within 15 Business
Days of receiving the Plan as to whether EchoStar may implement the Plan. If
Hughes agrees that EchoStar may implement the Plan, EchoStar shall as soon as
practicable thereafter implement the Plan. If Hughes does not agree that
EchoStar may implement the Plan, EchoStar shall promptly, and in any event
within 20 Business Days thereafter, take one of the actions described in the
first sentence of this Section 5.2(e). If EchoStar determines to solicit
consents as described in subsection clause (i) of this Section 5.2(e), such
consents shall be solicited on reasonable and customary terms, including the
offering by EchoStar of a reasonable and customary consent fee or interest
payment modification in order to induce the requisite number of holders of
EchoStar Notes to consent to such amendments so as to not require EchoStar to
effect a "Change in Control" offer to the holders of such EchoStar Notes.
40
Section 5.3. Covenants of Hughes.
(a) Conduct of Hughes' Operations. During the period from the
date of this Agreement to the Merger Effective Time, except (i) with respect to
the consummation of the GM Transactions (including the distribution, if any, by
Hughes of a $4,200,000,000 note to GM or an affiliate thereof), (ii) as
expressly contemplated by the Hughes Transaction Agreements and the transactions
expressly contemplated thereby, (iii) for any redemption of any shares of Series
A Preferred Stock in connection with the conversion, redemption or cancellation
of the GM Series H Preference Stock in accordance with the terms of the
Certificate of Designations relating to the GM Series H Preference Stock, (iv)
for any roll up transactions with respect to Hughes' DBS business in Latin
America substantially in accordance with Section 5.3(a) of the Hughes Disclosure
Schedule, and (v) for the sale or refinancing of the PanAmSat Note (as defined
in the GM/Hughes Separation Agreement), Hughes shall and shall cause its
Subsidiaries (other than PanAmSat and HSSL and their Subsidiaries) to, and shall
use commercially reasonable efforts to cause PanAmSat and HSSL to, conduct their
businesses and operations in the ordinary course, consistent with past practice,
and shall use their commercially reasonable efforts to maintain and preserve
their business organization and its material rights and franchises and to retain
the services of its officers and key employees and maintain relationships with
customers, suppliers, lessees, licensees and other third parties to the end that
their goodwill and ongoing business shall not be impaired in any material
respect, including by continuing to compete with EchoStar. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Merger Effective Time, except (i) with respect to the consummation of the
GM Transactions, (ii) as expressly contemplated by the Hughes Transaction
Agreements and the transactions contemplated thereby, (iii) the sale or
refinancing of the PanAmSat Note, (iv) for any roll up transactions with respect
to Hughes' DBS business in Latin America substantially in accordance with
Section 5.3(a) of the Hughes Disclosure Schedule, or (v) as otherwise set forth
in Section 5.3(a) of the Hughes Disclosure Schedule, Hughes shall not and shall
cause its Subsidiaries (other than PanAmSat and HSSL and their Subsidiaries) not
to, and shall use commercially reasonable efforts to cause PanAmSat and HSSL and
their Subsidiaries not to, without the prior written consent of EchoStar:
(i) do or effect any of the following actions with
respect to Hughes' or any of its Subsidiaries' securities: (A) adjust,
split, combine, recapitalize or reclassify its capital stock, (B) make,
declare or pay any dividend or distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or
any securities or obligations convertible into or exchangeable for any
shares of its capital stock, (C) grant any Person any right or option to
acquire any shares of its capital stock other than grants in accordance
with the provisions of Section 5.1(j) hereof, (D) except with respect to
the issuance of Hughes Preference Stock in connection with the Greater
Spinco Preference Share Exchange (as defined in the Implementation
Agreement), issue, deliver or sell or agree to issue, deliver or sell any
additional shares of its capital stock or any securities, instruments or
obligations convertible into or exchangeable or exercisable for any shares
of its capital stock or such securities (except pursuant to the exercise of
outstanding options and options issued after the date hereof in accordance
with the terms of Section 5.1(j) of this Agreement) or (E) enter into any
agreement, understanding or arrangement with respect to the sale or voting
of its capital stock;
(ii) take action to intentionally and improperly
interfere with EchoStar's or its Subsidiaries' existing contractual
economic relationships or with their
41
suppliers, equipment manufacturers, dealers and retailers by encouraging or
inducing such Persons not to perform their existing contracts with or
otherwise conduct business with EchoStar or its Subsidiaries;
(iii) sell, transfer, lease, pledge, mortgage, encumber or
otherwise dispose of any amount of Hughes or any of its Subsidiaries'
property or assets that is material to Hughes and its Subsidiaries, taken
as a whole, other than in the ordinary course of business, consistent with
past practice;
(iv) make or propose any changes in its certificate of
incorporation or by-laws (or equivalent organizational documents);
(v) merge or consolidate with any other Person or
acquire assets or capital stock of any other Person which are material to
Hughes and its Subsidiaries, taken as a whole or enter into any
confidentiality agreement with any Person with respect to any such
transaction;
(vi) create any Subsidiaries which are material to Hughes
and its Subsidiaries taken as a whole and which are not, directly or
indirectly, wholly owned by Hughes;
(vii) enter into or modify any Hughes Plan or other
employment, severance, change in control, termination or similar agreements
or arrangements with, or grant any bonuses, salary increases, severance or
termination pay to, or otherwise increase the compensation or benefits of,
any officer, director, consultant or employee of Hughes or its
Subsidiaries, other than pursuant to the Employee Matters Agreement,
payment of severance or termination benefits or increases in salary,
compensation or benefits granted in the ordinary course of business
consistent with past practice or as provided for in the Employee Matters
Agreement contemplated by the GM/Hughes Separation Agreement, except as may
be required by Applicable Law or a binding written contract in effect on
the date of this Agreement;
(viii) except as may be required by Applicable Law or by
accounting principles, change any method or principle of accounting in a
material manner that is inconsistent with past practice;
(ix) take any action that would reasonably be expected to
result in the representations and warranties set forth in Article 4
becoming false or inaccurate such that the condition set forth in Section
6.3(a) would fail to be satisfied;
(x) enter into or carry out any other transaction which
is material to Hughes and its Subsidiaries, taken as a whole, other than in
the ordinary and usual course of business;
(xi) take any action which could reasonably be expected
to adversely affect or delay the ability of any parties hereto to obtain
any approval of any Governmental Authority required to consummate the
transactions contemplated hereby;
42
(xii) except as specifically permitted in the
Implementation Agreement, amend the Hughes Transaction Agreements to which
EchoStar is not a party; or
(xiii) agree in writing or otherwise to take any of the
foregoing actions.
For purposes of this Agreement, the obligation of Hughes to use commercially
reasonable efforts to cause PanAmSat or HSSL to take or not take any action
shall require only that Hughes (i) vote the shares it owns in PanAmSat and HSSL
on any matter submitted by PanAmSat and HSSL, as applicable, for approval of its
respective stockholders, (ii) request that PanAmSat and HSSL act in a manner
consistent with the provisions of this Agreement and (iii) request that any
employees of Hughes who serve as members of the Board of Directors of PanAmSat
or HSSL vote on matters submitted to the Board of Directors of PanAmSat or HSSL,
as applicable, to the extent that so voting would be considered by them to be in
the best interests of PanAmSat or HSSL, as applicable, and its respective
stockholders and otherwise consistent with their fiduciary duties as directors.
(b) Notification of Certain Matters. Hughes shall give prompt
notice to EchoStar of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
of Hughes contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Merger Effective Time, (ii) any material failure of
Hughes to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by them hereunder and (iii) any Hughes Material
Adverse Effect; provided, however, that the delivery of any notice pursuant to
this Section 5.3(b) shall not limit or otherwise affect the remedies available
hereunder to EchoStar.
(c) Hughes Boards, Committees and Officers. Hughes shall take
all appropriate action such that, at the Merger Effective Time, the Board of
Directors, committees of the Board of Directors, composition of such committees
(including chairpersons thereof) and certain officers of Hughes (as indicated on
Exhibit H) shall be as set forth on Exhibit H until the earlier of the
resignation or removal of any individual listed on or designated in accordance
with Exhibit H or until their respective successors are duly appointed or
elected and qualified, as the case may be. On or prior to the Merger Effective
Time, the Management Transition Committee referred to in Section 1.6 hereof may
designate, with the unanimous approval of the members of the Management
Transition Committee, additional officers who shall be added to Exhibit H,
provided, that appointment of such additional officers must be approved by the
Board of Directors of the Surviving Corporation after the Merger Effective Time.
If any officer listed on or appointed in accordance with Exhibit H ceases to be
a full-time employee of Hughes or EchoStar prior to the Merger Effective Time,
or if any director, committee member or committee chairman listed or designated
on Exhibit H is not available to serve as such at the Merger Effective Time, the
parties hereto shall, except as otherwise provided in Exhibit H, choose another
individual to serve in such individual's stead. On or prior to the Merger
Effective Time, Hughes, to the extent necessary, shall deliver to EchoStar
evidence of the resignations of the directors of Hughes not so designated to be
continuing to serve as directors of Hughes after the Merger Effective Time, such
resignations to be effective as of the Merger Effective Time.
(d) Permit Matters. During the period from the date of this
Agreement to the Merger Effective Time, Hughes shall and shall cause its
Subsidiaries to (i) take all actions necessary to maintain and preserve the
Hughes Permits and (ii) refrain from taking any action that
43
would give the FCC or any other Governmental Authority with jurisdiction
reasonable grounds to institute proceedings for the suspension, revocation or
adverse modification of any Hughes Permits, except where the failure to take
such action, or the taking of such action, as the case may be, could not
reasonably be expected to have a Hughes Material Adverse Effect.
(e) Certain Matters with respect to Indian Entities. Notwithstanding
anything to the contrary contained herein or in any other Hughes Transaction
Agreement, nothing in any of such agreements shall permit EchoStar or any other
Person, at any time prior to the Merger Effective Time, to (A) appoint or
influence the appointment of any officers or directors of HSSL or HTIL, (B)
control, direct or influence the management or policy decisions of HSSL or HTIL,
or (C) engage in any other activity or exercise any other rights that would
result in an assumption or change of control of HSSL or HTIL. For purposes of
this Section 5.3(e) "control" shall have the meaning specified in the Securities
and Exchange Board of India (Substantial Acquisition of Shares & Takeovers)
Regulations 1997.
(f) Indemnification; Directors' and Officers' Insurance.
(i) From and after the Merger Effective Time, the Surviving
Corporation agrees that it will indemnify and hold harmless each present
and former director and officer of EchoStar and each of its Subsidiaries,
and each person appointed by EchoStar to serve as director on another
corporation's board of directors (when acting in such capacity), determined
as of the Merger Effective Time (the "EchoStar Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or prior
to the Merger Effective Time, whether asserted or claimed prior to, at or
after the Merger Effective Time, to the fullest extent that EchoStar would
have been permitted under Nevada law and its articles of incorporation or
by-laws in effect on the date hereof to indemnify such person (and Merger
shall also advance expenses as incurred to the fullest extent permitted
under applicable law provided the person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification); and
provided, further, that any determination required to be made with respect
to whether an officer's or director's conduct complies with the standards
set forth under Nevada law and EchoStar's articles of incorporation and by-
laws shall be made by independent counsel selected by the Surviving
Corporation.
(ii) Any EchoStar Indemnified Party wishing to claim
indemnification under paragraph (i) of this Section 5.3(f), upon learning
of any such claim, action, suit, proceeding or investigation, shall
promptly notify the Surviving Corporation thereof, but the failure to so
notify shall not relieve the Surviving Corporation of any liability it may
have to such EchoStar Indemnified Party if such failure does not materially
prejudice the indemnifying party. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Merger Effective Time), (i) the Surviving Corporation shall have the right
to assume the defense thereof and the Surviving Corporation shall not be
liable to such EchoStar Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such EchoStar
Indemnified Parties in connection with the defense thereof, except that if
the Surviving Corporation elects not to assume such defense or counsel for
44
the EchoStar Indemnified Parties advises that there are issues which raise
conflicts of interest between the Surviving Corporation and the EchoStar
Indemnified Parties, the EchoStar Indemnified Parties may retain one
counsel satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the EchoStar Indemnified
Parties promptly as statements therefor are received, (ii) the EchoStar
Indemnified Parties will cooperate in the defense of any such matter and
(iii) the Surviving Corporation shall not be liable for any settlement
effected without its prior written consent; and provided, further, that the
Surviving Corporation shall not have any obligation hereunder to any
EchoStar Indemnified Party if and when a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final,
that the indemnification of such EchoStar Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. If such indemnity is
not available with respect to any EchoStar Indemnified Party, then the
Surviving Corporation and the EchoStar Indemnified Party shall contribute
to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits.
(iii) For a period of six years after the Merger Effective Time,
the Surviving Corporation shall provide officers' and directors' liability
insurance ("D&O Insurance") covering the EchoStar Indemnified Parties for
all applicable incidents, acts or omissions occurring prior to the Merger
Effective Time, regardless of when, and occurring after the Merger
Effective Time until the six year anniversary of the Merger Effective Time.
Such insurance coverage shall be no less favorable to the EchoStar
Indemnified Parties in coverage or amount than the greater of (A) the
insurance coverage in effect for the Surviving Corporation's officers and
directors at the Spin-Off Effective time and (B) the insurance coverage in
effect for EchoStar's officers and directors as of the date hereof. The
term "coverage" as used in the Section 5.3(f) shall be deemed to include
all excess coverage.
(iv) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) shall transfer all or substantially
all of its properties and assets to any individual, corporation or other
entity, then, and in each such case, proper provisions shall be made so
that the successors and assigns of the Surviving Corporation shall assume
all of the obligations set forth in this Section.
(v) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the EchoStar Indemnified
Parties, their heirs and their representatives.
(g) Supplemental Indentures and Registration Rights Regarding Certain
EchoStar Notes. Hughes shall execute and deliver at the Merger Effective Time
supplemental indentures in order to assume the obligations of EchoStar under the
indentures relating to the debt instruments of EchoStar and its Subsidiaries
listed on Schedule 5.3(g) of the EchoStar Disclosure Schedule, in each case in
accordance with the applicable EchoStar indenture. In addition, the Surviving
Corporation shall assume the obligations of EchoStar and its Subsidiaries under
those registration rights agreements set forth in Section 5.3(g) of the EchoStar
Disclosure Schedule.
45
ARTICLE 6
CONDITIONS
Section 6.1. Mutual Conditions. The obligations of the parties
hereto to consummate the Merger shall be subject to fulfillment of each and all
of the following conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree issued by a court of competent jurisdiction
or Governmental Authority of competent jurisdiction which prevents the
consummation of the Merger shall have been issued and remain in effect, and no
statute, rule or regulation shall have been enacted by any Governmental
Authority which prevents the consummation of the Merger.
(b) All waiting periods applicable to the consummation of the Merger
under the HSR Act and any similar law of foreign jurisdictions shall have
expired or been terminated and all approvals of, or filings with, any
Governmental Authority (other than the FCC) required to consummate the
transactions contemplated hereby shall have been obtained or made, other than
approvals and filings, the failure to obtain or make which, in the aggregate,
are not reasonably likely to have a Combined Companies Material Adverse Effect.
For the purposes of this Agreement, a "Combined Companies Material Adverse
Effect" means an event, change, circumstance or effect that has had or is
reasonably likely to have a material adverse effect on the business, operations,
assets, liabilities or financial condition of Hughes, EchoStar and their
respective Subsidiaries, taken as a whole, assuming consummation of the Merger,
other than events, changes, circumstances or effects that arise out of or result
from (w) economic factors affecting the economy or financial markets as a whole
or generally affecting the direct broadcast satellite industry, (x) the Hughes
Recapitalization, the Spin-Off and the GM Debt/Equity Exchanges, (y) the
announcement of the execution of the this Agreement and the other agreements
contemplated hereby (including any cancellations of or delays in customer
orders, any reduction in sales, any disruption in supplier, distributor, partner
or similar relationships or any loss of employees) and (z) any and all actions
taken by Hughes or EchoStar pursuant to Section 5.1(b) hereof and the effects
thereof.
(c) All material orders and approvals of the FCC required in
connection with the consummation of the transactions contemplated hereby shall
have been obtained; provided, however, that the provisions of this Section
6.1(c) shall not be available to any party whose failure to fulfill its
obligations pursuant to Section 5.1(b) has been the cause of, or shall have
resulted in, the failure to obtain such consent or approval or action.
(d) The GM Transactions (including the GM Charter Amendment, the
Hughes Recapitalization and the Spin-Off) shall have been consummated in
accordance with the terms contemplated by the Hughes Transaction Agreements and
the GM Transaction Agreements; provided, however, that the consummation of any
Debt/Equity Exchange shall not be a condition to Closing.
(e) All of the conditions to the consummation of the Merger Financing
shall have been satisfied and the parties shall be prepared to consummate the
Merger Financing immediately following the Merger Effective Time.
(f) The shares of Hughes Class A Common Stock to be issued pursuant
to the Merger and the shares of Hughes Class C Common Stock outstanding
immediately prior to
46
the Merger Effective Time shall have been approved for listing on the NYSE or
approved for quotation on Nasdaq, subject to official notice of issuance.
(g) The GM Registration Rights Agreement (as defined in the
Implementation Agreement) and the EchoStar Controlling Stockholder Registration
Rights Agreement (as defined in the Implementation Agreement) have been entered
into and shall be in full force and effect; provided, however, that the
provisions of this Section 6.1(g) shall not be available to any party if such
party's failure to enter into a contract has been the cause of, or shall have
resulted in, the failure to enter into these agreements;
(h) The Surviving Corporation would be permitted to issue,
immediately following the Merger Effective Time, capital stock of the Surviving
Corporation having an aggregate fair market value that is at least equal to the
Minimum Amount (as defined below), without such issuance resulting in a breach
of Section 6.2(a) or Section 6.2(c) of the Implementation Agreement (without
regard to whether GM shall have determined that such issuance would not
jeopardize the Tax-Free Status of the Spin-Off (as defined in the Implementation
Agreement) pursuant thereto), it being understood that the determination of the
amount of capital stock of the Surviving Corporation that may be so issued:
(i) shall take into account (A) all capital stock of the Surviving
Corporation that is outstanding after giving effect to the consummation of
the Hughes Recapitalization and the Merger, and (B) all options or rights
to acquire, and securities that are convertible into or exchangeable for,
capital stock of the Surviving Corporation that are outstanding after
giving effect to the consummation of the Hughes Recapitalization and the
Merger (whether or not such options or rights or conversion or exchange
features are then exercisable or are contingent on the occurrence or non-
occurrence of a future event), to the extent that the acquisition of
capital stock thereunder would be presumed under Section 6.2(g) of the
Implementation Agreement to be part of a Section 355(e) Plan (as defined in
the Implementation Agreement) or otherwise reasonably would be expected to
be treated as part of a Section 355(e) Plan that includes the Spin-Off;
(ii) shall give effect to the presumptions set forth in Section 6.2(g)
of the Implementation Agreement and, in addition, shall be based on (A) the
assumption that the Surviving Corporation shall issue the Assumed PanAmSat
Minority Share Consideration (as defined below) and (B) the conclusive
presumption that the acquisition of the Assumed PanAmSat Minority Share
Consideration would be treated as part of a Section 355(e) Plan that
includes the Spin-Off; and
(iii) shall be based on the assumptions that, immediately after the
Merger Effective Time: (A) Hughes Class C Common Stock has a fair market
value per share equal to the Recapitalization Price; (B) Hughes Class A
Common Stock has a fair market value per share equal to the
Recapitalization Price, unless the Recapitalization Price is less than the
product of (1) the Average Price (as defined below) of a share of EchoStar
Class A Common Stock and (2) the Class A Exchange Ratio, in which case the
Hughes Class A Common Stock shall have a fair market value per share equal
to such product; (C) Hughes Class B Common Stock has a fair market value
per share determined on the basis of the advice of an investment banking
firm selected by GM and reasonably satisfactory to EchoStar; and (D) Hughes
Preference Stock has a fair market value equal to the product of (1) the
number of shares of Hughes Common Stock into
47
which such Hughes Preference Stock would convert pursuant to the mandatory
conversion provision thereof if the Current Market Price (as defined in the
Certificate of Designation of the GM Series H Preference Stock) were equal
to the Recapitalization Price and (2) the Recapitalization Price.
For purposes of this Section 6.1(h):
(v) "Assumed PanAmSat Minority Share Consideration" shall mean
(1) that number of shares of Hughes Class C Common Stock that the
parties hereto estimate reasonably could be expected to be issued in
consideration for the securities of PanAmSat that are issued and
outstanding as of the Spin-Off Effective Time and not owned by the
Surviving Corporation or an affiliate thereof, or (2) if the parties
cannot so agree to such an estimate, a number of shares of Hughes
Class C Common Stock having an aggregate fair market value equal in
amount to 105% of the aggregate fair market value of the PanAmSat
common stock, and other securities of PanAmSat (excluding employee
stock options) that reasonably could be expected to be acquired for
capital stock of the Surviving Corporation, in each case that are
issued and outstanding as of the Spin-Off Effective Time and not owned
by the Surviving Corporation or an affiliate thereof, which (A) in the
case of the outstanding shares of common stock of PanAmSat shall be
equal to the product of the Average Price of a share of such PanAmSat
common stock and the number of shares of PanAmSat common stock issued
and outstanding as of the date of the Spin-Off Effective Time and not
owned by the Surviving Corporation or an affiliate thereof and (B) in
the case of any other securities of PanAmSat shall be determined on
the basis of the advice of an investment banking firm selected by GM
and reasonably satisfactory to EchoStar.
(w) "Average Price" of a share of capital stock of an issuer
shall mean the average (rounded to the nearest 1/10,000, or if there
shall not be a nearest 1/10,000, to the next highest 1/10,000) of the
Volume Weighted Average Trading Prices (as defined below) of such
share of capital stock of such issuer for each of the five (5)
consecutive trading days (or, if less, the number of trading days
following the Regulatory Approval Date (as defined in the Separation
Agreement) and before the Spin-Off Effective Time (as defined in the
Implementation Agreement)) ending on and including the trading day
immediately prior to the date of the Spin-Off Effective Time.
(x) "Minimum Amount" shall be equal to the excess of (x)
$1,000,000,000 (One Billion Dollars) over (y) the fair market value of
the capital stock of Hughes into which the Interim EchoStar Stock
would convert at the Merger Effective Time; provided, however, that
the Minimum Amount shall not be less than $250,000,000 (Two Hundred
Fifty Million Dollars).
(y) "Interim EchoStar Stock" shall mean (1) capital stock of
EchoStar issued on or after the date hereof and prior to the Merger
Effective Time and (2) capital stock of EchoStar that would be issued
upon the exercise, conversion or exchange of options or rights to
acquire, or securities that are convertible into or exchangeable for,
capital stock of EchoStar or any successor entity thereto (whether or
not such options or rights or conversion or exchange
48
features are then exercisable or are contingent on the occurrence or
non-occurrence of a future event), to the extent that (A) such
options, rights or securities are issued on or after the date hereof
and prior to the Merger Effective Time and (B) the acquisition of
capital stock thereunder would be presumed under Section 6.2(g) of the
Implementation Agreement to be part of a Section 355(e) Plan or
otherwise reasonably would be expected to be treated as part of a
Section 355(e) Plan with the Spin-Off.
(z) "Volume Weighted Average Trading Price" means, with respect
to a share of capital stock of an issuer on any trading day (defined
as 9:30 a.m. through 4:30 p.m., Eastern Time), the weighted average of
the reported per share prices at which transactions in such share of
stock of such issuer are executed on the Nasdaq Stock Market during
such trading day (weighted based on the number of such shares traded
of such issuer, as such weighted average price appears on the
Bloomberg screen "Volume at Price" page for such shares of capital
stock of such issuer).
Section 6.2. Conditions to Obligations of Hughes. The obligations of
Hughes to consummate the Merger and the other transactions contemplated hereby
shall be subject to the fulfillment of the following conditions unless waived by
Hughes:
(a) The representations and warranties of EchoStar set forth in
Article 3 herein shall be true and correct as of the date of this Agreement and
at and as of the Closing Date as though made on and as of the Closing Date
(except for representations and warranties made as of a specified date, which
need be true and correct only as of the specified date), except to the extent
that all of the breaches of such representations and warranties collectively
(without giving effect to any materiality or similar qualification) could not
reasonably be expected to result in a, and have not resulted in a continuing,
Combined Companies Material Adverse Effect; provided, however, that any and all
actions taken by EchoStar pursuant to Section 5.1(b) and the effects thereof on
the representations and warranties of EchoStar set forth in Article 3 shall be
ignored for purposes of this Section 6.2(a).
(b) EchoStar shall have performed in all material respects all of
its obligations hereunder to be performed by it at or prior to the Merger
Effective Time.
(c) EchoStar shall have furnished Hughes with a certificate dated
the Closing Date signed on its behalf by its Chairman, President or any Vice
President to the effect that the conditions set forth in Sections 6.2(a) and (b)
have been satisfied.
(d) EchoStar shall have taken one of the actions contemplated by the
first sentence of Section 5.2(e) hereof or the Plan shall have been implemented
as contemplated thereby.
(e) Hughes shall have received the Tax Opinion of Weil, Gotshal &
Manges LLP, counsel to Hughes, substantially in the form attached hereto as
Exhibit C, on the basis of facts, representations and assumptions stated therein
as of the Merger Effective Time, to the effect that the Merger constitutes a
reorganization within the meaning of Section 368(a) of the Code, it being
understood that in rendering the Tax Opinion, such tax counsel shall be entitled
to rely upon, among other things, representations of officers of EchoStar and
Hughes and of the
49
EchoStar Controlling Stockholder substantially in the form of Exhibits D, E and
F attached hereto and assumptions deemed necessary by such tax counsel.
Section 6.3. Conditions to Obligations of EchoStar. The obligation
of EchoStar to consummate the Merger and the transactions contemplated hereby
shall be subject to the fulfillment of the following conditions unless waived by
EchoStar:
(a) The representations and warranties of Hughes set forth in
Article 4 herein shall be true and correct as of the date hereof and at and as
of the Closing Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be true
and correct only as of the specified date), except to the extent that all of the
breaches of such representations and warranties collectively (without giving
effect to any materiality or similar qualification) could not reasonably be
expected to result in a, and have not resulted in a continuing, Combined
Companies Material Adverse Effect; provided, however, that any and all actions
taken by Hughes pursuant to Section 5.1(b), and the effects thereof on the
representations and warranties of Hughes set forth in Article 4 shall be ignored
for purposes of this Section 6.3(a).
(b) Hughes shall have performed in all material respects all of its
obligations hereunder to be performed by it at or prior to the Merger Effective
Time.
(c) Hughes shall have furnished EchoStar with a certificate dated
the Closing Date signed on behalf of it by the Chairman, President or any Vice
President to the effect that the conditions set forth in Sections 6.3(a) and (b)
have been satisfied.
(d) EchoStar shall have received the Tax Opinion of Sullivan &
Cromwell, special counsel to EchoStar, substantially in the form attached hereto
as Exhibit B, on the basis of facts, representations and assumptions stated
therein as of the Merger Effective Time, to the effect that the Merger
constitutes a reorganization within the meaning of Section 368(a) of the Code,
it being understood that in rendering the Tax Opinion, such tax counsel shall be
entitled to rely upon, among other things, representations of officers of
EchoStar and Hughes and of the EchoStar Controlling Stockholder substantially in
the form of Exhibits D, E and F attached hereto and assumptions deemed necessary
by such tax counsel.
(e) The representations and warranties of GM set forth in Article 2
of the Implementation Agreement shall be true and correct as of the date hereof
and at and as of the closing date as though made on and as of the closing date
(except for representations and warranties made as of a specified date, which
need to be true and correct only as of the specified date), except to the extent
that all of the breaches of such representations and warranties collectively
(without giving effect to any materiality or similar qualification) could not
reasonably be expected to result in a, or have not resulted in a continuing,
Combined Companies Material Adverse Effect or a material adverse effect on
EchoStar's or Hughes' ability to consummate the transactions contemplated by the
EchoStar Transaction Agreements or the Hughes Transaction Agreements;
(f) GM shall have performed in all material respects all of its
obligations under the Implementation Agreement to be performed by it at or prior
to the Spin-Off Effective Time (as defined in the Implementation Agreement).
50
(g) GM shall have furnished EchoStar with a certificate dated the
closing date signed on its behalf by its Chairman, President or any Vice
President to the effect that the conditions set forth in Sections 6.3(e) and (f)
have been satisfied.
ARTICLE 7
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any
time prior to the Merger Effective Time by written notice delivered by the
terminating party to the other parties:
(a) by mutual written consent duly authorized by the respective
Boards of Directors of Hughes and EchoStar;
(b) by either Hughes or EchoStar if:
(i) (A) any permanent injunction or other order of a court of
competent jurisdiction or other competent Governmental Authority preventing
the consummation of the Merger, (1) in an action brought by a federal,
state or local Governmental Authority under the Antitrust Laws of the
United States or FCC Regulations, shall have become final and
nonappealable, (2) in an action brought by a foreign Governmental Authority
under Antitrust Laws, shall have become final and nonappealable or (3) in
an action brought by any other Person (other than a Governmental Authority)
under the Antitrust Laws or FCC Regulations, shall have become final and
nonappealable; or (B) any permanent injunction or other order of a court of
competent jurisdiction or other competent Governmental Authority preventing
the consummation of the Merger, other than in an action brought under the
Antitrust Laws or FCC Rules, shall have become final and nonappealable;
(ii) the Merger shall not have been consummated before January
21, 2003 (the "Outside Date"), provided that (A) if all conditions to
Closing set forth in Article 6 have been satisfied or waived on or prior to
such date (other than those contained in Sections 6.1(b) and 6.1(c) and any
of such conditions that by their nature are to be fulfilled at the Closing)
and the Department of Justice or Federal Trade Commission has, prior to the
Outside Date, agreed with EchoStar and Hughes to enter into to a consent
decree or other settlement permitting the consummation of the Merger, then
the Outside Date shall be extended to the Second Business Day immediately
following the date such consent decree or other settlement is filed in
court (but in no event later than five (5) Business Days following the
Outside Date), at which time, the parties shall consummate the Merger in
accordance with Section 1.2; or (B) such period shall be extended by the
Boards of Directors of both Hughes and EchoStar (provided that the right to
terminate this Agreement under any provision of this Section 7.1(b)(ii)
shall not be available to any party whose failure (or whose affiliate's
failure, which in the case of Hughes shall include GM) to perform any
material covenant or obligation under this Agreement or the other
Transaction Agreements has been the cause of or resulted in the failure of
the Merger to occur on or before such date); or
(iii) provided that there shall have occurred either a duly held
meeting of the GM common stockholders (including any adjournment or
postponement
51
thereof) at which a vote was taken or a solicitation of the written consent
of the GM common stockholders in accordance with the DGCL, the GM
Transactions fail to receive the Requisite Stockholder Approval either by
reason of a negative vote of the GM common stockholders or by reason of a
Consent Solicitation Failure. For the purposes of this Agreement, a
"Consent Solicitation Failure" means the failure to receive the Requisite
Stockholder Vote because written consents signed by a sufficient number of
holders within sixty (60) days of the earliest dated consent delivered in
the manner required by Section 228 of the DGCL were not obtained; unless
such failure to receive such written consents shall have resulted from GM's
abandonment of the consent solicitation, provided that GM shall have
delivered to EchoStar a Confirmation concurrently with such abandonment
and, provided, further, that the right of termination provided under this
clause (iii) shall be reinstated if GM shall fail to recommence the consent
solicitation as promptly as practicable after such abandonment and
provided, further, that only one such abandonment of the consent
solicitation (other than an abandonment by reason of an injunction granted
by a Governmental Authority having competent jurisdiction) shall be
permitted hereunder without giving rise to the right of termination.
(c) by Hughes if:
(i) a breach by EchoStar of any representation or warranty
contained in Article 3 hereof has occurred, which breach, in the aggregate
with all other such breaches, if any, would give rise to a failure of a
condition set forth in Section 6.2(a) and cannot be cured by the Outside
Date);
(ii) a breach by EchoStar of any of the covenants or agreements
contained herein has occurred, which breach, in the aggregate with all
other such breaches, if any, would give rise to a failure of a condition
set forth in Section 6.2(b) and cannot be cured by the Outside Date;
(iii) a EchoStar Material Adverse Effect which also would be, or
would reasonably be expected to be, a Combined Companies Material Adverse
Effect, shall have occurred and be continuing at the time of termination,
and cannot be cured by the Outside Date; provided, however, that any and
all actions taken by EchoStar pursuant to Section 5.1(b) and the effects
thereof on the representations and warranties of EchoStar in Article 3
shall be ignored for the purposes of this Section 7.1(c)(iii);
(iv) (A) Unless the Department of Justice or the Federal Trade
Commission shall have agreed to a consent decree or other settlement
approving of the Merger prior to the fifteenth Business Day before the
Outside Date, the waiting period applicable to the consummation of the
Merger under the HSR Act shall not have expired or been terminated on or
prior to the date which is fifteen (15) Business Days before the Outside
Date, provided, that if the DOJ or the FTC shall have agreed to a consent
decree or other settlement permitting consummation of the Merger prior to
the fifteenth Business Day before the Outside Date, Hughes shall not be
entitled to terminate this Agreement pursuant to this Section 7.1(c)(iv)
(A) unless the waiting period applicable to the consummation of the Merger
under the HSR Act shall not have expired or been terminated on or prior to
the date which is five (5) Business Days before the Outside Date (such
period of time between the fifteenth Business Day and the fifth Business
Day before the Outside Date, the ("Non-Termination Period"); provided,
further, that
52
EchoStar shall not be entitled to terminate the Merger Agreement pursuant
to any term hereof during the Non-Termination Period if EchoStar did not
have such right to terminate this Agreement immediately prior to the first
day of the Non-Termination Period; or (B) all material orders and approvals
of the FCC required in connection with the consummation of the transactions
contemplated hereby shall have not been obtained and become final on or
prior to the date which is ten (10) business days before the Outside Date
such that the condition in Section 6.1(c) is incapable of being fulfilled
unless the DOJ or FTC shall have agreed to a consent decree or other
settlement permitting consummation of the Merger prior to the fifteenth
Business Day before the Outside Date, in which case all material orders and
approvals of the FCC required in connection with the consummation of the
transactions contemplated hereby shall have not been obtained and become
final on or prior to the date which is three (3) Business Days after the
date the consent decree or other settlement permitting consummation of the
Merger is filed in court;
(v) (A) a breach by EchoStar of any representation or warranty
contained in the Implementation Agreement shall have occurred, which breach
cannot be cured by the Outside Date, except to the extent that all of the
breaches of such representations and warranties collectively (without
giving effect to any materiality or similar qualification) could not
reasonably be expected to have a material adverse impact on EchoStar's or
Hughes' ability to consummate the transactions contemplated by the GM
Transaction Agreements, the EchoStar Transaction Agreements or the Hughes
Transaction Agreements or (B) a material breach by EchoStar of any of the
covenants or agreements contained in the Implementation Agreement has
occurred, which breach cannot be cured by the Outside Date;
(vi) GM (A) shall have been notified by the IRS that the Ruling
(as defined in the Implementation Agreement) has been withdrawn,
invalidated or modified in an adverse manner or (B)(1) shall have been
notified by the IRS, or shall have otherwise reasonably determined, on the
basis of an opinion of outside tax counsel, in accordance with Section
6.1(d) of the Separation Agreement, that there is a more than immaterial
possibility that the consummation of the Spin-Off will not be tax-free and
(2) provided that the matter is capable of being resolved by a ruling by
the IRS, GM and Hughes shall have been informed by the IRS that the IRS
will not issue a Subsequent Ruling (as defined in the implementation
Agreement) confirming the Ruling;
(vii) (A) the Merger Financing Agreement shall not have been
entered into, or the definitive terms thereof agreed, by the necessary
parties thereto on or prior to the date which is one hundred eighty (180)
calendar days after the date of this Agreement.
(viii) GM shall have delivered to EchoStar a Notice of Non-
Recommendation (as defined in the Implementation Agreement) pursuant to
Section 1.2(b) of the Implementation Agreement and the right to terminate
in respect of such Notice of Non-Recommendation shall not have been
terminated pursuant to Section 1.2(c) or 1.2(e) of the Implementation
Agreement.
(ix) GM shall propose to enter into an agreement or arrangement
with respect to a Competing Transaction after having complied with the
provisions of
53
Section 5.1(j)(i)(II) of the Implementation Agreement and shall have paid
the Termination Fee owed pursuant to Section 7.2(b) hereof.
(d) by EchoStar if:
(i) GM shall have entered into any agreement or arrangement
(other than a confidentiality agreement) regarding, or the Board of
Directors of GM or any committee of the Board of Directors of GM shall
approve or recommend, any Competing Transaction;
(ii) a breach by Hughes of any representation or warranty
contained in Article 4 hereof has occurred, which breach, in the aggregate
with all other such breaches, would give rise to a failure of a condition
set forth in Section 6.3(a) and cannot be cured by the Outside Date;
(iii) a breach by Hughes of any of the covenants or agreements
contained herein has occurred, which breach, in the aggregate with all
other such breaches, would give rise to a failure of a condition set forth
in Section 6.3(b) and cannot be cured by the Outside Date;
(iv) a Hughes Material Adverse Effect which also would be, or
would reasonably be expected to be, a Combined Companies Material Adverse
Effect, shall have occurred and be continuing at the time of termination
and cannot be cured by the Outside Date; provided, however, that any and
all actions taken pursuant to Section 5.1(b), and the effects thereof on
the representations and warranties of Hughes in Article 4 shall be ignored
for the purposes of this Section 7.1(d)(iv); or
(v) (A) a breach by GM or Hughes of any representation or
warranty contained in the Implementation Agreement shall have occurred,
which breach cannot be cured by the Outside Date; except to the extent that
all of the breaches of such representations and warranties collectively
could not reasonably be expected to have a material adverse impact on
Hughes' or EchoStar's ability to consummate the transactions contemplated
by the GM Transaction Agreements, the Hughes Transactions Agreements or the
EchoStar Transaction Agreements; or (B) a material breach by GM or Hughes
of any of the covenants or agreements contained in the Implementation
Agreement has occurred, which breach cannot be cured by the Outside Date.
(vi) GM shall have delivered to EchoStar a Notice of Non-
Recommendation (as defined in the Implementation Agreement) pursuant to
Section 1.2(b) of the Implementation Agreement (including by reason of GM
having failed to provide a Confirmation (as defined in the Implementation
Agreement) to EchoStar within the applicable Confirmation Period (as
defined in the Implementation Agreement) pursuant to Section 1.2(d) of the
Implementation Agreement) and EchoStar's right to terminate in respect of
such Notice of Non-Recommendation shall not have been terminated pursuant
to Section 1.2(c) or, in the case of a Notice of Non-Recommendation
pursuant to Section 1.2(b) only, Section 1.2(e) of the Implementation
Agreement.
54
Section 7.2. Effect of Termination; Fees and Expenses upon
Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1, this Agreement, except for the provisions of Section 5.1(f), this
Section 7.2 and Sections 8.2 through 8.11, shall become void and have no effect,
without any liability on the part of any party or its directors, officers,
employees or stockholders. Notwithstanding the foregoing, nothing in this
Section 7.2 shall relieve or release any party to this Agreement of liability
for a breach of any provision of this Agreement or invalidate the provisions of
the Confidentiality Agreement.
(b) If this Agreement is terminated (A) (i) by EchoStar or Hughes
pursuant to Section 7.1(b)(iii), (ii) at any time after the date of this
Agreement and before such termination a Competing Transaction shall have been
publicly disclosed and (iii) within fifteen months of such termination GM or any
of its Subsidiaries enters into a definitive agreement with respect to, or
consummates, such Competing Transaction, (B) (i) by EchoStar or Hughes pursuant
to Section 7.1(b)(iii), (ii) at any time after the date hereof, a Competing
Transaction shall have been publicly disclosed which Competing Transaction has
not been withdrawn or abandoned at the time of such stockholder vote and (iii)
within fifteen months of such termination GM or any of its Subsidiaries enters
into a definitive agreement with respect to, or consummates, any Competing
Transaction, or (C) by Hughes pursuant to Sections 7.1(c)(viii) or (c)(ix) or by
EchoStar pursuant to Sections 7.1(d)(i) or (vi), then, in each case, Hughes
shall pay or cause to be paid to EchoStar, in cash by wire transfer in
immediately available funds to an account designated by EchoStar, (x) on the
same day as the execution of a definitive agreement with respect to the
referenced Competing Transaction, in the event this Agreement is terminated by
EchoStar or Hughes as described in clauses (A) or (B) above, or (y) no later
than one business day following such termination, in the event this Agreement is
terminated by EchoStar as described in clause (C) above, and (z) concurrently
with such termination in the event this Agreement is terminated by Hughes as
described in clause (C) above, a termination fee and expense reimbursement in an
aggregate amount equal to $600,000,000.00 (Six Hundred Million Dollars) (the
"Termination Fee"), which amount shall not be subject to offset on deduction of
any kind by Hughes.
(c) If this Agreement is terminated by EchoStar pursuant to Section
7.1(b)(i)(A)(l) or by Hughes pursuant to Section 7.1(b)(i)(A)(l) or Section
7.1(c)(iv), EchoStar shall pay or cause to be paid to Hughes, in cash by wire
transfer in immediately available funds to an account designated by Hughes, no
later than one business day following such termination, if terminated by Hughes,
or concurrently with such termination, if terminated by EchoStar, a termination
fee and expense reimbursement in an amount equal to $600,000,000.00 (Six Hundred
Million Dollars), which amount shall not be subject to offset or deduction of
any kind by EchoStar; provided, that the payment of one-half of the Termination
Fee shall not be required concurrently with such termination (and the parties
may elect to resolve such dispute in accordance with Section 8.9) if Hughes'
failure (or the failure of any of its Affiliates) to comply with Section 5.1(b)
has been the cause of or resulted in the occurrence or non-occurrence which
permitted termination under Section 7.1(b)(i)(A)(l) or 7.1(c)(iv).
Notwithstanding anything to the contrary in this Section 7.2(c), if the parties
have available to them, and EchoStar is willing to accept, a settlement, consent
decree, stipulation or other agreement or resolution (each a "Settlement") with
the Department of Justice, the Federal Trade Commission or any other
Governmental Authority, but Hughes terminates this Agreement pursuant to Section
7.1(b)(i)(A)(1) or Section 7.1(c)(iv) hereof then EchoStar shall not be required
to pay Hughes the termination fee described in this Section 7.2(c).
55
(d) The parties hereto agree that the provisions contained in this
Section 7.2 are an integral part of the transactions contemplated by this
Agreement, that the damages resulting from the termination of this Agreement as
set forth in Sections 7.2(b) and (c) of this Agreement are uncertain and
incapable of accurate calculation and that the amounts payable pursuant to
Sections 7.2(b) and (c) hereof are reasonable forecasts of the actual damages
which may be incurred by the parties under such circumstances. The amounts
payable pursuant to Sections 7.2(b) and (c) hereof constitute liquidated damages
and not a penalty and shall be the sole monetary remedy in the event of
termination of this Agreement on the bases specified in such Sections. If either
party fails to pay to the other party any amounts due under Sections 7.2(b) and
(c), as applicable, in accordance with the terms hereof, the breaching party
shall pay the costs and expenses (including legal fees and expenses) of the
other party in connection with any action, including the filing of any lawsuit
or other legal action, taken to collect payment.
(e) Any amounts not paid when due pursuant to this Section 7.2 shall
bear interest from the date such payment is due until the date paid at a rate
equal to LIBO plus three percent. For purposes of this Agreement, LIBO shall
mean the current LIBO rate as quoted by Citibank, N.A., adjusted for reserve
requirements, if any, and subject to customary change of circumstance
provisions, for interest periods of six months.
Section 7.3. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors;
provided however, that no amendment shall be made which by law requires approval
or authorization by the stockholders of Hughes or EchoStar, without such
approval or authorization. Notwithstanding the foregoing, this Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 7.4. Extension; Waiver. At any time prior to the Merger
Effective Time, Hughes (with respect to EchoStar) and EchoStar (with respect to
Hughes) by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of such other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive or extend the
time for compliance by such other party with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
ARTICLE 8
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties. The
parties hereto hereby agree that the representations and warranties of Hughes
and EchoStar contained in this Agreement or in any certificate, document or
instrument delivered in connection herewith (other than the Implementation
Agreement), shall not survive the Merger Effective Time.
Section 8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or dispatched by a nationally recognized
overnight courier service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
56
(a) if to Hughes Electronics Corporation
200 North Sepulveda Boulevard
El Segundo, CA 90245
Attention: General Counsel
Telecopy No.: (310) 456-1089
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green and
Michael E. Lubowitz
Telecopy No.: (212) 310-8007
and
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk and
Joseph P. Gromacki
Telecopy No.: (312) 861-2200
(b) if to EchoStar Communications Corporation
5701 South Santa Fe Drive
Littleton, Colorado 80120
Attention: David K. Moskowitz, General Counsel
Telecopy No.: (303) 723-1699
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Frank J. Aquila and John J. O'Brien
Telecopy No.: (212) 558-3588
Section 8.3. Interpretation; Absence of Presumption.
(a) For the purposes of this Agreement, (i) words in the singular
shall be held to include the plural and vice versa and words of one gender shall
be held to include the other gender as the context requires, (ii) the terms
"hereof", "herein", and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Schedules and Exhibits hereto) and not to any particular provision of
this Agreement, and Article, Section, paragraph, Exhibit and Schedule references
are to the Articles, Sections, paragraphs, Exhibits and Schedules to this
Agreement unless otherwise specified, (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iv) the word "or" shall not be exclusive, (v) provisions shall
apply, when appropriate,
57
to successive events and transactions, (vi) all references to any period of days
shall be deemed to be to the relevant number of calendar days, (vii) all
references to the word "shares" shall be deemed also to refer to fractions of
shares, as the context requires, (viii) "Dollars" or "$" means United States
Dollars, (ix) "cash" means Dollars in immediately available funds and (x) the
phrase "the date hereof" means the date of this Agreement.
(b) The Article, Section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 8.4. Knowledge. For purposes of this Agreement, the knowledge
of (a) EchoStar and its Subsidiaries shall mean the knowledge, after due
inquiry, of the senior officers of EchoStar and its Subsidiaries and (b) Hughes
shall mean the knowledge, after due inquiry, of the senior officers of Hughes
and its Subsidiaries.
Section 8.5. Counterparts. This Agreement may be executed in
counterparts, which together shall constitute one and the same Agreement. The
parties may execute more than one copy of the Agreement, each of which shall
constitute an original.
Section 8.6. Entire Agreement; Severability.
(a) This Agreement (including the documents and the instruments
referred to herein) and the Confidentiality Agreement contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter, and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.
(b) If any provision of this Agreement or the application thereof to
any Person or circumstance is determined by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to Persons or circumstances or in jurisdictions
other than those as to which it has been held invalid or unenforceable, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination, the parties shall negotiate in good faith in an
effort to agree upon such a suitable and equitable provision to effect the
original intent of the parties.
Section 8.7. Third Party Beneficiaries. Except as set forth in Section
5.3(f) hereto, the provisions of this Agreement are solely for the benefit of
the parties and are not intended to confer upon any Person except the parties
any rights or remedies hereunder and there are no third party beneficiaries of
this Agreement and this Agreement shall not provide any third Person with any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
58
Section 8.8. Governing Law. Except to the extent the provisions of the
NRS govern the Merger, this Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law. Each of the parties hereto agrees that this Agreement has
been entered into by the parties in express reliance upon 6 Del. C. Sec. 2708.
Section 8.9. Jurisdiction. Any suit, action or proceeding seeking to
enforce an provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated by this Agreement may be
brought against any of the parties in any Federal court located in the State of
Delaware, or any Delaware state court. Each party irrevocably and
unconditionally agrees (a) to be subject to the jurisdiction of the courts of
the State of Delaware and of the federal courts sitting in the State of
Delaware, and (b) (1) to the extent such party is not otherwise subject to
service of process in the State of Delaware, to appoint and maintain an agent in
the State of Delaware as such party's agent for service of legal process and (2)
that service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service, and that service made pursuant to (b)
(1) or (2) above shall have the same legal force and effect as if served upon
such party personally within the State of Delaware. For purposes of implementing
the parties' agreement to appoint and maintain an agent for service of process
in the State of Delaware, each such party does appoint [name] [address], as such
agent. Without limiting the generality of the foregoing, each party hereto
agrees that service of process upon such party at the address referred to in
Section 8.2, together with written notice of such service to such party, shall
be deemed effective service of process upon such party.
Section 8.10. Specific Performance. Except under such circumstances as
cause a termination fee to be payable pursuant to Section 7.2 by any of the
parties hereto based on such breach or threatened breach, the parties agree that
the remedies at law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at law would be adequate is
waived. Accordingly, in the event of any actual or threatened default in, or
breach of, any of the terms, conditions and provisions of this Agreement, the
party or parties who are or are to be thereby aggrieved shall have the right to
specific performance and injunctive or other equitable relief of its rights
under this Agreement, in addition to any and all other rights and remedies at
law or in equity, and all such rights and remedies shall be cumulative. Any
requirements for the securing or posting of any bond with such remedy are
waived.
Section 8.11. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party; provided, however, that, in connection with
the Financings, either party may assign all or any part of its rights under this
Agreement to any Person required by such party's financing sources in order to
secure such party's obligations to such financing sources. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
* * * * * *
59
IN WITNESS WHEREOF, each of the undersigned, intending to be legally bound,
has caused this Agreement to be duly executed and delivered on the date first
set forth above.
ECHOSTAR COMMUNICATIONS CORPORATION
By: /s/ David K. Moskowitz
--------------------------------
Name: David K. Moskowitz
------------------------------
Title: Senior Vice President, General
Counsel and Secretary
-----------------------------
HUGHES ELECTRONICS CORPORATION
By: /s/ Larry D. Hunter
--------------------------------
Name: Larry D. Hunter
------------------------------
Title: Vice President
-----------------------------
EX-99.3
5
dex993.txt
IMPLEMENTATION AGREEMENT
Exhibit 99.3
EXECUTION COPY
IMPLEMENTATION AGREEMENT
by and among
GENERAL MOTORS CORPORATION,
HUGHES ELECTRONICS CORPORATION
and
ECHOSTAR COMMUNICATIONS CORPORATION
Dated as of October 28, 2001
TABLE OF CONTENTS
Page
----
ARTICLE 1..................................................................................... 5
THE GM TRANSACTIONS........................................................................... 5
Section 1.1. GM Board Approval of the GM Transactions............................ 5
Section 1.2. GM Stockholder Approval of the GM Transactions...................... 6
Section 1.3. Conditions to GM's Obligations Relating to the
Stockholder Approval Process........................................ 9
Section 1.4. Spin-Off of Hughes from GM.......................................... 9
Section 1.5. Effects of the Spin-Off.............................................11
Section 1.6. Cooperation of Transfer Agents; Stockholder Records;
GM Class H Common Stock Certificates................................12
Section 1.7. Closing of Transfer Records.........................................13
Section 1.8. Cancellation........................................................13
Section 1.9. Treatment of Stock Options, LTAP Awards and
Restricted Stock Units..............................................13
Section 1.10. GM Charter Amendment................................................16
Section 1.11. Cooperation; Redemption of Hughes Preferred Stock;
Hughes Charter Amendments...........................................16
Section 1.12. Further Assurances Regarding the GM Transactions....................17
Section 1.13. Elimination of GM Class H Common Stock from GM
Certificate of Incorporation........................................18
ARTICLE 2.....................................................................................18
REPRESENTATIONS AND WARRANTIES OF GM..........................................................18
Section 2.1. Organization and Standing...........................................18
Section 2.2. Corporate Power and Authority.......................................19
Section 2.3. Conflicts, Consents and Approvals...................................19
Section 2.4. Ownership of Hughes Capital Stock...................................21
Section 2.5. Capitalization; Class H Fraction....................................22
Section 2.6. Litigation..........................................................24
Section 2.7. Brokerage and Finder's Fees; Opinions of Financial Advisors.........24
Section 2.8. Spin-Off/Merger Registration Statement, GM Proxy/Consent
Solicitation Statement, EchoStar Information Statement and
GM Debt/Equity Exchange Registration Statement......................24
Section 2.9. Tax Representations.................................................25
Section 2.10. Requisite Approvals.................................................25
Section 2.11. Agreement with GM Pension Plans.....................................26
ARTICLE 3.....................................................................................27
REPRESENTATIONS AND WARRANTIES OF HUGHES......................................................27
Section 3.1. Organization and Standing.............................................27
Section 3.2. Corporate Power and Authority.........................................27
Section 3.3. Spin-Off/Merger Registration Statement, GM Proxy/Consent
Solicitation Statement, EchoStar Information
Statement and GM Debt/Equity Exchange Registration Statement..........28
Section 3.4. Tax Representations...................................................28
ARTICLE 4.....................................................................................28
REPRESENTATIONS AND WARRANTIES OF ECHOSTAR....................................................29
Section 4.1. Organization and Standing.............................................29
Section 4.2. Corporate Power and Authority.........................................29
Section 4.3. Spin-Off/Merger Registration Statement, GM Proxy/Consent
Solicitation Statement, EchoStar Information
Statement and GM Debt/Equity Exchange Registration Statement..........30
Section 4.4. Tax Representations...................................................30
Section 4.5. Merger Agreement Representations and Warranties.......................30
ARTICLE 5.....................................................................................30
COVENANTS AND AGREEMENTS OF THE PARTIES......................................................30
Section 5.1. Mutual Covenants......................................................30
Section 5.2. Covenants of GM and Hughes............................................45
Section 5.3. Covenants and Agreements of EchoStar..................................55
ARTICLE 6.....................................................................................59
TAX-FREE STATUS OF THE SPIN-OFF...............................................................59
Section 6.1. Representations and Warranties........................................59
Section 6.2. Restrictions Relating to the Spin-Off.................................59
Section 6.3. Cooperation and Other Covenants.......................................64
Section 6.4. Indemnification for Tax Liabilities...................................66
Section 6.5. Procedure for Indemnification for Tax Liabilities.....................69
Section 6.6. Arbitration...........................................................70
Section 6.7. Certain Stock Acquisitions............................................71
ARTICLE 7.....................................................................................72
INDEMNIFICATION...............................................................................72
Section 7.1. Indemnification by Hughes.............................................72
Section 7.2. Indemnification by GM.................................................74
Section 7.3. Indemnification by EchoStar...........................................77
Section 7.4. Certain Definitions...................................................78
Section 7.5. Other Liabilities.....................................................79
Section 7.6. Tax Effects of Indemnification........................................79
Section 7.7. Effect of Insurance Upon Indemnification..............................80
Section 7.8. Procedure for Indemnification Involving Third-Party Claims............80
Section 7.9. Procedure for Indemnification Not Involving Third-Party Claims.......82
Section 7.10. Exclusive Remedies...................................................82
ARTICLE 8.....................................................................................82
TERMINATION AND AMENDMENT.....................................................................82
Section 8.1. Termination..........................................................82
Section 8.2. Effect of Termination................................................82
Section 8.3. Amendment............................................................82
Section 8.4. Extension; Waiver....................................................83
ARTICLE 9.....................................................................................83
MISCELLANEOUS.................................................................................83
Section 9.1. Survival.............................................................83
Section 9.2. Notices..............................................................83
Section 9.3. Interpretation; Absence of Presumption...............................85
Section 9.4. Counterparts.........................................................86
Section 9.5. Entire Agreement; Severability.......................................86
Section 9.6. Third Party Beneficiaries............................................87
Section 9.7. Governing Law........................................................87
Section 9.8. Specific Performance.................................................87
Section 9.9. Assignment...........................................................87
EXHIBITS
Exhibit A - Form of PanAmSat Stock Purchase Agreement
Exhibit B - Form of Merger Commitment Letter
Exhibit C - Supplemental Agreement
Exhibit D - Pledge Agreement
Exhibit E - Form of EchoStar Stockholder Consent
Exhibit F - Form of GM/Hughes Separation Agreement
Exhibit G - Form of Merger Agreement
Exhibit H - Form of GM Charter Amendment
Exhibit I - Form of Certificate of Designations Relating to Hughes Preference Stock
Exhibit J - Form of Stockholders Agreement
Exhibit K - Form of New Registration Rights Agreements Term Sheets
Exhibit L - Matters Pertaining to the GM Debt/Equity Exchange
-iv-
SCHEDULES
GM Disclosure Schedule
----------------------
Section 2.5(b) Capitalization; Class H Fraction
Section 2.6 Litigation
Section 6.2(f) Intercompany Indebtedness
Hughes Disclosure Schedule
--------------------------
Section 6.2(f) Intercompany Indebtedness
Other Schedules
---------------
Schedule 7.2 Certain Claims
-v-
INDEX OF DEFINED TERMS
Page
----
Adverse Notification.......................................................... 9
Affiliate.....................................................................78
Agreement..................................................................... 1
Ancillary Tax Opinions........................................................57
AOL...........................................................................23
AOL Registration Rights Agreement.............................................23
AOL Section 355(e) Ruling.....................................................63
Applicable Law................................................................42
Article 6 Dispute Party.......................................................70
Article 6 Indemnifying Party..................................................69
Assumed AOL Sale..............................................................63
Bankers.......................................................................64
Business Day..................................................................66
Certificates..................................................................12
Change in Tax Law.............................................................62
Claim.........................................................................33
Class H Fraction..............................................................37
Code.......................................................................... 4
Competing Transaction.........................................................40
Confidentiality Agreement.....................................................79
Confirmation.................................................................. 8
Confirmation Period........................................................... 8
Confirmation Request.......................................................... 8
Control.......................................................................68
Conversion Issuances..........................................................63
Current GM Pension Plans Registration Rights Agreement........................22
D&O Insurance.................................................................46
Debt/Equity Issuances.........................................................63
Denominator................................................................... 1
DGCL.......................................................................... 6
Dispute.......................................................................70
Dispute Notice................................................................70
Disqualifying Action..........................................................60
DTV Business..................................................................61
EchoStar...................................................................... 1
EchoStar 10-K.................................................................27
-vi-
Page
----
EchoStar 10-Q.................................................................29
EchoStar Affiliate............................................................78
EchoStar Controlling Stockholder.............................................. 3
EchoStar Controlling Stockholder Registration Rights Agreement................28
EchoStar Indemnitees..........................................................78
EchoStar Information Statement................................................23
EchoStar Material Adverse Effect..............................................28
EchoStar Sale Process Claim...................................................58
EchoStar Section 368 Opinion..................................................48
EchoStar Securities Disclosure Document.......................................44
EchoStar Securities Issuance..................................................42
EchoStar Securities Issuances.................................................43
EchoStar Stockholder Consent.................................................. 4
EchoStar Transaction Agreements...............................................29
EchoStar/Hughes Employee Matters Agreement....................................27
Encumbrances..................................................................20
Exchange Act..................................................................15
Exchange Debt................................................................. 2
Exchange Option...............................................................14
Exchange Shares............................................................... 2
Final Determination...........................................................67
GM............................................................................ 1
GM $1-2/3 Common Stock........................................................ 2
GM Affiliate..................................................................78
GM Board Policy Statement..................................................... 6
GM Business...................................................................75
GM Certificate of Incorporation............................................... 1
GM Charter Amendment..........................................................16
GM Class H Common Stock....................................................... 2
GM Debt/Equity Exchange....................................................... 2
GM Debt/Equity Exchange Registration Statement................................25
GM Disclosure Schedule........................................................21
GM Financial Advisor Fairness Opinions........................................ 6
GM Financial Advisors......................................................... 6
GM Indemnitees................................................................78
GM Insurance Policy...........................................................46
GM Notional Shares............................................................10
GM Pension Plans..............................................................26
GM Pension Plans Contribution and Transfer Agreement..........................26
GM Preference Stock...........................................................22
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GM Preferred Stock............................................................22
GM Proxy/Consent Solicitation Statement....................................... 7
GM Sale Process Claim.........................................................47
GM Series H Preference Stock.................................................. 2
GM Transaction Agreements.....................................................19
GM Transactions............................................................... 2
GM Transfer Agent.............................................................12
GM-Hughes Sale Process Claim..................................................50
GM/Hughes Intellectual Property Agreement..................................... 4
GM/Hughes Separation Agreement................................................ 4
GM/Hughes Tax Agreements...................................................... 4
Governmental Authority........................................................18
Greater Spinco Preference Share Exchange......................................10
Greater Spinco Preference Shares..............................................10
HCG........................................................................... 1
HCI........................................................................... 1
HCSS.......................................................................... 1
HSR Act.......................................................................20
HSSL..........................................................................35
Hughes........................................................................ 1
Hughes 10-K...................................................................27
Hughes 10-Q...................................................................27
Hughes Affiliate..............................................................78
Hughes Amended and Restated By-laws...........................................17
Hughes Business...............................................................72
Hughes Capital Stock..........................................................68
Hughes Certificate of Incorporation...........................................17
Hughes Charter Amendments.....................................................17
Hughes Class C Common Stock................................................... 2
Hughes Class C Common Stock Exchange..........................................10
Hughes Covered Person.........................................................46
Hughes Disclosure Schedule....................................................62
Hughes Financial Advisors..................................................... 6
Hughes Holdings...............................................................43
Hughes Incentive Plan.........................................................16
Hughes Indemnitees............................................................78
Hughes Material Adverse Effect................................................26
Hughes Preference Stock....................................................... 2
Hughes Recapitalization....................................................... 1
Hughes Reorganization.........................................................43
-viii-
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Hughes Sale Process Claim.....................................................51
Hughes Series A Preferred Stock...............................................17
Hughes Transaction Agreements.................................................27
Hughes Transfer Agent.........................................................12
Indemnified Party.............................................................33
Indemnifying Party............................................................79
Indemnitee....................................................................79
Indemnity Payment.............................................................79
Insurance Proceeds............................................................80
IRS...........................................................................30
IRS Submission................................................................31
Losses........................................................................49
LTAP..........................................................................14
Mailing Date.................................................................. 6
Merger........................................................................ 1
Merger Agreement.............................................................. 4
Merger Commitment Letter...................................................... 3
Merger Financing.............................................................. 3
Merger Financing Agreement.................................................... 3
Nasdaq........................................................................20
Negotiation Period............................................................70
Non-Recommendation Determination.............................................. 7
Notice of Non-Recommendation.................................................. 7
Notice of Proposed Mailing.................................................... 7
Numerator.....................................................................24
NYSE..........................................................................14
Option........................................................................13
PanAmSat...................................................................... 1
PanAmSat Financing Agreement.................................................. 3
PanAmSat Purchase Financing................................................... 3
PanAmSat Stock Purchase Agreement............................................. 1
PanAmSat Stock Sale........................................................... 1
Person........................................................................68
Pledge Agreement.............................................................. 3
Potential Disqualifying Action................................................60
PRIMESTAR Registration Rights Agreement.......................................23
Proposed Acquisition Transaction..............................................60
Recapitalization Amount....................................................... 2
Recapitalization Debt.........................................................44
Redactable Information........................................................31
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Refinancing Debt..............................................................44
Registration Rights Letter Agreement..........................................19
Remaining Shares..............................................................50
Remaining Shares Distribution.................................................52
Remaining Shares Section 355(e) Ruling........................................52
Representatives...............................................................40
Request.......................................................................82
Requisite Stockholder Approval................................................26
Ruling........................................................................ 9
Ruling Request................................................................31
Sale Process Loss.............................................................77
SEC........................................................................... 9
Section 355(e) Plan...........................................................58
Section 368 Opinion...........................................................57
Securities Act................................................................22
Separate Counsel..............................................................81
Settlement....................................................................55
Significant Subsidiary........................................................21
Solvency Opinion..............................................................50
Spin-Off...................................................................... 2
Spin-Off Effective Time.......................................................11
Spin-Off/Merger Registration Statement........................................24
Stockholders Agreement........................................................19
Subsequent Ruling.............................................................64
Subsequent Tax Opinion........................................................64
Subsidiary....................................................................21
Substantially All of the DTV Business.........................................62
Superior Proposal.............................................................41
Supplemental Agreement........................................................ 3
Tax...........................................................................68
Tax Control...................................................................68
Tax Counsel...................................................................57
Tax Materials.................................................................59
Tax Opinions..................................................................57
Tax-Free Status of the Spin-Off...............................................60
Tax-Related Losses............................................................67
Third-Party Claim.............................................................69
Transaction Agreements........................................................30
Transactions.................................................................. 6
U.S. Trust....................................................................23
Voting Stock..................................................................68
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Page
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Withdrawal Notice............................................................. 8
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IMPLEMENTATION AGREEMENT
This Implementation Agreement (this "Agreement") is made and entered
into as of October 28, 2001, by and among Hughes Electronics Corporation, a
Delaware corporation ("Hughes"), General Motors Corporation, a Delaware
corporation that owns directly all of the issued and outstanding capital stock
of Hughes ("GM"), and EchoStar Communications Corporation, a Nevada corporation
("EchoStar").
WHEREAS, Hughes and EchoStar desire to combine the business of
EchoStar with the Hughes Business (as defined below), following the separation
of Hughes from GM, pursuant to a merger of EchoStar with and into Hughes, with
Hughes as the surviving corporation (the "Merger"), as contemplated by the
Merger Agreement (as defined below); and
WHEREAS, it is a condition to the Merger that, at the time of the
consummation of the Merger, the Hughes Recapitalization (as defined below) and
the Spin-Off (as defined below) be completed and that Hughes be an independent,
publicly owned company comprising the Hughes Business, separate from and no
longer wholly owned by GM; and
WHEREAS, subject to the terms and conditions set forth in the PanAmSat
Stock Purchase Agreement (the "PanAmSat Stock Purchase Agreement"), entered into
by and among Hughes, Hughes Communications, Inc., a California corporation and
an indirect wholly owned subsidiary of Hughes ("HCI"), Hughes Communications
Galaxy, Inc., a California corporation and an indirect wholly owned subsidiary
of Hughes ("HCG"), and Hughes Communications Satellite Services, Inc.,
California corporation and an indirect wholly owned subsidiary of Hughes
("HCSS"), concurrently with the execution and delivery of this Agreement, in the
form attached hereto as Exhibit A, HCI, HCG and HCSS have agreed to sell to
EchoStar, and EchoStar has agreed to purchase from HCI, HCG and HTSC (such
transaction, the "PanAmSat Stock Sale"), all of the shares of capital stock of
PanAmSat Corporation, a Delaware corporation ("PanAmSat"), owned by HCI, HCG and
HCSS, in accordance with the terms and conditions set forth in the PanAmSat
Stock Purchase Agreement; and
WHEREAS, immediately prior to the Spin-Off, Hughes shall distribute to
GM, in respect of GM's ownership interest in Hughes, the Cash Dividend (as
defined in the GM/Hughes Separation Agreement (as defined below)), and, if and
to the extent of any shortfall in funds available to Hughes to pay in full the
Cash Dividend, the Demand Note (as defined in the GM/Hughes Separation
Agreement), and in connection with such dividend the denominator (the
"Denominator") of the fraction described in Article Fourth, Division I, Section
(a)(4) of the Restated Certificate of Incorporation of GM, as amended (the "GM
Certificate of Incorporation"), will be reduced as contemplated by the GM/Hughes
Separation Agreement (the "Hughes Recapitalization"); and
WHEREAS, at any time after the date of this Agreement and prior to the
date that is six (6) months after the Spin-Off Effective Time (as defined in the
Merger Agreement), GM may,
pursuant to one or more transactions, issue shares of GM's Class H Common Stock,
par value $0.01 per share (the "GM Class H Common Stock"), or distribute shares
of Class C Common Stock of Hughes, par value $0.01 per share (the "Hughes Class
C Common Stock") (any such shares of GM Class H Common Stock or Hughes Class C
Common Stock distributed by GM, the "Exchange Shares"), up to an aggregate of
one hundred million (100,000,000) Exchange Shares (subject to reduction pursuant
to the GM/Hughes Separation Agreement and subject to increase by up to an
additional fifty million (50,000,000) Exchange Shares (but in no event shall
such increase exceed One Billion Dollars ($1,000,000,000.00)) in accordance with
Section 5.1(h) hereof, to holders of certain outstanding debt obligations of GM
("Exchange Debt") in exchange for such Exchange Debt (any such exchange, a "GM
Debt/Equity Exchange"); and
WHEREAS, immediately following the Hughes Recapitalization, (i) GM,
pursuant to provisions to be implemented by means of an amendment of the GM
Certificate of Incorporation, shall distribute to the holders of record of GM
Class H Common Stock shares of Hughes Class C Common Stock in exchange for all
of the outstanding shares of GM Class H Common Stock in accordance with the GM
Certificate of Incorporation, as amended in connection with the Hughes
Recapitalization, and the GM Class H Common Stock will be redeemed and canceled,
(ii) in connection therewith, GM shall distribute to holders of record of GM's
Series H 6.25% Automatically Convertible Preference Stock, par value $0.10 per
share (the "GM Series H Preference Stock"), shares of Preference Stock, par
value $0.10 per share, of Hughes (the "Hughes Preference Stock"), in exchange
for all of the outstanding shares of GM Series H Preference Stock in accordance
with the Certificate of Designations relating to the GM Series H Preference
Stock and the GM Series H Preference Stock will be canceled, and (iii) GM shall,
subject to Section 5.2(h) of this Agreement, either retain, or, immediately
following the redemption of shares of GM Class H Common Stock in exchange for
shares of Hughes Class C Common Stock as described in clause (i) above,
distribute by means of a dividend to the holders of record of GM's Common Stock,
par value $1-2/3 per share (the "GM $1-2/3 Common Stock"), in respect of all
outstanding shares of GM $1-2/3 Common Stock, the remaining shares of Hughes
Class C Common Stock held by GM and not previously distributed to the holders of
record of GM Class H Common Stock, in each case as provided in this Agreement
(the transactions described in clauses (i) through (iii) above being referred to
herein collectively as the "Spin-Off"); and
WHEREAS, consummation of the Hughes Recapitalization and the Spin-Off
is conditioned on, among other things, the approval by the holders of a majority
of the outstanding shares of GM $1-2/3 Common Stock and GM Class H Common Stock,
each voting as a separate class and both voting together as a single class based
on their respective per share voting power, of this Agreement, the GM/Hughes
Separation Agreement and the transactions contemplated hereby and thereby,
including the GM Charter Amendment (as defined below), the Hughes
Recapitalization and the Spin-Off (collectively, the "GM Transactions"); and
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WHEREAS, a certain lender has delivered a commitment letter to Hughes
and EchoStar pursuant to which it has committed to lend to Hughes or the
Surviving Corporation (as defined in the Merger Agreement) up to Five Billion
Five Hundred Twenty Five Million Dollars ($5,525,000,000.00) for the purpose of
financing the Recapitalization Amount (as defined in the GM/Hughes Separation
Agreement), refinancing certain outstanding indebtedness in connection with the
consummation of the Merger and financing the combined business of Hughes and
EchoStar following the Merger (the "Merger Financing") on the terms set forth in
the commitment letter attached hereto as Exhibit B or in any similar commitment
or financing letter or other agreement replacing, and having substantially the
same effect as, such commitment letter and reasonably acceptable to Hughes (in
either case, the "Merger Commitment Letter"); and
WHEREAS, GM, Hughes, EchoStar and The Samburu Warrior Revocable Trust,
a trust as to which Charles W. Ergen is the sole trustee (the "EchoStar
Controlling Stockholder"), are concurrently entering into that certain
Supplemental Agreement & Guaranty (the "Supplemental Agreement"), in the form
attached hereto as Exhibit C, relating to the commitment of EchoStar to use its
best efforts to assist Deutsche Bank, A.G., New York, in obtaining commitments
from nationally recognized banking institutions to provide for an additional
amount of financing such that the aggregate amount of financing to be obtained
pursuant to the Merger Financing (including financing arranged pursuant to any
co-arrangements with co-arrangers as contemplated by the provisions of the
Merger Commitment Letter) shall be in the amount of at least Five Billion Five
Hundred Twenty Five Million Dollars ($5,525,000,000.00), and, in connection
therewith, the EchoStar Controlling Stockholder has pledged certain shares of
EchoStar stock to GM pursuant to that certain Pledge Agreement (the "Pledge
Agreement"), executed by the EchoStar Controlling Stockholder and GM
concurrently with the Supplemental Agreement, in the form attached hereto as
Exhibit D; and
WHEREAS, the Merger Financing will be consummated (i) in accordance
with one or more credit agreements (collectively, the "Merger Financing
Agreement") to be entered into by and among Hughes, EchoStar and the lenders
parties thereto as soon as reasonably practicable following the date hereof
based on the terms set forth in the Merger Commitment Letter and/or (ii) with
the proceeds from one or more private placements or public offerings of debt or
equity securities of EchoStar as contemplated herein; and
WHEREAS, pursuant to the Merger Commitment Letter, a certain lender
has committed to lend to EchoStar up to One Billion Nine Hundred Million Dollars
($1,900,000,000.00) for the purpose of consummating the PanAmSat Stock Sale (the
"PanAmSat Purchase Financing"); and
WHEREAS, the PanAmSat Purchase Financing will be consummated (i) in
accordance with a credit agreement (the "PanAmSat Financing Agreement") to be
entered into by and among EchoStar and the lenders parties thereto as soon as
reasonably practicable following the
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date hereof based on the terms set forth in the Merger Commitment Letter and/or
(ii) with proceeds from one or more private placements or public offerings of
debt or equity securities of EchoStar as contemplated herein; and
WHEREAS, the EchoStar Controlling Stockholder, acting by written
consent immediately after the execution of the Merger Agreement, shall have
executed and delivered to EchoStar a written consent as the controlling
stockholder of EchoStar (the "EchoStar Stockholder Consent"), in the form
attached hereto as Exhibit E, adopting and approving the Merger Agreement, and,
as a result of the EchoStar Stockholder Consent, no further approval of the
Merger Agreement by the EchoStar Board of Directors or the EchoStar stockholders
will be required in order to consummate the Merger; and
WHEREAS, the Hughes Recapitalization will occur pursuant to the
Separation Agreement (the "GM/Hughes Separation Agreement") entered into by and
between GM and Hughes concurrently with the execution and delivery of this
Agreement, in the form attached hereto as Exhibit F, and certain other matters
relating to the separation of Hughes from GM will be implemented pursuant to
certain other agreements contemplated therein, including (i) the GM/Hughes Tax
Agreements (as defined in the GM/Hughes Separation Agreement) previously entered
into by and among GM, Hughes and certain other parties thereto or entered into
by and between GM and Hughes concurrently with the execution and delivery of
this Agreement, as applicable, and (ii) the Intellectual Property Agreement (the
"GM/Hughes Intellectual Property Agreement") entered into by and between GM and
Hughes concurrently with the execution and delivery of this Agreement, in the
form attached as Exhibit A to the GM/Hughes Separation Agreement; and
WHEREAS, the Spin-Off will occur as contemplated by this Agreement;
and
WHEREAS, immediately after the Spin-Off and subject to satisfaction of
the conditions precedent thereto, the Merger will occur pursuant to an Agreement
and Plan of Merger (the "Merger Agreement") entered into by and among EchoStar
and Hughes concurrently with the execution and delivery of this Agreement, in
the form attached hereto as Exhibit G; and
WHEREAS, the parties intend the Spin-Off to qualify as a distribution
of Hughes stock to GM stockholders with respect to which no gain or loss will be
recognized pursuant to Section 355 and related provisions of the Internal
Revenue Code of 1986, as amended, together with the rules and regulations
promulgated thereunder (the "Code"), by GM, Hughes and their respective
stockholders; and
WHEREAS, the parties intend the Merger to qualify as a reorganization
described in Section 368(a) of the Code; and
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WHEREAS, (i) the respective Boards of Directors of GM, Hughes, and
EchoStar have determined that the Merger is advisable, desirable and in the best
interests of their respective stockholders, (ii) the respective Boards of
Directors of Hughes and EchoStar have approved the Merger Agreement and the
other agreements referred to therein to which each is a party, as applicable,
(iii) the respective Boards of Directors of GM, Hughes and EchoStar have
approved this Agreement and the other agreements referred to herein to which
each is a party, as applicable, (iv) the respective Boards of Directors of GM
and Hughes have approved the Implementation Agreement and the GM/Hughes
Separation Agreement and the other agreements referred to therein to which each
is a party, (v) the Board of Directors of GM has approved the GM Transactions,
including the GM Charter Amendment, and has determined, subject to its fiduciary
duties under Applicable Law (as defined below), to recommend that its
stockholders approve and adopt the GM Transactions as contemplated herein, (vi)
the Board of Directors of Hughes has recommended that its stockholders approve
and adopt the Merger Agreement and GM shall have, in its capacity as the sole
stockholder of Hughes, at a meeting to be held after the execution of the Merger
Agreement, adopted and approved the Merger Agreement, (vii) the Board of
Directors of EchoStar has recommended that its stockholders approve and adopt
the Merger Agreement and the EchoStar Controlling Stockholder shall have, in his
capacity as controlling stockholder of EchoStar, acting by written consent
immediately after the execution of the Merger Agreement, adopted and approved
the Merger Agreement such that the EchoStar Stockholder Approval (as defined in
the Merger Agreement) shall have been obtained, and (viii) the Board of
Directors of Hughes has approved the Hughes Charter Amendments (as defined
below) and GM shall have, in its capacity as the sole stockholder of Hughes, at
a meeting to be held immediately after the execution of this Agreement, adopted
and approved the amendment of the Hughes Certificate of Incorporation
constituting a part of the Hughes Charter Amendments;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
ARTICLE 1
THE GM TRANSACTIONS
Section 1.1. GM Board Approval of the GM Transactions. GM's Board of
Directors, at a meeting duly convened and held on October 28, 2001, (a)
determined that, as of such date, the execution, delivery and performance of
this Agreement by GM and the consummation of the transactions contemplated
hereby would be advisable, desirable and in the best interests of GM and its
stockholders and that, as of such date, consummation of the GM Transactions
would be fair to the holders of GM $1-2/3 Common Stock and the holders of GM
Class H Common Stock; (b)
-5-
approved this Agreement and the transactions contemplated hereby; and (c)
determined, subject to its fiduciary duties under Applicable Law, to recommend
the GM Transactions as fair to the holders of GM $1-2/3 Common Stock and the
holders of GM Class H Common Stock and to recommend and submit the GM
Transactions for their approval. In connection with this determination, each of
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bear, Stearns & Co. Inc.
(the "GM Financial Advisors") has provided its written opinion, dated as of such
date and addressed to the Board of Directors of GM (the "GM Financial Advisor
Fairness Opinions"), to the effect that, as of such date and taking into account
all relevant financial aspects of the GM Transactions and the Merger (together,
the "Transactions") and certain other related transactions, taken as a whole,
the consideration to be provided to GM and its subsidiaries and to the holders
of GM $1-2/3 Common Stock (if applicable) and the holders of GM Class H Common
Stock in the GM Transactions is fair, from a financial point of view, to the
holders of GM $1-2/3 Common Stock and the holders of GM Class H Common Stock. In
addition, each of Goldman, Sachs & Co. and Credit Suisse First Boston
Corporation (the "Hughes Financial Advisors") has provided its written opinion,
dated as of such date and addressed to the Board of Directors of GM and to the
Board of Directors of Hughes, to the effect that, as of such date and based on
market conditions at such time, the exchange ratios contemplated by the Merger
Agreement are fair, from a financial point of view, to the holders of Hughes
Class C Common Stock immediately prior to the Merger, including GM and the
holders of GM 1-2/3 Common Stock and GM Class H Common Stock, as applicable.
Section 1.2. GM Stockholder Approval of the GM Transactions.
(a) GM's Obligations Relating to the Stockholder Approval Process.
In addition to the obligations of GM and Hughes set forth in Section 5.1(g)
below with respect to the preparation and filing of the Spin-Off/Merger
Registration Statement (as defined below), subject in all cases to the other
provisions of this Section 1.2 and to Section 1.3 below, GM shall, at such times
as it shall reasonably determine, consistent with its obligations under Section
5.1 below, following the satisfaction or waiver of each and all of the
conditions set forth in Section 1.3 below:
(i) take all other action, in accordance with the U.S. federal
securities laws, the Delaware General Corporation Law (as amended from time to
time, the "DGCL"), all other Applicable Law, its certificate of incorporation,
its bylaws and the policy statement of its Board of Directors regarding certain
capital stock matters (a copy of which has been heretofore provided to EchoStar)
(the "GM Board Policy Statement"), necessary to present the GM Charter
Amendment, the Hughes Recapitalization and all other aspects of the GM
Transactions, including the Spin-Off, to the holders of GM $1-2/3 Common Stock
and GM Class H Common Stock for their consideration and in order to seek the
Requisite Stockholder Approval (as defined below) of the GM Transactions;
(ii) include in a proxy statement or consent solicitation
statement of GM to be distributed to GM's common stockholders in connection with
the GM Transactions (as amended
-6-
and supplemented from time to time, the "GM Proxy/Consent Solicitation
Statement") the recommendation of its Board of Directors in favor of the GM
Transactions;
(iii) mail the GM Proxy/Consent Solicitation Statement to its
common stockholders (the date on which such mailing is commenced being referred
to herein as the "Mailing Date"); and
(iv) use commercially reasonable efforts, in accordance with
the U.S. federal securities laws, the DGCL and all other Applicable Law, to
solicit from its common stockholders entitled to vote thereon, as determined by
GM in its sole and absolute discretion, either (A) proxies to be voted at a
stockholders meeting or (B) written consents to be obtained in connection with a
consent solicitation, in each case sufficient under Applicable Law to constitute
the Requisite Stockholder Approval of the GM Transactions.
(b) Non-Recommendation Determination. If GM's Board of Directors
shall have determined, in good faith and upon advice of legal counsel, that, in
accordance with its fiduciary duties under Applicable Law, either (i) it cannot
or will not be able to recommend the GM Transactions to its common stockholders
for their approval or (ii) after having recommended to its common stockholders
approval of the GM Transactions, it is required to withdraw, revoke or modify in
any adverse manner such recommendation (in either case, a "Non-Recommendation
Determination"), GM shall promptly provide written notice thereof to EchoStar (a
"Notice of Non-Recommendation"), in which event GM shall not be required to take
or continue any of the actions set forth in Section 1.2, and, subject to Section
1.2(c) and Section 1.2(e), the provisions of Sections 7.1(c)(viii) and
7.1(d)(vi) of the Merger Agreement shall apply.
(c) Notice of Proposed Mailing. At any time after delivering a
Notice of Non-Recommendation that has not been withdrawn pursuant to Section
1.2(e), GM may deliver a written notice to EchoStar that GM proposes to mail the
GM Proxy/Consent Solicitation Statement and submit the GM Transactions to its
common stockholders for their consideration notwithstanding such Non-
Recommendation Determination (a "Notice of Proposed Mailing"); provided, that GM
shall not deliver a Notice of Proposed Mailing unless GM shall have determined,
in good faith and upon advice of legal counsel, that taking into account such
Non-Recommendation Determination and the fiduciary duties of its Board of
Directors under Applicable Law, (A) GM is authorized under the DGCL to mail the
GM Proxy/Consent Solicitation Statement and submit the GM Transactions to its
common stockholders and (B) the receipt of the Requisite Stockholder Approval
(if received) would result in the GM Transactions being duly authorized by all
necessary corporate action on the part of GM. In the event that GM delivers a
Notice of Proposed Mailing, the provisions of Sections 7.1(c)(viii) and
7.1(d)(vi), as the case may be, of the Merger Agreement shall, commencing five
(5) Business Days (as defined below) after such delivery, no longer apply as a
result of such Notice of Non-Recommendation and the parties' right to terminate
the Merger Agreement pursuant to Sections 7.1(c)(viii) and 7.1(d)(vi), as the
case may be, thereof as a result of such Notice of Non-
-7-
Recommendation shall terminate, in which case GM shall be required to mail the
GM Proxy/Consent Solicitation Statement and submit the GM Transactions to its
common stockholders in accordance with Section 1.2(a) notwithstanding such Non-
Recommendation Determination; provided, that the GM Proxy/Consent Solicitation
Statement may in such event include a recommendation that GM's common
stockholders reject the GM Transactions (or no recommendation with respect to
the GM Transactions) and such additional disclosure relating to the Non-
Recommendation Determination as may be required in order to avoid the
misstatement of a material fact or the omission of a material fact necessary to
make the statements therein not misleading or as otherwise may be required in
accordance with Applicable Law.
(d) Request for Confirmation. In the event that the conditions set
forth in Sections 1.3(a), (c) and (d) have been satisfied for not less than ten
(10) Business Days, and continue to be satisfied, but GM shall not have
commenced the mailing of the GM Proxy/Consent Solicitation Statement, EchoStar
may from time to time make a written request (a "Confirmation Request") that GM
confirm in writing (a "Confirmation") that, as of the date of such Confirmation,
GM's Board of Directors continues to recommend the GM Transactions and has a
good faith intention and is prepared to submit the GM Transactions to GM's
common stockholders in accordance with Section 1.2(a), and continues to take all
actions in accordance with Section 5.1(a) in furtherance thereof, and is in
compliance with Section 5.1(j); provided, that EchoStar may not make any
Confirmation Request within ten (10) Business Days after it has received a
Confirmation. If EchoStar delivers a Confirmation Request to GM in accordance
with the preceding sentence, then either (i) GM shall provide a Confirmation to
EchoStar within five (5) Business Days following its receipt of the Confirmation
Request (a "Confirmation Period") or (ii) in the event that GM fails to provide
a Confirmation to EchoStar within the applicable Confirmation Period, GM shall
be deemed to have delivered a Notice of Non-Recommendation as of the end of such
Confirmation Period and the provisions of Section 7.1(d)(vi) of the Merger
Agreement shall apply.
(e) Withdrawal of Notice of Non-Recommendation. At any time after
delivering a Notice of Non-Recommendation pursuant to Section 1.2(b) hereof, GM
may deliver a written notice to EchoStar that the GM Board of Directors has
determined to recommend the GM Transactions to its common stockholders for their
approval and to withdraw the Notice of Non-Recommendation (a "Withdrawal
Notice"). In the event that GM delivers a Withdrawal Notice, commencing five (5)
Business Days after such delivery, the provisions of Sections 7.1(c)(viii) and
7.1(d)(vi) of the Merger Agreement shall no longer apply as a result of such
Notice of Non-Recommendation and the parties' rights to terminate the Merger
Agreement pursuant to Sections 7.1(c)(viii) and 7.1(d)(vi), as the case may be,
thereof as a result of such Notice of Non-Recommendation shall terminate, in
which case GM shall be required to mail the GM Proxy/Consent Solicitation
Statement and submit the GM Transactions to its common stockholders in
accordance with Section 1.2(a) notwithstanding such Non-Recommendation
Determination.
-8-
Section 1.3. Conditions to GM's Obligations Relating to the
Stockholder Approval Process. GM's obligation to take the actions set forth in
Section 1.2 above is subject to the satisfaction of each and all of the
following conditions (any of which, other than the condition set forth in
Section 1.3(a), may be waived in whole or in part by GM, in its sole and
absolute discretion, after consultation with EchoStar):
(a) the U.S. Securities and Exchange Commission (the "SEC") shall
have declared the Spin-Off/Merger Registration Statement effective, all other
required approvals and clearances of the Spin-Off/Merger Registration Statement
and the GM Proxy/Consent Solicitation Statement shall have been received from
the SEC and no stop order suspending the effectiveness of the Spin-Off/Merger
Registration Statement shall be in effect and no similar restraining order shall
have been entered or threatened by the SEC with respect to the Transactions;
(b) all applicable material state and foreign blue sky or securities
permits or approvals required to mail the GM Proxy/Consent Solicitation
Statement and take the other actions set forth in Section 1.2 above shall have
been received in accordance with Applicable Law and no restraining order shall
have been entered or threatened by any state securities administrator or any
foreign securities administrator with respect to the Transactions;
(c) GM shall have received the Ruling (as defined in the GM/Hughes
Separation Agreement); and
(d) the Merger Financing Agreement shall have been executed and shall
be in full force and effect, and none of the agent banks thereunder shall have
notified Hughes or EchoStar in writing that the transactions contemplated by the
Merger Financing Agreement are not reasonably likely to be consummated prior to
the date set forth in Section 7.1(b)(ii) of the Merger Agreement (any such
notification, an "Adverse Notification") such that there is a material risk that
the Merger Financing will not be available at or immediately prior to the Spin-
Off Effective Time.
Section 1.4. Spin-Off of Hughes from GM.
(a) Subject to the consummation by GM and Hughes of the Hughes
Recapitalization in accordance with the terms and conditions of the GM/Hughes
Separation Agreement, including the receipt by GM of all of the dividend
distributions contemplated by Section 1.1(a) of the GM/Hughes Separation
Agreement in an amount equal to the Recapitalization Amount, the parties agree
that, immediately following the consummation of the Hughes Recapitalization and
immediately prior to the Merger, GM and Hughes shall promptly take all actions
within their control legally required to effect (i) the Hughes Class C Common
Stock Exchange (as defined below) and (ii) provided that the GM Series H
Preference Stock shall not have been previously converted, redeemed or otherwise
canceled pursuant to the Certificate of Designations relating to the GM Series
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H Preference Stock, substantially concurrently therewith, the Greater Spinco
Preference Share Exchange (as defined below).
(b) For the purposes of this Agreement, the following terms shall
have the following meanings:
(i) "GM Notional Shares" means the aggregate number determined
by the Board of Directors of GM, in good faith and in accordance with the
provisions of the succeeding sentence, to be the aggregate number of notional
shares representing GM's retained economic interest in Hughes. The aggregate
number of GM Notional Shares shall be calculated, as of any particular time, by
subtracting (A) the number of shares of GM Class H Common Stock issued and
outstanding as of such time from (B) the Denominator determined by the Board of
Directors of GM as of such point in time rather than as an average with respect
to any accounting period. Promptly following any determination by the Board of
Directors of GM of the aggregate number of GM Notional Shares pursuant to this
Agreement, GM shall provide written notice thereof to EchoStar (which notice
shall include the computation thereof);
(ii) "Greater Spinco Preference Share Exchange" means the
distribution by GM to the holders of the GM Series H Preference Stock of shares
of Hughes Preference Stock having all of the rights, features and other
attributes of Greater Spinco Preference Shares (as defined below), such that all
of the outstanding shares of GM Series H Preference Stock shall be canceled in
accordance with the terms of the GM Certificate of Incorporation, including the
Certificate of Designations relating to the GM Series H Preference Stock;
(iii) "Greater Spinco Preference Shares" shall have the meaning
set forth in Section 6(iii)(d)(II) of the Certificate of Designations relating
to the GM Series H Preference Stock constituting part of the GM Certificate of
Incorporation;
(iv) "Hughes Class C Common Stock Exchange" means (A) the pro
rata distribution to the holders of GM Class H Common Stock of shares of Hughes
Class C Common Stock representing their proportionate economic interest in
Hughes in exchange for all of the outstanding shares of GM Class H Common Stock
(i.e., the distribution of one share of Hughes Class C Common Stock in exchange
for each outstanding share of GM Class H Common Stock) such that all of the
outstanding shares of GM Class H Common Stock shall be redeemed and canceled in
accordance with the terms of the GM Certificate of Incorporation, as amended
pursuant to the GM Charter Amendment, and (B) in the event that the number of
shares of Hughes Class C Common Stock that would be issuable in order to
represent the GM Notional Shares determined as of immediately prior to the Spin-
Off Effective Time (and after giving effect to the adjustment to the Denominator
in connection with the Hughes Recapitalization as contemplated by Section 1.1(b)
of the GM/Hughes Separation Agreement) is greater than zero, the retention by
GM, or, immediately following the redemption of shares of GM Class H Common
Stock in exchange for shares of Hughes
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Class C Common Stock as described in clause (A) above, the distribution by GM by
means of a dividend to the holders of GM $1-2/3 Common Stock, of all or a
portion of the remaining shares of Hughes Class C Common Stock held by GM as of
such time, as contemplated by Section 5.2(h) below; and
(v) "Spin-Off Effective Time" means the effective time of the
Hughes Class C Common Stock Exchange in accordance with the GM Certificate of
Incorporation, as amended pursuant to the GM Charter Amendment and Applicable
Law.
Section 1.5. Effects of the Spin-Off. From and after the Spin-Off
Effective Time, the Spin-Off shall have the effects specified in DGCL Sections
151 and 173 (as applicable) and set forth in this Agreement.
(a) Exchange of Hughes Class C Common Stock for GM Class H Common
Stock. At and as of the Spin-Off Effective Time, by virtue of the Spin-Off and
without any action on the part of GM, Hughes, any holder of capital stock of GM
or any other Person (as defined below), (i) for all purposes of determining the
record holders of Hughes Class C Common Stock, the holders of record of GM Class
H Common Stock as of immediately prior to the Spin-Off Effective Time shall be
deemed to be holders of the shares of Hughes Class C Common Stock distributed to
such holders pursuant to the Hughes Class C Common Stock Exchange and (ii)
subject to any transfer of such stock, each such holder shall be entitled to
receive all dividends payable on, and exercise voting rights and all other
rights and privileges with respect to, the shares of Hughes Class C Common Stock
distributed to such holder pursuant to the Hughes Class C Common Stock Exchange.
(b) Distribution With Respect to GM $1-2/3 Common Stock. In the
event that GM effects the Remaining Shares Distribution (as defined below and as
contemplated by Section 5.2(h) of this Agreement), then, at and as of the Spin-
Off Effective Time, by virtue of the Spin-Off and without any action on the part
of GM, Hughes, any holder of capital stock of GM or any other Person, (i) for
all purposes of determining the record holders of Hughes Class C Common Stock,
the holders of record of GM $1-2/3 Common Stock as of immediately prior to the
Spin-Off Effective Time shall be deemed to be holders of the shares of Hughes
Class C Common Stock distributed to such holders pursuant to the Hughes Class C
Common Stock Exchange and (ii) subject to any transfer of such stock, each such
holder shall be entitled to receive all dividends payable on, and exercise
voting rights and all other rights and privileges with respect to, the shares of
Hughes Class C Common Stock distributed to such holder pursuant to the Hughes
Class C Common Stock Exchange.
(c) Exchange of Greater Spinco Preference Shares for GM Series H
Preference Stock. In accordance with the terms of the GM Certificate of
Incorporation, including the Certificate of Designations relating to the GM
Series H Preference Stock, GM shall, provided that the GM Series H Preference
Stock shall not have been previously converted, redeemed or otherwise canceled
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pursuant to the Certificate of Designations relating to the GM Series H
Preference Stock, pursuant to the Greater Spinco Preference Share Exchange, make
a distribution to the holders of the GM Series H Preference Stock of Hughes
Preference Stock having all of the rights, features and other attributes of
Greater Spinco Preference Shares such that all of the outstanding shares of GM
Series H Preference Stock shall be canceled. At and as of the Spin-Off Effective
Time, by virtue of the Spin-Off and without any action on the part of GM,
Hughes, any holder of capital stock of GM or any other Person, (i) for all
purposes of determining the record holders of Hughes Preference Stock, the
holders of record of GM Series H Preference Stock as of immediately prior to the
Spin-Off Effective Time shall be deemed to be holders of Hughes Preference Stock
distributed to such holders pursuant to the Greater Spinco Preference Share
Exchange and (ii) subject to any transfer of such stock, each such holder shall
be entitled to receive all dividends payable on, and exercise voting rights and
all other rights and privileges with respect to, Hughes Preference Stock
distributed to such holder pursuant to the Greater Spinco Preference Share
Exchange.
(d) Treasury Shares. At and as of the Spin-Off Effective Time, by
virtue of the Spin-Off, without any action on the part of GM, Hughes, any holder
of capital stock of GM or any other Person, each share of GM Class H Common
Stock owned by GM as of immediately prior to the Spin-Off Effective Time shall
be canceled and retired, and no payment or distributions shall be made in
respect thereof.
Section 1.6. Cooperation of Transfer Agents; Stockholder Records; GM
Class H Common Stock Certificates.
(a) Cooperation. GM shall cooperate, and shall instruct Fleet
National Bank, N.A., in its capacity as the transfer agent for the GM Class H
Common Stock (the "GM Transfer Agent"), to cooperate fully with Hughes and the
transfer agent for the Hughes Class C Common Stock (the "Hughes Transfer
Agent"), and Hughes shall cooperate, and shall instruct the Hughes Transfer
Agent to cooperate fully with GM and the GM Transfer Agent in connection with
the Spin-Off and all related matters, including those matters relating to (i)
the issuance and delivery of certificates representing, or other evidence of
ownership of (any such instruments, "Certificates"), the shares of Hughes Class
C Common Stock to be distributed in exchange for all of the shares of GM Class H
Common Stock outstanding as of immediately prior to the Spin-Off Effective Time
as described in Section 1.5(a) above, (ii) the issuance and delivery of
Certificates evidencing the shares of Hughes Class C Common Stock to be retained
by GM, if any, and/or distributed to holders of GM $1-2/3 Common Stock as
described in Section 1.5(b) above, and (iii) the issuance and delivery of
Certificates evidencing the shares of Hughes Preference Stock to be distributed
in exchange for all of the shares of GM Series H Preference Stock outstanding as
of immediately prior to the Spin-Off Effective Time as described in Section
1.5(c) above. GM and Hughes shall jointly instruct the GM Transfer Agent and the
Hughes Transfer Agent to cooperate with each other such that the Hughes Transfer
Agent shall distribute letters of transmittal, in form reasonably satisfactory
to each of GM and Hughes, to all holders of GM Class H Common Stock and GM
Series H Preference Stock as of
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immediately prior to the Spin-Off Effective Time in connection with the exchange
of Certificates evidencing shares of GM Class H Common Stock and GM Series H
Preference Stock for Certificates evidencing shares of Hughes Class C Common
Stock and Hughes Preference Stock, respectively.
(b) Following the Spin-Off Effective Time, GM shall instruct the GM
Transfer Agent to deliver to the Hughes Transfer Agent true, correct and
complete copies of the transfer records reflecting the record holders of GM
Class H Common Stock and GM Series H Preference Stock, in each case as of
immediately prior to the Spin-Off Effective Time. Upon the reasonable request of
Hughes from time to time after the Spin-Off Effective Time in connection with
any legitimate corporate purpose, GM shall cooperate, and shall instruct the GM
Transfer Agent to cooperate, in providing Hughes reasonable access to all
historical share, transfer and dividend payment records with respect to the
holders of GM Class H Common Stock and GM Series H Preference Stock as of
immediately prior to the Spin-Off Effective Time.
(c) Return or Destruction of GM Class H Common Stock Certificates.
GM and Hughes shall use commercially reasonable efforts to enter into an
agreement with the Hughes Transfer Agent relating to the exchange of
Certificates of Hughes Class C Common Stock for Certificates of GM Class H
Common Stock in connection with the Spin-Off, which shall include provisions
reasonably satisfactory to GM and Hughes generally to the effect that following
such time as any Certificates of GM Class H Common Stock are surrendered to the
Hughes Transfer Agent for cancellation, Hughes shall use commercially reasonable
efforts to cause the Hughes Transfer Agent to certify as to their destruction or
promptly deliver such Certificates of GM Class H Common Stock to GM, as may be
requested by GM.
Section 1.7. Closing of Transfer Records. From and after the Spin-
Off Effective Time, transfers of shares of GM Class H Common Stock or GM Series
H Preference Stock outstanding prior to the Spin-Off Effective Time shall not be
made on the stock transfer books of GM.
Section 1.8. Cancellation. From and after the Spin-Off Effective
Time, (a) each holder of a Certificate or Certificates formerly representing
shares of GM Class H Common Stock will thereafter cease to have any rights with
respect to such shares, and such Certificates will represent the shares of
Hughes Class C Common Stock distributed in the Spin-Off and (b) each holder of
Certificates formerly representing shares of GM Series H Preference Stock will
thereafter cease to have any rights with respect to such shares, and such
Certificates will represent the Greater Spinco Preference Shares distributed in
the Spin-Off.
Section 1.9. Treatment of Stock Options, LTAP Awards and Restricted
Stock Units.
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(a) Prior to the Spin-Off Effective Time, in order to preserve the
economic interest and cost to exercise with respect to each employee stock
option to purchase GM Class H Common Stock, GM and Hughes shall take all such
actions as may be necessary to cause each such unexpired and unexercised option,
whether or not vested or exercisable, under stock option plans of GM or Hughes
with respect to GM Class H Common Stock (each, an "Option") to be automatically
converted at the Spin-Off Effective Time into an option (an "Exchange Option")
to purchase, on the same terms and conditions as were applicable to each such
Option immediately before the Spin-Off Effective Time, (i) the same number of
shares of Hughes Class C Common Stock as the holder of such Option would have
been entitled to purchase had such holder exercised each such Option in full
immediately prior to the Spin-Off Effective Time and (ii) at a price per share
equal to the per share exercise price for the Option immediately prior to the
Spin-Off Effective Time; provided, however, that in the case of any Option to
which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code, the conversion formula shall be adjusted, if necessary,
to comply with Section 424(a) of the Code. In connection with the issuance of
Exchange Options, Hughes shall (i) reserve for issuance the number of shares of
Hughes Class C Common Stock that will become subject to Exchange Options
pursuant to this Section 1.9 and (ii) from and after the Spin-Off Effective
Time, upon exercise of Exchange Options, make available for issuance all shares
of Hughes Class C Common Stock covered thereby, subject to the terms and
conditions applicable thereto.
(b) Prior to the Spin-Off Effective Time, in order to preserve the
economic interest and cost to fund with respect to the Hughes Long-Term
Achievement Plan (the "LTAP"), GM and Hughes shall take all such actions as may
be necessary to cause, effective as of the Spin-Off Effective Time, (i) any
portion of a payment under the LTAP which is payable in shares of GM Class H
Common Stock to be payable in the same number of shares of Hughes Class C Common
Stock (and not shares of GM Class H Common Stock), and (ii) any portion of a
payment under the LTAP which is payable in shares of GM $1-2/3 Common Stock to
be payable in a number of shares of Hughes Class C Common Stock (and not shares
of GM $1-2/3 Common Stock) determined pursuant to the following formula: the
number of shares of GM $1-2/3 Common Stock that would otherwise be payable shall
be multiplied by the ratio of (x) the average of the daily high and low trading
prices of a share of GM $1-2/3 Common Stock on the New York Stock Exchange
("NYSE") as quoted by a publicly available stock quotation service for the three
(3) stock trading days ending on and including the fifth trading day before the
date on which the Spin-Off Effective Time occurs, divided by (y) the average of
the daily high and low trading prices of a share of GM Class H Common Stock on
the NYSE as quoted by a publicly available stock quotation service for the
three (3) stock trading days ending on and including the fifth trading day
before the date on which the Spin-Off Effective Time occurs; provided, that any
fractional share of Hughes Class C Common Stock payable in accordance with the
calculation set forth in clause (ii) of this Section 1.9(b) shall be rounded to
the nearest whole share of Hughes Class C Common Stock; provided, further, that
any payment under the LTAP which will become payable in shares of Hughes Class C
Common Stock pursuant to this Section 1.9(b) shall be payable on the same terms
and conditions as were applicable to such payment immediately
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before the date of this Agreement. Hughes shall (i) reserve for issuance the
number of shares of Hughes Class C Common Stock that will become payable under
the LTAP pursuant to this Section 1.9 and (ii) from and after the Spin-Off
Effective Time, with respect to any payment under the LTAP which is payable in
shares of Hughes Class C Common Stock, make available for issuance all such
shares of Hughes Class C Common Stock, subject to the terms and conditions
applicable thereto.
(c) Restricted stock units with respect to GM Class H Common Stock
and other incentive compensation awards payable in, or determined by reference
to, shares of GM Class H Common Stock will be converted into an equal number of
restricted stock units (or incentive compensation awards) with respect to Hughes
Class C Common Stock.
(d) If and to the extent required by the terms of the LTAP, any
awards under the LTAP, any applicable stock option plan or pursuant to the terms
of any applicable Options or restricted stock units (or incentive compensation
awards), GM and Hughes shall use commercially reasonable efforts to obtain the
consent of each holder of outstanding Options or restricted stock units (or
incentive compensation awards) to the treatment of such Options and restricted
stock units (or incentive compensation awards), and such rights to payment under
the LTAP, in accordance with this Section 1.9.
(e) Prior to the Spin-Off Effective Time, the Board of Directors of
GM or an appropriate committee of non-employee directors thereof, or the Board
of Directors of Hughes or an appropriate committee of non-employee directors
thereof, as applicable, shall adopt a resolution consistent with the
interpretive guidance of the SEC, so that the disposition of each Option and the
acquisition of any shares of Hughes Class C Common Stock, any Exchange Options
or any other equity securities or derivative securities of Hughes pursuant to
this Agreement by each officer or director of GM or Hughes who may become
subject to Section 16 of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act"), with
respect to Hughes, shall be exempt for purposes of Section 16 of the Exchange
Act.
(f) GM and Hughes shall take all such actions as may be necessary to
prevent Options, interests in the LTAP, restricted stock units with respect to
GM Class H Common Stock and other incentive compensation awards from being
adjusted to change the number of shares or the purchase price of shares with
respect to such awards (or triggering a payment obligation to such holders) as a
result of the Hughes Recapitalization.
(g) Hughes shall not be obligated to deliver GM Class H Common Stock
or Hughes Class A Common Stock (or otherwise fund any cost) with respect to the
exercise of any Option which is held by an employee of GM or one of its
Subsidiaries (other than Hughes and its Subsidiaries).
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(h) GM, Hughes and each of Hughes' Subsidiaries (including PanAmSat
and DTVLA) shall take all such actions as may be necessary to prevent stock
options, restricted stock units or other incentive compensation awards granted
to employees of Hughes or any of its Subsidiaries (including PanAmSat and DTVLA)
after the signing of this Agreement from vesting or becoming exercisable as a
result of, or in connection with, any of the transactions contemplated by this
Agreement.
(i) To the extent provided in the Hughes Electronics Corporation
Incentive Plan ("Hughes Incentive Plan"), options granted under the Hughes
Incentive Plan will terminate upon the consummation of a Change in Control
Event, as defined in the Hughes Incentive Plan, unless the GM Committee, as
defined in the Hughes Incentive Plan, provides for the assumption, substitution
or continuation of the options in accordance with the terms of the Hughes
Incentive Plan. In consultation with EchoStar and Hughes, the GM Committee or
its delegate (or any successor thereto under the terms of the Hughes Incentive
Plan) shall, subject to Applicable Law and with the prior approval of EchoStar,
exercise its authority pursuant to the terms of the Hughes Incentive Plan
(including Section 7(c)(iii) thereof) to limit the period of exercisability of
any stock option held by any employee who terminates employment for any reason
after the Closing Date to not more than two years beyond the date of such
termination of employment (but in no event beyond the term of the option). With
respect to actions which are taken pursuant to this Section 1.9(i) by the GM
Committee or its delegate with the approval of EchoStar, (i) neither of the
Hughes Indemnitees nor the EchoStar Indemnitees shall be entitled to
indemnification under this Agreement from GM and (ii) the GM Indemnitees shall
be entitled to indemnification under this Agreement by Hughes and EchoStar.
Section 1.10. GM Charter Amendment. The parties acknowledge that
the filing of an appropriate amendment to the GM Certificate of Incorporation,
substantially in the form attached as Exhibit H hereto with such additional
changes as may be approved by the GM Board of Directors and are required in
order to permit the declaration and payment by Hughes of a promissory note to a
wholly owned subsidiary of GM (formed as a limited liability company) which
shall hold, directly or indirectly, all of GM's interest in Hughes and the net
income of which shall be included in the Available Separate Consolidated Net
Income of Hughes (as defined in the GM Certificate of Incorporation) as
contemplated by the provisions of the GM/Hughes Separation Agreement (the "GM
Charter Amendment"), will be required in order to permit the reduction of the
Denominator and to permit the Hughes Class C Common Stock Exchange, and that the
GM Charter Amendment will be consummated only after obtaining the Requisite
Stockholder Approval thereof as contemplated by this Agreement.
Section 1.11. Cooperation; Redemption of Hughes Preferred Stock;
Hughes Charter Amendments. Consistent with the terms and conditions of this
Agreement, each of GM and Hughes shall, and shall cause its affiliates to,
cooperate with the other party in all respects to accomplish the Spin-Off and
promptly take, or cause to be taken, any and all actions within its control
necessary
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under Applicable Law, regulations and agreements in order to consummate and make
effective the Spin-Off immediately prior to the Merger Effective Time.
(a) Without limiting the generality of the foregoing, pursuant to
Article IV, Section 6(c) of the Amended and Restated Certificate of
Incorporation of Hughes, as amended (the "Hughes Certificate of Incorporation"),
Hughes shall take all actions within its control necessary to enable it to
issue, as of immediately prior to the Spin-Off Effective Time, to GM for
distribution to the holder of the GM Series H Preference Stock pursuant to the
Greater Spinco Preference Share Exchange an appropriate number of shares of
Hughes Preference Stock in redemption of all of the Hughes Series A Preferred
Stock, par value $0.10 per share (the "Hughes Series A Preferred Stock"), such
that all of the outstanding shares of GM Series H Preference Stock shall be
canceled as of the Spin-Off Effective Time as contemplated by Section 1.8 of
this Agreement. The parties acknowledge that such actions, to the extent
required to be taken, shall require the filing of an appropriate amendment to
the Hughes Certificate of Incorporation.
(b) Each of GM and Hughes shall take all actions within its control
legally required such that, as of immediately prior to the Spin-Off Effective
Time, the Hughes Certificate of Incorporation shall have been amended and
restated (pursuant to one or more amendments in forms to be mutually agreed by
the parties hereto prior to the Mailing Date) to (i) authorize the Hughes Class
A Common Stock (as defined in the Merger Agreement), the Hughes Class B Common
Stock (as defined in the Merger Agreement) and the Hughes Class C Common Stock
in accordance with the terms set forth as Exhibit A to the Merger Agreement,
(ii) include the Certificate of Designations relating to the Hughes Preference
Stock, in the form attached hereto as Exhibit I, (iii) following the redemption
of the Hughes Series A Preferred Stock, to eliminate the Hughes Series A
Preferred Stock, (iv) to cause Hughes to elect not to be governed by Section
203 of the DGCL, and (v) to authorize the necessary series of capital stock in
connection with the adoption of a stockholder rights plan as contemplated by
Section 5.1(p) below. Each of GM and Hughes shall take all actions within its
control legally required such that, as of immediately prior to the Spin-Off
Effective Time, the By-laws of Hughes shall have been amended and restated to
read in its entirety as mutually agreed among the parties hereto (as amended and
restated, the "Hughes Amended and Restated By-laws", and together with the
Hughes Certificate of Incorporation as amended and restated as contemplated
herein, the "Hughes Charter Amendments").
Section 1.12. Further Assurances Regarding the GM Transactions.
Consistent with the terms and conditions of this Agreement and the GM/Hughes
Separation Agreement, each of the parties shall use commercially reasonable
efforts (except where a different efforts standard is specifically contemplated
by the GM Transaction Agreements (as defined below), the Hughes Transaction
Agreements (as defined below) or the EchoStar Transaction Agreements (as defined
below), in which case, such different standard shall apply) to promptly take, or
cause to be taken, any and all actions, and do, or cause to be done, all things
necessary under Applicable Law, regulations and agreements in order to
consummate and make effective the GM Transactions, including the
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Spin-Off. Without limiting the generality of the foregoing, each of the parties
shall cooperate with each other in all respects, and execute and deliver, or use
commercially reasonable efforts (except where a different efforts standard is
specifically contemplated by the GM Transaction Agreements, the Hughes
Transaction Agreements or the EchoStar Transaction Agreements, in which case,
such different standard shall apply) to cause to have executed and delivered,
all instruments, including instruments of conveyance, assignment and transfer,
which shall include appropriate representations, warranties and covenants, and
to make all filings with, and to obtain all consents, approvals or
authorizations of, any foreign, federal, state or local governmental or
regulatory body, agency, instrumentality or authority ("Governmental Authority")
which are reasonably requested by the other parties in order to consummate and
make effective the GM Transactions, including the Spin-Off.
Section 1.13. Elimination of GM Class H Common Stock from GM
Certificate of Incorporation. The parties acknowledge that it is GM's current
intention, following the redemption of the outstanding GM Class H Common Stock
in connection with the GM Transactions, to amend and restate the GM Certificate
of Incorporation to eliminate the GM Class H Common Stock from the GM
Certificate of Incorporation. At GM's election, GM may include in the GM
Proxy/Consent Solicitation Statement a proposal to GM common stockholders to
amend the GM Certificate of Incorporation in accordance with Applicable Law to
eliminate the GM Class H Common Stock from the GM Certificate of Incorporation
at any time determined by GM in its sole and absolute discretion (provided, that
such time shall not be earlier than the time of the consummation of the
redemption of the outstanding GM Class H Common Stock and provided, further,
that the approval of such proposal by the GM common stockholders shall not be a
part of the Requisite Stockholder Approval).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF GM
In order to induce EchoStar to enter into this Agreement, GM hereby
represents and warrants to EchoStar as follows, except as specifically described
in GM's annual report on Form 10-K for the fiscal year ended December 31, 2000,
GM's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2001
and all other reports, filings, registration statements and other documents
filed by GM with the SEC after June 30, 2001 and prior to the date hereof (as
such documents have been amended since the time of their filing and prior to the
date hereof), all of which are of public record.
Section 2.1. Organization and Standing. GM is a corporation validly
existing and in good standing under the laws of the State of Delaware, with all
corporate power to carry on its business as now conducted. GM is duly qualified
to do business and is in good standing (to the extent that such concepts or
equivalent concepts are recognized in such jurisdictions) in each jurisdiction
in which the nature of the business conducted by it or the property it owns,
leases or
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operates makes such qualification necessary, except where the failure to be so
qualified or in good standing in such jurisdiction could not reasonably be
expected to have a material adverse impact on GM's ability to consummate the
transactions contemplated by the GM Transaction Agreements, a Hughes Material
Adverse Effect (as defined in the Merger Agreement) or a material adverse effect
on Hughes' ability to consummate the transactions contemplated by the Hughes
Transaction Agreements.
Section 2.2. Corporate Power and Authority. GM has (or will have
prior to execution thereof) all requisite corporate power and authority to enter
into the GM Transaction Agreements and to consummate the transactions
contemplated thereby. The execution and delivery of the GM Transaction
Agreements by GM, the execution and delivery of the Hughes Transaction
Agreements by Hughes, and, subject to the recommendation of the GM Board of
Directors in accordance with the provisions of Section 1.2 above and receipt of
the Requisite Stockholder Approval, the consummation of the transactions
contemplated by the GM Transaction Agreements and the Hughes Transaction
Agreements to be effected by GM have been (or will be prior to execution and
delivery thereof) duly authorized by all necessary corporate action on the part
of GM. Each of the GM Transaction Agreements has been (or will be) duly
executed and delivered by GM, and, assuming the due authorization, execution and
delivery by the other parties thereto, constitutes (or will constitute when
executed) the legal, valid and binding obligation of GM, enforceable against GM
in accordance with its terms, except as enforceability may be limited by
bankruptcy, similar laws of debtor relief and general principles of equity.
For the purposes of this Agreement, "GM Transaction Agreements" means
this Agreement, the Stockholders Agreement (the "Stockholders Agreement") to be
entered into by and among GM, Hughes and the EchoStar Controlling Stockholder
concurrently with the execution and delivery of this Agreement, in the form
attached hereto as Exhibit J, the Registration Rights Letter Agreement (the
"Registration Rights Letter Agreement") to be entered into by and among Hughes,
GM, EchoStar, the EchoStar Controlling Stockholder and the GM Pension Plans (as
defined below) (or a trustee therefor) concurrently with the execution and
delivery of this Agreement, relating to the registration rights term sheet in
the form attached hereto as Exhibit K, the GM Registration Rights Agreement to
be entered into by and between Hughes and GM as contemplated by the Registration
Rights Letter Agreement, the GM/Hughes Separation Agreement, the Supplemental
Agreement, the Pledge Agreement, the GM/Hughes Tax Agreements, the GM/Hughes
Intellectual Property Agreement, the GM/Hughes Special Employee Items Agreement
(as defined in the GM/Hughes Separation Agreement), the Contribution and
Transfer Agreement to be entered into by and among GM and the GM Pension Plans
concurrently with the execution and delivery of this Agreement and all other
agreements contemplated hereby or thereby to which GM is (or will be) a party.
Section 2.3. Conflicts, Consents and Approvals. The execution and
delivery by GM of the GM Transaction Agreements, the execution and delivery by
Hughes of the Hughes
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Transaction Agreements, and the consummation of the transactions contemplated by
the GM Transaction Agreements and the Hughes Transaction Agreements will not:
(a) violate any provision of the GM Certificate of Incorporation
(after giving effect to the GM Charter Amendment), the bylaws of GM, the GM
Board Policy Statement, the Hughes Certificate of Incorporation, the Hughes By-
laws (after giving effect to the Hughes Charter Amendments) or the certificate
of incorporation or the bylaws of any of Hughes' Subsidiaries;
(b) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time or both, would constitute a default) under, require the consent
of any party under, or entitle any party (with the giving of notice, the passage
of time or both) to terminate, accelerate, modify or call a default under, or
result in the creation of any liens, pledges, security interests, preemptive
rights, charges, restrictions, claims or other encumbrances of any kind or
nature (collectively, "Encumbrances") upon any of the properties or assets of GM
or any of its Significant Subsidiaries (as defined below), other than Hughes and
its Subsidiaries, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, intellectual property or other
license, contract, undertaking, agreement, lease or other instrument or
obligation to which GM or any of its Significant Subsidiaries (other than Hughes
and its Subsidiaries) is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to GM or any of its Significant Subsidiaries (other than
Hughes and its Subsidiaries); or
(d) except as contemplated by the GM Transaction Agreements or the
Merger Agreement, require any consent or approval of, or registration or filing
by GM or any of its Affiliates (other than Hughes and its Subsidiaries) with,
any third party or Governmental Authority, other than (i) authorization for
listing or quotation of the shares of Hughes Class C Common Stock and Hughes
Class A Common Stock to be issued in connection with the Spin-Off and the
Merger, as applicable, on the NYSE or the Nasdaq Stock Market ("Nasdaq"),
subject to official notice of issuance, (ii) actions required by the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act"), and any similar laws of
foreign jurisdictions, and (iii) registrations or other actions required under
federal, state and foreign securities laws as are contemplated by this
Agreement;
except in the case of (b), (c) and (d) for any of the foregoing that, in the
aggregate, could not reasonably be expected to have a material adverse impact on
GM's ability to consummate the transactions contemplated by the GM Transaction
Agreements or a Hughes Material Adverse Effect or a material adverse effect on
Hughes' ability to consummate the transactions contemplated by the Hughes
Transaction Agreements.
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(e) For the purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Subsidiary", with respect to a Person, means any
corporation, limited liability company, partnership, trust or unincorporated
organization of which securities or interests having by the terms thereof
ordinary voting power to elect at least a majority of the board of directors or
others performing similar functions with respect to such corporation, limited
liability company, partnership, trust or unincorporated organization are
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries; and
(ii) "Significant Subsidiary" means a Subsidiary of a Person that
would constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the Exchange Act, if such Rule were applicable to such Person.
Section 2.4. Ownership of Hughes Capital Stock. As of the date of
this Agreement and through and until immediately prior to the Spin-Off Effective
Time (i.e., not giving effect to the Hughes Class C Common Stock Exchange or the
Greater Spinco Preference Share Exchange), each outstanding share of Hughes
capital stock is and shall be owned by GM, free and clear of all Encumbrances.
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Section 2.5. Capitalization; Class H Fraction.
--------------------------------
(a) As of the date of this Agreement, GM's authorized capital stock
consists of 2,000,000,000 shares of GM $1-2/3 Common Stock; 3,600,000,000 shares
of GM Class H Common Stock; 6,000,000 shares, no par value per share, of
Preferred Stock ("GM Preferred Stock"); and 100,000,000 shares, $0.10 par value
per share, of Preference Stock ("GM Preference Stock") of which 2,669,633 shares
are designated as GM Series H Preference Stock. As of October 25, 2001, (i)
555,503,649 shares of GM $1-2/3 Common Stock were issued and outstanding,
200,795,732 shares of GM $1-2/3 Common Stock were held by GM as treasury shares,
336,512 shares of GM $1-2/3 Common Stock were reserved for issuance upon
exercise of outstanding options and 27,093 shares of GM $1-2/3 Common Stock were
issuable with respect to awards under the LTAP; (ii) 876,982,994 shares of GM
Class H Common Stock were issued and outstanding, 81,564,668 shares of GM Class
H Common Stock were held by GM as treasury shares, 84,535 shares of GM Class H
Common Stock were reserved for issuance upon exercise of outstanding options,
1,048,325 shares of GM Class H Common Stock were issuable with respect to awards
under the LTAP and 139,293 shares of GM Class H Common Stock were issuable with
respect to restricted stock or restricted stock units; (iii) no shares of GM
Preferred Stock were issued and outstanding; and (iv) 2,669,633 shares of GM
Series H Preference Stock were issued and outstanding and no shares of GM Series
H Preference Stock were held by GM as treasury shares. Each outstanding share
of GM capital stock, including the GM Class H Common Stock and the GM Series H
Preference Stock, is duly authorized and validly issued, fully paid and
nonassessable and has not been issued in violation of any preemptive or similar
rights. GM has no authorized or outstanding bonds, debentures, notes or other
obligations or securities, the holders of which have the right to vote with the
stockholders of GM on any matter.
(b) Other than the GM Series H Preference Stock, any shares of GM
Class H Common Stock to be issued pursuant to any GM Debt/Equity Exchange, as
contemplated by the Merger Agreement or as set forth in Section 2.5(b) of the
disclosure schedule delivered by GM to EchoStar and dated as of the date of this
Agreement (the "GM Disclosure Schedule"), there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance, sale
or transfer of any GM Class H Common Stock, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of GM Class
H Common Stock and, except as expressly provided by the GM Transaction
Agreements, GM has no obligation of any kind to issue any additional shares of
GM Class H Common Stock or to pay for shares of GM Class H Common Stock. The
issuance and sale of all of the shares of capital stock described in this
Section 2.5, including the GM Class H Common Stock and the GM Series H
Preference Stock, have been in compliance with federal and state securities
laws. Section 2.5(b) of the GM Disclosure Schedule accurately sets forth the
number of shares of GM Class H Common Stock issuable upon exercise of options to
purchase shares of GM Class H Common Stock, and the exercise prices with
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respect thereto, along with a list of the options to purchase shares of GM Class
H Common Stock held by each corporate officer of GM and Hughes. Other than (i)
the Restated Registration Rights Agreement, dated as of July 1, 2000, by and
among GM, United States Trust Company of New York ("U.S. Trust"), as Trustee of
the GM Special Hourly Employees Pension Trust established under the GM Hourly-
Rate Employees Pension Plan, and U.S. Trust, as Trustee of the Sub-Trust of the
GM Welfare Benefit Trust established under the GM Welfare Benefit Trust, a
voluntary employees' beneficiary association trust established to fund certain
collectively bargained hourly retiree health care benefits under the GM Health
Care Program for Hourly Employees and certain collectively bargained hourly
retiree life insurance benefits under the GM Life and Disability Benefits
Program for Hourly Employees and such benefits under other applicable
collectively bargained welfare plans, and certain related agreements and
arrangements relating thereto (collectively, the "Current GM Pension Plans
Registration Rights Agreement"), (ii) the Registration Rights Agreement, dated
as of June 21, 1999, between GM and America Online, Inc. ("AOL"), and certain
related agreements and arrangements relating thereto (collectively, the "AOL
Registration Rights Agreement"), (iii) the Registration Rights Agreement, dated
as of April 28, 1999, between GM and PRIMESTAR, Inc., and certain related
agreements and arrangements relating thereto (collectively, the "PRIMESTAR
Registration Rights Agreement") and (iv) the Registration Rights Letter
Agreement, neither GM nor any GM Affiliate (as defined below) has entered into
or agreed to enter into any contract, agreement or understanding (other than
such other contracts, agreements or understandings contemplated by this
Agreement, the Merger Agreement or the GM/Hughes Separation Agreement) that
would require registration of any shares of GM Class H Common Stock under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") or under any state securities law or granted
registration rights with respect to any shares of GM Class H Common Stock to any
Person.
(c) As of September 30, 2001, the Numerator (as defined below) of the
Class H Fraction was 876,948,420 and the Denominator of the Class H Fraction was
1,299,745,326, in each case with respect to the quarterly accounting period
ended on such date. As of the date of this Agreement, the aggregate outstanding
shares of GM Series H Preference Stock were convertible, at the option of the
holder, into 24.1935 shares of GM Class H Common Stock for each share of GM
Series H Preference Stock, which number reflects all required adjustments as of
such date pursuant to the Certificate of Designations relating to the GM Series
H Preference Stock (including adjustments to reflect the three-for-one stock
split in respect of GM Class H Common Stock effected pursuant to a 200 percent
stock dividend paid on June 30, 2000 to holders of record of GM Class H Common
Stock as of June 13, 2000). On June 24, 2002, if not previously converted,
redeemed or otherwise canceled pursuant to the terms of the Certificate of
Designations relating to the GM Series H Preference Stock, subject to adjustment
pursuant to the terms of the Certificate of Designations relating to the GM
Series H Preference Stock in effect on the date of this Agreement, each share of
GM Series H Preference Stock will automatically convert into a certain number
(between 24.1935 and 30.0) of shares of GM Class H Common Stock determined
pursuant to the provisions of the Certificate of Designations relating to the GM
Series H Preference Stock. Upon any such
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conversion, assuming that GM Class H Common Stock remains outstanding as of such
time, the numerator (the "Numerator") of the Class H Fraction will be increased
to reflect such number of shares of GM Class H Common Stock issued upon
conversion and the Denominator of the Class H Fraction will be increased to
reflect such number of shares of GM Class H Common Stock issued upon conversion.
(d) All dividends paid on the GM Series H Preference Stock have been
declared by the Board of Directors of GM for payment on, and have been paid on,
each Preferential Dividend Payment Date (as defined in the Certificate of
Designations relating to the GM Series H Preference Stock) and there exist no
accrued and unpaid dividends on the GM Series H Preference Stock, other than
dividends which have accrued from or since the last Preferential Dividend
Payment Date and which will be declared and paid on dates consistent with past
practice.
Section 2.6. Litigation. Except as set forth on Section 2.6 of the GM
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of GM, threatened against GM or any
of its Significant Subsidiaries (other than Hughes and its Subsidiaries) or its
or their properties which could reasonably be expected to have a material
adverse impact on GM's ability to consummate the transactions contemplated by
the GM Transaction Agreements or a Hughes Material Adverse Effect or a material
adverse effect on Hughes' ability to consummate the transactions contemplated by
the Hughes Transaction Agreements.
Section 2.7. Brokerage and Finder's Fees; Opinions of Financial
Advisors.
(a) Except for obligations to the GM Financial Advisors and the Hughes
Financial Advisors, neither GM nor any GM Affiliates, stockholders, directors,
officers or employees has incurred or will incur on behalf of GM or any GM
Affiliate, any brokerage, finder's or similar fee in connection with the
transactions contemplated by the GM Transaction Agreements or the Hughes
Transaction Agreements.
(b) The Board of Directors of GM has received the GM Financial Advisor
Fairness Opinions. GM has heretofore provided a copy of such opinions to
EchoStar for informational purposes only, and EchoStar acknowledges that it has
no right to rely on such opinion. As of the date of this Agreement, such
opinions have not been withdrawn, revoked or modified.
Section 2.8. Spin-Off/Merger Registration Statement, GM Proxy/Consent
Solicitation Statement, EchoStar Information Statement and GM Debt/Equity
Exchange Registration Statement. None of the information provided by or on
behalf of GM or any GM Affiliate (except to the extent it constitutes
information provided by or on behalf of Hughes or any Hughes Affiliate (as
defined below)) for inclusion in (a) the Spin-Off/Merger Registration Statement,
at the time it becomes effective, (b) the GM Proxy/Consent Solicitation
Statement, at the date of mailing and at the date of voting or consent and
approval with respect thereto, (c) the information statement of
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EchoStar to be distributed to EchoStar's common stockholders in connection with
the Merger (as amended and supplemented from time to time, the "EchoStar
Information Statement"), at the date of mailing, and (d) any GM Debt/Equity
Exchange Registration Statement (as defined below), at the time it becomes
effective, shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The information in the Spin-Off/Merger Registration
Statement, the GM Proxy/Consent Solicitation Statement, the EchoStar Information
Statement and any GM Debt/Equity Exchange Registration Statement provided by or
on behalf of GM or any GM Affiliate (except to the extent it constitutes
information provided by or on behalf of Hughes or any Hughes Affiliate) will
comply as to form in all material respects with the provisions of the Securities
Act and the Exchange Act. No representation or warranty is made by GM in this
Section 2.8 with respect to statements made or incorporated by reference therein
based on information provided by or on behalf of Hughes or EchoStar for
inclusion in the Spin-Off/Merger Registration Statement, the GM Proxy/Consent
Solicitation Statement, the EchoStar Information Statement or any GM Debt/Equity
Exchange Registration Statement. For the purposes of this Agreement, (i) "Spin-
Off/Merger Registration Statement" means, collectively, the registration
statement(s) on Form S-4, as amended from time to time, relating to the Hughes
Class C Common Stock (and other Hughes securities, if applicable) to be
distributed pursuant to the Spin-Off and the Hughes Class A Common Stock, Hughes
Class B Common Stock and Hughes Class C Common Stock to be issued pursuant to
the Merger, including any prospectus relating to the Hughes Class A Common
Stock, Hughes Class B Common Stock or Hughes Class C Common Stock (and other
Hughes securities, if applicable), as amended and supplemented from time to
time, and including the GM Proxy/Consent Solicitation Statement, as amended and
supplemented from time to time and the EchoStar Information Statement, as
amended and supplemented from time to time, and (ii) "GM Debt/Equity Exchange
Registration Statement" means the registration statement(s) on Form S-3 (or any
other appropriate form), as amended from time to time, relating to shares of GM
Class H Common Stock or Hughes Class C Common Stock, as applicable, to be issued
in connection with any GM Debt/Equity Exchange, including any prospectus
relating to the GM Class H Common Stock or Hughes Class C Common Stock, as
amended and supplemented from time to time.
Section 2.9. Tax Representations. GM currently believes that it will
be able to make any representations, warranties or covenants which are
reasonably likely to be requested by the IRS (as defined below) in connection
with the Ruling Request (as defined below).
Section 2.10. Requisite Approvals.
(a) The affirmative votes of the holders of each of (i) a majority of
the voting power of all outstanding shares of GM $1-2/3 Common Stock and GM
Class H Common Stock, voting together as a single class based on their
respective per share voting power pursuant to the provisions set forth in the GM
Certificate of Incorporation, as amended, (ii) a majority of the outstanding
shares of GM $1-2/3 Common Stock, voting as a separate class, and (iii) a
majority of
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the outstanding shares of GM Class H Common Stock, voting as a separate class,
in each case to approve the GM Charter Amendment, the Hughes Recapitalization
and all other aspects of the GM Transactions, including the Spin-Off (the
"Requisite Stockholder Approval"), are the only votes of the holders of any
class or series of GM capital stock that will be obtained or are necessary in
order to approve the GM Transactions.
(b) At a stockholder meeting held immediately after the approval of
the Merger Agreement by the Hughes Board of Directors and the execution of the
Merger Agreement, GM shall have, in its capacity as the sole stockholder of
Hughes, adopted and approved the Merger Agreement (and the execution, delivery
and performance thereof) and the transactions contemplated by the Hughes
Transaction Agreements. No other vote or consent of the holders of any class or
series of Hughes capital stock is necessary to approve and adopt the Merger
Agreement.
Section 2.11. Agreement with GM Pension Plans. Pursuant to the
Contribution and Transfer Agreement (the "GM Pension Plans Contribution and
Transfer Agreement") to be entered into by and among GM and the GM Pension
Plans, concurrently with the execution and delivery of this Agreement, U.S.
Trust, as Trustee of the GM Special Hourly Employees Pension Trust established
under the GM Hourly-Rate Employees Pension Plan, and U.S. Trust, as Trustee of
the Sub-Trust of the GM Welfare Benefit Trust established under the GM Welfare
Benefit Trust, a voluntary employees' beneficiary association trust established
to fund certain collectively bargained hourly retiree health care benefits under
the GM Health Care Program for Hourly Employees and certain collectively
bargained hourly retiree life insurance benefits under the GM Life and
Disability Benefits Program for Hourly Employees and such benefits under other
applicable collectively bargained welfare plans (together, the "GM Pension
Plans"), have agreed that, except as may be permitted under the terms of an IRS
private letter ruling requested by GM after the Merger Effective Time and
obtained in accordance with the terms of the GM Pension Plans Contribution and
Transfer Agreement, prior to the first day after the second anniversary of the
Spin-Off Effective Time, the GM Pension Plans will not enter into any agreement,
understanding or arrangement or any substantial negotiations with respect to any
disposition of GM Class H Common Stock, Hughes Class C Common Stock, or any
successor security, except as expressly contemplated by the GM Transactions, and
has provided a copy of the GM Pension Plans Contribution and Transfer Agreement
to EchoStar.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HUGHES
In order to induce EchoStar to enter into this Agreement, Hughes hereby
represents and warrants to EchoStar as follows, except as specifically described
in Hughes' annual report on Form 10-K for the fiscal year ended December 31,
2000 (the "Hughes 10-K"), Hughes' quarterly report on Form 10-Q for the fiscal
quarter ended September 30, 2001 (the "Hughes 10-Q") and all other reports,
filings, registration statements and other documents filed by Hughes with the
SEC after September 30, 2001 and prior to the date hereof (as such documents
have been amended since the time of their filing and prior to the date hereof),
all of which are of public record.
Section 3.1. Organization and Standing. Each of Hughes and Hughes'
Significant Subsidiaries is a corporation validly existing and in good standing
under the laws of the State of Delaware, with respect to Hughes, and (to the
extent such concepts or equivalent concepts are recognized in such
jurisdictions) under the laws of its state or other jurisdiction of
incorporation, with respect to Hughes' Significant Subsidiaries, in each case,
with all corporate (and other) power to carry on its business as now conducted.
Each of Hughes and Hughes' Subsidiaries is duly qualified to do business and is
in good standing (to the extent that such concepts or equivalent concepts are
recognized in such jurisdictions) in each jurisdiction in which the nature of
the business conducted by it or the property it owns, leases or operates makes
such qualification necessary, except where the failure to be so qualified or in
good standing in such jurisdiction could not reasonably be expected to have a
Hughes Material Adverse Effect or have a material adverse impact on its ability
to consummate the transactions contemplated by the Hughes Transaction
Agreements.
Section 3.2. Corporate Power and Authority. Hughes has (or will have
prior to execution thereof) all requisite corporate power and authority to enter
into the Hughes Transaction Agreements and to consummate the transactions
contemplated thereby. The execution and delivery of each of the Hughes
Transaction Agreements by Hughes and the consummation of the transactions
contemplated thereby to be effected by Hughes, have been (or will be prior to
execution and delivery thereof) duly authorized by all necessary corporate
action on the part of Hughes. Each of the Hughes Transaction Agreements has been
(or will be) duly executed and delivered by Hughes and assuming the due
authorization, execution and delivery by the other parties thereto, constitutes
(or will constitute when executed) the legal, valid and binding obligation of
Hughes, enforceable against Hughes in accordance with its terms, except as
enforceability may be limited by bankruptcy, similar laws of debtor relief and
general principles of equity.
For the purposes of this Agreement, "Hughes Transaction Agreements"
means this Agreement, the Merger Agreement, the PanAmSat Stock Purchase
Agreement, the Merger Commitment, the Merger Financing Agreement, the
Supplemental Agreement, the Stockholders Agreement, the GM/Hughes Separation
Agreement, the GM/Hughes Tax Agreements, the EchoStar/Hughes Employee Matters
Agreement ("EchoStar/Hughes Employee Matters Agreement")
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entered into by and between EchoStar and Hughes concurrently with the execution
and delivery of the Agreement, in the form attached as Exhibit I to the Merger
Agreement, the GM/Hughes Intellectual Property Agreement, the GM/Hughes Special
Employee Items Agreement (as defined in the GM/Hughes Separation Agreement), the
Registration Rights Letter Agreement, the EchoStar Controlling Stockholder
Registration Rights Agreement ("EchoStar Controlling Stockholder Registration
Rights Agreement") to be entered into by and among Hughes, EchoStar and the
EchoStar Controlling Stockholder as contemplated by the Registration Rights
Letter Agreement, the GM Pension Plans Registration Rights Agreement to be
entered into by and between Hughes and the GM Pension Plans (or the trustee
therefor) as contemplated by the Registration Rights Letter Agreement, the GM
Registration Rights Agreement to be entered into by and between Hughes and GM as
contemplated by the Registration Rights Letter Agreement and all other
agreements contemplated hereby or thereby to which Hughes is (or will be) a
party.
Section 3.3. Spin-Off/Merger Registration Statement, GM Proxy/Consent
Solicitation Statement, EchoStar Information Statement and GM Debt/Equity
Exchange Registration Statement. None of the information provided by or on
behalf of Hughes or any Hughes Affiliate (except to the extent it constitutes
information provided by or on behalf of GM or any GM Affiliate) for inclusion in
(a) the Spin-Off/Merger Registration Statement, at the time it becomes
effective, (b) the GM Proxy/Consent Solicitation Statement, at the date of
mailing and at the date of voting or consent and approval with respect thereto,
(c) the EchoStar Information Statement, at the date of mailing, and (d) any GM
Debt/Equity Exchange Registration Statement, at the time it becomes effective,
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The information in the Spin-Off/Merger Registration Statement, the
GM Proxy/Consent Solicitation Statement, the EchoStar Information Statement and
any GM Debt/Equity Exchange Registration Statement provided by or on behalf of
Hughes or any Hughes Affiliate (except to the extent it constitutes information
provided by or on behalf of GM or any GM Affiliate) will comply as to form in
all material respects with the provisions of the Securities Act and the Exchange
Act. No representation or warranty is made by Hughes in this Section 3.3 with
respect to statements made or incorporated by reference therein based on
information provided by or on behalf of GM or EchoStar for inclusion in the
Spin-Off/Merger Registration Statement, the GM Proxy/Consent Solicitation
Statement, the EchoStar Information Statement or any GM Debt/Equity Exchange
Registration Statement.
Section 3.4. Tax Representations. Hughes currently believes that it
will be able to make and certify the statements set forth in Exhibit E to the
Merger Agreement and to make any representations, warranties or covenants which
are reasonably likely to be requested by the IRS or GM in connection with the
Ruling Request.
ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF ECHOSTAR
In order to induce GM and Hughes to enter into this Agreement, EchoStar
hereby represents and warrants to GM and Hughes as follows, except as
specifically described in EchoStar's annual report on Form 10-K for the fiscal
year ended December 31, 2000 (the "EchoStar 10-K"), EchoStar's quarterly report
on Form 10-Q for the fiscal quarter ended September 30, 2001 (the "EchoStar 10-
Q") and all other reports, filings, registration statements and other documents
filed by EchoStar with the SEC after September 30, 2001 and prior to the date
hereof (as such documents have been amended since the time of their filing and
prior to the date hereof), all of which are of public record.
Section 4.1. Organization and Standing. Each of EchoStar and
EchoStar's Significant Subsidiaries is a corporation validly existing and in
good standing under the laws of the State of Nevada, with respect to EchoStar,
and (to the extent that such concepts or equivalent concepts are recognized in
such jurisdictions) under the laws of its state or other jurisdiction of
incorporation, with respect to EchoStar's Significant Subsidiaries, in each case
with all corporate power to carry on its business as now conducted. Each of
EchoStar and EchoStar's Subsidiaries is duly qualified to do business and is in
good standing (to the extent such concepts or equivalent concepts are recognized
in such jurisdictions) in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so qualified or in good
standing in such jurisdiction could not reasonably be expected to have a
EchoStar Material Adverse Effect (as defined in the Merger Agreement) or have a
material adverse impact on its ability to consummate the transactions
contemplated by the EchoStar Transaction Agreements.
Section 4.2. Corporate Power and Authority. EchoStar has (or will have
prior to execution thereof) all requisite corporate power and authority to enter
into the EchoStar Transaction Agreements and to consummate the transactions
contemplated thereby. The execution and delivery of the EchoStar Transaction
Agreements by EchoStar and the consummation of the transactions contemplated
thereby to be effected by EchoStar have been (or will be prior to execution and
delivery thereof) duly authorized by all necessary corporate action on the part
of EchoStar. Each of the EchoStar Transaction Agreements has been (or will be)
duly executed and delivered by EchoStar and, assuming the due authorization,
execution and delivery by the other parties thereto, constitutes (or will
constitute when executed) the legal, valid and binding obligations of EchoStar,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, similar laws of debtor relief and general
principles of equity.
For the purposes of this Agreement, (a) "EchoStar Transaction
Agreements" means this Agreement, the Merger Agreement, the Merger Commitment
Letter, the Merger Financing Agreement, the PanAmSat Financing Agreement, the
PanAmSat Stock Purchase Agreement, the Registration Rights Letter Agreement, the
EchoStar Controlling Stockholder Registration Rights
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Agreement, the EchoStar/Hughes Employee Matters Agreement, the Supplemental
Agreement and all other agreements contemplated hereby or thereby to which
EchoStar is (or will be) a party; and (b) "Transaction Agreements" means,
collectively, the GM Transaction Agreements, the Hughes Transaction Agreements
and the EchoStar Transaction Agreements.
Section 4.3. Spin-Off/Merger Registration Statement, GM Proxy/Consent
Solicitation Statement, EchoStar Information Statement and GM Debt/Equity
Exchange Registration Statement. None of the information provided by or on
behalf of EchoStar or any EchoStar Affiliate (as defined below) for inclusion in
(a) the Spin-Off/Merger Registration Statement, at the time it becomes
effective, (b) the GM Proxy/Consent Solicitation Statement, at the date of
mailing and at the date of voting or consent and approval with respect thereto,
(c) the EchoStar Information Statement, at the date of mailing, or (d) any GM
Debt/Equity Exchange Registration Statement, at the time it becomes effective,
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The information in the Spin-Off/Merger Registration Statement, the
GM Proxy/Consent Solicitation Statement, the EchoStar Information Statement and
any GM Debt/Equity Exchange Registration Statement provided by or on behalf of
EchoStar or any EchoStar Affiliate will comply as to form in all material
respects with the provisions of the Securities Act and the Exchange Act. No
representation or warranty is made by EchoStar in this Section 4.3 with respect
to statements made or incorporated by reference therein based on information
provided by or on behalf of GM or Hughes for inclusion in the Spin-Off/Merger
Registration Statement, the GM Proxy/Consent Solicitation Statement, the
EchoStar Information Statement or any GM Debt/Equity Exchange Registration
Statement.
Section 4.4. Tax Representations. EchoStar currently believes that it
will be able to make and certify the statements set forth in Exhibit D to the
Merger Agreement and to make any representations, warranties or covenants which
are reasonably likely to be requested by the IRS in connection with the Ruling
Request.
Section 4.5. Merger Agreement Representations and Warranties. Except
to the extent repeated in this Agreement, EchoStar hereby represents and
warrants to GM with respect to each of the matters set forth in Article 3 of the
Merger Agreement to the full extent set forth therein as though such
representations and warranties were made by EchoStar to GM in this Agreement.
ARTICLE 5
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 5.1. Mutual Covenants.
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(a) General. Each of the parties hereto shall use commercially
reasonable efforts (except where a different efforts standard is specifically
contemplated by the GM Transaction Agreements, the Hughes Transaction Agreements
or the EchoStar Transaction Agreements, in which case, such different standard
shall apply) to take all actions and to do all things necessary, proper or
advisable to consummate as soon as reasonably practicable the transactions
contemplated by the GM Transaction Agreements, the Hughes Transaction Agreements
and the EchoStar Transaction Agreements, including with respect to the
satisfaction of each and all of the conditions set forth in Section 1.3 of this
Agreement, Article 6 of the GM/Hughes Separation Agreement and Article 6 of the
Merger Agreement, in each case subject to the terms and conditions of such
agreement.
(b) Notification of Certain Matters. Each of the parties hereto shall
give prompt notice to the others of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would cause such party's
representations or warranties contained in this Agreement to be untrue or
inaccurate at or prior to the Merger Effective Time, and (ii) any material
failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 5.1(b) shall not limit
or otherwise affect the remedies available hereunder to any of the parties.
(c) The Ruling Request. As soon as reasonably practicable after the
date of this Agreement, GM shall submit to the Internal Revenue Service of the
United States Department of the Treasury (the "IRS") a request (the "Ruling
Request") for (i) the Ruling, (ii) an AOL Section 355(e) Ruling (as defined
below), (iii) a Remaining Shares Section 355(e) Ruling (as defined below), (iv)
a ruling that no gain or loss will be recognized by GM or any GM Affiliate on
the transfer of GM Class H Common Stock or Hughes Class C Common Stock in any GM
Debt/Equity Exchange, and (v) any other ruling in connection with the Spin-Off
that GM, in consultation with EchoStar, deems to be appropriate. The initial
Ruling Request and any supplemental materials submitted to the IRS relating
thereto (each, an "IRS Submission") shall be prepared by GM. EchoStar shall
cooperate fully with GM in the preparation of the Ruling Request and any other
IRS Submission and shall make its officers, employees, advisors and others
associated with EchoStar available for meetings with GM and the IRS as requested
by GM. EchoStar shall provide GM with such representations and warranties and
such covenants as may be requested by the IRS or reasonably requested by GM in
connection with the Ruling Request or any other IRS Submission. Unless the
Merger Agreement has been terminated, GM shall provide EchoStar with a
reasonable opportunity to review and comment on each IRS Submission prior to the
filing of such IRS Submission with the IRS; provided that GM may redact from any
IRS Submission any information ("Redactable Information") that (A) GM, in its
good faith judgment, considers to be confidential and not germane to the
obligations of EchoStar or its affiliates under the EchoStar Transaction
Agreements or the obligations after the Merger Effective Time of Hughes or its
affiliates under the Hughes Transaction Agreements and (B) is not (and is not
reasonably expected to become) a part of any other publicly available
information, including any non-confidential filing. Unless the Merger Agreement
shall have been terminated, no IRS
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Submission shall be filed with the IRS unless, prior to such filing, EchoStar
shall have agreed as to the form and substance of such IRS Submission to the
extent that the IRS Submission (I) includes statements or representations
relating to facts that are or will be under the control of EchoStar or any of
its affiliates or (II) is relevant to (and the rulings described in clauses (i)
through (iii) of the first sentence of this Section shall be considered to be
relevant), or creates, any actual or potential obligations of, or limitations
on, EchoStar or any of its affiliates (including Hughes for periods after the
Spin-Off Effective Time), including any such obligations of, or limitations on,
EchoStar or its affiliates or, after the Merger Effective Time, Hughes or its
affiliates under the Hughes Transaction Agreements and the EchoStar Transaction
Agreements, as applicable; provided, however, that if the IRS requests same day
filing of an IRS Submission that does not include any material issue or
statement, then GM is required only to make a good faith effort to notify
EchoStar' representatives and to give such representatives an opportunity to
review and comment on such IRS Submission prior to filing it with the IRS.
Unless the Merger Agreement is terminated, GM shall provide EchoStar with copies
of each IRS Submission as filed with the IRS promptly following the filing
thereof; provided that GM may redact any Redactable Information from the IRS
Submission. Neither GM nor GM's representatives shall conduct any substantive
communications with the IRS regarding any issue arising with respect to the
Ruling Request, including meetings or conferences with IRS personnel, whether
telephonically, in person or otherwise, without first notifying EchoStar or
EchoStar' representatives and giving EchoStar (or EchoStar's representatives) a
reasonable opportunity to participate, and a reasonable number of EchoStar's
representatives shall have an opportunity to participate in all conferences or
meetings with IRS personnel that take place in person, regardless of the nature
of the issues expected to be discussed. Each of GM, Hughes and EchoStar agrees
to use its best efforts to obtain the Ruling and the other rulings set forth in
the Ruling Request. If, with respect to a convertible debt obligation issued by
EchoStar that is outstanding as of the date hereof, or issued by EchoStar after
the date hereof but prior to the receipt of regulatory approval of the Merger,
in each case that (i) is not convertible into equity of EchoStar or any other
Person for at least two (2) years after the Spin-Off Effective Time and (ii) has
a conversion price that (at the time of the filing of the Ruling Request for an
existing convertible debt obligation and at the time of issuance for a newly
issued convertible debt obligation) exceeds the then-market value of the
underlying stock into which it is convertible by at least five percent (5%),
then GM shall seek to obtain (and EchoStar shall cooperate with GM in connection
therewith, in accordance with this Section 5.1(c)) a ruling as to the treatment
of the convertible debt obligation under Section 355(e) of the Code; provided
that, in the reasonable judgment of GM, seeking such a ruling would not
significantly and unreasonably delay or interfere with the ability of GM to
obtain the Ruling and the other rulings requested in the Ruling Request or with
the completion of the Spin-Off and the Merger, but, in such a case, without
prejudice to the rights of Hughes, after the Merger Effective Time, to pursue a
Subsequent Ruling under Section 6.3(b)(iv).
(d) Tax-Free Treatment. Each of GM, Hughes and EchoStar shall take the
position for all purposes that the Merger qualifies as a reorganization pursuant
to Section 368(a) of the Code (unless and until Hughes and GM fail to obtain the
Section 368 Opinion (as defined below)
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as of the Merger Effective Time), and that the Spin-Off qualifies as a
distribution of Hughes stock to GM stockholders with respect to which no gain or
loss will be recognized by GM or any GM Affiliate, Hughes or their respective
stockholders pursuant to Section 355 and related provisions of the Code.
(e) Notifications to and Approvals of Governmental Authorities. Each
of the parties hereto shall use commercially reasonable efforts (except where a
different efforts standard is specifically contemplated by the GM Transaction
Agreements, the Hughes Transaction Agreements or the EchoStar Transaction
Agreements, in which case, such different standard shall apply) to promptly make
all filings with any foreign, federal, state or local Governmental Authorities
as are required of such party to consummate the transactions contemplated by the
GM Transaction Agreements, the Hughes Transaction Agreements and the EchoStar
Transaction Agreements, except for such filings which the failure to make would
not reasonably be expected to have a Hughes Material Adverse Effect or an
EchoStar Material Adverse Effect or have a material adverse impact on the
ability of any party to consummate the transactions contemplated by the GM
Transaction Agreements, the Hughes Transaction Agreements and the EchoStar
Transaction Agreements, as applicable, and shall supply to the other parties,
and to any foreign, federal, state or local Governmental Authority, any
information reasonably necessary to make effective the transactions contemplated
by the GM Transaction Agreements, the Hughes Transaction Agreements and the
EchoStar Transaction Agreements.
(f) Director and Officer Indemnification.
(i) The certificate of incorporation and by-laws of Hughes, from
and after the Spin-Off Effective Time, shall contain indemnification provisions,
with respect to directors and officers of Hughes prior to the Spin-Off Effective
Time, as shall be mutually agreed among the parties hereto. Such indemnification
provisions shall not be amended, repealed or otherwise modified for a period of
six (6) years after the Spin-Off Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Spin-Off Effective Time were directors or officers of Hughes in respect of
actions or omissions occurring at or prior to the Spin-Off Effective Time,
unless and to the extent that such modification is required by law.
(ii) For six (6) years after the Spin-Off Effective Time, Hughes
(and any successor corporation) shall indemnify, defend and hold harmless to the
fullest extent permitted under the DGCL the present and former officers and
directors of Hughes and its Subsidiaries (each an "Indemnified Party") against
all losses, claims, damages, liabilities, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the written consent of Hughes)) in connection with
any claim, suit, action, proceeding or investigation (a "Claim") that is, in
whole or in part, based on or arising out of the fact that such Person is or was
a director or officer of Hughes or its Subsidiaries and arising out of actions
or omissions by such director or officer in his
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or her capacity as such occurring at or prior to the Spin-Off Effective Time
(and shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
the DGCL, upon receipt from the Indemnified Party to whom expenses are advanced
of the undertaking to repay such advances contemplated by Section 145(e) of the
DGCL).
(iii) Without limiting the generality of the foregoing, in the
event that any Claim is brought against any Indemnified Party after the Spin-Off
Effective Time, (A) the Indemnified Parties may retain Hughes' regularly engaged
independent legal counsel or other independent legal counsel reasonably
acceptable to Hughes and (B) Hughes shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received, provided that Hughes shall not be liable for any settlement of any
Claim effected without its written consent. Any Indemnified Party wishing to
claim indemnification under this Section 5.1(f) upon learning of any such Claim
shall notify Hughes (although the failure so to notify Hughes shall not relieve
Hughes from any liability which Hughes may have under this Section 5.1(f),
except to the extent such failure materially prejudices Hughes' position with
respect to such Claim), and shall deliver to Hughes the undertaking contemplated
by Section 145(e) of the DGCL. The Indemnified Parties as a group may retain no
more than one law firm (in addition to local counsel) to represent them with
respect to each such matter unless there is, under applicable standards of
professional conduct (as determined by counsel to the Indemnified Parties), an
actual conflict between the interests of any two or more Indemnified Parties, in
which event such additional counsel as may be required may be retained by the
Indemnified Parties.
(iv) Each Indemnified Party shall have rights as a third party
beneficiary under this Section 5.1(f) as separate contractual rights for his or
her benefit, and such rights shall be enforceable by such Indemnified Party, his
or her heirs and personal representatives.
(v) This Section 5.1(f) shall survive the consummation of the
Merger and the Merger Effective Time, and shall be binding on all successors and
assigns of Hughes.
(vi) No amounts shall be owed or payable by Hughes, pursuant to
this Section 5.1(f), in connection with any Claims brought, directly or
indirectly, against any Hughes Covered Person (as defined in Section 5.2(b)(i)
hereof) in the event that coverage for such amounts is available under the GM
policies, maintained in accordance with Section 5.2(b) hereof, for such Claims.
(g) Preparation and Filing of the Spin-Off/Merger Registration
Statement, the GM Proxy/Consent Solicitation Statement and the EchoStar
Information Statement.
(i) As soon as reasonably practicable after the date of this
Agreement, the parties shall cooperate fully with each other to jointly prepare
the Spin-Off/Merger Registration
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Statement (which shall include each of the GM Proxy/Consent Solicitation
Statement and the EchoStar Information Statement). Hughes shall take all
commercially reasonable action in order to cause the Spin-Off/Merger
Registration Statement, including any and all amendments thereto, to be executed
and filed with the SEC and submitted or filed with any applicable foreign and
state securities law regulators in accordance with Applicable Law, in each case
as soon as reasonably practicable after the date hereof. The parties shall
promptly provide each other with copies of, and consult with each other and
prepare written responses with respect to, any written comments received from
the SEC and other state and foreign securities regulators with respect to the
Spin-Off/Merger Registration Statement and promptly advise each other of any
oral comments received from the SEC and other state and foreign securities
regulators, and, to the extent reasonably practicable under the circumstances,
shall consult with each other and offer a reasonable opportunity to appropriate
representatives of the other parties to participate in any telephone calls with
the SEC or any state or foreign regulator the purpose of which is to discuss
comments made by such regulators. The parties shall respond to any comments made
by the SEC or any state or foreign regulator as soon as reasonably practicable
following the receipt of such comments. No amendment or supplement to the Spin-
Off/Merger Registration Statement (or any related materials) will be filed or
submitted to the SEC or any state or foreign regulator or publicly disseminated
by any of the parties without the approval of the other parties, which shall not
be unreasonably withheld or delayed. The parties shall consult and coordinate
with one another in determining the Mailing Date, and GM shall keep EchoStar
reasonably informed regarding the state and federal securities regulatory
process. The parties shall use commercially reasonable efforts to cause the
Spin-Off/Merger Registration Statement to be declared effective by the SEC and
to be approved by all other applicable foreign and state securities law
regulators in accordance with Applicable Law. The parties shall take all other
actions with respect to the preparation and delivery of the Spin-Off/Merger
Registration Statement as required by Section 1.2 hereof.
(ii) EchoStar shall promptly furnish Hughes and GM with all
information concerning EchoStar or any Subsidiary of EchoStar as may be
necessary or reasonably requested by GM or Hughes for inclusion in the Spin-
Off/Merger Registration Statement. GM and Hughes shall promptly furnish EchoStar
with all information concerning GM, Hughes, any Subsidiary of Hughes (other than
PanAmSat and Hughes Software Systems Limited ("HSSL")) and, to the extent
obtainable by GM or Hughes using commercially reasonable efforts, PanAmSat and
HSSL, as may be necessary or reasonably requested by EchoStar for inclusion in
the Spin-Off/Merger Registration Statement. If at any time prior to the Merger
Effective Time, any information pertaining to EchoStar or any Subsidiary of
EchoStar contained in or omitted from the Spin-Off/Merger Registration Statement
makes the statements contained therein false or misleading, EchoStar shall
promptly inform Hughes and GM and promptly provide the information necessary to
make the statements contained therein not false and misleading. If at any time
prior to the Merger Effective Time, any information pertaining to GM, Hughes or
any Subsidiary of Hughes (other than PanAmSat or HSSL) contained in or omitted
from the Spin-Off/Merger Registration Statement makes the statements contained
therein false or misleading, Hughes and GM shall promptly inform EchoStar and
promptly
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provide the information necessary to make the statements contained therein not
false and misleading. If at any time prior to the Merger Effective Time, any
information pertaining to PanAmSat or HSSL contained in or omitted from the
Spin-Off/Merger Registration Statement, to the knowledge of GM or Hughes, makes
the statements contained therein false or misleading, GM or Hughes shall
promptly inform the other and EchoStar and shall use commercially reasonable
efforts to promptly provide the information necessary to make the statements
contained therein not false and misleading.
(iii) EchoStar shall promptly furnish GM with all information
concerning EchoStar or any Subsidiary of EchoStar, as may be necessary or
reasonably requested by GM for inclusion in the GM Proxy/Consent Solicitation
Statement. Hughes shall promptly furnish GM with all information concerning
Hughes, any Subsidiary of Hughes (other than PanAmSat and HSSL) and, to the
extent obtainable by GM or Hughes using commercially reasonable efforts,
PanAmSat and HSSL, as may be necessary or reasonably requested by GM for
inclusion in the GM Proxy/Consent Solicitation Statement. GM and Hughes shall
promptly furnish EchoStar with all information concerning GM, Hughes, any
Subsidiary of Hughes (other than PanAmSat and HSSL) and, to the extent
obtainable by GM or Hughes using commercially reasonable efforts, PanAmSat and
HSSL, as may be necessary or reasonably requested for inclusion by EchoStar in
the GM Proxy/Consent Solicitation Statement. If at any time prior to the Merger
Effective Time, any information pertaining to EchoStar or any Subsidiary of
EchoStar contained in or omitted from the GM Proxy/Consent Solicitation
Statement makes the statements contained therein false or misleading, EchoStar
shall promptly inform GM and promptly provide the information necessary to make
the statements contained therein not false and misleading. If at any time prior
to the Merger Effective Time, any information pertaining to Hughes or any
Subsidiary of Hughes (other than PanAmSat or HSSL) contained in or omitted from
the GM Proxy/Consent Solicitation Statement makes the statements contained
therein false or misleading, Hughes shall promptly inform GM and EchoStar and
promptly provide the information necessary to make the statements contained
therein not false and misleading. If at any time prior to the Merger Effective
Time, any information pertaining to PanAmSat or HSSL contained in or omitted
from the GM Proxy/Consent Solicitation Statement, to the knowledge of GM or
Hughes, makes the statements contained therein false or misleading, GM or Hughes
shall promptly inform the other and EchoStar and use commercially reasonable
efforts to promptly provide the information necessary to make the statements
contained therein not false and misleading. If at any time prior to the Merger
Effective Time, any information pertaining to GM contained in or omitted from
the GM Proxy/Consent Solicitation Statement makes the statements contained
therein false or misleading, GM shall promptly inform EchoStar and promptly
provide the information necessary to make the statements contained therein not
false and misleading.
(iv) GM and Hughes shall promptly furnish EchoStar with all
information concerning GM, Hughes, any Subsidiary of Hughes (other than PanAmSat
and HSSL) and, to the extent obtainable by GM or Hughes using commercially
reasonable efforts, PanAmSat and HSSL, as may be necessary or reasonably
requested by EchoStar for inclusion in the EchoStar Information Statement. If at
any time prior to the Merger Effective Time, any information pertaining to GM,
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Hughes or any Subsidiary of Hughes (other than PanAmSat or HSSL) contained in or
omitted from the EchoStar Information Statement makes the statements contained
therein false or misleading, Hughes and GM shall promptly inform EchoStar and
promptly provide the information necessary to make the statements contained
therein not false and misleading. If at any time prior to the Merger Effective
Time, any information pertaining to PanAmSat or HSSL contained in or omitted
from the EchoStar Information Statement, to the knowledge of GM or Hughes, makes
the statements contained therein false or misleading, GM or Hughes shall
promptly inform the other and EchoStar and shall use commercially reasonable
efforts to promptly provide the information necessary to make the statements
contained therein not false and misleading. If at any time prior to the Merger
Effective Time, any information pertaining to EchoStar contained in or omitted
from the EchoStar Information Statement makes the statements contained therein
false or misleading, EchoStar shall promptly inform GM and Hughes and promptly
provide the information necessary to make the statements contained therein not
false and misleading.
(h) GM Debt/Equity Exchange.
(i) The parties acknowledge and agree that GM currently intends
to issue or distribute up to one hundred million (100,000,000) shares (subject
to appropriate antidilution adjustments and subject to reduction pursuant to the
provisions of Section 1.3 of the GM/Hughes Separation Agreement and subject to
increase by up to an additional fifty million (50,000,000) shares (but in no
event shall such Exchange Shares exceed One Billion Dollars ($1,000,000,000.00)
in accordance with the terms set forth on Exhibit L) of GM Class H Common Stock
or Hughes Class C Common Stock, as applicable, in one or more transactions (each
referred to individually as a "GM Debt/Equity Exchange" and referred to
collectively as the "GM Debt/Equity Exchange" or "GM Debt/Equity Exchanges," as
the context requires), between the date hereof and the date that is six (6)
months following the Spin-Off Effective Time, to holders of Exchange Debt in
exchange for such Exchange Debt. The parties acknowledge that any issuance of
shares of GM Class H Common Stock pursuant to any GM Debt/Equity Exchange shall
increase the Numerator (but not the Denominator) of the Class H Fraction (as
defined below) by the number of shares of GM Class H Common Stock so issued, in
accordance with the terms and provisions of the GM Certificate of Incorporation.
The parties shall cooperate with each other in all respects in connection with
any GM Debt/Equity Exchange and, without limiting the foregoing, EchoStar and
Hughes shall use commercially reasonable efforts to take any actions reasonably
requested by GM in connection with the consummation of any GM Debt/Equity
Exchange, including, after the Merger Effective Time, the registration of offers
and sales of shares of Hughes Class C Common Stock in accordance with the terms
set forth on Exhibit L attached hereto. For the purposes of this Agreement,
"Class H Fraction" means, as of any particular time, the fraction described in
Article Fourth, Division I, Section (a)(4) of the GM Certificate of
Incorporation as of such time.
(ii) The parties further acknowledge that GM currently intends to
register (or cause to be registered) the issuance of shares of GM Class H Common
Stock to be issued or the
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distribution of shares of Hughes Class C Common Stock to be distributed, as
applicable, in connection with any GM Debt/Equity Exchange for purposes of
resale pursuant to a GM Debt/Equity Exchange Registration Statement. EchoStar
and Hughes shall promptly furnish GM with all information concerning EchoStar,
any Subsidiary of EchoStar, Hughes or any Subsidiary of Hughes (other than
PanAmSat and HSSL) and, to the extent obtainable by Hughes using commercially
reasonable efforts, PanAmSat and HSSL, as may be requested for inclusion in any
GM Debt/Equity Exchange Registration Statement. GM shall promptly furnish
EchoStar and Hughes with all information concerning GM or any Subsidiary of GM
as may be requested for inclusion in any GM Debt/Equity Exchange Registration
Statement. If at any time prior to the consummation of any GM Debt/Equity
Exchange, any information pertaining to EchoStar, any Subsidiary of EchoStar,
Hughes or any Subsidiary of Hughes (other than PanAmSat or HSSL), contained in
or omitted from any GM Debt/Equity Exchange Registration Statement makes the
statements contained therein false or misleading, EchoStar and Hughes shall
promptly inform GM and promptly provide the information necessary to make the
statements contained therein not false and misleading. If at any time prior to
the consummation of any GM Debt/Equity Exchange, any information pertaining to
PanAmSat or HSSL contained in or omitted from any GM Debt/Equity Exchange
Registration Statement, to the knowledge of Hughes, makes the statements
contained therein false or misleading, Hughes shall promptly inform GM and use
commercially reasonable efforts to promptly provide the information necessary to
make the statements contained therein not false and misleading. If at any time
after the Spin-Off Effective Time and prior to the consummation of any GM
Debt/Equity Exchange, any information pertaining to GM or any Subsidiary of GM
contained in or omitted from any GM Debt/Equity Exchange Registration Statement
makes the statements contained therein false or misleading, GM shall promptly
inform EchoStar and Hughes and promptly provide the information necessary to
make the statements contained therein not false and misleading.
(i) Certain Transaction Costs. Except as otherwise provided in the
Transaction Agreements or any other agreement between or among the parties
relating to the GM Transactions and/or the Merger, and any of the other
transactions contemplated in connection therewith, but only if such other
agreement has been disclosed by Hughes and GM to EchoStar, all costs and
expenses incurred by GM, Hughes, EchoStar or their respective Affiliates in
connection with the GM Transactions and/or the Merger, and any of the other
transactions contemplated in connection therewith, shall be paid by the party
that actually incurs such costs and expenses. Notwithstanding the foregoing, the
responsibility for certain transaction costs relating to the GM Transactions and
the Merger shall be allocated in accordance with the provisions of this Section
5.1(i).
(i) The following costs and expenses incurred by GM, Hughes,
EchoStar or any of their respective affiliates shall be paid (or promptly
reimbursed upon invoice) fifty percent (50%) by GM and fifty percent (50%) by
EchoStar: (i) all reasonable out-of-pocket costs and expenses of printing and
distributing to stockholders the GM Proxy/Consent Solicitation Statement, the
EchoStar Information Statement, any prospectus contained in the Spin-Off/Merger
Registration Statement and any related soliciting or other materials, (ii) all
filing fees associated with filing of the
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Spin-Off/Merger Registration Statement and the EchoStar Information Statement
with the SEC and any other state and foreign securities law regulators, and
(iii) all listing fees associated with listing the shares of stock subject to
the Spin-Off/Merger Registration Statement, the EchoStar Information Statement,
and any GM Debt/Equity Exchange Registration Statement on the NYSE or for
quotation on the Nasdaq.
(ii) Hughes shall pay (or promptly reimburse upon invoice) the
following:
(A) all costs and expenses of Hughes, GM or any of their respective
affiliates relating primarily to the Merger, including all fees associated
with making any governmental or regulatory filings primarily in connection
with the Merger and the fees and expenses of the Hughes transfer agent (or
any successor transfer agent) but excluding any fees and expenses described
in Section 5.1(i)(iii)(B); and
(B) the fees and expenses of Goldman, Sachs & Co. and Credit Suisse
First Boston Corporation, financial advisors to Hughes in connection with
the Merger, and the fees and expenses of Weil, Gotshal & Manges LLP and
Latham & Watkins, legal advisors to Hughes, and any other legal advisors to
Hughes (in each case for legal services rendered to Hughes), in connection
with the Merger.
(iii) GM or a GM Affiliate shall pay (or promptly reimburse upon
invoice) the following:
(A) all costs and expenses of GM, Hughes or any of their respective
affiliates relating primarily to the GM Transactions, including the fees
and expenses of the GM transfer agent and any proxy or consent solicitation
agents, information agents or similar consultants or agents engaged by GM
in connection with effecting the GM Transactions but excluding any fees and
expenses described in Section 5.1(i)(ii)(B);
(B) the fees and expenses of Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Bear, Stearns & Co. Inc., financial advisors to GM in
connection with the GM Transactions, and Kirkland & Ellis and Richards,
Layton & Finger, legal advisors to GM, and any other legal advisors to GM
(in each case for legal services rendered to GM), in connection with the GM
Transactions;
(C) the fees and expenses incurred by Hughes and GM in connection with
the negotiation and documentation of any Demand Note; and
(D) the fees, costs, and expenses incurred by Hughes or GM in
connection with the Pre-Merger Finance (as defined in the Commitment
Letter).
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(j) No Solicitation.
(i) GM agrees that, during the term of this Agreement, it shall
not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or
knowingly permit any of its or its Subsidiaries' officers, directors, employees,
investment bankers, attorneys, accountants, agents or other advisors or
representatives (collectively, "Representatives"), directly or indirectly, to:
(A) solicit, initiate or knowingly facilitate or encourage the making
by any Person (other than the other parties hereto) of any proposal, offer
or inquiry that constitutes, or could be expected to lead to, a proposal
for any merger, consolidation or other business combination involving
Hughes, or any acquisition of any capital stock or any material portion of
the assets (except for (I) acquisitions of assets in the ordinary course of
business consistent with past practice and permitted by Section 5.3(a)(v)
of the Merger Agreement and (II) consummation of the transactions
contemplated by the EchoStar Transaction Agreements, the GM Transaction
Agreements and the Hughes Transaction Agreements) of Hughes or any of its
Subsidiaries, any GM Class H Common Stock or any combination of the
foregoing (in each case, a "Competing Transaction");
(B) participate in any discussions or negotiations regarding, or
furnish or disclose to any Person any information with respect to or in
furtherance of, or take any other action knowingly to facilitate any
inquiries with respect to any Competing Transaction;
(C) grant any waiver or release under any standstill or similar
agreement with respect to Hughes or any of its Subsidiaries or GM Class H
Common Stock; or
(D) execute or enter into any agreement, understanding or arrangement
(other than a confidentiality agreement) with respect to any Competing
Transaction or approve or recommend or propose to approve or recommend, any
Competing Transaction or any agreement, understanding or arrangement
relating to any Competing Transaction (or resolve or authorize or propose
to agree to do any of the foregoing actions);
provided, however, that:
(I) at any time prior to such time, if any, that the Requisite
Stockholder Approval shall have been received with respect to the GM
Transactions, GM may take any action described in the foregoing
clauses (B) or (C) (in the case of clause (C), only to the extent
necessary to permit the discussions or negotiations contemplated by
clause (B)) in respect of any Person, but only if (1) such Person has
delivered a proposal for a Competing Transaction that, in the good
faith judgment of the GM Board of Directors is a Superior Proposal or
is reasonably likely to lead to the delivery of a Superior Proposal
(as defined below) and (2) the Board of Directors
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of GM, after consultation with counsel, determines in good faith that
it is required to do so in order to comply with its fiduciary duties;
provided, further, that (x) prior to GM furnishing any confidential
information to such Person, such Person shall have entered into a
confidentiality agreement with GM and/or Hughes, provided that if such
confidentiality agreement contains provisions that are less
restrictive than the comparable provisions, or omits restrictive
provisions, contained in the Confidentiality Agreement (as defined in
the Merger Agreement), then the Confidentiality Agreement will be
deemed to be amended to contain, in substitution for such comparable
provisions, such less restrictive provisions, or to omit such
restrictive provisions, as the case may be, (y) GM shall promptly
notify EchoStar of any such inquiries, proposals or offers received
by, any such information requested from, or any such discussions or
negotiations sought to be initiated or continued with, any of its
Representatives indicating, in connection with such notice, the name
of such Person and the material terms and conditions of any inquiries,
proposals or offers, and shall keep EchoStar reasonably informed as to
the status thereof,
(II) GM may enter into any agreement or arrangement (other than a
confidentiality agreement, which may be entered into as contemplated
in clause (I) above) regarding any such Competing Transaction, or
approve or recommend to its stockholders (or resolve to do so), or
publicly propose to approve or recommend to its stockholders, any such
Competing Transaction, but only if it has first (1) given EchoStar at
least seventy-two (72) hours to respond to such Competing Transaction
after GM has notified EchoStar that, in the absence of any further
action by EchoStar, it would consider such Competing Transaction to be
a Superior Proposal and would be required to withdraw, revoke or
modify its recommendation of the GM Transactions, and given due
consideration to any amendments or modifications to the GM Transaction
Agreements, the Hughes Transaction Agreements and/or the EchoStar
Transaction Agreements proposed by EchoStar during such period and (2)
thereafter caused Hughes to terminate the Merger Agreement in
accordance with Section 7.1 thereof and simultaneously pay the
Termination Fee pursuant to Section 7.2 thereof; and
(III) nothing herein shall limit GM's ability to comply in good
faith, to the extent applicable, with Rules 14d-9 and 14e-2 of the
Exchange Act with regard to a tender or exchange offer or to make any
disclosure required by Applicable Law.
(ii) For the purposes of this Agreement, the following terms
shall have the following meanings:
(A) "Superior Proposal" shall mean a bona fide, written proposal by a
third-party for a Competing Transaction that is on terms that the GM Board
of Directors determines in
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good faith, after consultation with its financial advisors and counsel,
would, if consummated, result in a transaction that would be more favorable
to GM and its stockholders (taking into account such factors as the GM
Board of Directors in good faith deems relevant, including the identity of
the offeror and all legal, financial, regulatory and other aspects of the
proposal, including the terms of any financing and the likelihood that the
transaction will be consummated) than the transactions contemplated by the
GM Transactions and the Merger; and
(B) "Applicable Law" shall mean all applicable laws, statutes, orders,
rules, regulations, policies or guidelines promulgated, or judgments,
decisions or orders entered, by any Governmental Authority.
(iii) GM agrees that it will, and will cause its Subsidiaries and
its and their respective Representatives to, cease and cause to be terminated
immediately all existing discussions or negotiations with any Persons conducted
on or before the date hereof with respect to any Competing Transaction. EchoStar
acknowledges that, prior to the date of this Agreement, GM and Hughes solicited
or caused to be solicited by their respective financial advisors indications of
interest and proposals for a Competing Transaction.
(k) Public Announcements.
(i) Unless otherwise required by Applicable Law or requirements
of the NYSE or Nasdaq or any other applicable securities exchange (and in that
event only if time does not permit), at all times prior to the earlier of (A)
the Merger Effective Time, (B) the termination of this Agreement pursuant to
Section 8.1, and (C) any delivery by GM to EchoStar of a Notice of Non-
Recommendation (unless GM has subsequently delivered a Notice of Proposed
Mailing or a Withdrawal Notice prior to the termination of this Agreement
pursuant to Section 8.1), the parties hereto shall consult with each other
before issuing any press release or other public announcement or public
communication (including such communications as would require a filing under
Rule 425, Rule 165 and Rule 166 of the Securities Act or Rule 14a-12 of the
Exchange Act) with respect to the transactions and matters contemplated by the
GM Transaction Agreements, the Hughes Transaction Agreements or the EchoStar
Transaction Agreements and shall not issue any such press release, public
announcement or public communication prior to such consultation; provided, that
the initial press release relating to the Merger, the GM Transactions and the
other transactions contemplated by the GM Transaction Agreements, the Hughes
Transaction Agreements and the EchoStar Transaction Agreements will be a joint
press release. Without limiting the foregoing, at all times prior to the earlier
of (A) the Merger Effective Time or (B) the termination of this Agreement
pursuant to Section 8.1, each of the parties hereto shall use commercially
reasonable efforts to comply in all material respects with the requirements of
Rule 425, Rule 165 and Rule 166 of the Securities Act and Rule 14a-12 of the
Exchange Act.
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(ii) In addition, at all times prior to the Merger Effective
Time, the parties hereto shall consult with each other before filing any report
with respect to any period entirely or partially prior to the Merger Effective
Time required by or filed under the Securities Act or Exchange Act containing
any statement relating to the transactions and matters contemplated by the GM
Transaction Agreements, the Hughes Transaction Agreements or the EchoStar
Transaction Agreements and shall not file any such report prior to such
consultation.
(l) Hughes Reorganization.
(i) The parties acknowledge and agree that GM and Hughes may,
prior to the Spin-Off Effective Time, on terms reasonably acceptable to EchoStar
(whose agreement will not be unreasonably withheld or delayed) implement a
corporate reorganization in connection with any GM Debt/Equity Exchange (the
"Hughes Reorganization"), which would result in the creation of a holding
company (organized as a Delaware corporation) that would exist above Hughes as a
parent company and below GM as a wholly owned subsidiary ("Hughes Holdings"). As
a result of the Hughes Reorganization, the holder of Common Stock, par value
$0.01 per share, of Hughes would become the holder of Common Stock, par value
$0.01 per share, of Hughes Holdings and the holder of Hughes Series A Preferred
Stock would become the holder of Series A Preferred Stock, par value $0.10 per
share, of Hughes Holdings.
(ii) Upon the reasonable request of any party hereto, subject to
the agreement of each of the parties (whose agreement will not be unreasonably
withheld or delayed), the parties shall promptly amend and restate any or all of
the GM Transaction Agreements, the Hughes Transaction Agreements and the
EchoStar Transactions Agreements, and each and all of the other agreements
contemplated thereby (including, in each case, all exhibits, schedules and other
attachments thereto), to the extent appropriate in order to reflect the
implementation of the Hughes Reorganization and the matters addressed in this
Section 5.1(l), and the parties hereby agree to execute and deliver any such
amendment and restatement of any or all of such agreements prior to the
implementation of the Hughes Reorganization.
(m) EchoStar Securities Issuances.
(i) The parties acknowledge and agree that EchoStar, in
accordance with Section 5.2(a)(i) of the Merger Agreement, currently intends to
issue shares of EchoStar Class A Common Stock, debt securities or securities
convertible into or exchangeable therefor, in one or more transactions (each
referred to individually as a "EchoStar Securities Issuance" and referred to
collectively as the "EchoStar Securities Issuances" as the context requires),
between the date hereof and the Merger Effective Time. From the date hereof
until the earlier of (x) the Merger Effective Time and (y) the termination of
this Agreement, the parties shall cooperate with each other in all respects in
connection with any EchoStar Securities Issuance and, without limiting the
foregoing,
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GM and Hughes shall use commercially reasonable efforts to take any actions
reasonably requested by EchoStar in connection with the consummation of any
EchoStar Securities Issuance.
(ii) The parties acknowledge that EchoStar may register the
issuance of the securities of EchoStar to be issued in connection with any
EchoStar Securities Issuance or may issue such securities in one or more
transactions that are exempt from the registration requirements of the
Securities Act. Any registration statement, offering memorandum or offering
circular relating to an EchoStar Securities Issuance is referred to herein as a
"EchoStar Securities Disclosure Document"). GM and Hughes shall promptly furnish
EchoStar with all information concerning GM, Hughes, any Subsidiary of Hughes
(other than PanAmSat and HSSL) and, to the extent obtainable by GM or Hughes
using commercially reasonable efforts, PanAmSat and HSSL, as may be reasonably
requested by EchoStar for inclusion in any EchoStar Securities Disclosure
Document. If at any time after the date hereof until the earlier of the (x)
Merger Effective Time and (y) the termination of this Agreement, any information
pertaining to GM, Hughes or any Subsidiary of Hughes (other than PanAmSat or
HSSL) contained in or omitted from the EchoStar Securities Disclosure Document
makes such statements contained therein false or misleading, Hughes and GM shall
promptly inform EchoStar and promptly provide the information necessary to make
the statements contained therein not false and misleading. If, at any time after
the date hereof until the earlier of the (x) Merger Effective Time and (y) the
termination of this Agreement, any information pertaining to PanAmSat or HSSL
contained in or omitted from the EchoStar Securities Disclosure Document, to the
knowledge of GM or Hughes, makes such statements contained therein false or
misleading, GM or Hughes shall promptly inform the other and EchoStar and shall
use commercially reasonable efforts to promptly provide the information
necessary to make the statements contained therein not false and misleading.
(iii) EchoStar shall cause the entire net proceeds of any and
all EchoStar Securities Issuances to be held directly by EchoStar (rather than
any Subsidiary of EchoStar) at the Merger Effective Time.
(n) Recapitalization Debt Repayment. For a period of two (2) years
after the Merger Effective Time, Hughes and EchoStar shall cause the portion of
the Merger Financing that will be incurred by Hughes prior to the Spin-Off
Effective Time for the purpose of financing a portion of the Recapitalization
Amount (the "Recapitalization Debt") either to remain outstanding as debt of
Hughes, or to be refinanced by new indebtedness of equal principal amount
incurred by Hughes or DTV Enterprises LLC ("Refinancing Debt"), except to the
extent that the Recapitalization Debt or any Refinancing Debt is repaid during
such two (2)-year period from operating cash flow of Hughes and its Subsidiaries
or from the proceeds of sale of one or more assets that were held by Hughes and
its Subsidiaries prior to the Merger Effective Time.
(o) No Further Holding Company. Until the earlier of (i) six months
after the Merger Effective Time and (ii) the date on which GM has completed
Debt/Equity Exchanges for the
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full amount of Exchange Shares permitted hereunder, Hughes (or if Hughes
Holdings is formed prior to the Spin-Off Effective Time in accordance with
Section 5.1(l), Hughes Holdings) shall not engage in any transaction that would
cause Hughes (or, if Hughes Holdings is so formed, Hughes Holdings) to cease to
be the ultimate parent corporation of the group.
(p) Hughes Stockholder Rights Plan. Hughes shall adopt a
stockholder rights plan, effective as of the Spin-Off Effective Time, in a form
to be mutually agreed among the parties hereto.
Section 5.2. Covenants of GM and Hughes.
(a) Amendments to and Termination of the GM Transaction Agreements
and Certain Other Agreements. Each of GM and Hughes agrees that, prior to the
Merger Effective Time, it will, subject to the provisions of the immediately
following sentence, consult with EchoStar regarding any change, amendment or
waiver that is proposed to be made to any of the GM Transaction Agreements, the
Hughes Transaction Agreements or any of the other agreements contemplated
thereby. During such period, no changes or amendments will be made to such
agreements, or waivers of rights under such agreements, without the written
consent of EchoStar, unless such changes or amendments, taken together with all
other changes and amendments (i) could not reasonably be foreseen to have an
adverse effect on the business, assets, liabilities or financial condition of
Hughes and (ii) do not shift responsibility for any liabilities between GM and
any GM Affiliate, on the one hand, and Hughes and any Hughes Affiliate, on the
other hand, change in any substantive or non-immaterial respect any conditions
or termination provisions, change any terms or provisions in which a change
thereof would be prohibited after receipt of the Requisite Stockholder Approval,
or impair or delay the consummation of the GM Transactions or the Merger. Each
of GM and Hughes agrees that it shall not, and shall not permit any of its
affiliates to, terminate any of the GM Transaction Agreements, the Hughes
Transaction Agreements or any of the other agreements contemplated thereby,
other than in connection with the termination of this Agreement, the GM/Hughes
Separation Agreement or the Merger Agreement (each of which may be terminated in
accordance with its terms), without the written consent of EchoStar. Each of GM
and Hughes shall promptly provide to EchoStar a copy of any amendment to any of
the GM Transaction Agreements or Hughes Transaction Agreements.
(b) Director and Officer Insurance.
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(i) Claims-Made Coverage. Until the six (6) year anniversary of
the Spin-Off Effective Time, or until such earlier time as Hughes requests, GM
shall provide directors' and officers' liability insurance ("D&O Insurance")
covering each Hughes Covered Person for all applicable incidents, acts or
omissions occurring prior to the Spin-Off Effective Time, regardless of when,
prior to the six (6) year anniversary of the Spin-Off Effective Time (or Hughes'
earlier termination of coverage), any claims relating to such incidents, acts or
omissions are presented. Except as set forth in 5.2(b)(iv), GM shall provide
such coverage at no cost to Hughes. Such insurance coverage shall be no less
favorable to any Hughes Covered Person in coverage or amount than the lesser of
(A) the coverage in effect at the Spin-Off Effective Time or (B) any applicable
insurance coverage in effect for GM at the time of the claim; provided, however,
that with respect to clause (B) above, if GM determines that (x) the amount or
scope of such coverage will be reduced to a level materially inferior to the
level of coverage in existence immediately prior to the Spin-Off Effective Time
or (y) the retention or deductible levels applicable to such coverage, if any,
will be increased to a level materially greater than the levels in existence
immediately prior to the Spin-Off Effective Time, GM shall give Hughes notice of
such determination as promptly as practicable, but in no event less than thirty
(30) days prior to the effectiveness of such reduction in coverage or increase
in retention or deductible levels. Upon notice of such determination, Hughes
shall be entitled to no less than ninety (90) days to evaluate its options
regarding continuance of coverage hereunder and may cancel all or any portion of
such coverage as of any day within such ninety (90) day period, regardless of
whether such date coincides with any anniversary of the Spin-Off Effective Time.
At any time during the period that GM is obligated to provide coverage pursuant
to this Section 5.2(b)(i), upon at least thirty (30) days prior written notice,
Hughes may request GM to cancel all or any portion of such coverage as of the
next anniversary of the Spin-Off Effective Time. In the event of any
cancellation of coverage by Hughes pursuant to this Section 5.2(b)(i), GM shall
have no obligation to provide such canceled coverage with respect to any period
from and after the effective date of such termination. The term "coverage" as
used in this Section 5.2(b) shall be deemed to include all applicable excess
coverage. For the purposes of this Agreement, (I) "Hughes Covered Person" means
each individual who served at any time within the six (6) year period prior to
the Spin-Off Effective Time as a director, director nominee or officer of
Hughes, any Hughes Affiliate or any corporation to which Hughes is a successor,
in each case to the extent covered by a particular GM Insurance Policy (as
defined below) providing D&O Insurance coverage; and (II) "GM Insurance Policy"
means any policy of insurance maintained by GM or any GM Affiliate prior to the
Spin-Off Effective Time.
(ii) Occurrence Coverage for Prior Acts. GM shall take no action
to remove any Hughes Covered Person from D&O Insurance coverage under any GM
Insurance Policy effective at, or at any time prior to, the Spin-Off Effective
Time that is written on an occurrence basis.
(iii) Claims. With respect to any claims for incidents, acts or
omissions occurring prior to or at the Spin-Off Effective Time, for which any
Hughes Covered Person may be
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entitled to assert a claim for recovery under any GM Insurance Policy providing
D&O Insurance coverage in accordance with the terms thereof, GM, at the request
of Hughes, shall use commercially reasonable efforts in asserting, or assisting
Hughes in asserting, such claims under any such GM Insurance Policy providing
D&O Insurance coverage; provided, that in all cases (A) Hughes shall promptly
pay or reimburse GM for all costs and expenses incurred by GM in connection with
such claims (whether such claims were made before or are made after the Spin-Off
Effective Time), including retrospective premium adjustments to the extent
attributable to such claims, (B) to the full extent permitted by contract and
law, the control and administration of such GM Insurance Policies providing D&O
Insurance coverage, including with respect to any proposed buyouts of such GM
Insurance Policies, shall remain with GM, (C) such claims shall be subject to
(and recovery thereon shall be reduced by the amount of) any applicable
deductibles, retentions, self-insurance provisions or any payment or
reimbursement obligations of GM or any GM Affiliate in respect thereof, (D) with
respect to claims-made GM Insurance Policies, such claims must have been
incurred and reported prior to the Spin-Off Effective Time to the extent
required by such policies and (E) Hughes shall promptly report to GM any such
claims. GM (or, in the event that the primary economic burden is to be borne by
Hughes by virtue of deductibles, retentions and retrospective premium
adjustments, GM and Hughes) and GM's insurers shall have the right to control
the investigation, defense and settlement of claims, but no such settlement may
be effected without the consent of Hughes, which consent shall not be
unreasonably withheld or delayed, unless such settlement includes as an
unconditional term thereof the delivery of a written release of Hughes and any
other insured parties from all liability in respect of such claim.
(iv) Treatment of Certain Retentions and Deductibles.
Responsibility for deductible and self-insured amounts with respect to any GM
Insurance Policy providing D&O Insurance coverage provided or maintained after
the Spin-Off Effective Time pursuant to Section 5.2(b)(i) or 5.2(b)(ii) as it
relates to coverage for any Hughes Covered Person shall be borne one hundred
percent (100%) by Hughes. Notwithstanding the foregoing, if GM and Hughes are
involved in the same claim, GM and Hughes shall negotiate in good faith the fair
allocation of any self-insurance retention or other deductible payable under the
GM Insurance Policies providing D&O Insurance coverage. Such allocation shall be
based upon all relevant factors, including, without limitation and as
appropriate, the relative number of Persons affiliated with Hughes or GM that
are involved in such claim and the nature of the allegations with respect to
each such Person.
(v) Adjustment of Premiums Applicable to Period Prior to the
Spin-Off Merger Effective Time. Any premiums that have been paid or are payable
by Hughes to GM with respect to D&O Insurance coverage under any of the GM
Insurance Policies maintained or provided prior to the Spin-Off Effective Time
shall be pro-rated, and as soon as practicable after the Spin-Off Effective Time
shall be either refunded by GM to Hughes or paid by Hughes to GM, as
appropriate, so that Hughes is responsible for only those premiums relating to
(A) any full policy year ending prior to the Spin-Off Effective Time and (B) the
partial policy year ending at the Spin-Off Effective Time.
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(c) Letters of Accountants.
(i) To the extent applicable as a result of any requirement to
include their respective financial statements in the Spin-Off/Merger
Registration Statement, GM and Hughes shall use commercially reasonable efforts
to cause to be delivered to EchoStar to the extent permitted by applicable
accounting standards letters from the independent accountants of each of GM and
Hughes, dated a date within two (2) Business Days before the date on which the
Spin-Off/Merger Registration Statement shall become effective, addressed to
EchoStar and its Board of Directors, customary in form and scope for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Spin-Off/Merger Registration Statement.
(ii) To the extent applicable as a result of any requirement to
include their respective financial statements in the EchoStar Information
Statement, GM and Hughes shall use commercially reasonable efforts to cause to
be delivered to EchoStar to the extent permitted by applicable accounting
standards in connection with the EchoStar Information Statement two (2) letters
from the independent accountants of each of GM and Hughes, one dated a date
within two (2) Business Days before the date on which the registration
statement(s) containing the EchoStar Information Statement shall become
effective and one dated a date within two (2) Business Days before the date on
which the EchoStar Information Statement is mailed to EchoStar's stockholders,
in each case addressed to EchoStar and its Board of Directors, customary in form
and scope for comfort letters delivered by independent public accountants in
connection with registration statements and information statements similar to
the EchoStar Information Statement.
(d) Pre-Closing Cooperation. GM and Hughes promptly shall furnish
EchoStar with all information concerning each of them as may reasonably be
requested by EchoStar for use by Sullivan & Cromwell, special counsel to
EchoStar, in preparing its tax opinion to the effect that the Merger qualifies
as a reorganization pursuant to Section 368(a) of the Code (the "EchoStar
Section 368 Opinion"). GM and Hughes shall provide EchoStar with such
representations and warranties as may reasonably be requested by EchoStar with
respect to the EchoStar Section 368 Opinion.
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(e) GM Sale Process Claims.
(i) EACH OF GM AND HUGHES, ON BEHALF OF ITSELF AND THE GM
AFFILIATES AND THE HUGHES AFFILIATES, RESPECTIVELY, ACKNOWLEDGES AND AGREES
THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS, WARRANTIES AND COVENANTS OF
ECHOSTAR SET FORTH IN THIS AGREEMENT, THE MERGER AGREEMENT OR ANY OF THE
AGREEMENTS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE TRANSACTION
AGREEMENTS), ECHOSTAR MAKES NO REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER,
EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT, THE MERGER AGREEMENT OR
ANY OF THE AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING
THE TRANSACTION AGREEMENTS). Each of GM and Hughes, on behalf of itself and the
GM Affiliates and the Hughes Affiliates, respectively, represents and warrants
to EchoStar that in making its determination to enter into, and to proceed with
the transactions contemplated by this Agreement, the Merger Agreement or any of
the agreements or transactions contemplated hereby or thereby (including the
Transaction Agreements), it has not relied on and will not rely on any
representation, warranty or covenant of EchoStar or any EchoStar Affiliate, or
of any of their respective Representatives, other than the express
representations, warranties and covenants of EchoStar set forth in this
Agreement or any of the agreements contemplated hereby to which each of
EchoStar, on the one hand, and GM or Hughes on the other hand, is a party
(including the other Transaction Agreements).
(ii) Other than with respect to any claim based on a breach by
EchoStar of any of the Transaction Agreements to which EchoStar is a party, each
of GM and Hughes, on behalf of itself and the GM Affiliates and the Hughes
Affiliates, respectively, hereby waives, releases and forever discharges any and
all claims (including any and all claims, controversies, actions, causes of
action, cross-claims, counter-claims, demands, debts, compensatory damages,
liquidated damages, punitive or exemplary damages, other damages, claims for
costs and attorneys' fees, or liabilities of any nature whatsoever in law or in
equity, whether related to, arising out of or due to occurrences or conditions
prior to, on or after the Merger Effective Time, and whether known or unknown,
suspected, or claimed) against EchoStar or any EchoStar Affiliate or any of
their respective Representatives which any of GM, any GM Affiliate, Hughes or
any Hughes Affiliate may have to the extent related to, arising out of or due
to, directly or indirectly, the investigation, consideration or pursuit
(including the adequacy of disclosures to and due diligence of GM, Hughes or
any unaffiliated Persons and including any allegations of breach of fiduciary
duty with respect to the transactions contemplated by this Agreement and the
Merger Agreement) of one or more strategic business combination transactions
involving EchoStar or any EchoStar Affiliate, and one or more unaffiliated
Persons (any such claim, a "GM Sale Process Claim"), except to the extent that
any of GM or Hughes hereafter incurs any Losses (as defined below) in respect
thereof arising out of a Third-Party Claim (as defined below). For the purposes
of this Agreement, "Losses" means any
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losses, liabilities, claims, obligations, Taxes (as defined below), demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements or fees, attorneys' fees and
court costs or other expenses, of any nature or kind, whether or not the same
would properly be reflected on a balance sheet.
(iii) Other than with respect to any claim based on a breach by
EchoStar of any of the Transaction Agreements to which EchoStar is a party, each
of GM and Hughes agrees that it shall not, and shall cause the GM Affiliates and
the Hughes Affiliates, respectively, not to, seek to recover from EchoStar or
any EchoStar Affiliate or any of their respective Representatives any Losses to
the extent that such Losses relate to, arise out of or are due to a GM Sale
Process Claim unless and until such time, and only to the extent that, any of GM
or Hughes incurs any Losses in respect thereof arising out of a Third-Party
Claim.
(f) Hughes Sale Process Claims.
(i) HUGHES, ON BEHALF OF ITSELF AND EACH HUGHES AFFILIATE,
RESPECTIVELY, ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE EXPRESS
REPRESENTATIONS, WARRANTIES AND COVENANTS OF GM SET FORTH IN THIS AGREEMENT, THE
GM/HUGHES SEPARATION AGREEMENT OR ANY OF THE AGREEMENTS CONTEMPLATED HEREBY OR
THEREBY (INCLUDING THE TRANSACTION AGREEMENTS), GM MAKES NO REPRESENTATION,
WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS
AGREEMENT, THE GM/HUGHES SEPARATION AGREEMENT, THE MERGER AGREEMENT OR ANY OF
THE AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE
TRANSACTION AGREEMENTS). Hughes, on behalf of itself and each Hughes Affiliate,
respectively, represents and warrants to GM that in making its determination to
enter into, and to proceed with the transactions contemplated by, this
Agreement, the GM/Hughes Separation Agreement, the Merger Agreement and each of
the agreements contemplated hereby and thereby (including the Transaction
Agreements), it has not relied on and will not rely on any representation,
warranty or covenant of GM, any GM Affiliate, or any Representative of GM or any
GM Affiliate, other than the express representations, warranties and covenants
of GM set forth in this Agreement, the GM/Hughes Separation Agreement or any of
the agreements contemplated hereby or thereby to which Hughes and GM are each a
party (including the Transaction Agreements).
(ii) Other than with respect to any claim based on a breach by GM
of any of the Transaction Agreements to which GM is a party, Hughes, on behalf
of itself and each Hughes Affiliate, hereby waives, releases and forever
discharges any and all claims (including any and all claims, controversies,
actions, causes of action, cross-claims, counter-claims, demands, debts,
compensatory damages, liquidated damages, punitive or exemplary damages, other
damages, claims for costs and attorneys' fees, or liabilities of any nature
whatsoever in law and in equity, whether
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related to, arising out of, or due to occurrences or conditions prior to, on or
after the Spin-Off Effective Time, and whether known or unknown, suspected, or
claimed) against GM, any GM Affiliate or any of their respective Representatives
which Hughes or any Hughes Affiliate may have to the extent related to, arising
out of or due to, directly or indirectly, the investigation, consideration or
pursuit (including the adequacy of disclosure by and due diligence of GM, Hughes
or any unaffiliated Persons and including any allegations of breach of fiduciary
duty with respect to the transactions contemplated by this Agreement and the
Merger Agreement) of one or more strategic business combination transactions
involving Hughes or any Hughes Affiliate and one or more unaffiliated Persons
(any such claim, a "Hughes Sale Process Claim"), except to the extent that
Hughes hereafter incurs any Losses in respect thereof arising out of a Third-
Party Claim.
(iii) Other than with respect to any claim based on a breach by
GM of the Transaction Agreements to which GM is a party, Hughes agrees that it
shall not, and shall cause each Hughes Affiliate not to, seek to recover from
GM, any GM Affiliate or any of their respective Representatives any Losses, to
the extent that such Losses relate to, arise out of or are due to, directly or
indirectly, any Hughes Sale Process Claim unless and until such time, and only
to the extent that, Hughes incurs any Losses in respect thereof arising out of a
Third-Party Claim.
(g) GM-Hughes Sale Process Claims.
(i) GM, ON BEHALF OF ITSELF AND EACH GM AFFILIATE, RESPECTIVELY,
ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS, WARRANTIES
AND COVENANTS OF HUGHES SET FORTH IN THIS AGREEMENT, THE GM/HUGHES SEPARATION
AGREEMENT OR ANY OF THE AGREEMENTS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE
TRANSACTION AGREEMENTS), HUGHES MAKES NO REPRESENTATION, WARRANTY OR COVENANT
WHATSOEVER, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT, THE GM/HUGHES
SEPARATION AGREEMENT, THE MERGER AGREEMENT OR ANY OF THE AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE TRANSACTION
AGREEMENTS). GM, on behalf of itself and each GM Affiliate, respectively,
represents and warrants to Hughes that in making its determination to enter
into, and to proceed with the transactions contemplated by, this Agreement, the
GM/Hughes Separation Agreement, the Merger Agreement and each of the agreements
contemplated hereby and thereby (including the Transaction Agreements), it has
not relied on and will not rely on any representation, warranty or covenant of
Hughes, any Hughes Affiliate, or any Representative of Hughes or any Hughes
Affiliate, other than the express representations, warranties and covenants of
Hughes set forth in this Agreement, the GM/Hughes Separation Agreement or any of
the agreements contemplated hereby or thereby to which GM and Hughes are each a
party (including the Transaction Agreements).
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(ii) Other than with respect to any claim based on a breach by
Hughes of the Transaction Agreements to which Hughes is a party, GM, on behalf
of itself and each GM Affiliate, hereby waives, releases and forever discharges
any and all claims (including any and all claims, controversies, actions, causes
of action, cross-claims, counter-claims, demands, debts, compensatory damages,
liquidated damages, punitive or exemplary damages, other damages, claims for
costs and attorneys' fees, or liabilities of any nature whatsoever in law and in
equity, whether related to, arising out of, or due to occurrences or conditions
prior to, on or after the Spin-Off Effective Time, and whether known or unknown,
suspected, or claimed) against Hughes, any Hughes Affiliate or any of their
respective Representatives which GM or any GM Affiliate may have to the extent
related to, arising out of or due to, directly or indirectly, the investigation,
consideration or pursuit (including the adequacy of disclosure by and due
diligence of Hughes, GM or any unaffiliated Persons and including any
allegations of breach of fiduciary duty with respect to the transactions
contemplated by this Agreement and the Merger Agreement) of one or more
strategic business combination transactions involving Hughes or any Hughes
Affiliate and one or more unaffiliated Persons (any such claim, a "GM-Hughes
Sale Process Claim"), except to the extent that GM hereafter incurs any Losses
in respect thereof arising out of a Third-Party Claim.
(iii) Other than with respect to any claim based on a breach by
Hughes of the Transaction Agreements to which Hughes is a party, GM agrees that
it shall not, and shall cause each GM Affiliate not to, seek to recover from
Hughes, any Hughes Affiliate or any of their respective Representatives any
Losses, to the extent that such Losses relate to, arise out of or are due to,
directly or indirectly, any GM-Hughes Sale Process Claim unless and until such
time, and only to the extent that, GM incurs any Losses in respect thereof
arising out of a Third-Party Claim.
(h) Remaining Shares. In the event that either (i) the IRS requires,
as a condition to the issuance of the Ruling, that GM distribute all or any of
the Remaining Shares (as defined below) in the Spin-Off to the holders of the GM
$1-2/3 Common Stock or (ii) in connection with the Ruling Request, the IRS does
not issue a ruling to the effect that GM may retain and subsequently dispose of
the Remaining Shares, under conditions acceptable to GM in its sole and absolute
discretion, in a manner that will not cause the retention and disposition of the
Remaining Shares to be treated as part of a Section 355(e) Plan (as defined
below) that includes the GM Transactions and the Merger (a "Remaining Shares
Section 355(e) Ruling"), then GM shall distribute in the Spin-Off to the holders
of the GM $1-2/3 Common Stock (the "Remaining Shares Distribution") (A) in the
case of clause (i) above, all or the specified portion of the Remaining Shares
and (B) in the case of clause (ii) above, such number of the Remaining Shares
(up to the number of Remaining Shares then held by GM) as is necessary to allow
the condition contained in Section 6.1(h) of the Merger Agreement to be
satisfied. If the IRS issues a Remaining Shares Section 355(e) Ruling, then GM
may, in its sole and absolute discretion, retain, distribute or otherwise
dispose of or deal with the Remaining Shares; provided that GM shall comply with
any condition imposed by the IRS, in connection with the Ruling or the Remaining
Shares Section 355(e) Ruling, that relates to the Remaining Shares. For the
purposes of this Agreement, "Remaining Shares" means those shares of
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Hughes Class C Common Stock, if any, held by GM immediately prior to the Spin-
Off Effective Time that (I) will not be distributed by GM to the holders of the
GM Class H Common Stock in the Spin-Off and (II) will not be transferred in any
GM Debt/Equity Exchange.
(i) Solvency Opinion. Prior to the Hughes Recapitalization, Hughes
shall use commercially reasonable efforts to seek an opinion of Houlihan Lokey
Howard & Zukin (the "Solvency Opinion"), a copy of which shall be provided to
EchoStar, if requested, regarding Hughes' ability to declare the dividend
contemplated by the Hughes Recapitalization.
(j) Certain Merger Agreement Covenants. GM shall use commercially
reasonable efforts to take all actions in its capacity as the sole stockholder
of Hughes to allow Hughes to comply with Hughes' covenant in Section 5.3(a)(iv)
of the Merger Agreement. Except as expressly contemplated by any of the GM
Transaction Agreements, Hughes Transaction Agreements or EchoStar Transaction
Agreements, GM shall not take any action in respect of Hughes that, if taken by
Hughes, would cause Hughes to violate the covenants set forth in Sections
5.3(a)(iii), (v), (vi), (vii), (ix), (x), (xi) or (xiii) of the Merger
Agreement.
(k) GM Class H Common Stock. From and after the date hereof until
immediately prior to the Spin-Off Effective Time, except for (i) following the
effectiveness of the GM Charter Amendment, reducing the Denominator of the Class
H Fraction as contemplated by Section 1.1(b) of the GM/Hughes Separation
Agreement, (ii) increasing the Numerator and the Denominator of the Class H
Fraction to include such number of shares of GM Class H Common Stock issued in
the event that shares are issued as a result of the conversion of the GM Series
H Preference Stock into GM Class H Common Stock, (iii) increasing the Numerator
and the Denominator of the Class H Fraction as a result of the grant and/or
exercise of employee stock options as provided in the GM Certificate of
Incorporation, (iv) adjusting the Numerator and the Denominator of the Class H
Fraction to reflect changes during the applicable quarterly accounting period
due to the passage of time and (v) increasing the Numerator of the Class H
Fraction to include the number of shares of GM Class H Common Stock issued as a
result of any GM Debt/Equity Exchange, and except as contemplated by the
Transaction Agreements and the transactions contemplated thereby, (A) GM shall
not adjust the Numerator or the Denominator of the Class H Fraction or take any
actions that would require it to do so and (B) GM shall not do or effect any of
the following actions with respect to the GM Class H Common Stock: (I) adjust,
split, combine, recapitalize or reclassify the GM Class H Common Stock, (II)
make, declare or pay any dividend or distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of GM Class H Common Stock or
any securities or obligations convertible into or exchangeable for shares of GM
Class H Common Stock, (III) grant any Person any right or option to acquire any
shares of GM Class H Common Stock other than grants in accordance with, and to
the extent permitted by Hughes pursuant to, Section 5.1(j) of the Merger
Agreement, (IV) issue, deliver or sell or agree to issue, deliver or sell any
additional shares of GM Class H Common Stock or any securities or obligations
convertible into or exchangeable for any shares of GM Class H Common Stock
(except
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pursuant to the exercise of outstanding options and options issued after the
date hereof in accordance with, and to the extent permitted by Hughes pursuant
to, Section 5.1(j) of the Merger Agreement) or (V) enter into any agreement,
understanding or arrangement with respect to the sale or voting of GM Class H
Common Stock.
(l) GM Cooperation with Regulatory Matters.
(i) In furtherance of the covenants of Hughes set forth in
Section 5.1(b) of the Merger Agreement, as soon as practicable, and in any event
within twenty (20) Business Days after the date hereof, GM shall file any
Notification and Report Forms and related material required to be filed by it
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the HSR Act and any similar required
notifications under the laws of any foreign jurisdiction with respect to the
Merger and the transactions contemplated by the Merger Agreement and shall
promptly make any further filings pursuant thereto that may be necessary, proper
or advisable. GM shall, subject to Section 5.1(b)(v) of the Merger Agreement:
(A) use best efforts to obtain prompt termination of any waiting period under
the HSR Act (including any extension of the initial thirty (30) day waiting
period) with respect to the Merger, and shall not, without the prior consent of
EchoStar, agree with any Governmental Authority to cause Hughes not to
consummate the Merger for a period of time beyond the expiration of the waiting
period applicable to the consummation of the Merger under the HSR Act or to
extend the Closing Date (as defined in the Merger Agreement) to a date within
the ninety (90) day period prior to the Outside Date (as defined in the Merger
Agreement); (B) furnish to Hughes and EchoStar such information and assistance
as EchoStar may reasonably request in connection with the preparation of any
submissions to, or agency proceeding by, any Governmental Authority under any
Antitrust Law (as defined in the Merger Agreement); (C) keep Hughes and EchoStar
promptly apprised of any communications with, and inquiries or requests for
information from, such Governmental Authority; (D) permit Hughes and EchoStar to
review any material communication given by it to, and consult with Hughes and
EchoStar in advance of any meetings or conferences with, any Governmental
Authority or, in connection with any proceeding by a private party, with any
other Person, give Hughes and EchoStar the opportunity to attend and participate
in such meetings and conferences; and (v) use best efforts to cooperate with
Hughes and EchoStar to cause the conditions set forth in Section 6.1(b) of the
Merger Agreement to be satisfied; provided that GM shall not take any action
that would be reasonably likely to (1) prevent the delivery of the Tax Opinions
or the Ruling, or (2) cause the representations and assumptions underlying the
Tax Opinions or the Ruling not to be true and correct in all material respects.
(ii) In furtherance and not in limitation of the covenants of GM
contained in this Section 5.2(l), GM shall use best efforts in cooperating with
Hughes to resolve such objections, if any, as may be asserted with respect to
the transactions contemplated by the Merger Agreement under any rules and
regulations of any Antitrust Law (as defined in the Merger Agreement). In
connection with the foregoing, if any administrative or judicial action or
proceeding,
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including any proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by the Merger Agreement as
violative of any Antitrust Law, GM shall, subject to Section 5.1(b)(v) of the
Merger Agreement, use best efforts in cooperating with Hughes to avoid the
institution of any such action or proceeding and to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by the Merger Agreement.
(iii) If any objections are asserted with respect to the
transactions contemplated by the Merger Agreement under any Antitrust Law or if
any suit is instituted by any Governmental Authority or any private party
challenging any of the transactions contemplated by the Merger Agreement as
violative of any Antitrust Law, GM shall, subject to Section 5.1(b)(v) of the
Merger Agreement, use its best efforts in cooperating with Hughes to resolve any
such objections or challenge as such Governmental Authority or private party may
have to such transactions under such law so as to permit consummation of the
transactions contemplated by the Merger Agreement. In furtherance and not in
limitation of the foregoing, GM (and, to the extent required by any Governmental
Authority, their Subsidiaries and affiliates (other than Hughes and any Hughes
Affiliates) over which they exercise control) shall be required, subject to
Section 5.1(b)(v) of the Merger Agreement, to enter into a settlement,
undertaking, consent decree, stipulation or other agreement (each, a
"Settlement") with a Governmental Authority regarding antitrust matters in
connection with the transactions contemplated by the Merger Agreement, including
any Settlement that requires Hughes to hold separate (including by establishing
a trust or otherwise) or to sell or otherwise dispose of any of its assets or
its subsidiaries' efforts.
Section 5.3. Covenants and Agreements of EchoStar.
(a) Amendments to and Termination of the EchoStar Transaction
Agreements. EchoStar agrees that, prior to the Merger Effective Time, it will,
subject to the provisions of the immediately following sentence, consult with GM
and Hughes regarding any change, amendment or waiver that is proposed to be made
to any of the EchoStar Transaction Agreements or any of the other agreements
contemplated thereby. During such period, no changes or amendments will be made
to any such agreements, or waivers of rights under such agreements, without the
written consent of GM and Hughes, unless such changes or amendments, taken
together with all other changes and amendments, (i) could not reasonably be
foreseen to have an adverse effect on the business, assets, liabilities or
financial condition of EchoStar or, following the Merger Effective Time, Hughes,
and (ii) do not change in any substantive or non-immaterial respect any
conditions or termination provisions, change any terms or provisions in which a
change thereof would be prohibited after a stockholder vote, or impair or delay
the consummation of the Merger, any GM Debt/Equity Exchange or the GM
Transactions. EchoStar shall not, and shall not permit any of its affiliates
to, terminate any of the EchoStar Transaction Agreements or any of the other
agreements contemplated thereby, other than in connection with a termination of
this Agreement or the Merger
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Agreement (each of which may be terminated in accordance with its terms),
without the written consent of GM and Hughes. EchoStar shall promptly provide GM
and Hughes a copy of any amendment to any of the EchoStar Transaction
Agreements. Notwithstanding the foregoing, the parties agree that EchoStar may
take any of the foregoing actions with respect to the Merger Financing Agreement
and the PanAmSat Financing Agreement, subject to compliance with the relevant
terms of the Merger Agreement and the PanAmSat Stock Purchase Agreement,
respectively.
(b) Letter of Accountants.
(i) To the extent applicable as a result of any requirement to
include its financial statements in the Spin-Off/Merger Registration Statement,
EchoStar shall use commercially reasonable efforts to cause to be delivered to
GM and Hughes to the extent permitted by applicable accounting standards, if and
to the extent applicable in view of the status of Hughes as a registrant under
the Securities Act in connection with Spin-Off/Merger Registration Statement,
letters from the independent accountants of EchoStar, dated a date within two
(2) Business Days before the date on which the Spin-Off/Merger Registration
Statement shall become effective, addressed to Hughes and GM and their
respective Boards of Directors, customary in form and scope for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Spin-Off/Merger Registration Statement.
(ii) To the extent applicable as a result of any requirement to
include its financial statements in any GM Debt/Equity Exchange Registration
Statement, each of EchoStar and Hughes shall use commercially reasonable efforts
to cause to be delivered to GM to the extent permitted by applicable accounting
standards, if and to the extent applicable in view of the status of GM as a
registrant under the Securities Act in connection with any GM Debt/Equity
Exchange Registration Statement, letters from the respective independent
accountants of EchoStar and Hughes, dated as of a date within two (2) Business
Days before the date on which any GM Debt/Equity Exchange Registration Statement
shall become effective, addressed to GM and the GM respective Boards of
Directors, customary in form and scope for comfort letters delivered by
independent public accountants in connection with registration statements
similar to such GM Debt/Equity Exchange Registration Statement.
(iii) To the extent applicable as a result of any requirement to
include its financial statements in any GM Proxy/Consent Solicitation Statement,
EchoStar and Hughes shall use commercially reasonable efforts to cause to be
delivered to GM to the extent permitted by applicable accounting standards in
connection with any GM Proxy/Consent Solicitation Statement two (2) letters from
the independent accountants of EchoStar, one dated a date within two (2)
Business Days before the date on which the registration statement(s) containing
such GM Proxy/Consent Solicitation Statement shall become effective and one
dated a date within two (2) Business Days before the date on which such GM
Proxy/Consent Solicitation Statement is mailed to GM's stockholders, in each
case addressed to GM and the GM Board of Directors, customary in form
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and scope for comfort letters delivered by independent public accountants in
connection with proxy or consent solicitation statements similar to such GM
Proxy/Consent Solicitation Statement.
(c) Merger Agreement Covenants. EchoStar hereby covenants to GM
as to each of the matters set forth in the covenants made by EchoStar in the
Merger Agreement to the full extent set forth therein as though such covenants
were made by EchoStar to GM in this Agreement.
(d) Pre-Closing Cooperation. EchoStar promptly shall furnish GM
with all information concerning it and its affiliates as may reasonably be
requested by GM (i) for inclusion in the Ruling Request or any other IRS
Submission and (ii) for use by (A) Weil, Gotshal & Manges LLP, counsel to Hughes
and GM, in preparing its opinion to the effect that the Merger qualifies as a
reorganization pursuant to Section 368 of the Code (the "Section 368 Opinion")
and (B) Kirkland & Ellis, special counsel to GM (together with Weil, Gotshal &
Manges LLP, "Tax Counsel"), in preparing its opinions to the effect that the
recapitalization of the GM $1-2/3 Common Stock and the GM Class H Common Stock
arising from the adoption of the GM Charter Amendment will be tax free to GM,
the holders of the GM $1-2/3 Common Stock and the holders of the GM Class H
Common Stock, and the GM Class H Common Stock is stock of GM for United States
federal income tax purposes (the "Ancillary Tax Opinions" and, together with the
Section 368 Opinion, the "Tax Opinions").
(e) EchoStar Sale Process Claims.
(i) ECHOSTAR, ON BEHALF OF ITSELF AND EACH ECHOSTAR
AFFILIATE, RESPECTIVELY, ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE EXPRESS
REPRESENTATIONS, WARRANTIES AND COVENANTS OF GM AND HUGHES SET FORTH IN THIS
AGREEMENT, THE MERGER AGREEMENT OR ANY OF THE AGREEMENTS CONTEMPLATED HEREBY OR
THEREBY (INCLUDING THE TRANSACTION AGREEMENTS), GM AND HUGHES MAKE NO
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESSED OR IMPLIED, IN
CONNECTION WITH THIS AGREEMENT, THE MERGER AGREEMENT OR ANY OF THE AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE TRANSACTION
AGREEMENTS). EchoStar, on behalf of itself and each EchoStar Affiliate,
respectively, represents and warrants to GM and Hughes that in making its
determination to enter into, and to proceed with the transactions contemplated
by, this Agreement, the Merger Agreement or any of the agreements contemplated
hereby and thereby (including the Transaction Agreements), it has not relied on
and will not rely on any representation, warranty or covenant of GM, Hughes, any
GM Affiliate or any Hughes Affiliate, or any Representative of GM, Hughes, any
GM Affiliate or any Hughes Affiliate, other than (A) the express
representations, warranties and covenants of GM set forth in this Agreement or
any of the agreements contemplated hereby to which each of GM, on the one hand,
and EchoStar, on the other hand, is a party and (B) the express representations,
warranties
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and covenants of Hughes (with respect to which, in each case, GM makes no
representation, warranty or covenant except as expressly provided therein) set
forth in the Merger Agreement (including the Hughes Disclosure Schedule (as
defined below)), this Agreement or any of the agreements contemplated hereby or
thereby to which Hughes, on the one hand, and EchoStar, on the other hand, is a
party (including the Transaction Agreements).
(ii) Other than with respect to any claim based on a breach by
GM or Hughes of any of the EchoStar Transaction Agreements to which GM or
Hughes, as applicable, is a party, EchoStar, on behalf of itself and the
EchoStar Affiliates, hereby waives, releases and forever discharges any and all
claims (including any and all claims, controversies, actions, causes of action,
cross-claims, counter-claims, demands, debts, compensatory damages, liquidated
damages, punitive or exemplary damages, other damages, claims for costs and
attorneys' fees, or liabilities of any nature whatsoever in law and in equity,
whether related to, arising out of or due to occurrences or conditions prior to,
on or after the Merger Effective Time, and whether known or unknown, suspected,
or claimed) against GM, any GM Affiliate, Hughes, any Hughes Affiliate or any of
their respective Representatives which any of EchoStar or any EchoStar Affiliate
may have to the extent related to, arising out of or due to, directly or
indirectly, the investigation, consideration or pursuit (including the adequacy
of disclosures to and due diligence of EchoStar, any EchoStar Affiliate, GM,
Hughes, any Hughes Affiliate or any unaffiliated Persons and including any
allegations of breach of fiduciary duty with respect to the transactions
contemplated by this Agreement and the Merger Agreement) of one or more
strategic business combination transactions involving Hughes or any Hughes
Affiliate, and one or more unaffiliated Persons (any such claim, a "EchoStar
Sale Process Claim"), except to the extent that EchoStar hereafter incurs any
Losses in respect thereof arising out of a Third-Party Claim.
(iii) Other than with respect to any claim based on a breach by
GM or Hughes of any Transaction Agreements to which GM or Hughes, as applicable,
is a party, EchoStar agrees that it shall not, and shall cause the EchoStar
Affiliates not to, seek to recover from GM, any GM Affiliate, Hughes, any Hughes
Affiliate or any of their respective Representatives any Losses to the extent
that such Losses relate to, arise out of or are due to an EchoStar Sale Process
Claim unless and until such time, and only to the extent that EchoStar incurs
any Losses in respect thereof arising out of a Third-Party Claim.
(f) Payment of Demand Note. EchoStar shall use commercially
reasonable efforts to cooperate with Hughes to ensure that the Demand Note, if
any, shall, subject to the consummation of the Merger, be paid in full
immediately upon the occurrence of the Merger Effective Time as set forth in
Section 1.1(a)(ii) of the GM/Hughes Separation Agreement.
(g) Mailing of the EchoStar Information Statement. EchoStar shall
mail the EchoStar Information Statement to its stockholders on a date reasonably
proximate to the Mailing Date in compliance with Applicable Law, including
Regulation 14(c) of the Exchange Act.
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ARTICLE 6
TAX-FREE STATUS OF THE SPIN-OFF
Section 6.1. Representations and Warranties.
(a) Hughes. Hughes hereby represents and warrants that (i) it has
examined or, prior to the Spin-Off Effective Time, will examine the Ruling and
any other rulings issued by the IRS in connection with the Spin-Off, the Tax
Opinions, each IRS Submission, the representation letters relating to the Tax
Opinions and any other materials delivered or deliverable by GM and others in
connection with the rendering by Tax Counsel of the Tax Opinions and the
issuance by the IRS of the Ruling and such other rulings (all of the foregoing,
collectively, the "Tax Materials"), which to the extent related to Hughes shall
be in form and substance reasonably satisfactory to Hughes, and (ii) the facts
presented and the representations made therein, to the extent descriptive of
Hughes (including the business purposes for the Spin-Off, the representations in
the Tax Materials to the extent that they relate to Hughes, the timing and
amount of, and other circumstances relating to, any issuance of GM Class H
Common Stock occurring prior to the completion of the Spin-Off and the plans,
proposals, intentions and policies of Hughes), are true, correct and complete in
all material respects; provided that Hughes makes no representation or warranty
with respect to such facts presented and representations made regarding those
issuances that are specifically described in Section 6.1(b) below. The
representations and warranties set forth in this Section 6.1(a) shall be true
and correct as of the date hereof and at all times through and including the
Spin-Off Effective Time.
(b) GM. GM hereby represents and warrants that (i) it has examined
or, prior to the Spin-Off Effective Time, will examine the Tax Materials and
(ii) the facts presented and the representations made therein, to the extent
descriptive of GM (including the business purposes for the Spin-Off, the
representations in the Tax Materials to the extent that they relate to GM, the
timing and amount of, and other circumstances relating to, the contribution by
GM of shares of GM Class H Common Stock to certain employee benefit plans of GM
in June 2000, the offering of newly issued shares of GM Class H Common Stock in
exchange for outstanding shares of GM $1-2/3 Common Stock in May 2000 and any
issuance of GM Class H Common Stock GM in any GM Debt/Equity Exchange, and the
plans, proposals, intentions and policies of GM), are true, correct and complete
in all material respects. The representations and warranties set forth in this
Section 6.1(b) shall be true and correct as of the date hereof and at all times
through and including the Spin-Off Effective Time.
Section 6.2. Restrictions Relating to the Spin-Off.
(a) In General. The parties intend the Spin-Off to qualify as a
distribution of Hughes stock to GM stockholders with respect to which no gain or
loss is recognized by GM or any
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GM Affiliate, Hughes or their respective stockholders pursuant to Section 355
and related provisions of the Code (such nonrecognition, the "Tax-Free Status of
the Spin-Off"). Neither Hughes nor EchoStar shall, nor shall Hughes or EchoStar
permit any of their respective Subsidiaries to, take any action (including
entering into any agreement, understanding or arrangement or any substantial
negotiations with respect to any transaction or series of transactions) that, or
fail to take any action within its control the failure of which, would cause the
Spin-Off to fail so to qualify in any respect or to any extent (any such action
or failure to act, a "Disqualifying Action"). Further, neither Hughes nor
EchoStar shall, nor shall Hughes or EchoStar permit any of their respective
Subsidiaries to, take any action (including entering into any agreement,
understanding or arrangement or any substantial negotiations with respect to any
transaction or series of transactions) that, or fail to take any action the
failure of which, would result in a more than immaterial possibility that the
Tax-Free Status of the Spin-Off would be jeopardized (any such action or failure
to act, a "Potential Disqualifying Action"), including any action or failure to
act that would be reasonably likely to be inconsistent with any representation
made in the Tax Materials, unless, prior to the taking of the Potential
Disqualifying Action, GM has determined, in its reasonable discretion, which
discretion shall be exercised in good faith solely to preserve the Tax-Free
Status of the Spin-Off, that the Potential Disqualifying Action would not
jeopardize the Tax-Free Status of the Spin-Off. Notwithstanding the foregoing,
if and to the extent that any Potential Disqualifying Action is described in and
specifically permitted pursuant to Sections 6.2(d), (e) or (f), such Potential
Disqualifying Action shall not be subject to the prior consent of GM pursuant to
this Section 6.2(a).
(b) [Intentionally omitted]
(c) Proposed Acquisition Transactions. Until the first day after the
second anniversary of the Spin-Off Effective Time, neither Hughes nor EchoStar
shall, nor shall Hughes or EchoStar permit any of their respective Subsidiaries
to:
(i) enter into any agreement, understanding or arrangement or
any substantial negotiations with respect to any transaction or series of
transactions (any such transaction, including any issuance or transfer of an
option (as defined for purposes of Section 355(e) of the Code), but excluding
the GM Transactions and the Merger, a "Proposed Acquisition Transaction") that
is, or that is presumed to be, for purposes of Section 355(e) of the Code and
applicable proposed, temporary or final Treasury Regulations promulgated
thereunder, part of a plan or series of related transactions (any such plan or
series of related transactions, as defined for purposes of Section 355(e) of the
Code, a "Section 355(e) Plan") pursuant to which, either individually or taken
together with the GM Transactions, the Merger, the Assumed AOL Sale (as defined
below), if any, the Conversion Issuances (as defined below) and the Debt/Equity
Issuances (as defined below), one or more Persons acquire directly or indirectly
stock or other interests (in any entity or combination of entities) that
represent a fifty percent (50%) or greater interest in (A) the total combined
voting power of all outstanding shares of Voting Stock (as defined below) of
Hughes or any successor corporation or (B) the total value of all outstanding
shares of Hughes Capital Stock (as defined below); or
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(ii) to the extent that Hughes or EchoStar has the right and
power to prohibit any agreement, understanding or arrangement or any substantial
negotiations with respect to a Proposed Acquisition Transaction, permit any
agreement, understanding or arrangement or any substantial negotiations with
respect to a Proposed Acquisition Transaction to occur;
unless, in each case, prior to entering into such agreement, understanding or
arrangement or commencing substantial negotiations with respect to such Proposed
Acquisition Transaction, GM has determined, in its reasonable discretion, which
discretion shall be exercised in good faith solely to preserve the Tax-Free
Status of the Spin-Off, that the consummation of such Proposed Acquisition
Transaction would not jeopardize the Tax-Free Status of the Spin-Off. For the
purposes of the preceding sentence, subject to Section 6.2(g), any acquisition
of GM Class H Common Stock prior to the completion of the Spin-Off shall be
treated as an acquisition of Voting Stock of Hughes.
(d) Continuation of the DTV Business. Until the first day after the
second anniversary of the Spin-Off Effective Time:
(i) Hughes shall continue the active conduct of its DTV
Business (as defined below) as conducted by Hughes immediately prior to the
Spin-Off. Hughes shall conduct the DTV Business directly (including through one
or more entities that are treated as disregarded entities for United States
federal income tax purposes), to the extent that the DTV Business was so
conducted immediately prior to the Spin-Off Effective Time. Hughes shall
continue the active conduct of the DTV Business primarily through officers and
employees of Hughes or any of Hughes' Subsidiaries (and not primarily through
independent contractors) who are not also officers or employees of GM or of any
GM Affiliate; provided, however, that, for the purposes of this Article 6,
neither Hughes nor any of the Subsidiaries of Hughes shall be deemed to be
Subsidiaries of GM or of any of the Subsidiaries of GM. For the purposes of this
Agreement, "DTV Business" means the business currently conducted by DIRECTV
Enterprises, Inc., a Delaware corporation and a direct wholly owned Subsidiary
of Hughes, and DIRECTV Operations, Inc., a California corporation and a direct
wholly owned Subsidiary of DIRECTV Enterprises, Inc.
(ii) Subject always to Section 6.2(e), Hughes shall not (A)
dispose of or otherwise discontinue the conduct of Substantially All of the DTV
Business (as defined below) (but Hughes shall not be prohibited under this
Section 6.2(d)(ii) from disposing of or discontinuing one or more trades or
businesses that constitute part of the DTV Business so long as Hughes does not
dispose of or discontinue the conduct of Substantially All of the DTV Business)
or (B) dispose of any business or assets that would cause the DTV Business to be
operated in a manner that is inconsistent in any material respect with the
business purposes for the Spin-Off as set forth in the Tax Materials, in each
case unless GM has determined, in its reasonable discretion, which discretion
shall be exercised in good faith solely to preserve the Tax-Free Status of the
Spin-Off, that such disposition or discontinuance would not jeopardize the Tax-
Free Status of the Spin-Off. For the
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purposes of this Agreement, "Substantially All of the DTV Business" shall mean
sixty percent (60%) or more of the DTV Business, based on the fair market value
of the assets, both tangible and intangible, of the DTV Business as of the Spin-
Off Effective Time. For the purposes of this clause (d)(ii), asset retirements,
sale-leaseback arrangements and discontinuances of product lines within a trade
or business the active conduct of which is continued shall not be deemed to be a
disposition or discontinuance of a trade or business or portion thereof.
(iii) Solely for purposes of this Section 6.2(d), Hughes shall
not be treated as directly or indirectly controlling a Subsidiary unless Hughes
owns, directly or indirectly, shares of capital stock of such Subsidiary
constituting Tax Control of the Subsidiary.
(e) Continuity of Business.
(i) Until the first day after the second anniversary of the
Spin-Off Effective Time, (A) Hughes shall not voluntarily dissolve or liquidate
and (B) except in the ordinary course of business, neither Hughes nor any of
Hughes' Subsidiaries directly or indirectly controlled by Hughes shall sell,
transfer or otherwise dispose of or agree to dispose of assets (including, for
this purpose, any shares of capital stock of such Subsidiaries) that, in the
aggregate, constitute more than (x) sixty percent (60%) of the gross assets of
Hughes or (y) sixty percent (60%) of the consolidated gross assets of Hughes and
such Subsidiaries, unless, prior to the consummation of such transaction, GM has
determined, in its reasonable discretion, which discretion shall be exercised in
good faith solely to preserve the Tax-Free Status of the Spin-Off, that such
transaction would not jeopardize the Tax-Free Status of the Spin-Off. The amount
of gross assets of Hughes and such Subsidiaries shall be based on the fair
market value of each such asset as of the Spin-Off Effective Time.
(ii) Sales, transfers or other dispositions by Hughes or any of
its Subsidiaries to Hughes or one or more Subsidiaries directly or indirectly
controlled by Hughes shall not be included in any determination under this
Section 6.2(e) as to whether sixty percent (60%) or more of the gross assets of
Hughes or sixty percent (60%) of the consolidated gross assets of Hughes and
such Subsidiaries have been sold, transferred or otherwise disposed of.
(iii) Solely for purposes of this Section 6.2(e), Hughes shall
not be treated as directly or indirectly controlling a Subsidiary unless Hughes
owns, directly or indirectly, shares of capital stock of such Subsidiary
constituting Tax Control of the Subsidiary.
(f) Intercompany Indebtedness. Except as set forth on Section 6.2(f)
of the GM Disclosure Schedule and Section 6.2(f) of the disclosure schedule
delivered by Hughes to EchoStar and dated as of the date of this Agreement (the
"Hughes Disclosure Schedule"), from the Spin-Off Effective Time until the first
day after the second anniversary of the Spin-Off Effective Time, neither GM nor
Hughes shall, nor shall they permit any of their respective Subsidiaries to,
create, incur, assume or allow to exist any indebtedness between GM or any GM
Affiliate, on the one hand, and
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Hughes or any Hughes Affiliate, on the other hand, other than (i) payables
incurred in the ordinary course of business and (ii) any indebtedness
distributed to GM as a part of the Hughes Recapitalization.
(g) Certain Presumptions. For the purposes of this Section 6.2, it
shall be presumed that no issuance of GM Class H Common Stock that occurred on
or prior to May 1, 2001 is part of a Section 355(e) Plan that includes any
Proposed Acquisition Transaction. For the purposes of this Section 6.2, (i)
unless the IRS has issued a ruling to GM to the effect that no disposition by
the holder of the GM Series H Preference Stock (or any successor securities,
including the Hughes Preference Stock, and including securities received upon
conversion or exchange of the GM Series H Preference Stock or any successor
securities) of any such stock or securities will be treated as part of a Section
355(e) Plan that includes the GM Transactions and the Merger, (an "AOL Section
355(e) Ruling"), it shall be conclusively presumed that the holder of the GM
Series H Preference Stock (or any successor securities, including the Hughes
Preference Stock, and including securities received upon conversion or exchange
of the GM Series H Preference Stock or any successor securities) will dispose of
all such stock and securities in a transaction (such transaction, the "Assumed
AOL Sale") that is part of a Section 355(e) Plan that includes the GM
Transactions and the Merger; (ii) unless the IRS has issued a ruling to the
contrary based on representations reasonably acceptable to GM, it shall be
conclusively presumed that each security or instrument that is outstanding
immediately prior to the Merger Effective Time and convertible into, or
exchangeable or exercisable for, capital stock of EchoStar (other than stock
options issued to employees of EchoStar or its Subsidiaries in connection with
the performance of services) will be converted, exchanged or exercised after the
Merger Effective Time into or for the largest number of shares of capital stock
of Hughes that may be issued thereunder, in each case in a transaction (such
transactions, collectively, the "Conversion Issuances") that is part of a
Section 355(e) Plan that includes the GM Transactions and the Merger; and (iii)
it shall be conclusively presumed that any shares of GM Class H Common Stock
issued or Hughes Class C Common Stock distributed (or that may be distributed)
by GM pursuant to any GM Debt/Equity Exchange was or will be issued or
distributed, as the case may be, in a transaction (such transactions,
collectively, the "Debt/Equity Issuances") that is part of a Section 355(e) Plan
that includes the GM Transactions and the Merger.
(h) Permitted Actions and Transactions. Notwithstanding the
foregoing, the provisions of this Section 6.2 shall not prohibit Hughes or
EchoStar, as the case may be, from implementing any Potential Disqualifying
Action, including any Proposed Acquisition Transaction, upon which the IRS has
granted a favorable ruling in, or which is described in reasonable detail in,
the Ruling or any Subsequent Tax Opinion (as defined below) or Subsequent Ruling
(as defined below).
(i) Valuation of Class B Common Stock. With respect to any Proposed
Acquisition Transaction occurring after the Merger Effective Time, for purposes
of GM's determination as described in Section 6.2(c), GM, relying on the advice
of the investment bankers
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referred to in Section 6.1(h)(iii)(B) of the Merger Agreement (the "Bankers")
shall determine the fair market value of the Hughes Class B Common Stock taking
into account (i) the valuation methodology that was employed in the
determination of the fair market value of such stock under Section
6.1(h)(iii)(B) of the Merger Agreement; (ii) any Change in Tax Law (as defined
in the GM/Hughes Separation Agreement) or a material change in, or failure of, a
relevant fact; and (iii) any change or development occurring after the Merger
Effective Time in the valuation methodology, practices or standards determined
by the Bankers generally used by professionals regularly engaged in the
valuation of securities.
Section 6.3. Cooperation and Other Covenants.
(a) Notice of Subsequent Hughes Actions. Each of Hughes and EchoStar,
on the one hand, and GM, on the other hand, shall furnish the other with a copy
of any ruling requests or other documents delivered to the IRS that relate to
the Spin-Off or that otherwise reasonably could be expected to have an impact on
the Tax-Free Status of the Spin-Off; provided that GM may redact any Redactable
Information.
(b) Post-Closing Cooperation.
(i) Each of Hughes and EchoStar, on the one hand, and GM, on the
other hand, shall cooperate with the other and shall take (or refrain from
taking) all such actions as the other may reasonably request in connection with
obtaining any determination by GM referred to in Section 6.2. Such cooperation
shall include providing any information, representations and/or covenants
reasonably requested by the other to enable either party (or counsel for such
party) to obtain and maintain either (A) an opinion of counsel selected by GM,
in its sole and absolute discretion, confirming, in form and substance
reasonably satisfactory to GM, that the taking of a Potential Disqualifying
Action or other action described in Section 6.2 would not jeopardize the Tax-
Free Status of the Spin-Off (a "Subsequent Tax Opinion") or (B) an IRS private
letter ruling to the same effect (a "Subsequent Ruling"). From and after any
date on which (x) Hughes or EchoStar, on the one hand, or GM, on the other hand,
makes any representation to the IRS for the purpose of obtaining a Subsequent
Ruling or to counsel selected by GM for the purpose of obtaining a Subsequent
Tax Opinion or (y) Hughes or EchoStar makes any representation to GM for the
purpose of any determination required to be made by GM pursuant to Section 6.2,
in connection with obtaining any such determination or the receipt of a
Subsequent Tax Opinion or Subsequent Ruling and until the first day after the
second anniversary of the date of such determination or receipt, neither party
shall take (nor shall it refrain from taking) any action that would have caused
such representation to be untrue unless the other party has determined, in its
reasonable discretion, which discretion shall be exercised in good faith solely
to preserve the Tax-Free Status of the Spin-Off, that such action would not
jeopardize the Tax-Free Status of the Spin-Off.
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(ii) In the event that Hughes notifies GM that it or EchoStar
desires to take a Potential Disqualifying Action or other action described in
Section 6.2 and GM concludes that such action might jeopardize the Tax-Free
Status of the Spin-Off, GM shall, at the request of Hughes, elect either (A) to
use commercially reasonable efforts to obtain a Subsequent Ruling that would
permit Hughes or EchoStar to take the specified action, with Hughes and EchoStar
to cooperate fully in connection with such efforts, or (B) to provide all
reasonable cooperation to Hughes or EchoStar in connection with Hughes or
EchoStar obtaining such a Subsequent Ruling in form and substance reasonably
satisfactory to GM. All expenses incurred in connection with obtaining such
Subsequent Ruling shall be borne by Hughes. If the parties obtain a Subsequent
Ruling that would permit Hughes or EchoStar to take a Potential Disqualifying
Action or other action described in Section 6.2 without jeopardizing the Tax-
Free Status of the Spin-Off, then GM shall make a favorable determination as to
the specified action under Section 6.2, unless GM determines, based on an
opinion of tax counsel, that there is a more than immaterial possibility that
the specified action nonetheless will jeopardize the Tax-Free Status of the
Spin-Off, based upon (i) a Change in Tax Law (as defined in the GM/Hughes
Separation Agreement) on or after the date on which the Subsequent Ruling is
issued or (ii) a change in, or failure of, a relevant fact (including an error
in stating, or an omission to state, a relevant fact in any IRS Submission or
otherwise); provided, that if GM makes such a determination in accordance with
the requirements described above, then the parties shall request that the IRS
confirm the Subsequent Ruling if the matter is capable of being resolved by a
further ruling from the IRS.
(iii) GM shall not file any request for a Subsequent Ruling
without the prior written consent of Hughes, which consent shall not be
unreasonably withheld or delayed, if a favorable Subsequent Ruling would be
reasonably likely to have the effect of reducing by more than an immaterial
amount the amount of equity that may be issued by Hughes in transactions that,
if consummated as of the proposed date of such request, would not have resulted
in a breach of Section 6.2(c).
(iv) At the request of Hughes, made after the Merger Effective
Time, GM shall seek to obtain a Subsequent Ruling, or shall provide cooperation
to Hughes and EchoStar in connection with Hughes and EchoStar obtaining a
Subsequent Ruling, in each case in accordance with clause (ii) of this Section
6.3(b), as to the treatment under Section 355(e) of the Code of one or more
convertible securities that may be issued by EchoStar after the date of this
Agreement and prior to the Merger Effective Time.
(c) Notice.
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(i) Hughes or EchoStar, as the case may be, shall give GM written
notice of any intention to effect or permit any Potential Disqualifying Action
or other action or transaction described in Section 6.2 at such time within a
period of time reasonably sufficient to enable GM (A) to make the determination
referred to in Section 6.2 or (B) to prepare and seek a Subsequent Tax Opinion
or a Subsequent Ruling in connection with such proposed action or transaction.
Each such notice by Hughes or EchoStar, as the case may be, shall set forth the
terms and conditions of the proposed action or transaction, including, as
applicable, the nature of any related action proposed to be taken by the Board
of Directors of Hughes or EchoStar or any of their respective affiliates, the
approximate number of shares of Hughes Capital Stock proposed to be transferred
or issued (directly or indirectly, in accordance with the provisions of Section
355(e) of the Code), the approximate Value of Hughes assets (or assets of any
Subsidiary of Hughes) proposed to be transferred, the proposed timetable for
such action or transaction, and the number of shares of Hughes Capital Stock
otherwise then owned by the other party to the proposed action or transaction
(directly or indirectly, in accordance with the provisions of Section 355(e) of
the Code), all with sufficient particularity to enable GM to make any such
required determination, including information required to prepare and seek a
Subsequent Tax Opinion or a Subsequent Ruling in connection with such proposed
action or transaction. All information provided by any of the parties to any
other party pursuant to this Section 6.3 shall be kept strictly confidential by
the receiving party or parties in accordance with the confidentiality
obligations of Article 3 of the GM/Hughes Separation Agreement (which are
incorporated herein by reference).
(ii) Promptly, but in any event within fifteen (15) days, other
than a Saturday, Sunday or a day on which banking institutions located in the
State of New York or Michigan are authorized or obligated by law or executive
order to close (such day, a "Business Day"), after GM receives such written
notice from Hughes or EchoStar, as the case may be, GM shall evaluate such
information and notify Hughes or EchoStar, as the case may be, in writing of (A)
such determination or (B) GM's intent to seek a Subsequent Tax Opinion or a
Subsequent Ruling or, as the case may be, GM's election to permit Hughes or
EchoStar to seek a Subsequent Ruling pursuant to Section 6.3(b)(ii)(B). If GM
makes a determination that a Potential Disqualifying Action or other action or
transaction described in Section 6.2 would jeopardize the Tax-Free Status of the
Spin-Off, such notice to Hughes or EchoStar shall set forth, in reasonable
detail, the reasons therefor. A party that receives a Subsequent Tax Opinion or
Subsequent Ruling shall notify each other party that is not otherwise provided
with a copy of the Subsequent Tax Opinion or Subsequent Ruling, promptly, but in
any event within two Business Days, after the receipt of the Subsequent Tax
Opinion or Subsequent Ruling.
Section 6.4. Indemnification for Tax Liabilities.
(a) General. Notwithstanding any other provision of this Agreement or
any provision of any of the GM/Hughes Tax Agreements to the contrary, but
subject to Section 6.4(b), Hughes shall, indemnify, defend and hold harmless GM
and each GM Affiliate (or any successor to
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any of them) from and against any and all (i) Taxes imposed pursuant to a Final
Determination, (ii) accounting, legal and other professional fees and court
costs incurred in connection with such Taxes and (iii) costs and expenses that
may result from adverse tax consequences to GM or GM's stockholders (including
all costs, expenses and damages associated with stockholder litigation or
controversies) (collectively, "Tax-Related Losses"), incurred by GM or any GM
Affiliate, to the extent caused by (A) any Disqualifying Action taken by Hughes,
EchoStar or any of their respective Subsidiaries or affiliates or (B) any other
breach by Hughes, or EchoStar, of any of their respective representations,
warranties or covenants made in this Article 6.
All interest or penalties incurred in connection with such Tax-Related Losses
shall be computed for the time period up to and including the date that Hughes
or EchoStar pays its indemnification obligation in full.
(b) Exceptions to Indemnification. If GM (i) makes a determination
pursuant to any clause of Section 6.2 on the basis of a Subsequent Tax Opinion
or Subsequent Ruling or otherwise, that a Proposed Disqualifying Action or other
action described in Section 6.2 would not jeopardize the Tax-Free Status of the
Spin-Off and (ii) delivers to Hughes written notice of such determination
pursuant to Section 6.3(c), then Hughes shall have no obligation to indemnify GM
or any GM Affiliate in respect of such action pursuant to Section 6.4(a), except
to the extent that any Tax-Related Losses result from the inaccuracy,
incorrectness or incompleteness of any representation provided by Hughes or
EchoStar, or the failure by Hughes or EchoStar to comply with any covenant, in
each case upon which such Subsequent Tax Opinion or Subsequent Ruling and/or
determination was based.
(c) Timing and Method of Tax Indemnification Payments. Hughes shall
pay any amount that is due and payable to GM pursuant to this Section 6.4 on or
before the ninetieth (90th) day following the earlier of agreement of the
parties or a Final Determination that such amount is due and payable to GM. All
payments pursuant to this Section 6.4 shall be made by wire transfer to the bank
account designated by GM for such purpose, and, on the date of such wire
transfer, Hughes or EchoStar, as the case may be, shall give GM notice of the
transfer.
(d) Certain Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Final Determination" means the final resolution of liability
for any Tax for a taxable period (A) by IRS Form 870 or 870-AD (or any successor
forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by
a comparable form under the laws of other jurisdictions; except that a Form 870
or 870-AD or comparable form that reserves (whether by its terms or by operation
of law) the right of the taxpayer to file a claim for refund and/or the right of
the taxing authority to assert a further deficiency shall not constitute a Final
Determination; (B) by a decision, judgment, decree or other order by a court of
competent jurisdiction, which has become
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final and unappealable; (C) by a closing agreement or accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable agreements
under the laws of other jurisdictions; (D) by any allowance of a refund or
credit in respect of an overpayment of Tax, but only after the expiration of all
periods during which such refund may be recovered (including by way of offset)
by the taxing jurisdiction; or (E) by any other final disposition, including by
reasons of the expiration of the applicable statute of limitations or by mutual
agreement of the parties;
(ii) "Hughes Capital Stock" means any class or series of capital
stock of Hughes or of any successor corporation;
(iii) "Person" means any individual, corporation, limited
liability company, partnership, trust or unincorporated organization or
government or any agency or political subdivision thereof;
(iv) "Tax" means any (A) United States federal, state or local or
non-United States income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), 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, assessment or governmental charge of any kind whatever imposed by any
Governmental Authority, including any interest, penalty or addition thereto,
whether disputed or not; (B) liability for the payment of any amount of the type
described in clause (A) above arising as a result of being (or having been) a
member of any group or being (or having been) included or required to be
included in any Tax return related thereto; and (C) liability for the payment of
any amount of the type described in clause (A) or clause (B) above as a result
of any express or implied obligation to indemnify or otherwise assume or succeed
to the liability of any other Person;
(v) "Tax Control" has the meaning given to "control" in Section
368(c) of the Code; and
(vi) "Voting Stock" means the total combined voting power of all
outstanding shares of Hughes Capital Stock entitled to vote generally in the
election of directors of Hughes.
(e) Prior Period Agreements. Except for the GM/Hughes Tax Agreements,
any and all existing Tax sharing agreements and practices regarding Taxes and
their payment, allocation or sharing between GM or any Subsidiary of GM
(including former subsidiaries and affiliates of GM) and Hughes or any
Subsidiary of Hughes shall be terminated with respect to Hughes and all
Subsidiaries of Hughes as of the Spin-Off Effective Time, and no remaining
liabilities thereunder shall exist thereafter.
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Section 6.5. Procedure for Indemnification for Tax Liabilities.
(a) Notice of Claim. If GM receives notice of the assertion of any (i)
claim, (ii) suit, (iii) arbitration, or (iv) inquiry, proceeding or
investigation by or before any Governmental Authority, in any case asserted by
or in right of a Person other than GM or any GM Affiliate, Hughes or any Hughes
Affiliate (a "Third-Party Claim"), with respect to which Hughes (the "Article 6
Indemnifying Party") may be obligated under Section 6.4 to provide
indemnification, GM shall give Hughes notice thereof (together with a copy of
such Third-Party Claim, process or other legal pleading) promptly after becoming
aware of such Third-Party Claim; provided, however, that the failure of GM to
give notice as provided in this Section shall not relieve Hughes of its
obligations under Section 6.4, except to the extent that Hughes is actually
prejudiced by such failure to give notice. Such notice shall describe such
Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party.
(i) GM and the Article 6 Indemnifying Party shall jointly control
the defense of, and cooperate with each other with respect to defending, any
Third-Party Claim with respect to which the Article 6 Indemnifying Party is
obligated under Section 6.4 to provide indemnification.
(ii) The Article 6 Indemnifying Party and GM shall exercise their
rights to jointly control the defense of any such Third-Party Claim solely for
the purpose of defeating such Third-Party Claim and, unless required by
applicable law, neither the Article 6 Indemnifying Party nor GM shall make any
statements or take any actions that could reasonably result in the shifting of
liability for Losses arising out of such Third-Party Claim from the party making
such statement or taking such action (or any of its affiliates) to the other
party (or any of its affiliates).
(iii) Statements made or actions taken by either the Article 6
Indemnifying Party or GM in connection with the defense of any such Third-Party
Claim shall not prejudice the rights of such party in any subsequent action or
proceeding between the parties.
(iv) If either GM or the Article 6 Indemnifying Party fails to
jointly defend any such Third-Party Claim, then the other party shall solely
defend such Third-Party Claim and the party failing to jointly defend shall use
commercially reasonable efforts to cooperate with the other party in its defense
of such Third-Party Claim; provided, however, that GM may not compromise or
settle any such Third-Party Claim without the prior written consent of the
Article 6 Indemnifying Party, which consent shall not be unreasonably withheld
or delayed. All costs and expenses of either party in connection with, and
during the course of, the joint control of the defense of any such Third-Party
Claim shall be paid by the party that incurs such costs and expenses.
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Section 6.6. Arbitration. Any dispute between the parties arising out
of or relating to this Article 6, including the interpretation of this Article 6
(in each case, a "Dispute"), shall be resolved only in accordance with the
following provisions:
(a) Negotiation. GM and Hughes or EchoStar, as the case may be (the
"Article 6 Dispute Party"), shall attempt in good faith to resolve any Dispute
promptly through negotiations of the parties. Either party may deliver to the
other a written notice of a Dispute, which shall set forth, in reasonable
detail, the nature of the Dispute (a "Dispute Notice"). Within twenty (20)
Business Days after the receipt of such Dispute Notice, the appropriate
representatives of GM and the Article 6 Dispute Party shall meet to attempt to
resolve such Dispute. If such Dispute has not been resolved within the period of
twenty (20) Business Days following the initial meeting of the representatives
of GM and the Article 6 Dispute Party following the receipt of a Dispute Notice
(the "Negotiation Period"), or if one of the parties fails or refuses to
negotiate such Dispute, then the issue shall be settled by arbitration pursuant
to Section 6.6(b). The results of such arbitration shall be final and binding on
the parties.
(b) Arbitration Procedure. Either party may initiate arbitration with
regard to such Dispute by giving the other party written notice either (i) at
any time following the end of the Negotiation Period or (ii) if the parties do
not meet within twenty (20) Business Days of the receipt of the Dispute Notice,
at any time thereafter. The arbitration shall be conducted by three arbitrators
in accordance with the Rules for Non-Administered Arbitration of Business
Disputes promulgated by the Center for Public Resources, as in effect on the
date hereof, except as otherwise provided in this Section 6.6. Within twenty
(20) days following receipt of the written notice of arbitration, GM and the
Article 6 Dispute Party shall each appoint one arbitrator. The two arbitrators
so appointed shall appoint the third arbitrator. If either GM or the Article 6
Dispute Party shall fail to appoint an arbitrator within such twenty (20) day
period, the arbitration shall be by the sole arbitrator appointed by the other
party. Whether selected by GM and the Article 6 Dispute Party or otherwise, each
arbitrator selected to resolve such dispute shall be a tax attorney or tax
accountant who is generally recognized in the tax community as a qualified and
competent tax practitioner with experience in the tax area involved in the issue
or issues to be resolved. Such arbitrators shall be empowered to determine
whether the Article 6 Dispute Party is required to indemnify GM pursuant to
Section 6.4 and to determine the amount of the related indemnification payment.
Each of GM and the Article 6 Dispute Party shall bear fifty percent (50%) of the
aggregate expenses of the arbitrators. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. (S)(S)1-14. The place of arbitration
shall be New York, New York. The final decision of the arbitrators shall be
rendered no later than one (1) year from the date of the written notice of
arbitration.
(c) Exclusive Remedies. Except for the right to pursue equitable
remedies, the remedies provided in this Article 6 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of Section 6.4. The parties hereto specifically
acknowledge that, in accordance with, but without limitation to, Section 9.8, GM
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shall have the right to obtain an injunction or other appropriate equitable
remedy, in the event that Hughes or EchoStar or any Subsidiary or affiliate of
either of them proposes to take any Potential Disqualifying Action or other
action described in Section 6.2 without the prior consent of GM or proposes
otherwise to take an action that is prohibited, or to fail to take an action
that is required, pursuant to this Article 6.
Section 6.7. Certain Stock Acquisitions. Each of Hughes (as to itself
and its affiliates) and EchoStar (as to itself, its affiliates and the EchoStar
Controlling Stockholder) represents, warrants and covenants that:
(a) Before the date that is more than two (2) years after the Spin-
Off, none of Hughes, EchoStar, the EchoStar Controlling Stockholder or any other
controlling shareholder (within the meaning of Treasury Regulation Section
1.355-7T(k)(3) (or any successor regulation)) of Hughes or EchoStar, or any
affiliate of any of them, will acquire (within the meaning of Section 355(e) of
the Code) any shares of Hughes capital stock or EchoStar capital stock from AOL.
(b) None of Hughes, EchoStar, the EchoStar Controlling Stockholder or
any other controlling shareholder (within the meaning of Treasury Regulation
Section 1.355-7T(k)(3) (or any successor regulation)) of Hughes or EchoStar, or
any affiliate of any of them, has discussed or will discuss with AOL or a
potential buyer of capital stock of GM or Hughes owned by AOL, prior to or at
the time of the Spin-Off, an acquisition (within the meaning of Section 355(e)
of the Code) of shares of GM capital stock or Hughes capital stock from AOL.
(c) None of Hughes, EchoStar, the EchoStar Controlling Stockholder or
any other controlling shareholder (within the meaning of Treasury Regulation
Section 1.355-7T(k)(3) (or any successor regulation)) of Hughes or EchoStar, or
any affiliate of any of them, will enter into, prior to or at the time of the
Spin-Off, an agreement, understanding, arrangement or substantial negotiations
regarding an acquisition (within the meaning of Section 355(e) of the Code) of
any shares of GM capital stock or Hughes capital stock from AOL.
(d) None of Hughes, EchoStar, the EchoStar Controlling Stockholder or
any other controlling shareholder (within the meaning of Treasury Regulation
Section 1.355-7T(k)(3) (or any successor regulation)) of Hughes or EchoStar, or
any affiliate of any of them has a plan or intention to acquire (within the
meaning of Section 355(e) of the Code) any shares of Hughes capital stock to be
held by AOL after the Spin-Off.
(e) In the case of an acquisition (within the meaning of Section
355(e) of the Code) of AOL's shares of capital stock of GM prior to the Spin-
Off, at no time before such acquisition will Hughes, EchoStar or the EchoStar
Controlling Stockholder or any other controlling shareholder (within the meaning
of Treasury Regulation Section1.355-7T(k)(3) (or any successor regulation)) of
Hughes or EchoStar discuss the Spin-Off with (i) AOL, (ii) a potential buyer of
shares
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of capital stock of GM owned by AOL or (iii) any controlling shareholder (within
the meaning of Treasury Regulation Section 1.355-7T(k)(3) (or any successor
regulation)) of any potential buyer of capital stock of GM owned by AOL, in each
case other than discussions under which no information is provided other than
information generally made available to the investing public.
ARTICLE 7
INDEMNIFICATION
Section 7.1. Indemnification by Hughes. Subject to Section 7.5 below
and, with respect to the indemnification of the GM Indemnitees, subject to the
consummation of the Spin-Off and Section 7.1(g) below:
(a) Hughes shall indemnify, defend and hold harmless the GM
Indemnitees (as defined below) from and against any and all Losses incurred or
sustained by the GM Indemnitees to the extent arising from Third Party Claims
relating to, arising out of or due to, directly or indirectly, the business or
operations of Hughes or any Hughes Affiliate (the "Hughes Business"),
irrespective of whether such Losses relate to, arise out of or are due to
occurrences or conditions prior to, at or after the Spin-Off Effective Time, and
including all Losses relating to, arising out of or due to, directly or
indirectly, (i) any business or operations previously owned by Hughes or any
Hughes Affiliate and disposed of prior to the Spin-Off Effective Time or (ii)
any occurrence relating to any disposition of any such business or operations,
except in each case of clause (i) and clause (ii), to the extent otherwise
provided in Section 7.2(i) with respect to Losses that may result from certain
claims as described on Schedule 7.2 attached hereto;
(b) Hughes shall indemnify, defend and hold harmless the GM
Indemnitees and, prior to the Merger Effective Time, the EchoStar Indemnitees
from and against any and all Losses incurred or sustained by the GM Indemnitees
or the EchoStar Indemnitees to the extent arising from Third Party Claims
relating to, arising out of or due to, directly or indirectly, (i) any breach by
Hughes or any Hughes Affiliate (x) with respect to the GM Indemnitees, at or
after the Spin-Off Effective Time, and (y) with respect to the EchoStar
Indemnitees, prior to the Merger Effective Time, in each case of any of the
covenants to be performed by Hughes or any Hughes Affiliate that are contained
in the Hughes Transaction Agreements or any of the agreements contemplated
thereby, and (ii) any breach prior to or as of the Merger Effective Time by
Hughes of the representations and warranties set forth in Sections 3.1, 3.2 and
3.3 of this Agreement; provided, however, that any such Losses relating to,
arising out of or due to any breach by Hughes of Section 3.3 of this Agreement
shall be limited to actual out-of-pocket Losses arising from Third-Party Claims;
(c) Hughes shall indemnify, defend and hold harmless the GM
Indemnitees from and against any and all actual out-of-pocket Losses incurred or
sustained by the GM Indemnitees to the extent arising from Third-Party Claims
relating to, arising out of or due to any untrue statement
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or alleged untrue statement of a material fact contained in, or incorporated by
reference into, any report of Hughes with respect to any period entirely or
partially prior to the Spin-Off Effective Time required by or filed under the
Exchange Act, or any filing made prior to the Spin-Off Effective Time under the
Securities Act by Hughes, or the omission or alleged omission to state in any
such report or filing a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that Hughes
shall not be liable in any such case to the extent that any such Losses relate
to, arise out of or are based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in any such report or filing in
reliance upon and in conformity with written information furnished to Hughes or
any Hughes Affiliate or any of their respective Representatives by or on behalf
of GM or any GM Affiliate or any of their respective Representatives
specifically for use in preparing such report or filing by Hughes; provided,
further, that Hughes shall not be liable in any such case to the extent that any
such Losses relate to, arise out of or are based upon statements or omissions
relating to any plans, proposals, intentions or policies of GM or any GM
Affiliate existing at the time such report or filing was made; provided,
further, that this Section 7.1(c) shall not apply to the Spin-Off/Merger
Registration Statement, the GM Proxy/Consent Solicitation Statement, the
EchoStar Information Statement or any GM Debt/Equity Exchange Registration
Statement (which are addressed in Section 7.1(b) by reference to the
representations and warranties set forth in Sections 3.3);
(d) Hughes shall indemnify, defend and hold harmless the GM
Indemnitees from and against any and all actual out-of-pocket Losses incurred or
sustained by the GM Indemnitees to the extent arising from Third-Party Claims
relating to, arising out of or due to any untrue statement or alleged untrue
statement of a material fact contained in, or incorporated by reference into,
any report of GM with respect to any period entirely or partially prior to the
Spin-Off Effective Time required by or filed under the Exchange Act relating to
Hughes, any Hughes Affiliate, the Hughes Business or the GM Class H Common
Stock, or any filing made prior to the Spin-Off Effective Time under the
Securities Act relating to Hughes, any Hughes Affiliate, the Hughes Business or
the GM Class H Common Stock by GM, or the omission or alleged omission to state
in any such report or filing a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
with respect to any such report or filing of GM, Hughes shall be liable in any
such case only to the extent that any such Losses arise out of or are based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made in any such report or filing in reliance upon and in conformity
with written information furnished to GM or any GM Affiliate or any of their
respective Representatives by or on behalf of Hughes or any Hughes Affiliate or
any of their respective Representatives specifically for use in preparing such
report or filing by GM; provided, further, that Hughes shall not be liable in
any such case to the extent that any such Losses relate to, arise out of or are
based upon statements or omissions relating to any plans, proposals, intentions
or policies of GM or any GM Affiliate existing at the time such report or filing
was made; provided, further, that this Section 7.1(d) shall not apply to the
Spin-Off/Merger Registration Statement, the GM Proxy/Consent Solicitation
Statement, the EchoStar Information
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Statement or any GM Debt/Equity Exchange Registration Statement (which are
addressed in Section 7.1 (b) by reference to the representations and warranties
set forth in Section 3.3);
(e) Hughes shall indemnify, defend and hold harmless the GM
Indemnitees from and against any and all Losses incurred or sustained by the GM
Indemnitees to the extent arising from Third Party Claims relating to or arising
out of actions taken (or omitted to be taken) from and after the Spin-Off
Effective Time by Hughes, any Hughes Affiliate or the Hughes transfer agent (or
any successor transfer agent) in connection with (i) effecting the exchange of
Certificates evidencing shares of Hughes Class C Common Stock and Hughes
Preference Stock for Certificates evidencing shares of GM Class H Common Stock
or GM Series H Preference Stock, as applicable, (ii) recognizing the persons who
were record holders of GM Class H Common Stock, GM $1-2/3 Common Stock, if
applicable, or GM Series H Preference Stock immediately prior to the Spin-Off
Effective Time, or GM in the event that GM retains any shares of Hughes Class C
Common Stock following the Spin-Off, as the record holders of Hughes Class C
Common Stock or Hughes Preference Stock, as applicable, or (iii) affording such
persons the dividend, voting and other rights and privileges incident to the
Hughes Class C Common Stock or Hughes Preference Stock, as applicable;
(f) Hughes shall indemnify, defend and hold harmless the GM
Indemnitees from and against any and all Losses incurred or sustained by the GM
Indemnitees to the extent arising from Third Party Claims relating to or arising
out of actions taken (or omitted to be taken) from and after the Spin-Off
Effective Time by Hughes, any Hughes Affiliate or the Hughes Transfer Agent (or
any successor transfer agent), upon the conversion of Hughes Preference Stock
into (or exchange of Hughes Preference Stock for) Hughes Class C Common Stock
(or any successor security) in accordance with its terms in connection with (i)
effecting the exchange of Certificates evidencing shares of Hughes Class C
Common Stock (or any successor security) for Certificates evidencing shares of
Hughes Preference Stock, (ii) recognizing the persons who were record holders of
Hughes Preference Stock immediately prior to such conversion (or exchange) as
the record holders of Hughes Class C Common Stock, or (iii) affording such
persons the dividend, voting and other rights and privileges incident to the
Hughes Class C Common Stock; and
(g) Nothing in this Section 7.1 shall obligate Hughes to indemnify
any of the GM Indemnitees from and against any Losses incurred or sustained by
the GM Indemnitees (i) arising solely or primarily from GM's actions in the
capacity of or interest as the sole stockholder of Hughes prior to the Spin-Off
Effective Time or (ii) relating to, arising out of or due to, directly or
indirectly, any Hughes Sale Process Claim.
Section 7.2. Indemnification by GM. Subject to Section 7.5 below
and, with respect to the indemnification of the Hughes Indemnitees, subject to
the consummation of the Spin-Off:
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(a) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees and the EchoStar Indemnitees (as defined below) from and against any
and all Losses incurred or sustained by them to the extent arising from Third
Party Claims relating to, arising out of or due to, directly or indirectly, the
business or operations of GM or any GM Affiliate (the "GM Business"),
irrespective of whether such Losses relate to, arise out of or are due to
occurrences or conditions prior to, at, or after the Spin-Off Effective Time,
except to the extent such Losses relate to, arise out of or are due to, directly
or indirectly, the Hughes Business as described in Section 7.1(a);
(b) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees and the EchoStar Indemnitees from and against any and all Losses
incurred or sustained by them to the extent arising from Third Party Claims
relating to, arising out of or due to, directly or indirectly, (i) any breach by
GM or any GM Affiliate of any of the covenants to be performed by it that are
contained in the GM Transaction Agreements or any of the agreements contemplated
thereby and (ii) any breach prior to or as of the Merger Effective Time by GM of
the representations and warranties set forth in Sections 2.1, 2.2, 2.3(a),(c)
and (d), 2.4, 2.5 (but only with respect to representations specifically
relating to the GM Class H Common Stock, the GM Series H Preference Stock and
the Class H Fraction), 2.8 and 2.10 of this Agreement; provided, however, that
any such Losses relating to, arising out of or due to any breach by GM of
Section 2.8 of this Agreement shall be limited to actual out-of-pocket Losses
arising from Third-Party Claims;
(c) except to the extent provided in Section 7.1(d), GM shall
indemnify, defend and hold harmless the Hughes Indemnitees from and against any
and all actual out-of-pocket Losses incurred or sustained by them to the extent
arising from Third-Party Claims relating to, arising out of or due to any untrue
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, any report of GM with respect to any period
entirely or partially prior to the Spin-Off Effective Time required by or filed
under the Exchange Act, or any filing made prior to the Spin-Off Effective Time
under the Securities Act by GM, or the omission or alleged omission to state in
any such report or filing a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
GM shall not be liable in any such case to the extent that any such Losses
relate to, arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in any such report or
filing in reliance upon and in conformity with written information furnished to
GM or any GM Affiliate or any of their respective Representatives by or on
behalf of Hughes or any Hughes Affiliate or any of their respective
Representatives specifically for use in preparing such report or filing by GM;
provided, further, that GM shall not be liable in any such case to the extent
that any such Losses relate to, arise out of or are based upon statements or
omissions relating to any plans, proposals, intentions or policies Hughes or any
Hughes Affiliate existing at the time such report or filing was made; provided,
further, that this Section 7.2(c) shall not apply to the Spin-Off/Merger
Registration Statement, the GM Proxy/Consent Solicitation Statement, the
EchoStar Information Statement or any GM Debt/Equity Exchange Registration
Statement (which are addressed in Section 7.2(b) by reference to the
representations and warranties set forth in Sections 2.8);
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(d) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees from and against any and all actual out-of-pocket Losses incurred or
sustained by them to the extent arising from Third-Party Claims relating to,
arising out of or due to any untrue statement or alleged untrue statement of a
material fact contained in, or incorporated by reference into, any report of
Hughes with respect to any period entirely or partially prior to the Spin-Off
Effective Time required by or filed under the Exchange Act relating to GM, any
GM Affiliate, the GM Business or the GM $1-2/3 Common Stock, or any filing made
prior to the Spin-Off Effective Time under the Securities Act relating to GM,
any GM Affiliate, the GM Business or the GM $1-2/3 Common Stock by Hughes, or
the omission or alleged omission to state in any such report or filing a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that with respect to any such report
or filing of Hughes, GM shall be liable in any such case only to the extent that
any such Losses arise out of or are based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in any such report
or filing in reliance upon and in conformity with written information furnished
to Hughes or any Hughes Affiliate or any of their respective Representatives by
or on behalf of GM or any GM Affiliate or any of their respective
Representatives specifically for use in preparing such report or filing by
Hughes; provided, further, that GM shall not be liable in any such case to the
extent that any such Losses relate to, arise out of or are based upon statements
or omissions relating to any plans, proposals, intentions or policies of Hughes
or any Hughes Affiliate existing at the time such report or filing was made;
provided, further, that this Section 7.2(d) shall not apply to the Spin-
Off/Merger Registration Statement, the GM Proxy/Consent Solicitation Statement,
the EchoStar Information Statement or any GM Debt/Equity Exchange Registration
Statement (which are addressed in Section 7.2(b) by reference to the
representations and warranties set forth in Sections 2.8);
(e) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees from and against any and all Losses incurred or sustained by them to
the extent arising from Third Party Claims relating to or arising out of actions
taken (or omitted to be taken) prior to the Spin-Off Effective Time by GM or any
GM Affiliate or the GM Transfer Agent (or any predecessor thereof) in connection
with (i) recognizing any person who is or was at any time a record holder of GM
Class H Common Stock, GM $1-2/3 Common Stock or GM Series H Preference Stock as
a record holder of GM Class H Common Stock, GM $1-2/3 Common Stock or GM Series
H Preference Stock, as applicable, or (ii) affording such persons the dividend,
voting and other rights and privileges incident to the GM Class H Common Stock,
GM $1-2/3 Common Stock or GM Series H Preference Stock, as applicable;
(f) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees and the EchoStar Indemnitees from and against any and all Losses
incurred or sustained by them to the extent arising from Third Party Claims
relating to, arising out of or due to any indebtedness for borrowed money of GM
or any GM Affiliate to the extent paid by Hughes or any Hughes Affiliate or
EchoStar or any EchoStar Affiliate at any time from and after the Spin-Off
Effective Time;
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(g) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees from and against any and all Losses incurred or sustained by them to
the extent arising from Third-Party Claims relating to, arising out of or due
to, directly or indirectly, the investigation, consideration or pursuit
(including the adequacy of disclosures to and due diligence of GM, Hughes or any
unaffiliated third Persons and including any allegations of breach of fiduciary
duty with respect to the transactions contemplated by this Agreement and the
Merger Agreement) of one or more strategic business combination transactions
involving Hughes or any Hughes Affiliate, and one or more unaffiliated Persons
(any such Loss, a "Sale Process Loss"), to the extent that any such Sale Process
Loss relates to, arises out of or is due to actions or omissions by GM, any GM
Affiliate, Hughes, any Hughes Affiliate or any of their respective
Representatives;
(h) except with respect to the adoption by Hughes of a stockholder
rights plan as contemplated by Section 5.1(p) above, GM shall indemnify, defend
and hold harmless the Hughes Indemnitees and the EchoStar Indemnitees from and
against any and all Losses incurred or sustained by them to the extent arising
from Third-Party Claims relating to, arising out of or due to, directly or
indirectly, the failure of any of the GM Transactions, at the time it is
effected, to be in compliance with all applicable provisions of the DGCL; and
(i) GM shall indemnify, defend and hold harmless the Hughes
Indemnitees and the EchoStar Indemnitees from and against any and all losses
incurred or sustained by them to the extent arising out of or due to, directly
or indirectly, those claims made by The Boeing Company set forth on Schedule 7.2
attached hereto, but only to the extent that the aggregate amount of all such
claims exceeds Six Hundred Seventy Million Dollars ($670,000,000.00).
Section 7.3. Indemnification by EchoStar. Subject to Section 7.5
below:
(a) EchoStar shall indemnify, defend and hold harmless the GM
Indemnitees and, prior to the Merger Effective Time, the Hughes Indemnities from
and against any and all Losses incurred or sustained by them to the extent
arising from Third Party Claims relating to, arising out of or due to, directly
or indirectly, (a) any breach by EchoStar or any EchoStar Affiliate of any of
the covenants to be performed by it that are contained in the EchoStar
Transaction Agreements or any of the agreements contemplated thereby and (b) any
breach prior to or as of the Merger Effective Time by EchoStar of the
representations and warranties set forth in Sections 4.1, 4.2 and 4.3 of this
Agreement; provided, however, that any such Losses relating to, arising out of
or due to any breach by EchoStar of Section 4.3 of this Agreement shall be
limited to actual out-of-pocket Losses arising from Third-Party Claims; and
(b) EchoStar shall indemnify, defend and hold harmless the GM
Indemnitees from and against any and all losses incurred or sustained by them to
the extent arising from Third Party
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Claims relating to, arising out of or due to, directly or indirectly, the
adoption by Hughes of a stockholder rights plan as contemplated by Section
5.1(p) above.
Section 7.4. Certain Definitions. For the purposes of this
Agreement, the following terms shall have the following meanings:
(a) "Affiliate" or "affiliate" means with respect to EchoStar, Hughes
or GM, an EchoStar Affiliate, a Hughes Affiliate or a GM Affiliate, as the case
may be.
(b) "Control" means the possession, direct or indirect, of the power
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 or
the beneficial ownership (as such term is used in Rule 13d-3 of the Exchange
Act) of more than fifty percent (50%) of the voting securities of a Person;
(c) "EchoStar Affiliate" means, as of any particular time, a Person
that, directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with EchoStar as of such time;
(d) "EchoStar Indemnitees" means EchoStar, all EchoStar Affiliates
and each of their respective directors, officers and employees (in their
capacities as such);
(e) "GM Affiliate" means, as of any particular time, a Person that,
directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with GM as of such time; provided,
however, that the term "GM Affiliate," as of any particular time, shall not
include Hughes or any Hughes Affiliate as of such time;
(f) "GM Indemnitees" means GM, all GM Affiliates and each of their
respective directors, officers and employees (in their capacities as such);
(g) "Hughes Affiliate" means (i) with respect to any time prior to
the Spin-Off Effective Time, a Person that, directly or indirectly through one
or more intermediaries, was Controlled by Hughes as of such time and (ii) with
respect to any time after the Spin-Off Effective Time, a Person that, directly
or indirectly through one or more intermediaries, Controls, is Controlled by or
is under common Control with Hughes as of such time; and
(h) "Hughes Indemnitees" means Hughes, all Hughes Affiliates and each
of their respective directors, officers and employees (in their capacities as
such).
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Section 7.5. Other Liabilities.
(a) This Article 7 shall not be applicable to any Tax-Related Losses,
which shall be governed by the GM/Hughes Tax Agreements and Article 6 of this
Agreement.
(b) Other than as expressly set forth in this Article 7, this Article
7 shall not be applicable to any Losses relating to, arising out of or due to,
directly or indirectly, any breach of the provisions of any contract, agreement
or understanding other than this Agreement, the GM Transaction Agreements, the
Hughes Transaction Agreements, the EchoStar Transaction Agreements and the other
agreements contemplated hereby and thereby, as applicable, solely between GM or
any GM Affiliate, on the one hand, and Hughes or any Hughes Affiliate, on the
other hand, which was entered into in the ordinary course of business or with
respect to which a copy has been heretofore provided to EchoStar, which Losses
shall be governed by the terms of such contract, agreement or understanding.
Section 7.6. Tax Effects of Indemnification.
(a) Any indemnification payment made under this Agreement between GM,
on the one hand, and Hughes or EchoStar, on the other hand, shall be
characterized for tax purposes as if such payment were made in connection with
the Spin-Off, and shall therefore be treated, to the extent permitted by law, as
either (i) a distribution from Hughes to GM or (ii) an offset to the
distribution made by Hughes to GM pursuant to Section 1.1(a) of the GM/Hughes
Separation Agreement.
(b) The amount of any Loss or Tax-Related Losses for which
indemnification is provided under this Agreement shall be (i) increased to take
account of net Tax cost, if any, incurred by the Person that is entitled to seek
indemnification under this Agreement ("Indemnitee") arising from the receipt or
accrual of an amount that a Person that is obligated to provide indemnification
under this Agreement (an "Indemnifying Party") is required to pay to an
Indemnitee under this Agreement ("Indemnity Payment") hereunder (grossed up for
such increase) and (ii) reduced to take account of net Tax benefit, if any,
realized by the Indemnitee arising from incurring or paying such Loss or Tax-
Related Losses. In computing the amount of any such Tax cost or Tax benefit,
the Indemnitee shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
or accrual of any Indemnity Payment hereunder or incurring or paying any
indemnified Loss or Tax-Related Losses. Any Indemnity Payment hereunder shall
initially be made without regard to this Section 7.6 and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
only after the Indemnitee has actually realized such cost or benefit. For the
purposes of this Agreement, an Indemnitee shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit to the extent that, and at such
time as, the amount of Taxes payable by such Indemnitee is increased above or
reduced below, as the
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case may be, the amount of Taxes that such Indemnitee would be required to pay
but for the receipt or accrual of the Indemnity Payment or the incurrence or
payment of such Loss or Tax-Related Losses, as the case may be. The amount of
any increase or reduction hereunder shall be adjusted to reflect any Final
Determination with respect to the Indemnitee's liability for Taxes, and payments
between the applicable parties to reflect such adjustment shall be made if
necessary.
Section 7.7. Effect of Insurance Upon Indemnification. The amount
which an Indemnifying Party is required to pay to any Indemnitee pursuant to
this Article 7 shall be reduced (including retroactively) by any payment
actually received and retained by an Indemnitee from an insurance carrier or
paid by an insurance carrier on behalf of the Indemnitee, net of any applicable
premium adjustment and tax effect ("Insurance Proceeds") and other amounts
actually recovered by such Indemnitee in reduction of the related Loss, it being
understood and agreed that each of the parties shall use commercially reasonable
efforts to collect any such proceeds or other amounts to which it or any of its
affiliates is entitled, without regard to whether it is the Indemnifying Party
hereunder. No Indemnitee shall be required, however, to collect any such
proceeds or other amounts prior to being entitled to indemnification from an
Indemnifying Party hereunder. If an Indemnitee receives an Indemnity Payment in
respect of a Loss and subsequently receives Insurance Proceeds or other amounts
in respect of such Loss, then such Indemnitee shall pay to such Indemnifying
Party an amount equal to the difference between (a) the sum of the amount of
such Indemnity Payment and the amount of such Insurance Proceeds or other
amounts actually received and (b) the amount of such Loss, in each case adjusted
(at such time as appropriate adjustment can be determined) to reflect any
premium adjustment attributable to such claim.
Section 7.8. Procedure for Indemnification Involving Third-Party
Claims.
(a) Notice of Claim. If any Indemnitee receives notice of the
assertion of any Third-Party Claim with respect to which an Indemnifying Party
is obligated under this Agreement to provide indemnification (other than
pursuant to Article 6), such Indemnitee shall give such Indemnifying Party
notice thereof (together with a copy of such Third-Party Claim, process or other
legal pleading) promptly after becoming aware of such Third-Party Claim;
provided, however, that the failure of any Indemnitee to give notice as provided
in this Section shall not relieve any Indemnifying Party of its obligations
under this Article 7, except to the extent that such Indemnifying Party is
actually prejudiced by such failure to give notice. Such notice shall describe
such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying Party, at such
Indemnifying Party's own expense and through counsel chosen by such Indemnifying
Party (which counsel shall be reasonably acceptable to the Indemnitee), may
elect to defend any Third-Party Claim. If an Indemnifying Party elects to
defend a Third-Party Claim, then, within ten (10) Business Days after receiving
notice of such Third-Party Claim (or sooner, if the nature of such Third-Party
Claim so requires), such Indemnifying Party shall notify the Indemnitee of its
intent to do so, and
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such Indemnitee shall cooperate in the defense of such Third-Party Claim. Such
Indemnifying Party shall pay such Indemnitee's reasonable out-of-pocket expenses
incurred in connection with such cooperation. Such Indemnifying Party shall keep
the Indemnitee reasonably informed as to the status of the defense of such
Third-Party Claim. After notice from an Indemnifying Party to an Indemnitee of
its election to assume the defense of a Third-Party Claim, such Indemnifying
Party shall not be liable to such Indemnitee under this Article 7 for any legal
or other expenses subsequently incurred by such Indemnitee in connection with
the defense thereof other than those expenses referred to in the preceding
sentence; provided, however, that such Indemnitee shall have the right to employ
one law firm as counsel, together with a separate local law firm in each
applicable jurisdiction ("Separate Counsel"), to represent such Indemnitee in
any action or group of related actions (which firm or firms shall be reasonably
acceptable to the Indemnifying Party) if, in such Indemnitee's reasonable
judgment at any time, either a conflict of interest between such Indemnitee and
such Indemnifying Party exists in respect of such claim, or there may be
defenses available to such Indemnitee which are different from or in addition to
those available to such Indemnifying Party and the representation of both
parties by the same counsel would be inappropriate, and in that event (i) the
reasonable fees and expenses of such Separate Counsel shall be paid by such
Indemnifying Party (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one Separate Counsel
(excluding local counsel) with respect to any Third-Party Claim (even if against
multiple Indemnitees)) and (ii) each of such Indemnifying Party and such
Indemnitee shall have the right to conduct its own defense in respect of such
claim. If an Indemnifying Party elects not to defend against a Third-Party
Claim, or fails to notify an Indemnitee of its election as provided in this
Article 7 within the period of ten (10) Business Days described above, the
Indemnitee may defend, compromise, and settle such Third-Party Claim and shall
be entitled to indemnification hereunder (to the extent permitted hereunder);
provided, however, that no such Indemnitee may compromise or settle any such
Third-Party Claim without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the Indemnifying Party shall not, without the prior written consent
of the Indemnitee, settle or compromise any Third-Party Claim or consent to the
entry of any judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to the Indemnitee of a written release
from all liability in respect of such Third-Party Claim.
(c) Joint Defense of Certain Claims. Notwithstanding the provisions
of Section 7.8(b), the Indemnifying Party and the Indemnified Party shall
control the defense of, and cooperate with each other with respect to defending,
any Third-Party Claim with respect to which each party is claiming that it is
entitled to indemnification under this Article 7. If either the Indemnifying
Party or the Indemnified Party fails to defend jointly any such Third-Party
Claim, the other party shall solely defend such Third-Party Claim and the party
failing to defend jointly shall use commercially reasonable efforts to cooperate
with the other party in its defense of such Third-Party Claim; provided,
however, that neither party may compromise or settle any such Third-Party Claim
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. All costs and expenses of either party in
connection with, and during the course of, the joint
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control of the defense of any such Third-Party Claim shall be initially paid by
the party that incurs such costs and expenses. Such costs and expenses shall be
reallocated and reimbursed in accordance with the respective indemnification
obligations of the parties at the conclusion of the defense of such Third-Party
Claim.
Section 7.9. Procedure for Indemnification Not Involving Third-Party
Claims. If any Indemnitee desires to assert against an Indemnifying Party any
claim for indemnification under this Article 7 other than a Third-Party Claim,
the Indemnitee shall deliver to the Indemnifying Party notice of its demand for
satisfaction of such Claim (a "Request"), specifying in reasonable detail the
amount of such Claim and the basis for asserting such Claim. Within thirty (30)
days after the Indemnifying Party has been given a Request, the Indemnifying
Party shall either (i) satisfy the Claim requested to be satisfied in such
Request by delivering to the Indemnitee payment by wire transfer or a certified
or bank cashier's check payable to the Indemnified Party in immediately
available funds in an amount equal to the amount of such Claim, or (ii) notify
the Indemnitee that the Indemnifying Party contests such Claim by delivering to
the Indemnitee a written notice of an objection to such Claim that specifies in
reasonable detail the basis for contesting such Claim.
Section 7.10. Exclusive Remedies. Except for the right to pursue
equitable remedies and for acts constituting fraud and criminal misconduct, the
remedies provided in this Article 7 shall be deemed the sole and exclusive
remedies of the parties among each other, from and after the Merger Effective
Time, in connection with or arising out of the subject matters of this
Article 7.
ARTICLE 8
TERMINATION AND AMENDMENT
Section 8.1. Termination. Prior to the Spin-Off Effective Time, this
Agreement shall terminate automatically upon termination of the Merger
Agreement.
Section 8.2. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.1 above, this Agreement, except for the
provisions of Section 5.1(i), all of Article 7, this Section 8.2 and all of
Article 9, shall become void and have no effect, without any liability under
this Agreement on the part of either party or its Subsidiaries or their
respective directors, officers, employees or stockholders. Notwithstanding the
foregoing, nothing in this Section 8.2 shall relieve either party to this
Agreement of liability for a breach of any provision of this Agreement or
invalidate the provisions of the Confidentiality Agreement.
Section 8.3. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors; provided, however, that no amendment shall be made following the
receipt of the Requisite Stockholder Approval that alters or
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changes (a) the amount or kind of shares, securities, cash, property and/or
rights to be received by the holders of GM Class H Common Stock or GM $1-2/3
Common Stock pursuant to this Agreement or (b) any of the terms and conditions
of this Agreement if such alteration or change would adversely affect the
holders of GM Class H Common Stock or GM $1-2/3 Common Stock without the
approval, if required, of the holders of GM Class H Common Stock or GM $1-2/3
Common Stock. Notwithstanding the foregoing, this Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.4. Extension; Waiver. At any time prior to the Merger
Effective Time, GM (with respect to EchoStar) and EchoStar (with respect to GM
and Hughes), by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of such other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto and (c) waive or
extend the time for compliance by such other party with any of the agreements or
conditions contained herein. Any agreement on the part of the parties hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such parties.
ARTICLE 9
MISCELLANEOUS
Section 9.1. Survival. The representations and warranties made
herein by the parties hereto shall not survive the Merger Effective Time, except
that the representations and warranties set forth in Sections 2.1, 2.2, 2.3(a),
(c) and (d), 2.4, 2.5 (but only with respect to representations specifically
relating to the GM Class H Common Stock, the GM Series H Preference Stock and
the Class H Fraction), 2.8, 2.10, 3.1, 3.2, 3.3, 4.1, 4.2 and 4.3 and Article 6
and the covenants and agreements contained herein which by their terms require
performance after the Merger Effective Time shall survive indefinitely.
Section 9.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or dispatched by a nationally recognized
overnight courier service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to GM:
300 Renaissance Center
Detroit, Michigan 48265-3000
Attention: Warren G. Andersen
Telecopy No.: (313) 665-4978
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with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk and Joseph P. Gromacki
Telecopy No.: (312) 861-2200
and with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green and Michael E. Lubowitz
Telecopy No.: (212) 310-8007
and, if delivered pursuant to Article 6, with a copy to:
GM
300 Renaissance Center
Detroit, Michigan 48265-3000
Attention: Chief Tax Officer
Telecopy No.: (313) 665-4125
(b) if to Hughes:
200 North Sepulveda Boulevard
P.O.Box 956
El Segundo, California 90245
Attention: General Counsel
Telecopy No.: (310) 456-1089
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and with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green and Michael E. Lubowitz
Telecopy No.: (212) 310-8007
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk and Joseph P. Gromacki
Telecopy No.: (312) 861-2200
and, if delivered pursuant to Article 6, with a copy to:
Hughes
200 North Sepulveda Boulevard
P.O. Box 956
El Segundo, California 90245
Attention: Michael J. Gaines and Brian R. Paperny
Telecopy No.: (310) 640-0433
(3) if to EchoStar:
5701 South Santa Fe Drive
Littleton, Colorado 80120
Attention: David K. Moskowitz, General Counsel
Telecopy No.: (303) 723-1699
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Francis J. Aquila and John J. O'Brien
Telecopy No.: (212) 558-3588
Section 9.3. Interpretation; Absence of Presumption.
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(a) For the purposes of this Agreement, (i) words in the singular
shall be held to include the plural and vice versa and words of one gender shall
be held to include the other gender as the context requires, (ii) the terms
"hereof", "herein", "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph and Exhibit references are to the
Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise
specified, (iii) the use of the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation," unless
the context otherwise requires or unless otherwise specified, (iv) the word "or"
shall not be exclusive, (v) provisions shall apply, when appropriate, to
successive events and transactions, (vi) all references to any period of days
shall be deemed to be to the relevant number of calendar days, (vii) "dollars"
or "$" means United States dollars, (viii) "cash" means dollars in immediately
available funds and (ix) the phrase "the date hereof" means the date of this
Agreement.
(b) The Article, Section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 9.4. Counterparts. This Agreement may be executed in
counterparts, which together shall constitute one and the same Agreement. The
parties may execute more than one copy of the Agreement, each of which shall
constitute an original.
Section 9.5. Entire Agreement; Severability.
(a) This Agreement (including the documents and the instruments
referred to herein) and the Confidentiality Agreement contain the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter, and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.
(b) If any provision of this Agreement or the application thereof to
any Person or circumstance is determined by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to Persons or circumstances or in jurisdictions
other than those as to which it has been held invalid or unenforceable, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the
-86-
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to either party. Upon such determination, the
parties shall negotiate in good faith in an effort to agree upon such a suitable
and equitable provision to effect the original intent of the parties.
Section 9.6. Third Party Beneficiaries. Except with respect to the
provisions of Sections 5.1(f) and 5.2(b) and the intended beneficiaries thereof,
the provisions of this Agreement are solely for the benefit of the parties and
are not intended to confer upon any Person except the parties any rights or
remedies hereunder, and there are no third party beneficiaries of this Agreement
and this Agreement shall not provide any third person with any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.
Section 9.7. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to principles of conflicts of law.
Section 9.8. Specific Performance. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
Accordingly, in the event of any actual or threatened default in, or breach of,
any of the terms, conditions and provisions of this Agreement, the party or
parties who are or are to be thereby aggrieved shall have the right to specific
performance and injunctive or other equitable relief of its rights under this
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. Any requirements
for the securing or posting of any bond with such remedy are waived.
Section 9.9. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto; provided, however, that each of GM
and Hughes shall have the right to assign all or any part of its rights,
interests or obligations under this Agreement to any parent thereof (whether as
a result of recapitalization, reorganization, merger or otherwise), and, in
connection with any such assignment, if and to the extent requested by any of
the parties hereto, the parties shall restate this Agreement in its entirety to
reflect such assignment and execute and deliver to each other any such
restatement of this Agreement, except that no such assignment shall relieve GM
or Hughes of any of their respective obligations hereunder or be permitted
without the prior written consent of EchoStar if any such assignment would have
an adverse effect on EchoStar or, after the Merger Effective Time, Hughes,
including with respect to any potential tax or other liabilities or obligations.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
* * * * * *
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IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Agreement to be duly executed and delivered on the date
first above written.
GENERAL MOTORS CORPORATION
By: /s/ Warren G. Andersen
------------------------------------------
Name: Warren G. Andersen
------------------------------------------
Title: Assistant General Counsel
------------------------------------------
HUGHES ELECTRONICS CORPORATION
By: /s/ Larry D. Hunter
------------------------------------------
Name: Larry D. Hunter
------------------------------------------
Title: Vice President
------------------------------------------
ECHOSTAR COMMUNICATIONS CORPORATION
By: /s/ David K. Moskowitz
------------------------------------------
Name: David K. Moskowitz
------------------------------------------
Title: Senior Vice President, General Counsel
and Secretary
------------------------------------------
EX-99.4
6
dex994.txt
SEPERATION AGREEMENT
Exhibit 99.4
EXECUTION COPY
SEPARATION AGREEMENT
by and between
GENERAL MOTORS CORPORATION
and
HUGHES ELECTRONICS CORPORATION
Dated as of October 28, 2001
TABLE OF CONTENTS
Page
ARTICLE 1
THE HUGHES RECAPITALIZATION.......................................................... 5
Section 1.1. Consummation of the Hughes Recapitalization.................. 5
Section 1.2. Further Assurances Regarding the Hughes Recapitalization..... 6
Section 1.3. Reductions in Exchange Shares and Cash Dividend.............. 7
Section 1.4. Refinancing of the PanAmSat Note............................. 8
ARTICLE 2
CERTAIN INTERCOMPANY MATTERS......................................................... 9
Section 2.1. Ancillary Separation Agreements.............................. 9
Section 2.2. Insurance Matters............................................ 9
Section 2.3. Registration Rights.......................................... 11
Section 2.4. No Amendment, Waiver or Termination of Merger Agreement...... 12
Section 2.5. Publicity.................................................... 12
ARTICLE 3
CONFIDENTIALITY...................................................................... 13
Section 3.1. Treatment of Confidential Information........................ 13
Section 3.2. Legally Required Disclosure of Confidential Information...... 13
Section 3.3. Policies and Procedures...................................... 14
ARTICLE 4
CONTINUING INFORMATION SUPPORT....................................................... 15
Section 4.1. Access to Information........................................ 15
Section 4.2. Production of Witnesses...................................... 15
Section 4.3. Reimbursement................................................ 15
Section 4.4. Retention of Records......................................... 16
ARTICLE 5
CONDITIONS TO CLOSE.................................................................. 16
Section 5.1. Conditions to Obligation to Consummate the Hughes
Recapitalization............................................. 16
Section 5.2. GM Notional Shares........................................... 19
ARTICLE 6
TERMINATION.......................................................................... 19
Section 6.1. Termination of Agreement..................................... 19
Section 6.2. Effect of Termination........................................ 19
ARTICLE 7
MISCELLANEOUS........................................................................ 19
Section 7.1. Notices...................................................... 20
Section 7.2. Interpretation; Absence of Presumption....................... 21
Section 7.3. Counterparts................................................ 21
Section 7.4. Entire Agreement; Severability.............................. 21
Section 7.5. Third Party Beneficiaries................................... 22
Section 7.6. Governing Law............................................... 22
Section 7.7. Specific Performance........................................ 22
Section 7.8. Assignment.................................................. 22
Section 7.9. Amendment................................................... 23
Section 7.10. Dispute Resolution.......................................... 23
Section 7.11. Consent to Jurisdiction..................................... 24
EXHIBITS
--------
Exhibit A--Form of GM/Hughes Intellectual Property Agreement
Exhibit B--Form of GM/Hughes Special Employee Items Agreement
Exhibit C--Form of Amended and Restated Agreement for the Allocation of United
States Income Taxes between GM and Hughes
-iv-
INDEX OF DEFINED TERMS
----------------------
Page
----
Affiliate.............................................. 10
Agreement.............................................. 1
AOL Registration Rights Agreement...................... 11
Applicable Law......................................... 17
Average Exchange Price................................. 8
Cash Dividend.......................................... 5
Change in Tax Law...................................... 16
Code................................................... 4
Confidential Information............................... 13
Control................................................ 10
Current Pension Plans Registration Rights Agreement.... 11
Demand Note............................................ 5
Denominator............................................ 5
EchoStar............................................... 1
EchoStar Stockholder Consent........................... 4
Excess Exchange Amount................................. 8
Excess Exchange Share Number........................... 8
Exchange Act........................................... 10
Exchange Debt.......................................... 1
Exchange Shares........................................ 1
GM..................................................... 1
GM $1-2/3 Common Stock................................. 2
GM Affiliate........................................... 10
GM Business............................................ 13
GM Certificate of Incorporation........................ 2
EchoStar Controlling Stockholder....................... 3
GM Class H Common Stock................................ 1
GM Debt/Equity Exchange................................ 1
GM Notional Shares..................................... 18
GM Series H Preference Stock........................... 2
GM Transactions........................................ 2
GM/Hughes Tax Agreements............................... 9
Governmental Authority................................. 7
HCG.................................................... 1
HCI.................................................... 1
HCSS................................................... 1
Hughes................................................. 1
Hughes Affiliate....................................... 10
-v-
Hughes Business........................................ 11
Hughes Class C Common Stock............................ 1
Hughes Insurance Claims................................ 11
Hughes Preference Stock................................ 2
Hughes Recapitalization................................ 6
Implementation Agreement............................... 2
Insurance Policy....................................... 11
IRS.................................................... 16
IRS Submission......................................... 16
Mandatory Exchange Share Reduction..................... 7
Merger................................................. 1
Merger Agreement....................................... 4
Merger Commitment Letter............................... 3
Merger Financing....................................... 3
Merger Financing Agreement............................. 3
NYSE................................................... 6
Optional Exchange Share Reduction...................... 7
PanAmSat............................................... 1
PanAmSat Financing Agreement........................... 3
PanAmSat Loan Agreement................................ 8
PanAmSat Note.......................................... 8
PanAmSat Note Repayment................................ 8
PanAmSat Purchase Financing............................ 3
PanAmSat Stock Purchase Agreement...................... 1
PanAmSat Stock Sale.................................... 1
Person................................................. 10
Pledge Agreement....................................... 3
PRIMESTAR Registration Rights Agreement................ 12
Recapitalization Amount................................ 5
Recapitalization Price................................. 6
Registration Rights Agreements......................... 12
Regulatory Approval Date............................... 6
Representatives........................................ 13
Requisite Stockholder Approval......................... 16
Ruling................................................. 16
Service Agent.......................................... 23
Spin-Off............................................... 2
Spin-Off Denominator................................... 6
Spin-Off Effective Time................................ 5
Spin-Off/Merger Registration Statement................. 17
Subsequent Ruling...................................... 16
Supplemental Agreement................................. 3
U.S. Trust............................................. 11
-vi-
Volume Weighted Average Trading Price.................. 6
-vii-
SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is made and entered into
as of October 28, 2001, by and between General Motors Corporation, a Delaware
corporation ("GM"), and Hughes Electronics Corporation, a Delaware corporation
and a wholly owned subsidiary of GM ("Hughes").
WHEREAS, Hughes and EchoStar Communications Corporation, a Nevada
corporation ("EchoStar"), desire to combine the business of EchoStar with the
Hughes Business (as defined in the Implementation Agreement), following the
separation of Hughes from GM, pursuant to a merger of EchoStar with and into
Hughes with Hughes as the surviving corporation (the "Merger"), as contemplated
by the Merger Agreement (as defined below); and
WHEREAS, it is a condition to the Merger that, at the time of the
consummation of the Merger, the Hughes Recapitalization (as defined below) and
the Spin-Off (as defined below) be completed and that Hughes be an independent,
publicly owned company comprising the Hughes Business, separate from and no
longer wholly owned by GM; and
WHEREAS, subject to the terms and conditions set forth in the PanAmSat
Stock Purchase Agreement (the "PanAmSat Stock Purchase Agreement"), entered into
by and among Hughes, Hughes Communications, Inc., a California corporation and
an indirect wholly owned subsidiary of Hughes ("HCI"), Hughes Communications
Galaxy, Inc., a California corporation and an indirect wholly owned subsidiary
of Hughes ("HCG"), and Hughes Communications Satellite Services, Inc.,
California corporation and an indirect wholly owned subsidiary of Hughes
("HCSS"), concurrently with the execution and delivery of this Agreement, in the
form attached as Exhibit A to the Implementation Agreement, HCI, HCG and HCSS
have agreed to sell to EchoStar, and EchoStar has agreed to purchase from HCI,
HCG and HTSC (such transaction, the "PanAmSat Stock Sale"), all of the shares of
capital stock of PanAmSat Corporation, a Delaware corporation ("PanAmSat"),
owned by HCI, HCG and HTSC, in accordance with the terms and conditions set
forth in the PanAmSat Stock Purchase Agreement; and
WHEREAS, at any time after the date of this Agreement and prior to the
date that is six (6) months after the Merger Effective Time (as defined in the
Merger Agreement), GM may, pursuant to one or more transactions, issue shares of
GM's Class H Common Stock, par value $0.01 per share (the "GM Class H Common
Stock"), or distribute shares of Class C Common Stock of Hughes, par value $0.01
per share (the "Hughes Class C Common Stock") (any such shares of GM Class H
Common Stock or Hughes Class C Common Stock distributed by GM, the "Exchange
Shares"), up to an aggregate of one hundred million (100,000,000) Exchange
Shares (subject to reduction pursuant to this Agreement and subject to increase
by up to an additional fifty million (50,000,000) Exchange Shares (but in no
event shall such increase exceed One Billion Dollars ($1,000,000,000.00)) in
accordance with Section 5.1(h) to the Implementation Agreement), to holders of
certain outstanding debt obligations of GM ("Exchange Debt") in exchange for
such Exchange Debt (any such exchange, a "GM Debt/Equity Exchange"); and
WHEREAS, GM and Hughes desire to consummate the Hughes
Recapitalization on the terms set forth in this Agreement and to set forth
certain rights and obligations of GM and Hughes with respect to the separation
of Hughes from GM pursuant to the Spin-Off; and
WHEREAS, immediately following the Hughes Recapitalization, (i) GM,
pursuant to provisions to be implemented by means of an amendment of the
Restated Certificate of Incorporation of GM, as amended (the "GM Certificate of
Incorporation"), shall distribute to the holders of record of GM Class H Common
Stock shares of Hughes Class C Common Stock in exchange for all of the
outstanding shares of GM Class H Common Stock in accordance with the GM
Certificate of Incorporation, as amended in connection with the Hughes
Recapitalization, and the GM Class H Common Stock will be redeemed and canceled,
(ii) in connection therewith, GM shall distribute to holders of record of GM's
Series H 6.25% Automatically Convertible Preference Stock, par value $0.10 per
share (the "GM Series H Preference Stock"), shares of Preference Stock, par
value $0.10 per share, of Hughes (the "Hughes Preference Stock"), in exchange
for all of the outstanding shares of GM Series H Preference Stock in accordance
with the Certificate of Designations relating to the GM Series H Preference
Stock and the GM Series H Preference Stock will be canceled, and (iii) GM shall,
subject to Section 5.2(h) of the Implementation Agreement, either retain, or,
immediately following the redemption of shares of GM Class H Common Stock in
exchange for shares of Hughes Class C Common Stock as described in clause (i)
above, distribute by means of a dividend to the holders of record of GM's Common
Stock, par value $1-2/3 per share (the "GM $1-2/3 Common Stock"), in respect of
all outstanding shares of GM $1-2/3 Common Stock, the remaining shares of Hughes
Class C Common Stock held by GM and not previously distributed to the holders of
record of GM Class H Common Stock, in each case as provided in the
Implementation Agreement (the transactions described in clauses (i) through
(iii) above being referred to herein collectively as the "Spin-Off"); and
WHEREAS, consummation of the Hughes Recapitalization and the Spin-Off
is conditioned on, among other things, the approval by the holders of a majority
of the outstanding shares of GM $1-2/3 Common Stock and GM Class H Common Stock,
each voting as a separate class and both voting together as a single class based
on their respective per share voting power, of this Agreement, the
Implementation Agreement (as defined below) and the transactions contemplated
hereby and thereby, including the GM Charter Amendment (as defined in the
Implementation Agreement), the Hughes Recapitalization and the Spin-Off
(collectively, the "GM Transactions"); and
WHEREAS, GM, Hughes and EchoStar have entered into an Implementation
Agreement, dated as of the date hereof (the "Implementation Agreement"), setting
forth, among other things, the rights and obligations of GM with respect to the
consummation of the GM Transactions, including the Spin-Off; and
WHEREAS, a certain lender has committed to lend to Hughes or the
Surviving Corporation (as defined in the Merger Agreement) up to Five Billion
Five Hundred Twenty Five
Million Dollars ($5,525,000,000.00) for the purpose of financing the
Recapitalization Amount (as defined below), refinancing certain outstanding
indebtedness in connection with the consummation of the Merger and financing the
combined business of Hughes and EchoStar following the Merger (the "Merger
Financing") on the terms set forth in the commitment letter, attached as Exhibit
B to the Implementation Agreement or in any similar commitment or financing
letter or other agreement replacing, and having substantially the same effect
as, such commitment letter and reasonably acceptable to Hughes (in either case,
the "Merger Commitment Letter"); and
WHEREAS, GM, Hughes, EchoStar and The Samburu Warrior Revocable Trust,
a trust as to which Charles W. Ergen is the sole trustee (the "EchoStar
Controlling Stockholder"), are concurrently entering into that certain
Supplemental Agreement & Guaranty (the "Supplemental Agreement"), in the form
attached as Exhibit C to the Implementation Agreement, relating to the
commitment of EchoStar to use its best efforts to assist Deutsche Bank, A.G.,
New York, in obtaining commitments from nationally recognized banking
institutions to provide for an additional amount of financing such that the
aggregate amount of financing to be obtained pursuant to the Merger Financing
(including financing arranged pursuant to any co-arrangements with co-arrangers
as contemplated by the provisions of the Merger Commitment Letter) shall be in
the amount of at least Five Billion Five Hundred Twenty Five Million Dollars
($5,525,000,000.00), and, in connection therewith, the EchoStar Controlling
Stockholder has pledged certain shares of EchoStar stock to GM pursuant to that
certain Pledge Agreement (the "Pledge Agreement"), executed by the EchoStar
Controlling Stockholder and GM concurrently with the Supplemental Agreement, in
the form attached as Exhibit D to the Implementation Agreement; and
WHEREAS, the Merger Financing will be consummated (i) in accordance
with one or more credit agreements (collectively, the "Merger Financing
Agreement") to be entered into by and among Hughes, EchoStar and the lenders
parties thereto as soon as reasonably practicable following the date hereof
based on the terms set forth in the Merger Commitment Letter and/or (ii) with
proceeds from one or more private placements or public offerings of debt or
equity securities of EchoStar as contemplated by the Implementation Agreement;
and
WHEREAS, a certain lender has delivered a commitment letter to
EchoStar, pursuant to which it has committed to lend to EchoStar up to One
Billion Nine Hundred Million Dollars ($1,900,000,000.00) for the purpose of
consummating the PanAmSat Stock Sale (the "PanAmSat Purchase Financing"); and
WHEREAS, the PanAmSat Purchase Financing will be consummated (i) in
accordance with a credit agreement (the "PanAmSat Financing Agreement") to be
entered into by and among EchoStar and the lenders parties thereto as soon as
reasonably practicable following the date hereof based on the terms set forth in
the Merger Commitment Letter and/or (ii) with proceeds from one or more private
placements or public offerings of debt or equity securities of EchoStar as
contemplated by the Implementation Agreement; and
-3-
WHEREAS, EchoStar Controlling Stockholder, acting by written consent
immediately after the execution of the Merger Agreement, shall have executed and
delivered to EchoStar a written consent as the controlling stockholder of
EchoStar (the "EchoStar Stockholder Consent"), in the form attached as Exhibit E
to the Implementation Agreement, adopting and approving the Merger Agreement,
and, as a result of the EchoStar Stockholder Consent, no further approval of the
Merger Agreement by the EchoStar Board of Directors or stockholders will be
required in order to consummate the Merger; and
WHEREAS, the Spin-Off will occur pursuant to the terms and conditions
of the Implementation Agreement; and
WHEREAS, immediately after the Spin-Off and subject to satisfaction of
the conditions precedent thereto, the Merger will occur pursuant to an Agreement
and Plan of Merger (the "Merger Agreement") entered into by and among EchoStar
and Hughes concurrently with the execution and delivery of this Agreement, in
the form attached as Exhibit G to the Implementation Agreement; and
WHEREAS, the parties intend the Spin-Off to qualify as a distribution
of Hughes stock to GM stockholders with respect to which no gain or loss will be
recognized pursuant to Section 355 and related provisions of the Internal
Revenue Code of 1986, as amended, together with the rules and regulations
promulgated thereunder (the "Code"), by GM, Hughes and their respective
stockholders; and
WHEREAS, the parties intend the Merger to qualify as a reorganization
described in Section 368(a) of the Code; and
WHEREAS, the respective Boards of Directors of GM and Hughes have
determined that the transactions contemplated hereby are advisable, desirable
and in the best interests of their respective stockholders and, by resolutions
duly adopted, the respective Boards of Directors of GM and Hughes have approved
and adopted this Agreement and the Board of Directors of GM has determined,
subject to its fiduciary duties under applicable law, to recommend the GM
Transactions to the GM common stockholders;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
-4-
ARTICLE 1
THE HUGHES RECAPITALIZATION
Section 1.1. Consummation of the Hughes Recapitalization. Subject
to the terms and conditions of this Agreement, including satisfaction or waiver
of each of the conditions set forth in Article 5 below, the parties agree as
follows:
(a) Dividend Distributions to GM. Prior to the effective time of the
Spin-Off (the "Spin-Off Effective Time"), Hughes shall distribute as a dividend
to GM (or pay to GM or a GM Affiliate in satisfaction of a promissory note
previously issued to GM or a GM Affiliate):
(i) Four Billion Two Hundred Million Dollars
($4,200,000,000.00), subject to any reduction pursuant to Section 1.3(b) below,
payable in cash (the "Cash Dividend"), subject to Section 1.1(a)(ii) below; and
(ii) if, at the time that the Cash Dividend is otherwise payable
under Section 1.1(a)(i) above, Hughes shall have insufficient funds available to
it to pay in full the Cash Dividend in cash, then, to the extent and in lieu of
any such shortfall in funds, Hughes shall distribute as a dividend to GM a
demand note issued by Hughes with an original principal amount equal to the
amount of such shortfall (the "Demand Note"), having terms, including interest
rate, reasonably acceptable to GM, Hughes and EchoStar. Any Demand Note shall be
paid in full upon the occurrence of the Merger Effective Time.
For the purposes of this Agreement, "Recapitalization Amount" means the amount
equal to Four Billion Two Hundred Million Dollars ($4,200,000,000.00) minus any
reduction required pursuant to Section 1.3(b) below, which amount is equal to
the deemed value of the distributions described in this Section 1.1(a).
The parties understand and agree that, at any time following the receipt of the
Requisite Stockholder Approval, Hughes may distribute as a dividend to GM or a
GM Affiliate a promissory note in an amount approximately equal to the
Recapitalization Amount. In the event that such a promissory note has been so
distributed as of the time of the Hughes Recapitalization, then the payments
described above in this Section 1.1(a) may be made in repayment of such
promissory note rather than as a dividend.
(b) Reduction of the Denominator of the Class H Fraction. In
consideration of the dividend distributions from Hughes described in Section
1.1(a) hereof, GM shall promptly take all actions within its control necessary
to cause the denominator of the fraction (the "Denominator") described in
Article Fourth, Division I, Section (a)(4) of the GM Certificate of
Incorporation to be reduced upon GM's receipt of such dividend distributions by
a number equal to the quotient
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determined by dividing the Recapitalization Amount by the Recapitalization Price
(as defined below). In connection therewith, Hughes shall issue to GM a number
of shares of Hughes Class C Common Stock such that the number of shares of
Hughes Class C Common Stock held by GM immediately prior to the Spin-Off
Effective Time shall equal the Spin-Off Denominator (as defined below). The
transactions described in Sections 1.1(a) and (b) hereof are referred to herein
collectively as the "Hughes Recapitalization."
(c) Certain Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Recapitalization Price" means the average (rounded to the
nearest 1/10,000, or if there shall not be a nearest 1/10,000, to the next
highest 1/10,000) of the Volume Weighted Average Trading Prices (as defined
below) of the GM Class H Common Stock for each of the five (5) consecutive
trading days (or, if less, the number of trading days following the Regulatory
Approval Date (as defined below) and before the date of the Spin-Off Effective
Time) ending on and including the trading day immediately prior to the date of
the Spin-Off Effective Time;
(ii) "Regulatory Approval Date" means the first date on which
there shall be a public announcement by GM or Hughes that the conditions set
forth in Section 6.1(b) and Section 6.1(c) of the Merger Agreement have been
satisfied or waived;
(iii) "Spin-Off Denominator" means the Denominator determined as
of immediately prior to the Spin-Off Effective Time, and after giving effect to
the adjustment to the Denominator in connection with the Hughes Recapitalization
as contemplated by Section 1.1(b) of this Agreement, and determined as of such
point in time rather than as an average with respect to any accounting period.
Any determination of the Spin-Off Denominator shall be made in good faith by the
GM Board of Directors in accordance with the preceding sentence. Promptly
following any determination by the GM Board of Directors of the Spin-Off
Denominator pursuant to this Agreement, GM shall provide written notice thereof
to EchoStar (which notice shall include the computation thereof); and
(iv) "Volume Weighted Average Trading Price" means, with respect
to any trading day (defined as 9:30 a.m. through 4:00 p.m., Eastern Time), the
weighted average of the reported per share prices at which transactions in GM
Class H Common Stock are executed on the New York Stock Exchange ("NYSE") during
such trading day (weighted based on the number of shares of GM Class H Common
Stock traded, as such weighted average price appears on the Bloomberg screen
"Volume at Price" page for GM Class H Common Stock when observed at 5:00 p.m.,
Eastern Time, on such trading day).
Section 1.2. Further Assurances Regarding the Hughes Recapitalization.
In addition to the actions expressly provided for elsewhere in this Agreement,
each of GM and Hughes
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shall, and shall cause its controlled affiliates to promptly take, or cause to
be taken, any and all actions within its control, and do, or cause to be done,
all things within its control necessary under applicable laws, regulations and
agreements in order to consummate and make effective the Hughes
Recapitalization. Without limiting the generality of the foregoing, each of GM
and Hughes shall cooperate with the other party in all respects, and promptly
take all actions within its control to execute and deliver, or to cause to have
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, which shall include appropriate representations,
warranties and covenants, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any foreign, federal, state or local
governmental or regulatory body, agency, instrumentality or authority
("Governmental Authority") which are reasonably requested by the other party in
order to consummate and make effective the Hughes Recapitalization.
Section 1.3. Reductions in Exchange Shares and Cash Dividend.
(a) Debt/Equity Exchange Reduction. If and only to the extent
required in order to satisfy the condition set forth in Section 6.1(h) of the
Merger Agreement as of immediately prior to the Merger Effective Time, then as
of immediately prior to the Hughes Recapitalization the aggregate number of
shares of Hughes Class C Common Stock which GM shall be entitled to distribute
in connection with all GM Debt/Equity Exchanges after the Merger Effective Time,
if any, shall be reduced (such reduction, a "Mandatory Exchange Share
Reduction") by an amount equal to the least of: (i) forty million (40,000,000),
(ii) the excess of one hundred million (100,000,000) over the number of shares
of GM Class H Common Stock that have been issued by GM in connection with all GM
Debt/Equity Exchanges prior to the Hughes Recapitalization and (iii) the minimum
number by which the total number of shares of Hughes Class C Common Stock that
GM is then entitled to distribute in connection with GM Debt/Equity Exchanges
would have to be reduced in order for the condition set forth in Section 6.1(h)
of the Merger Agreement to be satisfied; provided that in order to cause the
condition set forth in Section 6.1(h) of the Merger Agreement to be satisfied,
GM may in its sole and absolute discretion elect to reduce further (such further
reduction, an "Optional Exchange Share Reduction") the aggregate number of
additional shares of Hughes Class C Common Stock which it is entitled to
distribute in connection with any subsequent GM Debt/Equity Exchange by
delivering a written notice to Hughes and EchoStar setting forth the amount of
such additional reduction.
(b) Reduction of Cash Dividend. If, after giving effect to any
Mandatory Exchange Share Reduction and any Optional Exchange Share Reduction,
the conditions set forth in Section 5.1(l) below or Section 6.1(h) of the Merger
Agreement are still not satisfied, the Cash Dividend shall be reduced by an
amount equal to the least of: (i) seven hundred million dollars
($700,000,000.00), (ii) the Excess Exchange Amount (as defined below) and (iii)
the minimum amount by which the Cash Dividend would have to be reduced in order
for the conditions set forth in Section 5.1(l) below and Section 6.1(h) of the
Merger Agreement to be satisfied; provided that in order to cause the conditions
set forth in Section 5.1(l) below and in Section 6.1(h) of the Merger
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Agreement to be satisfied, GM may in its sole and absolute discretion elect to
further reduce the amount of the Cash Dividend by delivering a written notice to
Hughes and EchoStar, setting forth the amount of such additional reduction.
(c) Certain Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Average Exchange Price" means the quotient determined by
dividing (x) the aggregate fair market value (as determined in accordance with
the applicable exchange agreement entered into by GM and one or more financial
institutions in connection with such GM Debt/Equity Exchange(s)) of the Exchange
Debt repurchased by GM in exchange for shares of GM Class H Common Stock issued
in connection with any GM Debt/Equity Exchange that shall have occurred prior to
the Spin-Off Effective Time by (y) the aggregate number of shares of GM Class H
Common Stock issued in connection with such GM Debt/Equity Exchange.
(ii) "Excess Exchange Amount" means the product of the Average
Exchange Price multiplied by the Excess Exchange Share Number.
(iii) "Excess Exchange Share Number" means the number equal to
the excess, if any, of (x) the number of shares of GM Class H Common Stock
issued in connection with any GM Debt/Equity Exchange that shall have occurred
prior to the Spin-Off Effective Time over (y) sixty million (60,000,000);
provided that, in the event that there is no such excess, the "Excess Exchange
Share Number" shall be zero (0).
Section 1.4. Refinancing of the PanAmSat Note. Pursuant to the Loan
Agreement, dated as of May 15, 1997 (as amended, the "PanAmSat Loan Agreement"),
between Hughes, formerly known as Hughes Network Systems, Inc., and PanAmSat,
formerly known as Magellan International, Inc., as amended by the First
Amendment to Loan Agreement, entered into as of December 22, 1997, by and
between Hughes and PanAmSat, Hughes currently provides to PanAmSat a credit
facility, including the loan evidenced by the promissory note dated May 15,
1997, issued by PanAmSat to Hughes (such Loan Agreement and credit facility, the
"PanAmSat Note"). The parties intend that the entire amount outstanding under
the PanAmSat Note (including all principal, interest and any other amounts
outstanding thereunder) shall be paid in cash by PanAmSat to Hughes (such
payment of the entire amount outstanding under the PanAmSat Note, the "PanAmSat
Note Repayment") prior to the consummation of the Hughes Recapitalization.
Accordingly, Hughes has requested that PanAmSat use its best efforts to, and
Hughes shall use commercially reasonable efforts to cause PanAmSat to, (a) in
accordance with the terms of the PanAmSat Loan Agreement, replace the PanAmSat
Note with a credit facility or (b) obtain other third party financing
arrangements to refinance the PanAmSat Note, in each case, on such terms as may
be available to PanAmSat and as are reasonably acceptable to Hughes in
consultation with EchoStar; provided that any credit facility or other third
party financing arrangements that replace the
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PanAmSat Note (i) shall be on market terms (i.e., such credit facility or other
third party financing arrangements shall have terms that are generally
consistent in the aggregate with the terms available in the market at such time
for a comparable credit facility with respect to a comparable borrower) and (ii)
shall not contain any change of control or event of default provisions which
shall be triggered by the consummation of the GM Transactions or the Merger.
ARTICLE 2
CERTAIN INTERCOMPANY MATTERS
Section 2.1. Ancillary Separation Agreements. GM and Hughes,
together with their affiliates specified therein, have entered into or,
concurrently with the execution and delivery of this Agreement, are entering
into (a) the GM/Hughes Tax Agreements (as defined below), (b) the GM/Hughes
Intellectual Property Agreement in the form attached as Exhibit A hereto and (c)
the GM/Hughes Special Employee Items Agreement in the form attached as Exhibit B
hereto. For the purposes of this Agreement, "GM/Hughes Tax Agreements" means (i)
the Amended and Restated Agreement for the Allocation of United States Income
Taxes between GM and Hughes, in the form of Exhibit C attached hereto; (ii) the
Agreement for the Allocation of United States Federal Income Taxes, effective as
of December 29, 1985, by and among GM, Hughes Electronics Corporation (formerly
GM Hughes Electronics Corporation), HE Holdings, Inc. (formerly Hughes Aircraft
Company), and Delco Electronics Corporation, as amended to date; and (iii) the
Tax Sharing Agreement, dated as of December 17, 1997, by and among GM, Hughes
and HE Holdings, Inc. (subsequently renamed Raytheon Company).
Section 2.2. Insurance Matters.
(a) Cooperation in Insurance Matters. Prior to the Spin-Off
Effective Time, GM has maintained insurance programs which provide certain
coverages for a number of entities, including Hughes, Hughes Affiliates (as
defined below) and their respective officers and directors. From and after the
Spin-Off Effective Time, except as provided herein or as otherwise provided in
the Implementation Agreement with respect to directors and officers liability
insurance, Hughes shall be responsible for obtaining and maintaining its own
insurance program separately from the GM insurance programs (which may continue
to be maintained by GM). Notwithstanding the foregoing, (i) GM, upon the request
of Hughes, shall use commercially reasonable efforts to assist Hughes in the
transition to its own separate insurance coverage from and after the Spin-Off
Effective Time, and shall provide Hughes with any information that is in the
possession of GM and is reasonably available and useful to either obtain such
insurance coverage or to assist Hughes in preventing gaps in its insurance
coverages, (ii) in the event that prior to the Spin-Off Effective Time Hughes is
not able to obtain any such separate insurance coverage or to obtain such on
reasonable commercial terms substantially consistent with the commercial terms
applicable to the insurance coverage
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intended to be replaced, at the request of Hughes, GM and Hughes shall cooperate
with each other to enter into an arrangement, on an arm's-length basis, that
would permit Hughes for a reasonable period of time after the Spin-Off Effective
Time to continue to have the benefit of the insurance coverage formerly provided
by GM's insurance program, on terms that require Hughes to reimburse GM for the
costs of such extended insurance coverage that are fairly allocable to the
inclusion of Hughes among GM and the other GM parties that otherwise benefit
from such coverage, (iii) each of GM and Hughes, upon the request of the other,
shall cooperate with and use commercially reasonable efforts to assist the other
in the collection of proceeds from insurance claims made under any Insurance
Policy (as defined below) for the benefit of any insured party and (iv) each of
GM, Hughes, each GM Affiliate (as defined below) and each Hughes Affiliate,
shall use commercially reasonable efforts not to take any action that would
jeopardize or otherwise interfere with any party's ability to collect any
proceeds payable pursuant to any Insurance Policy.
(b) Certain Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Affiliate" or "affiliate" means with respect to GM or
Hughes, a GM Affiliate or a Hughes Affiliate, as the case may be.
(ii) "Control" means the possession, direct or indirect, of the
power 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 or the beneficial ownership (as such term is used in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, together with the rules and
regulations promulgated thereunder (the "Exchange Act")) of more than fifty
percent (50%) of the voting securities of a Person;
(iii) "GM Affiliate" means, as of any particular time, a Person
that, directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with GM as of such time; provided,
however, that the term "GM Affiliate," as of any particular time, shall not
include Hughes or any Hughes Affiliate as of such time;
(iv) "Hughes Affiliate" means (x) with respect to any time prior
to the Spin-Off Effective Time, a Person that, directly or indirectly through
one or more intermediaries, was Controlled by Hughes as of such time and (y)
with respect to any time after the Spin-Off Effective Time, a Person that,
directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with Hughes as of such time; and
(v) "Person" means any individual, corporation, limited
liability company, partnership, trust or unincorporated organization or
government or any agency or political subdivision thereof.
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(c) Claims. With respect to any claims in respect of the Hughes
Business arising out of events, acts or omissions commencing or occurring prior
to the Spin-Off Effective Time, for which Hughes, any Hughes Affiliates or any
of their respective officers, directors, employees or other covered parties may
be entitled to assert a claim for recovery under any policy of insurance
maintained by GM or any GM Affiliates prior to the Spin-Off Effective Time (an
"Insurance Policy") in accordance with the terms thereof ("Hughes Insurance
Claims"), GM, at the request of Hughes, shall use commercially reasonable
efforts in asserting, or assisting Hughes in asserting, such claims under any
such Insurance Policy; provided, that in all cases (i) Hughes shall promptly pay
or reimburse GM for all reasonable external costs and expenses incurred by GM in
connection with such claims (whether such claims were made before or are made
after the Spin-Off Effective Time) to the extent GM's assistance is so requested
by Hughes, including retrospective premium adjustments to the extent
attributable to such claims, (ii) to the full extent permitted by contract and
law, the control and administration of such Insurance Policies, including with
respect to any proposed buyouts of such Insurance Policies, shall remain with
GM, (iii) such claims shall be subject to (and recovery thereon shall be reduced
by the amount of) any applicable required deductibles, retentions, self-
insurance provisions or any payment or reimbursement obligations paid out by GM
or any GM Affiliates in respect thereof, (iv) with respect to claims-made
Insurance Policies, such claims must have been incurred and reported prior to
the Spin-Off Effective Time to the extent required by such policies, and (v)
Hughes shall promptly report to GM any such claims, although any delay in notice
shall not reduce any recoveries except to the extent GM is actually prejudiced
thereby. GM and its insurers shall cooperate with Hughes and shall have the
right in consultation with Hughes to control the investigation, defense and
settlement of all claims, but no such settlement may be effected without the
consent of Hughes, which consent shall not be unreasonably withheld or delayed,
unless such settlement does not include any admission of liability or exposure
to third party contribution claims and includes an unconditional written release
of Hughes and any other insured parties from all liability in respect of such
claim.
Section 2.3. Registration Rights.
(a) Registration Rights Agreements. GM hereby represents and
warrants that, other than (i) the Amended and Restated Registration Rights
Agreement, dated as of the date hereof, by and among GM, Hughes, United States
Trust Company of New York ("U.S. Trust"), as Trustee of the GM Special Hourly
Employees Pension Trust established under the GM Hourly-Rate Employees Pension
Plan, and U.S. Trust, as Trustee of the Sub-Trust of the GM Welfare Benefit
Trust established under the GM Welfare Benefit Trust, a voluntary employees'
beneficiary association trust established to fund certain collectively bargained
hourly retiree health care benefits under the GM Health Care Program for Hourly
Employees and certain collectively bargained hourly retiree life insurance
benefits under the GM Life and Disability Benefits Program for Hourly Employees
and such benefits under other applicable collectively bargained welfare plans,
and certain related agreements relating thereto (collectively, the "Current
Pension Plans Registration Rights Agreement"), (ii) the Registration Rights
Agreement, dated as of June 21, 1999, between GM and
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America Online, Inc., and certain related agreements relating thereto
(collectively, the "AOL Registration Rights Agreement"), (iii) the Registration
Rights Agreement, dated as of April 28, 1999, between GM and PRIMESTAR, Inc.,
and certain related agreements relating thereto (collectively, the "PRIMESTAR
Registration Rights Agreement" and, together with the Current Pension Plans
Registration Rights Agreement and the AOL Registration Rights Agreement, the
"Registration Rights Agreements") and (iv) the Registration Rights Letter
Agreement (as defined in the Implementation Agreement), neither GM nor any GM
Affiliate has entered into or agreed to enter into any contract, agreement or
understanding (other than such other contracts, agreements and understandings
contemplated by this Agreement, the Merger Agreement or the Implementation
Agreement) that would require registration of any shares of Hughes Class C
Common Stock under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, from or after the Spin-Off Effective Time.
(b) Assumption of Obligation. Effective as of the Spin-Off Effective
Time, GM shall assign to Hughes all of GM's rights as of such time relating to
the AOL Registration Rights Agreement and the PRIMESTAR Registration Rights
Agreement, and Hughes shall assume all of the obligations of GM as of such time
thereunder; provided, that Hughes shall not assume any of the obligations of GM
under the AOL Registration Rights Agreement or the PRIMESTAR Registration Rights
Agreement with respect to any events, acts or omissions occurring prior to the
Spin-Off Effective Time.
(c) No Amendment. Without the prior written consent of GM, Hughes
shall not modify or amend either of the AOL Registration Rights Agreement or
PRIMESTAR Registration Rights Agreement in any respect that would adversely
affect any rights or obligations of GM under the AOL Registration Rights
Agreement and the PRIMESTAR Registration Rights Agreement with respect to any
registration prior to the Spin-Off Effective Time of shares of GM Class H Common
Stock by GM pursuant to such agreements.
Section 2.4. No Amendment, Waiver or Termination of Merger Agreement.
Without the prior written consent of GM, Hughes shall not modify or amend in any
respect, or terminate or waive any right or condition set forth in, the Merger
Agreement.
Section 2.5. Publicity. Hughes, with respect to Hughes and all of
the Hughes Affiliates, and GM, with respect to GM and all of the GM Affiliates,
agree to take all commercially reasonable actions to discontinue their
respective uses as promptly after the Spin-Off Effective Time as is reasonably
practicable of any printed material that indicates a continued parent-subsidiary
relationship between GM and Hughes or any of their respective affiliates. This
Section 2.5 shall not be deemed to prohibit the use of printed material
containing appropriate and accurate references to the historical relationships
between the parties or their affiliates.
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ARTICLE 3
CONFIDENTIALITY
Section 3.1. Treatment of Confidential Information.
(a) Restrictions on Disclosure. From and after the Spin-Off
Effective Time, each of Hughes and GM agrees that it shall not, and shall not
permit any of its affiliates or any of its directors, officers, employees,
agents, consultants, advisors, accountants or attorneys (collectively,
"Representatives") to, disclose any Confidential Information (as defined below)
to any Person, other than as provided herein and in the Confidentiality
Agreement. Notwithstanding the foregoing, each of Hughes and GM and its
respective affiliates and Representatives may disclose such Confidential
Information, and such information shall no longer be deemed Confidential
Information, to the extent that such Confidential Information is or was (i)
available to such party outside the context of the parties' parent-subsidiary
relationship on a nonconfidential basis prior to its disclosure by the other
party, (ii) in the public domain other than by the breach of this Agreement,
(iii) lawfully acquired outside the context of the parties' parent-subsidiary
relationship on a nonconfidential basis or (iv) independently developed by, or
on behalf of, such party by Persons who do not have access to, or descriptions
of, any such Confidential Information. Confidential Information shall only be
used for the business of GM and Hughes and their affiliates and not for the
benefit of any other Person.
(b) Definition of Confidential Information. For the purposes of this
Agreement, the term "Confidential Information" means (i) as to Hughes, (A) any
information concerning GM, any GM Affiliate or the business or operations of GM
or any GM Affiliate other than the Hughes Business (the "GM Business") that was
obtained by Hughes or any Hughes Affiliate prior to the Spin-Off Effective Time,
(B) any information concerning GM or any GM Affiliate that is obtained by Hughes
under Section 4.1 or (C) any other information obtained by, or furnished to,
Hughes or any Hughes Affiliate after the Spin-Off Effective Time that (I) is
marked "Confidential" or "Secret" (or like marking) by GM or any GM Affiliate or
(II) GM and Hughes have agreed in writing is confidential or secret; and (ii) as
to GM, (A) any information concerning Hughes, any Hughes Affiliate or the Hughes
Business that was obtained by GM or any GM Affiliate prior to the Spin-Off
Effective Time, (B) any information concerning Hughes or any Hughes Affiliate
that is obtained by GM under Section 4.1 or (C) any other information obtained
by, or furnished to, GM or any GM Affiliate after the Spin-Off Effective Time
that (I) is marked "Confidential" or "Secret" (or like marking) by Hughes or any
Hughes Affiliate or (II) Hughes and GM have agreed in writing is confidential or
secret.
Section 3.2. Legally Required Disclosure of Confidential Information.
If either party to this Agreement or any of its respective affiliates or
Representatives becomes legally required to disclose any Confidential
Information, such disclosing party shall promptly notify the other party and use
commercially reasonable efforts to cooperate with the other party so that the
other party may
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seek a protective order or other appropriate remedy and/or waive compliance with
this Article 3. All expenses incurred in seeking a protective order or other
remedy shall be borne by the other party. If such protective order or other
remedy is not obtained, or if the other party waives compliance with this
Article 3, the disclosing party or its affiliate or Representative, as
applicable, shall (a) disclose only that portion of the Confidential Information
which its legal counsel advises it is compelled to disclose, (b) use
commercially reasonable efforts to obtain reliable assurance requested by the
other party that confidential treatment will be accorded such Confidential
Information and (c) promptly provide the other party with a copy of the
Confidential Information so disclosed, in the same form and format disclosed.
Section 3.3. Policies and Procedures. Hughes and GM shall each
maintain current policies and procedures, and develop such further policies and
procedures as shall from time to time become necessary, to ensure compliance
with this Article 3.
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ARTICLE 4
CONTINUING INFORMATION SUPPORT
Section 4.1. Access to Information. Until the seven (7) year
anniversary of the Spin-Off Effective Time or such longer period during which
any indemnification claim under this Agreement, the Implementation Agreement or
any other agreement between GM and Hughes remains outstanding, Hughes and GM
each shall afford to the other, and shall cause their respective affiliates and
Representatives to afford, reasonable access and reasonable duplicating rights
upon reasonable advance request and during normal business hours to all
information (other than information subject to the attorney-client privilege)
within such party's possession relating to such other party's business, assets
or liabilities to the extent that such access is reasonably required by such
other party for the conduct of such other party's business or for audit,
accounting, claims, litigation, regulatory or tax purposes, or for purposes of
fulfilling disclosure and reporting obligations; provided further that to the
extent that disclosing any such information would reasonably be expected to
constitute a waiver of attorney-client, work product or other privilege with
respect thereto, each of Hughes and GM and their respective affiliates shall
take all commercially reasonable action to prevent a waiver of any such
privilege, including entering into an appropriate joint defense agreement in
connection with affording access to such information. In connection therewith,
Hughes and GM shall, upon the request of the other party, make available their
respective officers and employees (and those of their respective affiliates) to
the extent that they are reasonably necessary to discuss and explain such
information with and to the other party. GM and Hughes shall each cooperate with
the other, and shall cause their respective affiliates and Representatives to
cooperate, in the provision of access to information reasonably necessary for
the preparation of reports required by or filed under the Exchange Act with
respect to any period entirely or partially prior to the Spin-Off Effective
Time. The access provided pursuant to this Section 4.1 shall be subject to such
additional confidentiality and security provisions as the disclosing party may
reasonably deem necessary.
Section 4.2. Production of Witnesses. Until the seven (7) year
anniversary of the Spin-Off Effective Time, each of Hughes and GM shall use
commercially reasonable efforts, and shall cause each of their respective
affiliates to use commercially reasonable efforts, to make available to the
other, upon written request, its directors, officers, employees and other
Representatives as witnesses to the extent that any such Person is reasonably
necessary (giving consideration to the business demands upon such Persons) in
connection with any legal, administrative or other proceedings in which the
requesting party may from time to time be involved.
Section 4.3. Reimbursement. Except with respect to costs and
expenses incurred in connection with any legal, administrative or other
proceeding or claim to which Section 2.2(c) applies, each party to this
Agreement providing access, information or witnesses to the other party pursuant
to Section 4.1 or 4.2 shall be entitled to receive from the recipient, upon the
presentation of
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invoices therefor, payment for all reasonable out-of-pocket costs and expenses
(excluding allocated compensation, salary and overhead expense) as may be
reasonably incurred in providing such information or witnesses.
Section 4.4. Retention of Records. Except as otherwise required by
law, each of Hughes and GM shall use commercially reasonable efforts to
accommodate the other with respect to retention and provision of copies of any
significant information in such party's possession or under its control relating
to the business or operations, assets or liabilities of the other party.
ARTICLE 5
CONDITIONS TO CLOSE
Section 5.1. Conditions to Obligation to Consummate the Hughes
Recapitalization. The obligations of GM and Hughes to consummate the Hughes
Recapitalization shall be subject to fulfillment of each and all of the
following conditions (any of which may be waived by GM or Hughes, on behalf of
GM or Hughes, respectively, in each case only with the consent of EchoStar):
(a) no temporary restraining order, preliminary or permanent
injunction or other order or decree issued by a court of competent jurisdiction
or Governmental Authority of competent jurisdiction which prevents the
consummation of any of the GM Transactions shall have been issued and remain in
effect, and no statute, rule or regulation shall have been enacted by any
Governmental Authority which prevents the consummation of the GM Transactions;
(b) the GM Transactions (including the GM Charter Amendment, the
Hughes Recapitalization and all other aspects of the GM Transactions, including
the Spin-Off) shall have received the approval of the holders of (i) a majority
of the voting power of all outstanding shares of the GM $1-2/3 Common Stock and
the GM Class H Common Stock, voting together as a single class based on their
respective per share voting power pursuant to the provisions set forth in the GM
Certificate of Incorporation, (ii) a majority of the outstanding shares of GM
$1-2/3 Common Stock, voting as a separate class, and (iii) a majority of the
outstanding shares of GM Class H Common Stock, voting as a separate class
(collectively, the "Requisite Stockholder Approval");
(c) following the receipt of the Requisite Stockholder Approval, the
GM Charter Amendment shall have been filed and become effective;
(d) GM shall have received a ruling (the "Ruling") from the Internal
Revenue Service of the United States Department of the Treasury ("IRS"), in form
and substance reasonably satisfactory to GM, to the effect that each of (x) the
distribution of Hughes Class C Common Stock to the holders of record of GM Class
H Common Stock and, in the event that the Remaining Shares
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Distribution (as defined in the Implementation Agreement) is to be effected, the
distribution of Hughes Class C Common Stock to the holders of record of GM
$1-2/3 Common Stock, in each case as contemplated by the Implementation
Agreement, (y) if applicable, the distribution of Hughes Preference Stock to the
holders of record of GM Series H Preference Stock will constitute a distribution
with respect to which no gain or loss will be recognized by GM or any GM
Affiliate, Hughes or their respective stockholders pursuant to Section 355 and
related provisions of the Code and (z) GM will be permitted, without
jeopardizing the Tax-Free Status of the Spin-Off (as defined in the
Implementation Agreement), to receive and retain the GM Note (as defined in the
Supplemental Agreement) and Pledged Collateral (as defined in the Pledge
Agreement), and subsequently dispose of such GM Note and Pledged Collateral,
under conditions acceptable to GM in its sole and absolute discretion; and GM
shall not have been notified by the IRS that the Ruling has been withdrawn,
invalidated or modified in an adverse manner, and GM shall not have been
notified by the IRS, and shall not have otherwise reasonably determined, on the
basis of an opinion of outside tax counsel, that there is a more than immaterial
possibility that the consummation of the Spin-Off will not be tax-free as
contemplated by the Implementation Agreement; provided that, for purposes of
this Section 5.1(d), if the IRS has not withdrawn, invalidated or modified the
Ruling or otherwise notified GM that the consummation of the Spin-Off will not
be tax-free, then a determination by GM, based on an opinion of tax counsel,
that, nonetheless, there is a more than immaterial possibility that the
consummation of the Spin-Off will not be tax-free as contemplated by the
Implementation Agreement shall be based upon (i) a Change in Tax Law (as defined
below) after the date on which the Ruling is issued or (ii) a change in, or
failure of, a relevant fact (including an error in stating, or an omission to
state, a relevant fact in any IRS Submission (as defined in the Implementation
Agreement) or otherwise); provided, further, that if GM makes a determination
that the Spin-Off will not be tax-free in accordance with the requirements
stated above, then GM and Hughes shall request that the IRS confirm the Ruling
in a Subsequent Ruling (as defined in the Implementation Agreement) if the
matter is capable of being resolved by a ruling by the IRS. For the purposes of
this Agreement, "Change in Tax Law" means any amendment to, or change in
(including any announcement of a prospective change, such as, but not limited
to, the reporting of legislation by the House Ways and Means Committee or the
Senate Finance Committee, or the proposal of a legislative change), the laws or
regulations of the United States, or any official administrative pronouncement
(including the issuance of any proposed regulation or IRS pronouncement) or
judicial decision interpreting or applying such laws or regulations, in each
case that has an effective date that is proposed to precede the Spin-Off
Effective Time or that otherwise applies to or affects the Spin-Off;
(e) GM shall have received the opinion of Kirkland & Ellis, tax
counsel to GM, to the effect that, on the basis of and subject to the
assumptions, representations, limitations and other matters set forth therein,
(i) the recapitalization of the GM $1-2/3 Common Stock and the GM Class H Common
Stock arising from the adoption of the GM Charter Amendment will be tax-free to
GM, the holders of GM $1-2/3 Common Stock and the holders of GM Class H Common
Stock and (ii) the GM Class H Common Stock is stock of GM for United States
federal income tax purposes;
-17-
(f) all conditions to the Merger, other than the consummation of the
Hughes Recapitalization and the Spin-Off, shall have been satisfied or waived
(provided that any such waiver by Hughes shall have been made only with GM's
consent), and the parties to the Merger Agreement shall be prepared to cause the
consummation of the Merger immediately following the Spin-Off Effective Time;
(g) all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder, and any applicable similar law of any foreign
jurisdiction with respect to the GM Transactions shall have expired or otherwise
been terminated, all approvals of, or filings with any Governmental Authority
required to consummate the GM Transactions shall have been obtained or made, and
the parties shall have made all other required notifications with respect to the
GM Transactions and shall have received all other required consents or approvals
with respect to the GM Transactions, other than approvals and filings, the
failure of which to obtain or make which, in the aggregate, are not reasonably
likely to result in a material adverse effect on the ability of GM or Hughes to
consummate the GM Transactions;
(h) the SEC shall have declared the Spin-Off/Merger Registration
Statement (as defined in the Implementation Agreement) effective, all other
required approvals and clearances of the Spin-Off/Merger Registration Statement
and the GM Proxy/Consent Solicitation Statement (as defined in the
Implementation Agreement) shall have been received from the SEC, and all
applicable material state and foreign blue sky or securities permits or
approvals required to mail the GM Proxy/Consent Solicitation Statement and take
the other actions set forth in Section 1.2 of the Implementation Agreement shall
have been received in accordance with Applicable Law (as defined in the
Implementation Agreement), and no stop order suspending the effectiveness of the
Spin-Off/Merger Registration Statement shall be in effect and no similar
restraining order shall have been entered by the SEC or any state or foreign
securities administrator with respect to the Transactions;
(i) the shares of Hughes Class A Common Stock and of Hughes Class C
Common Stock to be issued pursuant to the Spin-Off and the Merger shall have
been approved for listing on the NYSE or, in the alternative, approved for
quotation on the Nasdaq Stock Market, subject to official notice of issuance;
(j) GM and Hughes shall have received the opinion of Houlihan Lokey
Howard & Zukin, addressed to the Board of Directors of GM and Hughes, regarding
Hughes' ability to declare and pay the dividend contemplated by the Hughes
Recapitalization, in form and substance reasonably acceptable to Hughes,
immediately prior to the Hughes Recapitalization;
(k) at least five (5) trading days shall have elapsed since the
Regulatory Approval Date;
-18-
(l) the quotient determined by dividing (i) the Recapitalization
Amount by (ii) the Recapitalization Price, shall not exceed the aggregate number
of GM Notional Shares (as defined below) determined as of immediately prior to
the reduction of the Denominator contemplated by Section 1.1(b) of this
Agreement as part of the Hughes Recapitalization; and
(m) the Contribution and Transfer Agreement (as defined in the
Implementation Agreement) shall have been entered into and shall be in full
force and effect.
Section 5.2. GM Notional Shares. For the purposes of this Agreement,
including Section 5.1(l), "GM Notional Shares" means the aggregate number
determined by the Board of Directors of GM, in good faith and in accordance with
the provisions of the next succeeding sentence, to be the aggregate number of
notional shares representing GM's retained economic interest in Hughes. The
aggregate number of GM Notional Shares shall be determined, as of any particular
time, by subtracting (a) the number of shares of GM Class H Common Stock issued
and outstanding as of such time from (b) the Denominator determined by the Board
of Directors of GM as of such point in time rather than as an average with
respect to any accounting period. Promptly following any determination by the
Board of Directors of GM of the aggregate number of GM Notional Shares pursuant
to this Agreement, GM shall provide written notice thereof to EchoStar (which
notice shall include the computation thereof).
ARTICLE 6
TERMINATION
Section 6.1. Termination of Agreement. Prior to the Spin-Off
Effective Time, this Agreement shall terminate automatically upon termination of
the Merger Agreement.
Section 6.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 6.1 above, this Agreement shall become void and have no
effect, without any liability under this Agreement on the part of any party or
its directors, officers or stockholders. Notwithstanding the foregoing, nothing
in this Section 6.2 shall relieve any party to this Agreement of liability for a
breach of any provision of this Agreement.
ARTICLE 7
MISCELLANEOUS
-19-
Section 7.1. Notices. All notices shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or
dispatched by a nationally recognized overnight courier service to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to GM:
300 Renaissance Center
Detroit, Michigan 48265-3000
Attention: Warren G. Andersen
Telecopy No.: (313) 665-4978
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk and Joseph P. Gromacki
Telecopy No.: (312) 861-2200
(b) if to Hughes:
200 North Sepulveda Boulevard
P.O. Box 956
El Segundo, California 90245
Attention: General Counsel
Telecopy No.: (310) 456-1089
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green and Michael E. Lubowitz
Telecopy No.: (212) 310-8007
-20-
Section 7.2. Interpretation; Absence of Presumption.
(a) For the purposes of this Agreement, (i) words in the singular
shall be held to include the plural and vice versa and words of one gender shall
be held to include the other gender as the context requires, (ii) the terms
"hereof", "herein", and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
all of the Schedules and Exhibits hereto) and not to any particular provision of
this Agreement, and Article, Section, paragraph, Exhibit and Schedule references
are to the Articles, Sections, paragraphs, Exhibits and Schedules to this
Agreement unless otherwise specified, (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iv) the word "or" shall not be exclusive, (v) provisions shall
apply, when appropriate, to successive events and transactions, (vi) unless
otherwise specified, all references to any period of days shall be deemed to be
to the relevant number of calendar days, (vii) "dollars" or "$" means United
States dollars, (viii) "cash" means dollars in immediately available funds and
(ix) the phrase "the date hereof" means as of the date of this Agreement.
(b) The Article, Section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
Section 7.3. Counterparts. This Agreement may be executed in
counterparts, which together shall constitute one and the same Agreement. The
parties may execute more than one copy of the Agreement, each of which shall
constitute an original.
Section 7.4. Entire Agreement; Severability.
(a) This Agreement (including the documents and the instruments
referred to herein) contains the entire agreement between the parties with
respect to the subject matter hereof, supersede all previous agreements,
negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter and there are no agreements or
understandings between the parties other than those set forth or referred to
herein or therein.
(b) If any provision of this Agreement or the application thereof to
any person or circumstance is determined by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances or in jurisdictions
other than those as to which it has been held invalid or unenforceable, shall
remain in
-21-
full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination, the parties shall negotiate in good faith in an
effort to agree upon such a suitable and equitable provision to effect the
original intent of the parties.
Section 7.5. Third Party Beneficiaries. Prior to, and from and
after, the Spin-Off Effective Time, until the consummation of the Merger or the
termination of the Merger Agreement, EchoStar shall be a third party beneficiary
hereunder of its rights pursuant to Sections 1.1(a), 1.4, 5.1, 7.8 and 7.9
hereof. Except as provided in the previous sentence, (a) the provisions of this
Agreement are solely for the benefit of the parties and are not intended to
confer upon any person except the parties any rights or remedies hereunder, and
(b) there are no other third party beneficiaries of this Agreement and this
Agreement shall not provide any third person with any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
Section 7.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware (without regard
to principles of conflicts of laws).
Section 7.7. Specific Performance. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
Accordingly, in the event of any actual or threatened default in, or breach of,
any of the terms, conditions and provisions of this Agreement, the party or
parties who are or are to be thereby aggrieved shall have the right to specific
performance and injunctive or other equitable relief of its rights under this
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. Any requirements
for the securing or posting of any bond with such remedy are waived.
Section 7.8. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder (other than the rights and interests
of GM pursuant to Sections 2.2(a) and 2.2(c) hereof, and GM's rights hereunder
with respect to any Demand Note, which shall be freely assignable by GM) shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party; provided,
however, that GM shall have the right to assign all or any part of its rights,
interests or obligations under this Agreement to any parent thereof (whether as
a result of recapitalization, reorganization, merger or otherwise), and, in
connection with any such assignment, if and to the extent requested by either of
the parties hereto, the parties shall restate this Agreement in its entirety to
reflect such assignment and execute and deliver to each other any such
restatement of this Agreement, except that no such assignment shall relieve GM
of any of their respective obligations hereunder or be permitted without the
prior written consent of EchoStar if any such assignment would have an adverse
effect on EchoStar or, after the Merger Effective Time, Hughes, including with
respect to any potential tax or other liabilities or
-22-
obligations. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 7.9. Amendment. Subject to obtaining EchoStar's written
consent as required by Section 5.2(a) of the Implementation Agreement, this
Agreement may be amended by the parties hereto by action taken or authorized by
their respective Boards of Directors; provided, however, that no amendment shall
be made following the receipt of the Requisite Stockholder Approval that alters
or changes (a) the amount or kind of shares, securities, cash, property and/or
rights to be received by the holders of GM Class H Common Stock or GM $1-2/3
Common Stock pursuant to the Implementation Agreement or (b) any of the terms
and conditions of this Agreement if such alteration or change would adversely
affect the holders of GM Class H Common Stock or GM $1-2/3 Common Stock without
the approval, if required, of the holders of GM Class H Common Stock or GM
$1-2/3 Common Stock. Notwithstanding the foregoing, this Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 7.10. Dispute Resolution. GM and Hughes shall attempt in
good faith to resolve any dispute between the parties arising out of or relating
to this Agreement promptly through negotiations of the parties prior to seeking
any other legal or equitable remedy.
-23-
Section 7.11. Consent to Jurisdiction. Any action, suit or
proceeding arising out of any claim that the parties cannot settle through good
faith negotiations shall be litigated exclusively in the state courts of
Delaware. Each of the parties hereto hereby irrevocably and unconditionally (a)
submits to the jurisdiction of the state courts of Delaware for any such action,
suit or proceeding, (b) agrees not to commence any such action, suit or
proceeding except in the state courts of Delaware, (c) waives, and agrees not to
plead or to make, any objection to the venue of any such action, suit or
proceeding in the state courts of Delaware, (d) waives, and agrees not to plead
or to make, any claim that any such action, suit or proceeding brought in the
state courts of Delaware has been brought in an improper or otherwise
inconvenient forum, (e) waives, and agrees not to plead or to make, any claim
that the state courts of Delaware lack personal jurisdiction over it, and (f)
waives its right to remove any such action, suit or proceeding to the federal
courts except when such courts are vested with sole and exclusive jurisdiction
by statute. GM and Hughes shall cooperate with each other in connection with
any such action, suit or proceeding to obtain reliable assurances that
confidential treatment will be accorded any information that either party shall
reasonably deem to be confidential or proprietary. Each of the parties hereto
irrevocably designates and appoints its respective Service Agent (as defined
below) as its agent to receive service of process in any such action, suit or
proceeding. Each of the parties hereto further covenants and agrees that, until
the expiration of all applicable statutes of limitations relating to potential
claims under this Separation Agreement, each such party shall maintain a duly
appointed agent for the service of summonses and other legal process in the
State of Delaware, and shall promptly notify the other party hereto of any
change in the name or address of its Service Agent and the name and address of
any replacement for its Service Agent, if such agent is no longer the Service
Agent named herein. This Section 7.11 is meant to comply with 6 Del. C. Section
2708. For the purposes of this Agreement, "Service Agent" means, for GM and for
Hughes, The Corporation Trust Company, with offices on the date hereof at 1209
Orange Street, Wilmington, County of New Castle, Delaware 19801, or, for either
party, such other Person at such other address as such party may specify in a
notice provided to the other party after the date of this Agreement in
accordance with Section 7.1 of this Agreement.
* * * * *
-24-
IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Agreement to be duly executed and delivered on the date
first set forth above.
GENERAL MOTORS CORPORATION
By: /s/ Warren G. Andersen
--------------------------
Name: Warren G. Andersen
--------------------------
Title: Assistant General Counsel
--------------------------
HUGHES ELECTRONICS CORPORATION
By: /s/ Larry D. Hunter
--------------------------
Name: Larry D. Hunter
--------------------------
Title: Vice President
--------------------------
EX-99.5
7
dex995.txt
STOCK PURCHASE AGREEMENT
Exhibit 99.5
Execution Copy
STOCK PURCHASE AGREEMENT
AMONG
ECHOSTAR COMMUNICATIONS CORPORATION,
HUGHES ELECTRONICS CORPORATION,
HUGHES COMMUNICATIONS GALAXY, INC.,
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
AND
HUGHES COMMUNICATIONS, INC.
--------------------------------
Dated as of October 28, 2001
TABLE OF CONTENTS
-----------------
Section Page
------- ----
Article I SALE AND PURCHASE OF SHARES............................. 1
1.1 Sale and Purchase of Shares................................ 1
Article II PURCHASE PRICE AND PAYMENT.............................. 2
2.1 Amount of Purchase Price................................... 2
2.2 Form of Consideration...................................... 2
2.3 Failure to Receive Purchaser Financing..................... 3
2.4 Payment of Purchase Price.................................. 3
Article III ........................................................... 3
3.1 Alternative Transaction.................................... 3
3.2 Conditions................................................. 4
3.3 Voting Agreement........................................... 4
Article IV CLOSING AND TERMINATION................................. 4
4.1 Closing Date............................................... 4
4.2 Termination of Agreement................................... 5
4.3 Procedure Upon Termination................................. 6
4.4 Effect of Termination...................................... 6
Article V REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND HUGHES 6
5.1 Organization and Good Standing............................. 6
5.2 Authorization of Agreement................................. 6
5.3 Conflicts; Consents of Third Parties....................... 7
5.4 Litigation................................................. 8
5.5 Voting Agreements.......................................... 8
5.6 Ownership and Transfer of Shares........................... 8
5.7 PanAmSat SEC Documents..................................... 8
5.8 Absence of Certain Changes................................. 8
5.9 Related Party Transactions................................. 9
5.10 Capitalization............................................. 9
5.11 Financial Advisors......................................... 9
Article VI REPRESENTATIONS AND WARRANTIES OF PURCHASER............. 9
i
Section Page
------- ----
6.1 Organization and Good Standing............................. 9
6.2 Authorization of Agreement................................. 9
6.3 Conflicts; Consents of Third Parties....................... 10
6.4 Litigation................................................. 10
6.5 Investment Intention....................................... 10
6.6 Financial Advisors......................................... 11
6.7 Financing.................................................. 11
6.8 Absence of Inducement...................................... 11
6.9 Ownership of Common Stock.................................. 11
6.10 Ownership and Transfer of Purchaser Shares................. 11
6.11 Purchaser SEC Documents.................................... 12
6.12 Absence of Certain Changes................................. 12
Article VII COVENANTS............................................... 12
7.1 Access to Information...................................... 12
7.2 Conduct of the Business Pending the Closing................ 12
7.3 Regulatory................................................. 14
7.4 Other Actions.............................................. 16
7.5 Publicity.................................................. 17
7.6 Stockholders' Agreement.................................... 17
7.7 Take-Along Rights.......................................... 17
7.8 Exchange Offer............................................. 18
7.9 Notification of Certain Matters............................ 18
7.10 Intercompany Obligations................................... 18
7.11 Tax Allocation Agreement................................... 19
7.12 Actions Pursuant to the Stockholders' Agreement............ 19
Article VIII CONDITIONS TO CLOSING................................... 19
8.1 Mutual Conditions.......................................... 19
8.2 Conditions Precedent to Obligations of Purchaser........... 20
8.3 Conditions Precedent to Obligations of the Sellers......... 21
Article IX DOCUMENTS TO BE DELIVERED............................... 22
9.1 Documents to be Delivered by the Seller.................... 22
9.2 Documents to be Delivered by Purchaser..................... 22
ii
Section Page
------- ----
Article X INDEMNIFICATION......................................... 23
10.1 Indemnification by Hughes and the Sellers.................. 23
10.2 Indemnification by Purchaser............................... 23
10.3 Limitations on Indemnification............................. 24
10.4 Exclusive Remedy........................................... 25
10.5 Notice and Payment of Claims............................... 25
10.6 Procedure for Indemnification - Third Party Claims......... 25
Article XI MISCELLANEOUS........................................... 27
11.1 Certain Definitions........................................ 27
11.2 Payment of Sales, Use or Similar Taxes..................... 29
11.3 Knowledge.................................................. 29
11.4 Survival of Representations and Warranties................. 29
11.5 Commercially Reasonable Efforts............................ 30
11.6 Expenses................................................... 30
11.7 Specific Performance....................................... 30
11.8 Further Assurances......................................... 30
11.9 Submission to Jurisdiction; Consent to Service of Process.. 30
11.10 Entire Agreement; Amendments and Waivers................... 31
11.11 Governing Law.............................................. 31
11.12 Table of Contents and Headings............................. 31
11.13 Notices.................................................... 31
11.14 Severability............................................... 32
11.15 Binding Effect; Assignment................................. 33
11.16 Counterparts............................................... 33
iii
EXHIBITS
--------
Exhibit A -- Ownership of Shares
Exhibit B -- Continuing Obligations
Exhibit C -- Form of Registration Rights Agreement
iv
SCHEDULES
---------
Schedule 5.3 -- EchoStar's Consents
Schedule 5.8 -- Hughes and Sellers' Certain Changes
Schedule 5.9 -- Related Party Transactions
Schedule 6.3 -- Hughes and Sellers' Consents
Schedule 6.12 -- EchoStar's Certain Changes
v
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 28, 2001 (the "Agreement"), among
EchoStar Communications Corporation, a Nevada corporation (the "Purchaser"),
Hughes Electronics Corporation, a Delaware corporation ("Hughes"), Hughes
Communications Galaxy, Inc., a California corporation ("HCGI"), Hughes
Communications Satellite Services, Inc., a California corporation ("HCSSI") and
Hughes Communications, Inc., a California corporation ("HCI" and, collectively
with HCGI and HCSSI, the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers own an aggregate of 120,812,175 shares of common
stock, par value $0.01 per share ("Company Common Stock"), of PanAmSat
Corporation, a Delaware corporation (the "Company"), which shares constitute
approximately 80.6% of the issued and outstanding shares of capital stock of the
Company as of October 23, 2001; and
WHEREAS, the Sellers desire to sell to Purchaser, and Purchaser
desires to purchase from the Sellers, the Shares (as defined below) for the
purchase price and upon the terms and conditions hereinafter set forth; and
WHEREAS, certain terms used in this Agreement are defined in
Section 11.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares. Upon the terms and subject to the
conditions contained herein, on the Closing Date each Seller shall sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser shall purchase from
each Seller, the number of shares of Company Common Stock owned by such Seller
set forth opposite such Seller's name on Exhibit A hereto, plus any additional
shares of Company Common Stock that may be acquired by Hughes, the Sellers or
any Subsidiary of Hughes or the Sellers after the date hereof, whether through
purchase, stock split, stock dividend or otherwise (if and to the extent any
such Persons (other than the Sellers) acquire shares of Company Common Stock
after the date hereof, such Persons shall be deemed to be Sellers under this
Agreement; and all such shares of Company Common Stock (including
shares acquired after the date hereof) to be sold pursuant to this Agreement are
collectively referred to herein as the "Shares").
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Amount of Purchase Price. The purchase price per Share shall be
an amount equal to $22.47. The aggregate purchase price for all Shares purchased
hereby is referred to herein as the "Purchase Price".
2.2 Form of Consideration.
(a) In the event the Merger Agreement is terminated pursuant to
Section 7.1(b)(i)(A)(1) or 7.1(c)(iv) thereof, then, subject to Section 2.3
below, the Purchase Price shall be payable in cash, provided that Purchaser may,
in its sole discretion, pay up to $600,000,000.00 of the Purchase Price in
shares ("Purchaser Shares") of Class A common stock, $0.01 par value per share,
of Purchaser ("Purchaser Common Stock").
(b) In the event the Merger Agreement is terminated by Hughes
pursuant to Section 7.1(b)(i)(A)(3) thereof, then, subject to Section 2.3 below,
the Purchase Price shall be payable solely in cash.
(c) In the event the Merger Agreement is terminated pursuant to (i)
Section 7.1(c)(vii) thereof, or (ii) pursuant to Section 7.1(b)(ii) thereof as a
result of the failure of the condition set forth in Section 6.1(e) thereof (each
such termination, a "Financing Termination"), then the Purchase Price shall be
payable as follows:
(x) $1,500,000,000.00 in cash; and
(y) Purchaser shall use commercially reasonable efforts to pay
the remaining amount of the Purchase Price (the "Remainder") in cash
(including by raising cash through the issuance of equity or debt
securities or otherwise); provided that if Purchaser is unable to pay
the Remainder in cash (after using commercially reasonable efforts to
try to do so), the Remainder shall be payable by delivery to the
Sellers of a note in an aggregate principal amount equal to the
Remainder, having terms and conditions mutually acceptable to
Purchaser and Hughes; provided, further, that if the parties cannot
agree on the terms and conditions of such note, then an amount equal
to 50% of the Remainder shall be payable in Purchaser Shares and an
amount equal to 50% of the Remainder shall be payable in subordinated
notes with an aggregate principal amount equal to 50% of the
Remainder, which notes shall have a term no greater than five years,
an interest rate of LIBOR plus 500 basis points, and other customary
terms as are reasonably acceptable to Purchaser and Hughes.
2
For purposes of this Section 2.2, the value of any Purchaser Shares to
be delivered in partial payment of the Purchase Price shall be determined on the
basis of the average (rounded to the nearest 1/10,000, or if there shall not be
a nearest 1/10,000, to the next highest 1/10,000) of the Volume Weighted Average
Trading Prices (as defined below) of Purchaser Common Stock for each of the ten
(10) consecutive trading days ending on and including the trading day
immediately prior to the Closing Date (as defined below).
2.3 Failure to Receive Purchaser Financing. Notwithstanding anything
to the contrary in Section 2.2, in the event that the PanAmSat Purchase
Financing (as defined in the Merger Agreement) is not obtained by Purchaser at
or prior to the Closing Date, then the Purchase Price shall be payable in
accordance with Section 2.2(c), regardless of the section of the Merger
Agreement pursuant to which the Merger Agreement was terminated.
2.4 Payment of Purchase Price. On the Closing Date, Purchaser shall
pay (a) the cash portion of the Purchase Price to the Sellers by wire transfer
of immediately available funds into accounts designated by the Sellers and
allocated among the Sellers in accordance with their pro rata ownership of the
Shares as set forth on Exhibit A; (b) the portion of the Purchase Price, if any,
to be paid in Purchaser Shares by delivering to the Sellers certificates
evidencing Purchaser Shares due in payment of the Purchase Price and (c) the
portion of the Purchase Price, if any, to be paid in debt securities of
Purchaser, by delivering to the Sellers certificates evidencing such securities
for the payment of the Purchase Price.
ARTICLE III
3.1 Alternative Transaction. Notwithstanding anything to the
contrary contained herein, if at any time after the date hereof and on or prior
to the earlier of the Closing and the termination of this Agreement, (a)
Purchaser and the Company shall enter into an agreement (a "PanAmSat Merger
Agreement") providing for a merger (a "PanAmSat Merger") pursuant to which
Purchaser (which term shall include, for purposes of this Article III, the
Surviving Corporation (as defined in the Merger Agreement)) would acquire,
directly or indirectly through a wholly owned Subsidiary of Purchaser, all of
the issued and outstanding shares of Company Common Stock (the "Company
Shares"), or (b) Purchaser shall commence a tender offer (as it may be amended
from time to time, the "Tender Offer") to purchase all (and not less than all)
of the issued and outstanding Company Shares for cash or a combination of cash
and Purchaser Shares, then, subject to the conditions set forth in Section 3.2
below and subject to Applicable Law, the obligations of Purchaser under Articles
I and II and Sections 7.7 (other than the first sentence thereof) and 7.8, may
be satisfied by Purchaser by the consummation of the PanAmSat Merger or the
acceptance of the Shares for payment (which would constitute the Closing
hereunder) on or prior to the consummation of the Tender Offer. In no event
shall the entry by Purchaser (or any Subsidiary of Purchaser) into the PanAmSat
Merger Agreement, if any, or the making of the Tender
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Offer, if any, or any of the terms and conditions thereof, affect the rights and
obligations of the parties hereunder except as expressly provided in this
Article III.
3.2 Conditions. The obligations of Purchaser under Articles I and II
may be satisfied by Purchaser as provided in Section 3.1 only if the following
conditions shall have been satisfied (or waived by Hughes and the Sellers in
their sole discretion):
(a) the consideration to be received by the Sellers for the Shares
shall be in an amount equal to or in excess of the Purchase Price and, except as
provided in (b) below, shall be in cash;
(b) In the event the Merger Agreement is terminated pursuant to
Section 7.1(b)(i)(A)(1) or 7.1(c)(iv) thereof, Purchaser may pay a portion of
the consideration to be received by the Sellers for the Shares in the form of
Purchaser Shares; provided, that the value of any such Purchaser Shares (valued
in accordance with the second sentence of Section 2.2) shall not exceed the
lesser of (i) $600,000,000.00 and (ii) the product of (A) a fraction, the
numerator of which is the aggregate value of all non-cash consideration received
by all holders of Company Common Stock other than the Sellers (the "Other
Holders") and the denominator of which is the aggregate amount of cash plus the
value of all non-cash consideration received by the Other Holders for their
shares of Company Common Stock and (B) the Purchase Price; and
(c) if Purchaser shall not earlier have purchased the Shares at the
Closing pursuant to Section 2.4, the consummation of the PanAmSat Merger or the
Tender Offer, as the case may be, shall occur prior to or on the date on which
the Closing would otherwise occur pursuant to Section 4.1, and payment for the
Shares shall be made promptly upon the surrender of certificates for the Shares
as contemplated by the terms of the PanAmSat Merger Agreement or at or prior to
the consummation of the Tender Offer, as the case may be.
3.3 Voting Agreement. In the event that Purchaser proposes to enter
into a PanAmSat Merger Agreement, each of the Sellers will execute and deliver
to Purchaser a Voting Agreement, in customary form reasonably acceptable to both
parties, providing for each Seller to vote its Shares in favor of the PanAmSat
Merger.
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction of the conditions set
forth in Article VIII hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take place at 10:00
a.m. at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue,
New York, New York (or at such other time and place as the parties may designate
in writing) on the later of (a) the date which is sixty (60) days after
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the date of termination of the Merger Agreement and (b) the date which is three
(3) Business Days after the day on which the last to be fulfilled or waived of
the conditions set forth in Article VIII hereof shall have been fulfilled or
waived (other than any of such conditions that by their nature are to be
fulfilled at the Closing, but subject to the fulfillment or waiver of such
conditions) (the "Closing Date").
4.2 Termination of Agreement.
(a) This Agreement may be terminated prior to the Closing as
follows:
(i) by mutual written consent duly authorized by the respective
Boards of Directors of Hughes and Purchaser;
(ii) by Hughes or Purchaser if the purchase and sale of the Shares
contemplated hereby shall not have been consummated within nine (9) months
after the satisfaction of the condition set forth in Section 8.1(d) hereof,
unless such period shall be extended by the Boards of Directors of both
Hughes and Purchaser (provided that the right to terminate this Agreement
under this Section 4.2(a)(ii) shall not be available to Hughes or
Purchaser, as applicable, if its failure to perform any material covenant
or obligation under this Agreement has been the cause of or resulted in the
failure of the purchase and sale of the Shares to occur on or before such
date);
(iii) by Hughes or Purchaser if there shall be in effect any
permanent injunction or other Order of a court of competent jurisdiction or
other competent Governmental Body preventing the purchase and sale of the
Shares contemplated hereby which shall have become final and nonappealable
and, prior to such termination, the parties shall have used best efforts to
resist, resolve or lift, as applicable, such injunction or other Order;
(iv) by Hughes or Purchaser if the Merger Agreement shall have been
terminated pursuant to its terms, other than a termination pursuant to
Section 7.1(b)(i)(A)(1), 7.1(b)(i)(A)(3), 7.1(c)(iv), 7.1(c)(vii) or
7.1(b)(ii) as a result of the failure of the condition set forth in Section
6.1(e) of the Merger Agreement;
(v) by Hughes or Purchaser, if a material breach of any provision of
this Agreement has been committed by the other party and such breach has
not been waived and cannot be cured by the date set forth in Section
4.2(a)(ii) hereof; and, in the case of a breach by Hughes, such breach has
resulted in a PanAmSat Material Adverse Effect; provided, that termination
pursuant to this Clause (v) shall not relieve the breaching party of
liability for such breach or otherwise; or
(vi) by Hughes, during the thirty-day period immediately following a
Financing Termination.
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(b) This Agreement shall terminate automatically upon the
consummation of the Merger (as defined in the Merger Agreement).
(c) This Agreement shall terminate automatically upon the
satisfaction by Purchaser of its obligations under Section 1.1 in accordance
with Article III.
4.3 Procedure Upon Termination. In the event of termination of this
Agreement by Purchaser or Hughes, or both, pursuant to Section 4.2 hereof,
written notice thereof shall forthwith be given to the other party or parties,
and this Agreement shall terminate, and the purchase of the Shares hereunder
shall be abandoned, without further action by Purchaser, the Sellers or Hughes.
If this Agreement is terminated as provided herein, each party shall redeliver
all documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same.
4.4 Effect of Termination. In the event that this Agreement is
validly terminated prior to Closing as provided herein, then each of the parties
shall be relieved of its duties and obligations arising under this Agreement
after the date of such termination, and such termination shall be without
liability to Purchaser, Hughes or either Seller; provided, however, that the
obligations of the parties set forth in Sections 7.5, 11.6, 11.7, 11.9, 11.10,
11.11 and 11.15 hereof shall survive any such termination and shall be
enforceable hereunder; provided, further, however, that nothing in this Section
4.4 shall relieve Purchaser, Hughes or either Seller of any liability for a
breach of this Agreement or invalidate the provisions of the Confidentiality
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND HUGHES
The Sellers and Hughes hereby jointly and severally represent and
warrant to Purchaser that:
5.1 Organization and Good Standing. Each of the Sellers, Hughes and,
to the knowledge of Hughes, the Company and its Subsidiaries, is a corporation
duly organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority to conduct its
business as it is now being conducted.
5.2 Authorization of Agreement. Each of the Sellers and Hughes has
all requisite corporate power and authority to enter into this Agreement and
each other agreement, document, instrument or certificate to be entered into by
such party in connection with the consummation of the purchase and sale of the
Shares contemplated by this Agreement (together with this Agreement, the "Seller
Documents"), and to consummate the transactions contemplated hereby and thereby.
The execution and
6
delivery of this Agreement and each Seller Document by the Sellers and Hughes,
as applicable, and the consummation of the transactions contemplated thereby to
be effected by the Sellers and Hughes, as applicable, have been (or will be
prior to execution and delivery thereof) duly authorized by all necessary
corporate action on the part of the Sellers and Hughes, as applicable. This
Agreement has been, and each of the Seller Documents will be at or prior to the
Closing, duly executed and delivered by each Seller and Hughes, as applicable,
and, assuming the due authorization, execution and delivery by the other parties
hereto and thereto, this Agreement constitutes, and each of the Seller Documents
when so executed and delivered will constitute, the legal, valid and binding
obligations of each Seller and Hughes, as applicable, enforceable against each
of them in accordance with its terms, except as enforceability may be limited by
bankruptcy, similar laws of debtor relief and general principles of equity.
5.3 Conflicts; Consents of Third Parties. Except as set forth on
Schedule 5.3 hereto, the execution and delivery by Hughes and the Sellers of
this Agreement and the Seller Documents and the consummation of the transactions
contemplated hereby or thereby will not (i) violate any provision of the
certificate of incorporation or by-laws of Hughes or the Sellers; (ii) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with the giving of notice, the passage of time or
otherwise, would constitute a default) under, require the consent of any party
under, or entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or result
in the creation of any Lien upon any of the properties or assets of Hughes or
the Sellers under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, intellectual property or other license,
contract, undertaking, agreement, lease or other instrument or obligation to
which Hughes or either Seller is a party, including the Stockholders' Agreement;
(iii) violate any Order, writ, injunction, decree, statute, rule or regulation
applicable to Hughes or either Seller; or (iv) require any consent or approval
of or registration or filing by Hughes or any of its Affiliates (including the
Company and its Subsidiaries) with, any third party or any Governmental Body,
other than (a) actions required by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act"), and any similar laws of foreign jurisdictions and (b)
registrations or other actions required under federal, state and foreign
securities laws; except, in the case of clauses (ii) (but excluding application
to the Stockholders' Agreement), (iii) and (iv), for any of the foregoing that,
individually or in the aggregate, could not reasonably be expected to materially
delay or burden the consummation by Hughes or either Seller of the transactions
contemplated by this Agreement. Schedule 5.3 sets forth a true, complete and
correct list of any material consents, waivers, authorizations or approvals
required to be obtained under any agreement, license, lease, contract, loan,
note, mortgage, indenture or other commitment or obligation (whether written or
oral and express or implied), under which Hughes or either Seller is or may
become bound or is or may become subject to any obligation or liability or by
which any of their respective assets owned or used are or may become bound in
connection with the execution, delivery and performance of this Agreement by
Hughes and either Seller or consummation of the transactions contemplated
herein.
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5.4 Litigation. As of the date hereof, there are no Legal
Proceedings pending or, to the knowledge of Hughes, threatened that are
reasonably likely to prohibit or restrain the ability of Hughes or either Seller
to enter into this Agreement or consummate the transactions contemplated hereby.
5.5 Voting Agreements. Except for the Stockholders' Agreement and
the PanAmSat Voting Agreement, if any, neither Hughes nor either Seller is a
party to any voting trust or other voting agreement with respect to any of the
Shares or to any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the capital stock of the Company.
5.6 Ownership and Transfer of Shares. Each Seller is the sole record
and beneficial owner of the number of Shares indicated as being owned by such
Seller on Exhibit A, free and clear of any and all Liens, other than the
Stockholders' Agreement and restrictions imposed by federal or state securities
laws. Each Seller has the corporate power and authority to sell, transfer,
assign and deliver such Shares as provided in this Agreement, and such delivery
will convey to Purchaser good and valid title to such Shares, free and clear of
any and all Liens, other than the Stockholders' Agreement and restrictions
imposed by federal or state securities laws. Other than with respect to the
Stockholders' Agreement or any federal or state securities laws, no legend or
other reference to any purported Lien appears upon any certificate representing
the Shares.
5.7 PanAmSat SEC Documents.
(a) To Hughes' knowledge, the Company has timely filed with the U.S.
Securities and Exchange Commission ("SEC") all required reports, filings,
registration statements and other documents to be filed by them with the SEC
since January 1, 2000.
(b) To Hughes' knowledge, as of its filing date, or as amended or
supplemented prior to the date hereof, each PanAmSat SEC Document complied as to
form in all material respects with the applicable requirements of the Exchange
Act and the Securities Act.
(c) To Hughes' knowledge, no PanAmSat SEC Document, as of its filing
date, contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
5.8 Absence of Certain Changes. To the knowledge of Hughes, except as
set forth in Schedule 5.8 and except as contemplated hereby, since September 30,
2001, there has been no (i) PanAmSat Material Adverse Effect or (ii) development
that has had or could reasonably be expected to have a material adverse impact
on the ability of Hughes to consummate the transactions contemplated by this
Agreement.
8
5.9 Related Party Transactions. Except as set forth in Schedule 5.9
or as disclosed in the PanAmSat SEC Documents, since January 1, 2000, there have
been no material transactions, agreements, arrangements or understandings
between the Company or its Subsidiaries, on the one hand, and Hughes and its
Affiliates (other than Subsidiaries of the Company), on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K under the
Securities Act.
5.10 Capitalization. To the knowledge of Hughes, as of September 30,
2001, the authorized capital stock of the Company consisted of 400,000,000
shares of Common Stock and 50,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Stock"). To the knowledge of Hughes, as of October 23,
2001, (i) 149,847,692 shares of Common Stock were issued and outstanding and
(ii) no shares of Preferred Stock were issued and outstanding. To the knowledge
of Hughes, all the outstanding shares of the Company's capital stock are duly
authorized, validly issued, fully paid and non-assessable.
5.11 Financial Advisors. Except for obligations to Goldman, Sachs &
Co., Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Bear, Stearns & Co. Inc., neither Hughes nor any of its
Affiliates, stockholders, directors, officers or employees has incurred or will
incur on behalf of Hughes or any of its Affiliates, any brokerage, finder's or
similar fee in connection with the transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Hughes and the Sellers (it
being understood that the representations and warranties contained in Sections
6.10 and 6.11 shall be deemed made by Purchaser only if Purchaser determines to
pay a portion of the Purchase Price in Purchaser Shares) that:
6.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and is in good standing under the laws of the State
of Nevada, with full power and authority to conduct its business as it is now
being conducted.
6.2 Authorization of Agreement. Purchaser has all requisite
corporate power and authority to enter into this Agreement and each other
agreement, document, instrument or certificate to be entered into by Purchaser
in connection with the consummation of the purchase and sale of the Shares
contemplated by this Agreement (together with this Agreement, the "Purchaser
Documents"), and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and each Purchaser Document by
Purchaser and the consummation of the transactions contemplated thereby to be
effected by Purchaser have been (or will be prior to execution and delivery
thereof) duly authorized by all necessary corporate action on
9
the part of Purchaser. This Agreement has been, and each of Purchaser Documents
will be at or prior to the Closing, duly executed and delivered by Purchaser
and, assuming the due authorization, execution and delivery by the other parties
hereto and thereto, this Agreement constitutes, and each of Purchaser Documents
when so executed and delivered will constitute, the legal, valid and binding
obligations of Purchaser, enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, similar laws of debtor
relief and general principles of equity.
6.3 Conflicts; Consents of Third Parties. Except as set forth on
Schedule 6.3 hereto, the execution and delivery by Purchaser of this Agreement
and Purchaser Documents and the consummation of the transactions contemplated
hereby or thereby will not (i) violate any provision of the certificate of
incorporation or by-laws of Purchaser; (ii) violate, conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
the giving of notice, the passage of time or otherwise, would constitute a
default) under, require the consent of any party under, or entitle any party
(with the giving of notice, the passage of time or otherwise) to terminate,
accelerate, modify or call a default under, or result in the creation of any
Lien upon any of the properties or assets of Purchaser under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
intellectual property or other license, contract, undertaking, agreement, lease
or other instrument or obligation to which Purchaser is a party; (iii) violate
any Order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser; or (iv) require any consent or approval of or registration or filing
by Purchaser or any of its Affiliates with, any third party or any Governmental
Body, other than (a) actions required by the HSR Act, and any similar laws of
foreign jurisdictions and (b) registrations or other actions required under
federal, state and foreign securities laws; except, in the case of clauses (ii),
(iii) and (iv), for any of the foregoing that, individually or in the aggregate,
could not reasonably be expected to materially delay or burden the consummation
by Purchaser of the transactions contemplated by this Agreement. Schedule 6.3
sets forth a true, complete and correct list of any material consents, waivers,
authorizations or approvals required to be obtained under any agreement,
license, lease, contract, loan, note, mortgage, indenture or other commitment or
obligation (whether written or oral and express or implied), under which
Purchaser is or may become bound or is or may become subject to any obligation
or liability or by which any of its respective assets owned or used are or may
become bound in connection with the execution, delivery and performance of this
Agreement by Purchaser or consummation of the transactions contemplated herein.
6.4 Litigation. As of the date hereof, there are no Legal
Proceedings pending or, to the knowledge of Purchaser, threatened that are
reasonably likely to prohibit or restrain the ability of Purchaser to enter into
this Agreement or consummate the transactions contemplated hereby.
6.5 Investment Intention. Purchaser is acquiring the Shares for its
own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act)
thereof. Purchaser understands that the Shares have not been registered under
the Securities Act and cannot be sold unless
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subsequently registered under the Securities Act or an exemption from such
registration is available.
6.6 Financial Advisors. Except for obligations to UBS Warburg,
neither Purchaser nor any of its Affiliates, stockholders, directors, officers
or employees has incurred or will incur on behalf of Purchaser or any of its
Affiliates, any brokerage, finder's or similar fee in connection with the
transactions contemplated by this Agreement.
6.7 Financing. Purchaser has obtained a commitment letter, dated as
of October 28, 2001 (the "Bank Commitment"), from Deutsche Bank AG, New York
Branch, providing credit facilities to Purchaser for, among other things, the
purchase of the Shares hereunder. Purchaser has provided an executed copy of the
Bank Commitment to Sellers.
6.8 Absence of Inducement. Purchaser, on behalf of itself and its
Affiliates, acknowledges and agrees that, except for the express
representations, warranties and covenants of Hughes and the Sellers set forth in
this Agreement, Hughes and the Sellers make no representation, warranty or
covenant whatsoever, express or implied, in connection with this Agreement.
Purchaser, on behalf of itself and its Affiliates, represents and warrants to
Hughes and the Sellers that in making its determination to enter into, and to
proceed with the transactions contemplated by, this Agreement, it has not relied
on and will not rely on any representation, warranty or covenant of Hughes, the
Sellers, any of their respective Affiliates or any director, officer, employee,
agent, consultant, advisor, accountant or attorney of Hughes, the Sellers or any
of their respective Affiliates, other than the express representations,
warranties and covenants of Hughes and the Sellers set forth in this Agreement.
6.9 Ownership of Common Stock. Neither Purchaser nor any of its
Affiliates own any shares of Common Stock. Neither Purchaser nor any of its
Affiliates have purchased, sold or contracted to purchase or sell any Common
Stock, options to purchase Common Stock or other securities convertible into or
exchangeable for Common Stock, in the sixty (60) days prior to the date hereof.
6.10 Ownership and Transfer of Purchaser Shares. Purchaser has the
corporate power and authority to sell, transfer, assign and deliver Purchaser
Shares as contemplated by this Agreement, and such delivery will convey to the
Sellers good and valid title to such Purchaser Shares, free and clear of any and
all Liens, other than restrictions imposed by federal or state securities laws.
Purchaser has taken all action necessary to authorize and approve the issuance
of Purchaser Shares and as of the Closing Purchaser Shares will, if and when
issued in accordance herewith, be validly issued, fully paid and nonassessable.
There are no statutory or contractual preemptive rights or rights of refusal
with respect to any issuance of Purchaser Shares in accordance with the terms of
this Agreement. Other than with respect to any federal or state securities laws,
no legend or other reference to any purported Lien appears upon any certificate
representing Purchaser Shares.
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6.11 Purchaser SEC Documents.
(a) Purchaser has timely filed with the U.S. Securities and Exchange
Commission ("SEC") all required reports, filings, registration statements and
other documents to be filed by it with the SEC since January 1, 2000.
(b) As of its filing date, or as amended or supplemented prior to the
date hereof, each Purchaser SEC Document complied as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act.
(c) No Purchaser SEC Document, as of its filing date, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
6.12 Absence of Certain Changes. Except as set forth in Schedule
6.12 and except as contemplated hereby, since September 30, 2001, there has been
no (i) material adverse effect on the Purchaser or (ii) development that has had
or could reasonably be expected to have a material adverse impact on the ability
of Euripides to consummate the transactions contemplated by this Agreement.
ARTICLE VII
COVENANTS
7.1 Access to Information. Except as required by any confidentiality
agreement to which Purchaser, on the one hand, and either Seller, Hughes or the
Company, on the other hand, is a party or pursuant to Applicable Law, from and
after the date of this Agreement until the Closing Date (or the termination of
this Agreement), Hughes and the Sellers agree to use commercially reasonable
efforts to cause the Company to (i) permit representatives of Purchaser to have
reasonable access to the properties, books, records, contracts, tax records and
documents of the Company and its Subsidiaries, to the extent related to the
businesses of the Company and its Subsidiaries, at all reasonable times upon
reasonable advance notice, and in a manner so as not to interfere with the
normal operation of the Company's and its Subsidiaries' businesses and (ii)
furnish promptly such information concerning the Company's and its Subsidiaries'
businesses as Purchaser or its representatives may reasonably request. Such
access shall be limited to the extent that antitrust counsel to Hughes and
Purchaser agree that such limitation is advisable under applicable antitrust
law. Information obtained by Purchaser (or its officers, employees and
representatives) pursuant to this Section 6.1 shall be subject to the provisions
of the Confidentiality Agreement, which agreement remains in full force and
effect.
7.2 Conduct of the Business Pending the Closing. During the period
from the date of this Agreement to the Closing, Hughes and the Sellers shall use
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commercially reasonable efforts to cause the Company and its Subsidiaries to
conduct their respective businesses and operations in the ordinary course, to
maintain and preserve their business organization and their material rights and
franchises and to retain the services of their officers and key employees and
maintain relationships with customers, suppliers, lessees, licensees and other
third parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Closing,
Hughes and the Sellers shall use commercially reasonable efforts to cause the
Company and its Subsidiaries not to, without the prior written consent of
Purchaser:
(a) do or effect any of the following actions with respect to the
Company's or any of its Subsidiaries' securities: (i) adjust, split, combine,
recapitalize or reclassify its capital stock, (ii) make, declare or pay any
dividend or distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock, other than pursuant to that certain Tax Sharing Agreement (unexecuted as
of the date hereof but in effect by mutual agreement and practice) by and
between the Company and Hughes, (iii) grant any Person any right or option to
acquire any shares of its capital stock, other than grants of rights or options
(A) to individuals who are hired or promoted on or after the date hereof, (B)
after prior notice by PanAmSat to the chief executive officer of Euripides
describing special circumstances to employees affected by such circumstances,
and (C) to acquire not more than 3,000,000 shares of Company Common Stock, in
each case in the ordinary course of business, consistent with past practice and
which will not accelerate in vesting or exercisability as a result of or in
connection with the transactions contemplated by this Agreement, (iv) issue,
deliver or sell or agree to issue, deliver or sell any additional shares of its
capital stock or any securities, instruments or obligations convertible into or
exchangeable or exercisable for any shares of its capital stock or such
securities (except pursuant to the exercise of outstanding options and options
issued after the date hereof) or (v) enter into any agreement, understanding or
arrangement with respect to the sale or voting of its capital stock;
(b) take any intentional or improper action to interfere with the
Company's or its Subsidiaries' existing contractual or economic relationships
with its suppliers, equipment manufacturers, dealers and retailers;
(c) sell, transfer, lease, pledge, mortgage, encumber or otherwise
dispose of any amount of its property or assets that is material to the Company
and its Subsidiaries, taken as a whole, other than in the ordinary course of
business, consistent with past practice;
(d) make or propose any changes in its certificate of incorporation
or by-laws (or equivalent organizational documents);
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(e) merge or consolidate with any other Person or acquire assets or
capital stock of any other Person which are material to the Company and its
Subsidiaries, taken as a whole, or enter into any confidentiality agreement with
any Person with respect to any such transaction;
(f) create any Subsidiaries which are material to the Company and its
Subsidiaries taken as a whole and which are not, directly or indirectly, wholly
owned by the Company;
(g) enter into or modify any employment, severance, change in control,
termination or similar agreements or arrangements with, or grant any bonuses,
salary increases, severance or termination pay to, or otherwise increase the
compensation or benefits of, any officer, director, consultant or employee of
the Company or its Subsidiaries other than payment of severance or termination
benefits or increases in salary, compensation or benefits granted in the
ordinary course of business consistent with past practice, except as may be
required by Applicable Law or a binding written contract in effect on the date
of this Agreement;
(h) except as may be required by Applicable Law or by accounting
principles, change any method or principle of accounting in a material manner
that is inconsistent with past practice;
(i) take any action that would reasonably be expected to result in the
representations and warranties set forth in Article 4 becoming false or
inaccurate such that the condition set forth in Section 8.2(a) would fail to be
satisfied;
(j) except for any refinancing of the promissory note dated May 15,
1997, issued by the Company to Hughes, enter into or carry out any other
transaction which is material to the Company and its Subsidiaries, taken as a
whole, other than in the ordinary and usual course of business;
(k) enter into or amend any agreement or understanding between the
Company and either of Hughes or GM or their respective Subsidiaries (other than
agreements entered into in the ordinary course of business);
(l) take any action which could reasonably be expected to adversely
affect or delay the ability of any parties hereto to obtain any approval of any
Governmental Body required to consummate the transactions contemplated hereby;
or
(m) agree in writing or otherwise to do anything prohibited by this
Section 7.2.
7.3 Regulatory.
(a) As soon as practicable, and in any event within twenty (20)
Business Days after the date hereof, each of the parties hereto shall file any
Notification
14
and Report Forms and related material required to be filed by it with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act and any similar required notifications
under the laws of any foreign jurisdiction with respect to the transactions
contemplated by this Agreement and shall promptly make any further filings
pursuant thereto that may be necessary, proper or advisable.
(b) As soon as practicable after the date hereof, each of the parties
hereto shall make, and shall cause their Subsidiaries to make, all necessary
filings with or applications to any Governmental Body that has issued any
permits, approvals, authorizations, certificates, consents, franchises,
licenses, concessions and rights issued or authorized by any Governmental Body
("Permit") (as amended or modified) to, or held by, the Company or any of its
Subsidiaries, with respect to the transactions contemplated by this Agreement,
including any necessary applications to the FCC for consent to the transfer of
all Permits issued by the FCC to the Company or any of its Subsidiaries pursuant
to the transactions contemplated hereby (the "FCC Consent Application").
(c) The parties shall: (A) use their best efforts to obtain prompt
termination of any waiting period under the HSR Act (including any extension of
the initial thirty (30) day waiting period with respect to the transactions
contemplated by this Agreement), and neither party shall, without the prior
consent of the other, agree with any Governmental Authority not to consummate
the transactions contemplated by this Agreement for a period of time beyond the
expiration of the waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act or to extend the
Closing Date to a date within the thirty(30)-day period prior to the date set
forth in Section 4.2(a)(ii); (B) furnish to the other parties such information
and assistance as such parties may reasonably request in connection with the
preparation of any submissions to, or agency proceedings by, any Governmental
Body under any Antitrust Law; (C) keep the other parties promptly apprised of
any communications with, and inquiries or requests for information from, such
Governmental Bodies; (D) permit the other parties to review any material
communication given by it to, and consult with the other parties in advance of
any meeting or conference with, any Governmental Body or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by such applicable Governmental Body or other Person, give the other
parties the opportunity to attend and participate in such meetings and
conferences; and (E) use its best efforts to cause the condition set forth in
Section 8.1(a) of this Agreement to be satisfied; provided, however, that
nothing contained in this Section 7.3 shall require any employee or
representative of Hughes who serves as a director or officer of the Company or
any of its Subsidiaries to take any action on behalf of the Company or any of
its Subsidiaries, or to cause the Company or any of its Subsidiaries to take or
refrain from taking any action. For purposes of this Agreement, "Antitrust Law"
means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect
15
of monopolization or restraint of trade or lessening of competition through
merger or acquisition.
(d) Each party shall (i) use its best efforts to diligently prosecute
all applications with the FCC, including the FCC Consent Application, and all
similar foreign Governmental Bodies for consent to the transactions contemplated
herein, (ii) use its best efforts to resist or resolve any administrative
proceeding or suit, including appeals, that is instituted to challenge the grant
of any such applications, (iii) furnish to the other parties such information
and assistance as such parties reasonably may request in connection with the
preparation or prosecution of any such applications, (iv) keep the other parties
promptly apprised of any communications with, and inquiries or requests for
information from, such Governmental Bodies with respect to the transactions
contemplated hereby and (v) use its best efforts to cause the condition set
forth in Section 8.1(c) of this Agreement to be satisfied.
(e) In furtherance and not in limitation of the covenants of the
parties contained in Sections 7.3(a), (b), (c) and (d), each party shall use its
best efforts to resolve such objections if any, as may be asserted with respect
to the transactions contemplated hereby under any FCC Regulation or Antitrust
Law. In connection with the foregoing, if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Antitrust Law or any FCC Regulations, the parties
shall cooperate in all respects with each other and use their best efforts to
avoid the institution of any such action or proceeding and to contest and resist
any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement.
(f) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or any FCC Regulations or if any
suit is instituted by any Governmental Body or any private party challenging any
of the transactions contemplated hereby as violative of any Antitrust Law or FCC
Regulations, the parties shall use their best efforts to resolve any such
objections or challenge as such Governmental Body or private party may have to
such transactions under such law so as to permit consummation of the
transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each of Purchaser and Hughes (and, to the extent
required by any Governmental Body, their respective Subsidiaries and Affiliates
over which they exercise control, other than the Company and its Subsidiaries)
shall be required to enter into a settlement, undertaking, consent decree,
stipulation or other agreement with a Governmental Body regarding antitrust or
FCC matters in connection with the transactions contemplated by this Agreement.
7.4 Other Actions. Each of the Sellers, Hughes and Purchaser shall use
its best efforts (except where a different efforts standard is specifically
contemplated in this Agreement, in which case such different standard shall
apply) to (i) take all action
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and to do all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and (ii) cause the fulfillment at
the earliest practicable date of all of the conditions to their respective
obligations to consummate the transactions contemplated by this Agreement, other
than the conditions set forth in Section 8.1(d).
7.5 Publicity. Neither the Sellers, Hughes nor Purchaser shall issue
any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other parties hereto, which approval will not be unreasonably withheld or
delayed, unless, in the sole judgment of Purchaser, either Seller or Hughes,
disclosure is otherwise required by Applicable Law or by the applicable rules of
any stock exchange on which Purchaser, the Seller, Hughes, or any of their
respective Affiliates, lists securities, provided that, to the extent required
by Applicable Law, the party intending to make such release shall use its best
efforts consistent with such Applicable Law to consult with the other party with
respect to the text thereof.
7.6 Stockholders' Agreement. Purchaser acknowledges the existence of
the Stockholders' Agreement.
7.7 Take-Along Rights. Immediately after the execution and delivery of
this Agreement, the Sellers shall deliver to each party to the Stockholders'
Agreement a notice in the form prescribed therein. Purchaser agrees that, to the
extent any of the parties to the Stockholders' Agreement is then entitled
thereunder to, and elects to exercise, its Take-Along Rights (as defined in the
Stockholders' Agreement) triggered by the execution and delivery of this
Agreement, Purchaser will agree, unless such parties to the Stockholders'
Agreement otherwise agree, to purchase such Person's shares of Common Stock,
subject to the same terms and conditions as are contained herein, at the same
price per share of Common Stock and for the same type of consideration as
Purchaser is paying the Sellers hereunder (the "Purchase Price Per Share"). In
order to effectuate such transaction, Purchaser and each such Person exercising
Take-Along Rights shall enter into an agreement substantially similar to this
Agreement (and identical with respect to the Purchase Price Per Share and other
payment terms).
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7.8 Exchange Offer.
(a) Unless Purchaser shall have entered into the PanAmSat Merger
Agreement or commenced the Tender Offer pursuant to Article III hereof,
Purchaser agrees that promptly following the Closing, unless the Tender Offer or
the PanAmSat Merger shall have been consummated on or prior to the Closing, it
shall offer to purchase (the "Offer") all of the outstanding shares of Common
Stock of the Company (the "Remaining PanAmSat Shares"). The Offer (a) shall
provide that Purchaser shall pay or deliver to a holder of Remaining PanAmSat
Shares, for each Remaining PanAmSat Share, at the election of such holder,
either (i) cash in an amount equal to not less than the Purchase Price Per Share
or (ii) a number of shares of Class A common stock of Purchaser having an
aggregate fair market value (as of a date reasonably proximate to the date the
Offer is made) at least equal in amount to the Purchase Price Per Share and (b)
shall not limit the portion of the total consideration payable pursuant to the
Offer that may be payable in cash. Purchaser agrees to use commercially
reasonable efforts to structure the Offer such that the exchange of Class A
common stock of Purchaser for Remaining PanAmSat Shares will be a tax free
exchange.
(b) Not later than five (5) Business Days following the Closing,
Purchaser shall file with the United States Securities and Exchange Commission
("SEC") and with any other applicable Governmental Body all such documentation
as shall be necessary to effectuate the Offer (the "Exchange Offer Documents").
Purchaser shall as promptly as practicable provide Hughes with copies of, and
consult with Hughes and prepare written responses with respect to, any written
comments received from the SEC and other state and foreign securities regulators
with respect to the Exchange Offer Documents and promptly advise Hughes of any
oral comments received from the SEC and other state and foreign securities
regulators, and, to the extent reasonably practicable under the circumstances,
shall offer a reasonable opportunity to appropriate representatives of Hughes to
participate in any telephone calls with the SEC or any state or foreign
regulator the purpose of which is to discuss comments made by such regulators.
Purchaser shall respond to any comments made by the SEC or any state or foreign
regulator as soon as reasonably practicable following the receipt of such
comments. No amendment or supplement to the Exchange Offer Documents (or any
related materials) will be filed or submitted to the SEC or any state or foreign
regulator or publicly disseminated by Purchaser without the approval of Hughes,
which shall not be unreasonably withheld or delayed.
7.9 Notification of Certain Matters. Each party shall give prompt
written notice to the other parties of the initiation or threat of any
litigation that seeks or is reasonably likely to prohibit or restrain the
ability of such party to consummate the transaction contemplated by this
Agreement.
7.10 Intercompany Obligations. On or prior to the Closing, Purchaser
shall use best efforts to assume all of the obligations and commitments of GM
under, and from and after the Closing indemnify and hold General Motors
Corporation ("GM"), Hughes and the Sellers harmless from and against, any and
all indebtedness, liabilities,
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obligations, claims, costs and expenses, whether accrued, fixed or contingent,
mature or inchoate, known or unknown, reflected on a balance sheet or otherwise
(including reasonable attorneys' fees) incurred or which may be incurred by GM,
Hughes, the Sellers or any of their respective Subsidiaries resulting from or
arising out of that certain guaranty described on Exhibit B hereto. Purchaser
shall use best efforts to obtain the termination or release of GM, Hughes, the
Sellers and their respective Subsidiaries from such obligation.
7.11 Tax Allocation Agreement. Hughes shall use commercially
reasonable efforts to cause to be executed prior to the Closing a tax allocation
agreement between Hughes and the Company with substantially comparable terms to
the Amended and Restated Agreement for the Allocation of United States Income
Taxes between GM and Hughes dated the date hereof (the "TAA"); provided,
however, that substantially comparable terms do not include the terms of the TAA
which address the management of, or the compensation for, tax attributes.
7.12 Actions Pursuant to the Stockholders' Agreement. Hughes and the
Sellers shall use commercially reasonable efforts (including by exercising all
of their contractual rights under the Stockholders' Agreement) as soon as
practicable to cause, between the date hereof and the Closing Date, at least 50%
of the members of the Board of Directors of the Company to be comprised of
individuals who, as of the date hereof, or who hereafter become, directors or
employees of Hughes or its Affiliates.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Mutual Conditions. The obligation of the parties hereto to
consummate the transactions contemplated by this Agreement shall be subject to
fulfillment, on or prior to the Closing Date, of each and all of the following
conditions (any or all of which may be waived by written consent of Purchaser,
Hughes and the Sellers in whole or in part to the extent permitted by Applicable
Law):
(a) all waiting periods applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have expired
or been terminated and all approvals of, or filings with, any Governmental
Authority (other than the FCC) required to consummate the transactions
contemplated hereby shall have been obtained or made, other than approvals and
filings, the failure to obtain or make which, in the aggregate, are not
reasonably likely to have a PanAmSat Material Adverse Effect;
(b) no temporary restraining order, preliminary or permanent
injunction or other order or decree issued by a court of competent jurisdiction
or Governmental Authority of competent jurisdiction which prevents the
consummation of the transactions contemplated by this Agreement shall have been
issued and remain in
19
effect, and no statute, rule or regulation shall have been enacted by any
Governmental Authority which prevents the consummation of the transactions
contemplated by this Agreement;
(c) the FCC (or the FCC staff on delegated authority) shall have
granted any necessary consents to the transactions contemplated herein;
(d) the Merger Agreement shall have been terminated pursuant to
Section 7.1(b)(i)(A)(1), 7.1(b)(i)(A)(3), 7.1(c)(iv), 7.1(c)(vii) or 7.1(b)(ii)
as a result of the failure of the condition set forth in Section 6.1(e) of the
Merger Agreement; and
(e) Hughes and the Sellers shall have obtained all consents and
waivers referred to in Section 4.3 hereof with respect to the transactions
contemplated by this Agreement and the Seller Documents, except for those
consents and waivers the absence of which would not reasonably be expected to
cause a material adverse effect on the business, properties, results of
operations or financial condition of the Company and its Subsidiaries taken as a
whole.
8.2 Conditions Precedent to Obligations of Purchaser. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each and all of
the following conditions (any or all of which may be waived by Purchaser in
whole or in part to the extent permitted by Applicable Law):
(a) all representations and warranties of Hughes and the Sellers
contained herein shall be true and correct at and as of the Closing Date with
the same effect as though those representations and warranties had been made
again at and as of that time, except to the extent that all the breaches of such
representations and warranties collectively (without giving effect to any
materiality or similar qualification) could not reasonably be expected to result
in a, and have not resulted in a PanAmSat Material Adverse Effect; provided,
that any and all actions taken by Hughes and the Sellers pursuant to Article III
or Section 7.3 and the effects thereof on the representations and warranties of
Hughes and the Sellers set forth in Article V shall be ignored for purposes of
this Section 8.3;
(b) Hughes and the Sellers shall have performed and complied in all
material respects with all of their respective obligations and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date;
(c) Purchaser shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to Purchaser)
executed by Hughes and each Seller certifying as to the fulfillment of the
conditions specified in Sections 8.2(a), 8.2(b) and 8.2(g) hereof;
(d) certificates representing the Shares (or other reasonable
evidence of ownership thereof) shall have been, or shall at the Closing be,
validly delivered and
20
transferred to Purchaser, free and clear of any and all Liens, other than the
Stockholders' Agreement and restrictions imposed by federal or state securities
laws;
(e) there shall not have occurred after the date hereof and be
continuing any PanAmSat Material Adverse Effect; provided, however, that any and
all actions taken by any party hereto pursuant to Section 7.3 and the effects
thereof shall be ignored for the purposes of this Section 8.2(e);
(f) Purchaser shall have received the written resignations of each
director of the Company who is at the time of the Closing an employee of Hughes
or any of its Affiliates;
(g) the representation and warranty contained in Section 5.10 shall
have been true and correct as of the date made except for immaterial deviations
therefrom, and the Company shall not have taken any of the actions described in
Section 7.2(a)(ii), unless such actions are taken in the ordinary course of
business, consistent with past practice;
(h) (i) the Company shall not have issued, delivered or sold or
agreed to issue, deliver or sell more than 7% of its capital stock (in the
aggregate together with any securities, instruments or obligations convertible
into or exchangeable for its capital stock), except for such issuances,
deliveries, or sales, or such agreements to issue, deliver or sell that would
not be reasonably likely to impair in any material respect the ability of the
Purchaser to consummate the acquisition of the Remaining PanAmSat Shares at the
Purchase Price per Share set forth in Section 1.2, and (ii) shall not have taken
any other action with respect to its capital stock not permitted under Section
7.2(a) that would be reasonably likely to impair in any material respect the
ability of Purchaser to consummate the acquisition of the Remaining PanAmSat
Shares at the Purchase Price per Share set forth in Section 1.2;
(ii) the Company shall not have adopted any shareholder rights plan
or similar plan after the date hereof.
8.3 Conditions Precedent to Obligations of the Sellers. The
obligations of the Sellers to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each and all of the following conditions (any or all of which may be waived by
the Sellers in whole or in part to the extent permitted by Applicable Law):
(a) all representations and warranties of Purchaser contained herein
shall be true and correct as of the date of this Agreement and with the same
effect as though those representations and warranties had been made again at and
as of that time, except (i) for the representation contained in Section 6.4 and
(ii); to the extent that all the breaches of such representations and warranties
collectively (without giving effect to any materiality or similar qualification)
could not reasonably be expected to result in a, and have not resulted in a
PanAmSat Material Adverse Effect; provided, that any and all
21
actions taken by Purchaser pursuant to Article III or Section 7.3 and the
effects thereof on the representations and warranties of Purchaser set forth in
Article VI shall be ignored for purposes of this Section 8.3;
(b) Purchaser shall have performed and complied in all material
respects with all of its obligations and covenants required by this Agreement to
be performed or complied with by Purchaser on or prior to the Closing Date;
(c) the Sellers shall have been furnished with certificates (dated
the Closing Date and in form and substance reasonably satisfactory to the
Sellers) executed by Purchaser certifying as to the fulfillment of the
conditions specified in Sections 8.3(a) and 8.3(b);
(d) if Purchaser determines to pay any portion of the Purchase Price
in Purchaser Shares, Purchaser shall have executed and delivered to the Sellers
a registration rights agreement in the form attached hereto as Exhibit C.
ARTICLE IX
DOCUMENTS TO BE DELIVERED
9.1 Documents to be Delivered by the Seller. At the Closing, Hughes
and the Sellers shall deliver, or cause to be delivered, to Purchaser the
following:
(a) stock certificates representing the Shares, duly endorsed in
blank or accompanied by stock transfer powers;
(b) the certificates referred to in Sections 8.2(c) and 8.2(d)
hereof; and
(c) copies of all consents and waivers referred to in Section 8.1(e)
hereof.
9.2 Documents to be Delivered by Purchaser. At the Closing,
Purchaser shall deliver to the Sellers the following:
(a) evidence of the wire transfer referred to in Section 2.2 hereof;
(b) stock certificates representing Purchaser Shares, if any, duly
endorsed in blank or accompanied by stock transfer powers;
(c) the certificates referred to in Section 8.3(c) hereof; and
(d) written confirmation from Purchaser that it is simultaneously
purchasing the shares of Common Stock to be sold by those Persons, if any, who
exercise Take-Along Rights pursuant to the Stockholders' Agreement, as
contemplated by Section 7.7 hereof.
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ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Hughes and the Sellers. Subject to Section
10.3(a) hereof, if the Closing occurs or Purchaser purchases the Shares pursuant
to Article III, Hughes and each Seller, jointly and severally, hereby agree to
indemnify and hold Purchaser and its directors, officers, employees, Affiliates,
agents, successors and assigns (collectively, the "Purchaser Indemnified
Parties") harmless from and against, and shall reimburse Purchaser Indemnified
Parties for, any and all losses, liabilities, Legal Proceedings and reasonable
expenses (including reasonable costs of investigation and defense and reasonable
attorneys' and accountants' fees), whether or not involving a third-party claim
(collectively "Damages"), incurred thereby, directly or indirectly, based on,
arising out of, or resulting from:
(a) any breach of or inaccuracy in any representation or warranty made
by Hughes or any of the Sellers in this Agreement or any other certificate or
document delivered pursuant to this Agreement, other than those, if any, that
have been waived in writing by Purchaser and other than the representations
contained in Sections 5.6, 5.8 and 5.10 hereof; and
(b) any breach of or inaccuracy in the representations contained in
Sections 5.6 and 5.10 hereof;
(c) any breach or violation of or failure to fully perform any
covenant, agreement, undertaking or obligation of Hughes or either Seller set
forth in this Agreement, other than those, if any, that have been waived in
writing by Purchaser; and
(d) in the event that Hughes and the Company do not enter into a tax
allocation agreement as contemplated by Section 7.11 hereof, all income taxes
(including interest, penalties and additions to tax) that a taxing authority may
attempt to collect from the Company or any Subsidiary thereof solely pursuant to
Treasury Regulation (S)1.1502-6 or similar provisions of state law for a taxable
period or portion thereof during which the Company was a member of the GM or
Hughes consolidated, combined or unitary group for federal or state income tax
purposes excluding any taxes (including interest, penalties and additions to
tax) for which Purchaser indemnifies the Seller Indemnified Parties (as defined
below) pursuant to Section 10.2(d) hereof.
10.2 Indemnification by Purchaser. Subject to Section 10.3(b) hereof,
if the Closing occurs and any portion of the Purchase Price is paid in Purchaser
Shares, Purchaser hereby agrees to indemnify and hold Hughes and the Sellers and
their directors, officers, employees, Affiliates, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless from and against, and
shall reimburse the Seller Indemnified Parties for, any and all Damages incurred
thereby, directly or indirectly, based on, arising out of, or resulting from:
23
(a) any breach of or inaccuracy in any representation or warranty made
by Purchaser in this Agreement or any other certificate or document delivered
pursuant to this Agreement, other than those, if any, that have been waived in
writing by Hughes and other than the representation contained in Section 6.10
hereof;
(b) any breach of or inaccuracy in the representation contained in
Section 6.10 hereof;
(c) any breach or violation of or failure to fully perform any
covenant, agreement, undertaking or obligation of Purchaser set forth in this
Agreement, other than those, if any, that have been waived in writing by Hughes;
and
(d) in the event that Hughes and the Company do not enter into a tax
allocation agreement as contemplated by Section 7.11 hereof, any income taxes
(including interest, penalties and additions to tax) that would be imposed upon
or assessed against the Company or any Subsidiary thereof (other than solely
pursuant to Treasury Regulation (S)1.1502-6 or similar provisions of state law)
with respect to any taxable periods or portions thereof ending on or prior to
the Closing Date were the Company and its subsidiaries a separate group that
always filed separate consolidated, combined or unitary tax returns for federal,
state and local tax purposes (as applicable) and never joined in the filing of a
consolidated, combined or unitary tax return with General Motors Corporation, a
Delaware corporation or Hughes.
10.3 Limitations on Indemnification.
(a) The aggregate amount of Damages for which Hughes shall be
obligated to indemnify Purchaser Indemnified Parties pursuant to Sections
10.1(a) and (c) shall be limited to an amount equal to 50% of the Purchase Price
and the aggregate amount of Damages for which Hughes and each Seller shall be
obligated to indemnify Purchaser Indemnified Parties pursuant to Section 10.1(b)
shall be limited to an amount equal to 100% of the Purchase Price ; provided,
however, that the aggregate amount of Damages for which Hughes and each Seller
shall be obligated to indemnify Purchaser Indemnified Parties pursuant to
Sections 10.1(a), (b) and (c) shall be limited to an amount equal to 100% of the
Purchase Price.
(b) The aggregate amount of Damages for which Purchaser shall be
obligated to indemnify the Seller Indemnified Parties pursuant to Sections
10.2(a) and (c) shall be limited to an amount equal to 50% of the Purchase Price
and the aggregate amount of Damages for which Purchaser shall be obligated to
indemnify the Seller Indemnified Parties pursuant to Section 10.2(b) shall be
limited to an amount equal to 100% of the Purchase Price; provided, however,
that the aggregate amount of Damages for which Purchaser shall be obligated to
indemnify the Seller Indemnified Parties pursuant to Sections 10.2(a), (b) and
(c) shall be limited to an amount equal to 100% of the Purchase Price.
24
10.4 Exclusive Remedy. The parties acknowledge and agree that, except
for claims of fraud, the sole and exclusive remedy with respect to any and all
claims for indemnification relating to the subject matter of this Agreement
shall be pursuant to the indemnification provisions set forth in this Article X;
provided, however, that nothing in this Section 10.3 shall limit rights or
remedies which, as a matter of Applicable Law or public policy, cannot be
limited or waived.
10.5 Notice and Payment of Claims.
(a) Notice. The party entitled to indemnification pursuant to this
Article X (the "Indemnified Party") shall notify the party liable for
indemnification pursuant to this Article X (the "Indemnifying Party") within ten
(10) days after becoming aware of, and shall provide to the Indemnifying Party
as soon as practicable thereafter all information and documentation necessary to
support and verify, any damages that the Indemnified Party shall have determined
to have given or is reasonably likely to give rise to a claim for
indemnification hereunder, and the Indemnifying Party shall be allowed access to
all books and records in the possession or under the control of the Indemnified
Party which the Indemnifying Party reasonably determines to be related to such
claim. Notwithstanding the foregoing, the failure to so notify the Indemnifying
Party shall not relieve the Indemnifying Party of any Liability that it may have
to any Indemnified Party, except to the extent that the Indemnifying Party
demonstrates that it is materially prejudiced by the Indemnified Party's failure
to give such notice.
(b) Payment. In the event an action for indemnification under this
Article X shall have been finally determined, such final determination shall be
paid to Hughes and Sellers or Purchaser, as the case may be, on demand in
immediately available funds in U.S. dollars. An action, and the liability for
and amount of Damages therefor, shall be deemed to be "finally determined" for
purposes of this Article X when the parties to such action have so determined by
mutual agreement or, if disputed, when a final non-appealable Order shall have
been entered.
10.6 Procedure for Indemnification - Third Party Claims.
(a) Upon receipt by an Indemnified Party of notice of the commencement
of any Action by a third party (a "Third Party Claim") against it, such
Indemnified Party shall, if a claim is to be made against an Indemnifying Party
under this Article IX, give notice to the Indemnifying Party of the commencement
of such Third Party Claim as soon as practicable, but in no event later than ten
(10) days after the Indemnified Party shall have been served, but the failure to
so notify the Indemnifying Party shall not relieve the Indemnifying Party of any
Liability that it may have to any Indemnified Party, except to the extent that
the Indemnifying Party demonstrates that it is materially prejudiced by the
Indemnified Party's failure to give such notice.
(b) If a Third Party Claim is brought against an Indemnified Party and
it gives proper notice to the Indemnifying Party of the commencement of such
Third Party Claim, the Indemnifying Party will be entitled to participate in
such Third Party
25
Claim and, to the extent that it wishes (unless (i) the Indemnifying Party is
also a party to such Third Party Claim and the Indemnified Party determines in
good faith that joint representation would be inappropriate, or (ii) the
Indemnifying Party fails to provide reasonable assurance to the Indemnified
Party of its financial capacity to defend such Third Party Claim and provide
indemnification with respect to such Third Party Claim) to assume the defense of
such Third Party Claim with counsel reasonably satisfactory to the Indemnified
Party and, after notice from the Indemnifying Party to the Indemnified Party of
its election to assume the defense of such Third Party Claim, the Indemnifying
Party shall not, as long as it legitimately conducts such defense, be liable to
the Indemnified Party under this Article X for any fees of other counsel or any
other expenses with respect to the defense of such Third Party Claim, in each
case subsequently incurred by the Indemnified Party in connection with the
defense of such Third Party Claim, other than reasonable costs of investigation.
If the Indemnifying Party assumes the defense of a Third Party Claim, (i)
no compromise, discharge or settlement of, or admission of Liability in
connection with, such claims may be effected by the Indemnifying Party without
the Indemnified Party's written consent (which consent shall not be unreasonably
withheld or delayed) unless (A) there is no finding or public admission of any
violation of Law or any violation of the rights of any Person and no effect on
any other claims that may be made against the Indemnified Party, and (B) the
sole relief provided is monetary Damages that are paid in full by the
Indemnifying Party; (ii) the Indemnifying Party shall have no Liability with
respect to any compromise or proposed settlement of such claims effected without
its written consent (which consent shall not be unreasonably withheld or
delayed); and (iii) the Indemnified Party shall cooperate in all reasonable
respects with the Indemnifying Party in connection with such defense, and shall
have the right to participate, at the Indemnified Party's sole expense, in such
defense, with counsel selected by it. Should the Indemnified Party withhold
consent under clause (i) above, the Indemnifying Party shall have the right,
upon notice to the Indemnified Party within ten (10) days of receipt of the
Indemnified Party's denial of consent, to pay to the Indemnified Party the full
amount of such judgment or settlement, including all interest, costs or other
charges relating thereto, and shall pay all attorneys' fees incurred to such
date for which the Indemnifying Party is obligated under this Agreement, at
which time the Indemnifying Party's rights and obligations with respect to the
Third Party Claim shall cease. If proper notice is given to an Indemnifying
Party of the commencement of any Third Party Claim for which indemnification is
available hereunder and the Indemnifying Party does not, within thirty (30) days
after the Indemnified Party's notice is given, give notice to the Indemnified
Party of its election to assume the defense of such Third Party Claim, the
Indemnifying Party shall be bound by any determination made in such Third Party
Claim or any compromise or settlement effected by the Indemnified Party.
(c) Notwithstanding the foregoing, if an Indemnified Party determines in
good faith that there is a reasonable probability that a Third Party Claim may
adversely affect it other than as a result of monetary Damages for which it
could be entitled to
26
indemnification under this Agreement, the Indemnified Party may, by notice to
the Indemnifying Party, assume the exclusive right to defend, compromise, or
settle such Third Party Claim as against the Indemnified Party, but the
Indemnifying Party shall not be bound by any determination of a Third Party
Claim so defended or any compromise or settlement thereof.
(d) The Indemnifying Party hereby consents to the non-exclusive
jurisdiction of any court in which a Third Party Claim is brought against the
Indemnified Party for purposes of any claim that the Indemnified Party may have
under this Agreement with respect to such Third Party Claim or the matters
alleged therein, and agree that process may be served on the Indemnifying Party
with respect to such a claim anywhere in the world.
ARTICLE XI
MISCELLANEOUS
11.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 11.1:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Applicable Law" means all applicable laws, statutes, orders, rules,
regulations, policies or guidelines promulgated, or judgments, decisions or
orders entered by any Governmental Body.
"Business Day" means any day of the year except a Saturday, Sunday or
a day on which national banking institutions in New York are obligated by Law,
regulation or governmental order to close.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Common Stock" means the Company's common stock, $0.01 par value per
share.
"Confidentiality Agreement" means that certain confidentiality
agreement between Purchaser and the Company, dated February 27, 2001, including
all amendments thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
27
"Governmental Body" means any foreign, federal, state or local
governmental or regulatory body, administrative or regulatory authority,
commission, agency, instrumentality or authority.
"Implementation Agreement" means the Implementation Agreement, dated
as of the date hereof, by and among GM, Hughes and Purchaser.
"Legal Proceeding" means any criminal, civil, judicial, administrative
or arbitral actions, suits, proceedings (public or private), claims or
governmental proceedings.
"Lien" means any lien, pledge, security interest, charge, claim,
lease, option, right of first refusal, transfer restriction under any
shareholder or similar agreement, encumbrance or any other similar restriction
or limitation.
"Merger Agreement" means the Merger Agreement, dated as of the date
hereof, by and between Hughes and Purchaser.
"Order" means any order, injunction, judgment, decree, decision,
settlement, subpoena, verdict, ruling, writ, assessment or arbitration award.
"PanAmSat Material Adverse Effect" means an event, change,
circumstance or effect that has had or is reasonably likely to have a material
adverse effect on the business, operations, assets, liabilities or financial
condition of the Company and its Subsidiaries, taken as a whole, other than
events, changes, circumstances or effects that arise out of or result from (i)
factors affecting the economy or financial markets as a whole or generally
affecting the industries in which the Company or its Subsidiaries operate, (ii)
the announcement of the execution of this Agreement or any other Hughes
Transaction Agreement (as defined in the Merger Agreement) (including any
cancellations of or delays in customer orders, any reduction in sales, any
disruption in supplier, distributor, partner or similar relationships or any
loss of employees) and (iii) any change resulting solely from a change in
trading prices of the Company's outstanding publicly traded securities. A
PanAmSat Material Adverse Effect shall have occurred upon the complete failure
with respect to three (3) or more of the Company's satellites that are either
presently functional or are subsequently launched, and which satellite failures
are not covered by any launch or in orbit insurance.
"PanAmSat SEC Documents" means the Company's annual report on Form
10-K for each of the fiscal years ended December 31, 1998, 1999 and 2000, the
Company's quarterly reports on Form 10-Q for each of the fiscal quarters since
January 1, 2001 and all other reports, filings, registration statements and
other documents filed by the Company with the SEC after September 30, 2001 and
prior to the date hereof (as such documents have been amended since the time of
their filing and prior to the date hereof).
28
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Purchaser SEC Documents" means Purchaser's annual report on Form 10-K
for each of the fiscal years ended December 31, 1998, 1999 and 2000, Purchaser's
quarterly reports on Form 10-Q for each of the fiscal quarters since January 1,
2001 and all other reports, filings, registration statements and other documents
filed by Purchaser with the SEC after September 30, 2001 and prior to the date
hereof (as such documents have been amended since the time of their filing and
prior to the date hereof).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Stockholders' Agreement" means that certain Amended and Restated
Stockholders' Agreement, dated as of May 16, 1997, by and among the Company,
HCGI and the other parties thereto.
"Subsidiary" means any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company.
"Volume Weighted Average Trading Price" means, with respect to any
trading day (defined as 9:30 a.m. through 4:30 p.m., Eastern Time), the weighted
average of the reported per share prices at which transactions in Purchaser
Common Stock are executed on the Nasdaq Stock Market during such trading day
(weighted based on the number of shares of Purchaser Common Stock traded, as
such weighted average price appears on the Bloomberg screen "Volume at Price"
page for Purchaser Common Stock.
11.2 Payment of Sales, Use or Similar Taxes. All sales, use,
transfer, intangible, recordation, documentary stamp or similar taxes or
charges, of any nature whatsoever, applicable to, or resulting from, the
transactions contemplated by this Agreement shall be borne by Purchaser.
11.3 Knowledge. For purposes of this Agreement, the knowledge of (a)
Purchaser shall mean the actual knowledge of the senior officers of Purchaser
and (b) Hughes shall mean the actual knowledge of the senior officers of Hughes
and employees of Hughes who are directors or officers of the Company.
11.4 Survival of Representations and Warranties. The parties hereto
hereby agree that the representations and warranties contained in this Agreement
or in any certificate, document or instrument delivered in connection herewith,
and the rights of Purchaser Indemnified Parties and Seller Indemnified Parties
to seek indemnification with respect thereto, shall survive the execution and
delivery of this Agreement, and the Closing hereunder (other than the
representation contained in Section 5.8 hereof). Such representations and
warranties and the rights of Purchaser Indemnified Parties and Seller
29
Indemnified Parties to seek indemnification with respect thereto shall expire,
except with respect to any claim or action asserted prior to and pending at the
time of such expiration, twelve (12) months after the Closing or upon the
earlier termination of this Agreement pursuant to Section 4.2; provided,
however, that the representations and warranties contained in Sections 5.6 and
5.10 and Section 6.10 hereof shall survive indefinitely.
11.5 Commercially Reasonable Efforts. For purposes of Article VII of
this Agreement, the obligation of Hughes and each of the Sellers to use
commercially reasonable efforts to cause the Company to take or not take any
action shall require only that Hughes and each of the Sellers, as applicable,
(i) vote the Shares it owns on any matter submitted by the Company for approval
of its stockholders in a manner consistent with the provisions of Article VII
hereof, (ii) request that the Company use its best efforts to act in a manner
consistent with the provisions of Article VII hereof and (iii) request that any
employees of Hughes or such Seller who serve as members of the Board of
Directors of the Company vote on matters submitted to the Board of Directors of
the Company in a manner consistent with the provisions of Article VII hereof to
the extent that so voting would be considered by them to be in the best
interests of the Company and its stockholders and otherwise consistent with
their fiduciary duties as directors.
11.6 Expenses. Except as otherwise provided in this Agreement,
Hughes, the Sellers and Purchaser shall each bear their own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.
11.7 Specific Performance. The parties agree that the remedies at
law for any breach or threatened breach, including monetary damages, are
inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
Accordingly, in the event of any actual or threatened default in, or breach of,
any of the terms, conditions and provisions of this Agreement, including,
without limitation, the Sellers' obligation to sell the Shares to Purchaser, and
Purchaser's obligations to purchase the Shares from the Sellers, the party or
parties who are or are to be thereby aggrieved shall have the right to specific
performance and injunctive or other equitable relief of its rights under this
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. Any requirements
for the securing or posting of any bond with such remedy are waived.
11.8 Further Assurances. Hughes, the Sellers and Purchaser each
agree to execute and deliver such other documents or agreements and to take such
other action as may be reasonably necessary or desirable for the implementation
of this Agreement and the consummation of the transactions contemplated hereby.
11.9 Submission to Jurisdiction; Consent to Service of Process. Any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated by
30
this Agreement may be brought against any of the parties in any Federal court
located in the State of Delaware, or any Delaware state court, and each of the
parties hereto hereby consents to the exclusive jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and waives any objection to venue laid therein. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the State of Delaware. Without limiting the generality
of the foregoing, each party hereto agrees that service of process upon such
party at the address referred to in Section 11.13, together with written notice
of such service to such party, shall be deemed effective service of process upon
such party.
11.10 Entire Agreement; Amendments and Waivers. This Agreement
(including the documents and the instruments referred to herein) and the
Confidentiality Agreement contain the entire agreement between the parties with
respect to the subject matter hereof and supersede all previous agreements,
negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter, and there are no agreements
or understandings between the parties other than those set forth or referred to
herein or therein. This Agreement can be amended, supplemented or changed, and
any provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
11.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law.
11.12 Table of Contents and Headings. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
11.13 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or dispatched by a nationally recognized overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
31
If to Hughes or any Seller, to:
200 North Sepulveda Boulevard
P.O. Box 456
El Segundo, CA 90245
Attention: General Counsel
Telecopy No.: (310) 456-1089
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green and
Michael E. Lubowitz
Telecopy No.: (212) 310-8007
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk and
Joseph P. Gromacki
Telecopy No.: (312) 861-2200
If to Purchaser, to:
5701 Santa Fe Drive
Littleton, CO 80120
Attention: General Counsel
Telecopy No.: (303) 723-1699
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Francis J. Aquila and
John J. O'Brien
Telecopy No.: (212) 558-3588
11.14 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to
32
which it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner adverse to any party. Upon such determination, the
parties shall negotiate in good faith in an effort to agree upon such a suitable
and equitable provision to effect the original intent of the parties.
11.15 Binding Effect; Assignment. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns. The provisions of this Agreement are solely
for the benefit of the parties and are not intended to confer upon any Person
except the parties any rights or remedies hereunder and there are no third party
beneficiaries of this Agreement and this Agreement shall not provide any third
Person with any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party; provided,
however, that each Seller shall have the right to assign its rights, interests
and obligations to the Shares and under this Agreement to any Affiliate thereof
(whether as a result of recapitalization, reorganization, merger or otherwise),
except that no such assignment shall relieve either Seller of any of their
respective obligations hereunder.
11.16 Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same Agreement. The parties may
execute more than one copy of the Agreement, each of which shall constitute an
original.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
ECHOSTAR COMMUNICATIONS CORPORATION
By: /s/ David K. Moskowitz
------------------------------------------
Name: David K. Moskowitz
Title: Senior Vice President, General Counsel
and Secretary
HUGHES ELECTRONICS CORPORATION
By: /s/ Larry D. Hunter
------------------------------------------
Name: Larry D. Hunter
Title: Vice President
HUGHES GALAXY COMMUNICATIONS, INC.
By: /s/ Michael J. Gaines
------------------------------------------
Name: Michael J. Gaines
Title: President
HUGHES COMMUNICATIONS SATELLITE SERVICES, INC.
By: /s/ Michael J. Gaines
------------------------------------------
Name: Michael J. Gaines
Title: President
HUGHES COMMUNICATIONS, INC.
By: /s/ Michael J. Gaines
------------------------------------------
Name: Michael J. Gaines
Title: President