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CONTRIBUTION AND EXCHANGE AGREEMENT (TSAT)
among
TCI SATELLITE ENTERTAINMENT, INC.
and
LIBERTY LSAT, INC.
LIBERTY LSAT II, INC.
Dated as of March 16, 2000
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TABLE OF CONTENTS
1. Definitions................................................................................................1
2. Authorization of Securities................................................................................6
3. Issuance of Preferred Stock and Contributions..............................................................6
4. Closing....................................................................................................6
5. Register of Securities; Restrictions on Transfer of Securities.............................................7
6. Representations and Warranties by the Company..............................................................7
7. Representations and Warranties by the Investors...........................................................11
8. Conditions Precedent to the Investor's Obligations at the Closing.........................................13
9. Conditions Precedent to the Company's Obligations at the Closing..........................................15
10. Affirmative Covenants.....................................................................................16
11. Indemnification and Enforcement...........................................................................19
12. Miscellaneous............................................................................................ 21
ANNEXES
A Certificate of Stock Designation for Series A Preferred Stock
B Certificate of Stock Designation for Series B Preferred Stock
C Form of PCS Share Trust Certificate
D Proposed Amendments to Certificate of Incorporation
E Registration Rights Agreement
6(a) Capitalization
6(c) Subsidiaries
6(d) Required Consents
6(h) Material Undisclosed Liabilities
6(i) Material Adverse Changes
6(j) Material Defaults
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CONTRIBUTION AND EXCHANGE AGREEMENT (TSAT)
This Contribution and Exchange Agreement (TSAT) is made as of March 16,
2000, by and among TCI Satellite Entertainment, Inc., a Delaware corporation
(the "COMPANY"), Liberty LSAT, Inc., a Delaware corporation ("WIRELESS SUB 1")
and Liberty LSAT II, Inc., a Delaware corporation ("WIRELESS SUB 2" and together
with Wireless Sub 1, the "INVESTORS").
The Investors desire to acquire, and the Company desires to issue to
Investors, shares of Preferred Stock (as hereinafter defined) on the terms and
conditions set forth in this Agreement. Such acquisition and issuance will be
made concurrently with, or immediately following, the consummation of the
transactions described in that Contribution Agreement among Liberty KASTR Corp.,
Liberty XMSR, Inc., Liberty Astro, Inc., LSAT Astro, LLC and LMI/LSAT Holdings,
Inc. (collectively, the "LIBERTY AFFILIATES"), the Company and Liberty
Satellite, LLC (the "SATELLITE VENTURE") dated the same date as this Agreement
(the "SATELLITE VENTURE CONTRIBUTION AGREEMENT").
For United States federal income tax purposes, it is intended that the
transactions contemplated by this Agreement will qualify as a tax-free
contribution under Section 351 of the Internal Revenue Code of 1986, as amended.
Accordingly, in consideration of the covenants and agreements set forth in
this Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. Unless the context otherwise requires, the terms defined in this
SECTION 1 will have the meanings specified in this SECTION 1 for all purposes of
this Agreement, applicable to both the singular and plural forms. All accounting
terms defined in this SECTION 1 and other accounting terms used in this
Agreement will, except as otherwise provided for herein, be construed in
accordance with those generally accepted accounting principles that the Company
is required to employ by the terms of this Agreement. If and so long as the
Company has any Subsidiary, the accounting terms defined in this SECTION 1 and
other accounting terms appearing in this Agreement will be determined on a
consolidated basis for the Company and each of its Subsidiaries, and the
financial statements and other financial information to be furnished by the
Company pursuant to this Agreement will be prepared on a consolidated basis.
"ACTION" will have the meaning assigned to it in SECTION 11(c).
"AFFILIATE" will mean any Person which directly or indirectly controls, is
controlled by, or is under common control with, the indicated Person. For
purposes of this SECTION 1, "control" when used with respect to any Person
includes the direct or indirect beneficial ownership of 50% or more of the
voting securities or voting equity or partnership interests of such Person, or
the power to direct
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or cause the direction of the management or policies of such Person, whether by
contract or otherwise.
"AGREEMENT" will mean this Contribution and Exchange Agreement (TSAT).
"APPLICABLE LAW" will mean all provisions of constitutions, statutes,
rules, regulations, and orders of Governmental Authorities applicable to the
Company, including the Licenses, the Communications Act of 1934, as amended,
Environmental Laws, and Title 17 of the United States Code and all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Company is a party or by which it is bound.
"AUTHORIZED SIGNATORY" will mean such senior personnel of the Company as
may be duly authorized and designated in writing by the Company to execute
documents, agreements and instruments on behalf of the Company.
"BOARD" will mean the Board of Directors of the Company.
"BUSINESS DAY" will mean a day on which banks are open for the transaction
of business in New York.
"CERTIFICATE OF INCORPORATION" will mean the Company's Certificate of
Incorporation, as amended.
"CLOSING" will have the meaning assigned to it in SECTION 4.
"CLOSING DATE" will have the meaning assigned to it in SECTION 4.
"COMMISSION" will mean the Securities and Exchange Commission.
"COMPANY" will have the meaning assigned to it in the introductory
paragraph of this Agreement.
"COMPANY SEC REPORTS" will have the meaning assigned to it in SECTION 6(m).
"DESIGNATIONS" will have the meaning assigned to it in SECTION 2.
"ENVIRONMENTAL LAWS" will mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, permit
conditions, decrees or requirements of any Governmental Authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including those relating to releases,
discharges, emissions or disposals to air, water, land or ground water, to the
withdrawal or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls, asbestos or urea formaldehyde, to the treatment,
storage, disposal or management of hazardous substances (including petroleum,
crude oil
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or any fraction thereof, or other hydrocarbons), pollutants or contaminants,
to exposure to toxic, hazardous or other controlled, prohibited or regulated
substances, including any provisions under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.
Section 9601 ET SEQ.) or the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. Section 6901, ET SEQ.).
"EQUITY SECURITIES" will mean the stock of, and any similar interest in,
the Company and all securities (whether stock or indebtedness) convertible or
exchangeable, with or without consideration, into or for any stock or similar
interest and all securities (whether stock or indebtedness) carrying any warrant
or right to subscribe to or purchase any stock or similar interest or any such
warrant or right.
"EXCHANGE ACT" will mean the Securities Exchange Act of 1934, as amended.
"FCC" will mean the Federal Communications Commission or any successor
agency.
"FCC LICENSE" will mean any construction permit, community antennae relay
service, broadcast auxiliary license, earth station registration, business
radio, microwave or special safety radio service license issued by the FCC
pursuant to the Communications Act of 1934, as amended, and any other FCC
license from time to time necessary or advisable for the operation of the
Company's business.
"FINANCIALS" will have the meaning assigned to it in SECTION 6(h).
"GOVERNMENTAL AUTHORITY" will mean the United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, council, board, bureau,
agency, county, municipality, province, parish or other instrumentality of any
of the foregoing.
"HOLDER" of any Security will mean the record owner of such Security.
"HSR ACT" will mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED PARTY" will have the meaning assigned to it in SECTION 11(c).
"INDEMNIFYING PARTY" will have the meaning assigned to it in SECTION 11(c).
"INTERNAL REVENUE CODE" will mean the Internal Revenue Code of 1986, as
amended.
"INVESTORS" will have the meaning assigned to it in the introductory
paragraph of this Agreement.
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"LICENSES" will mean any license, permit, certificate of need,
authorization, certification, accreditation, franchise, approval or grant of
rights, whether based upon any agreement, statute, order, ordinance or otherwise
granted by any Governmental Authority to the Company or any Subsidiary necessary
or appropriate for the Company or any Subsidiary to engage in its business as
currently conducted, including in order to provide direct broadcast satellite,
telecommunication, local, long distance and wireless telephone services, cable
television services or internet services to residential, commercial or
governmental users, including FCC Licenses, together with any amendment,
modification or replacement with respect thereto.
"LIEN" will mean with respect to any property, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind, whether or not
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement and any lease deemed to
constitute a security interest and any option or other agreement to give any
security interest).
"LOSSES" will have the meaning assigned to it in SECTION 11(a).
"MATERIAL AGREEMENT" will have the meaning assigned to it in SECTION 6(j).
"MATERIALLY ADVERSE EFFECT" will mean any materially adverse effect upon
the business operation, assets, liabilities, financial condition, results of
operations or business prospects of the Company or any of its Subsidiaries, or
the ability of the Company to perform this Agreement or observe the terms of the
Designations, resulting from any act, omission, situation, status, event or
undertaking, either singly or taken together.
"MAXIMUM AMOUNT" will have the meaning assigned to it in SECTION 11(a).
"MINIMUM AMOUNT" will have the meaning assigned to it in SECTION 11(a).
"PCS SHARES" will have the meaning assigned to it in SECTION 3.
"PCS TRUST DOCUMENTS" will mean the Trust Agreement of the Liberty PCS
Trust entered into as of March 9, 1999 between TCI Wireless Holdings, Inc., as
Grantor, and M. ▇▇▇▇▇ ▇▇▇▇▇▇▇, as Trustee; the Stipulation entered on August 23,
1999, in the United States District Court for the District of Columbia in UNITED
STATES OF AMERICA V. AT&T CORP. AND TELE-COMMUNICATIONS, INC., No. 98-CV03170;
the Final Judgment entered on August 23, 1999, in the United States District
Court for the District of Columbia in UNITED STATES OF AMERICA V. AT&T CORP. AND
TELECOMMUNICATIONS, INC., No. 98-CV03170; the Order adopted March 5, 1999 by the
FCC in the Matter of Applications for Consent to Transfer of Control of Licenses
and Section 214 Authorizations from Tele-Communications, Inc. to AT&T Corp., CS
Docket No. 98-178; the Top Up Right Agreement entered into as of March 9, 1999,
among France Telecom S.A., Deutsche Telekom AG, and Liberty PCS Trust; and the
Standstill Agreement dated as of March 9, 1999, between Sprint Corporation and
the Liberty PCS Trust.
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"PERSON" will mean any natural person or any corporation, trust,
association, company, partnership, limited liability company, joint venture or
other entity, including any Governmental Authority.
"PREFERRED STOCK" will have the meaning assigned to it in SECTION 2.
"PROPOSED AMENDMENTS" will have the meaning assigned to it in SECTION 8(d).
"REGISTRATION RIGHTS AGREEMENT" will have the meaning assigned to it in
SECTION 8(g)(ix).
"REQUIRED CONSENTS" will mean any and all consents, authorizations and
approvals required for the execution, delivery and performance by the Company of
this Agreement and the Designations, each in accordance with their respective
terms, and the consummation of the transactions contemplated by this Agreement
and the Designations.
"SATELLITE VENTURE" will have the meaning assigned it in the second
paragraph of this Agreement.
"SATELLITE VENTURE CONTRIBUTION AGREEMENT" will have the meaning assigned
to it in the second paragraph of this Agreement.
"SECURITIES" will have the meaning assigned to it in SECTION 2.
"SECURITIES ACT" will mean the Securities Act of 1933, as amended.
"SERIES A PREFERRED STOCK" will have the meaning assigned to it in SECTION
2.
"SERIES B COMMON STOCK" will have the meaning assigned to it in SECTION 2.
"SERIES B PREFERRED STOCK" will have the meaning assigned to it in SECTION
2.
"SUBSIDIARY" will mean (i) any corporation of which 50% or more of the
voting stock, or any partnership or limited liability company of which 50% or
more of outstanding interests, is at any time owned by the Company, or by one or
more Subsidiaries of the Company, or by the Company and one or more Subsidiaries
of the Company, and (ii) any other entity which is controlled or capable of
being controlled by the Company or by one or more Subsidiaries of the Company or
by the Company and one or more Subsidiaries of the Company.
"TRADING PRICE" means, with respect to the PCS Shares as of the Closing
Date, the last reported sale price of shares of Sprint PCS Group Common Stock as
reported on the New York Stock Exchange on the day that is two full trading days
before the Closing Date. For purposes of this definition, a "trading day" is a
day on which the New York Stock Exchange is open for the transaction of business
(unless such trading will have been suspended for the entire day).
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"WIRELESS SUB 1" will have the meaning assigned to it in the introductory
paragraph of this Agreement.
"WIRELESS SUB 2" will have the meaning assigned to it in the introductory
paragraph of this Agreement.
2. AUTHORIZATION OF SECURITIES. The Company has authorized the issuance of an
aggregate of 150,000 shares of its Cumulative Preferred Stock, Series A (the
"SERIES A PREFERRED STOCK") and 150,000 shares of its Cumulative Convertible
Voting Preferred Stock, Series B (the "SERIES B PREFERRED STOCK"), each having
the rights, preferences and privileges set forth with respect to such series in
their respective Certificates of Stock Designation (hereinafter referred to as
the "DESIGNATIONS"), copies of which are attached hereto as ANNEX A and ANNEX B,
respectively. The shares of Series B Preferred Stock are convertible into shares
of Series B Common Stock of the Company (the "SERIES B COMMON STOCK") upon the
terms and conditions set forth in the Designations. The Series A Preferred Stock
and the Series B Preferred Stock are sometimes referred to collectively herein
as the "PREFERRED STOCK" and the Preferred Stock and Series B Common Stock are
sometimes referred to collectively as the "SECURITIES."
3. ISSUANCE OF PREFERRED STOCK AND CONTRIBUTION. Upon the terms and subject to
the conditions herein contained, the Company agrees to issue to Wireless Sub 2,
and Wireless Sub 2 agrees to acquire from the Company, at the Closing on the
Closing Date, 150,000 shares of Series A Preferred Stock. Upon the terms and
subject to the conditions herein contained, the Company agrees to issue to
Wireless Sub 1, and Wireless Sub 1 agrees to acquire from the Company, at the
Closing on the Closing Date, 150,000 shares of Series B Preferred Stock. In
exchange for such issuance, the Investors will each contribute to the Company
trust certificates issued by the Liberty PCS Trust representing an economic
interest in a number of shares of Sprint PCS Group Common Stock having an
aggregate value on the Closing Date, calculated at the Trading Price, equal to
$150,000,000 (the aggregate of such contributions is referred to as the "PCS
SHARES"), and the Company will assume the applicable obligations arising in
connection with the PCS Shares under the PCS Trust Documents. The trust
certificates and the interests represented thereby will be subject to the terms
of the PCS Trust Documents.
4. CLOSING. The closing of the issuance to the Investors of the Securities (the
"CLOSING") will occur at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C. in Denver,
Colorado, at 10:00 A.M., mountain time, on the satisfaction or waiver of the
conditions to Closing set forth in SECTIONS 8 and 9, or at such different time
or day as the Investors and the Company may agree (the "CLOSING DATE"). At the
Closing, the Company will deliver to the Investors certificates evidencing the
number of shares of Series A Preferred Stock and Series B Preferred Stock issued
to them in accordance with SECTION 3, each of which will be registered in the
appropriate Investor's name, and the Investors will each deliver to the Company
trust certificates in the form of ANNEX C representing an interest in the number
of PCS Shares prescribed by SECTION 3.
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5. REGISTER OF SECURITIES; RESTRICTIONS ON TRANSFER OF SECURITIES.
(a) REGISTER OF SECURITIES. The Company or its duly appointed agent will
maintain a separate register for the shares of each series and class of Equity
Securities, for the registration of the issuance and sale of all such shares.
All transfers of Preferred Stock, or Series B Common Stock issued upon
conversion of Series B Preferred Stock, will be recorded on the register
maintained by the Company or its agent, and the Company will be entitled to
regard the registered Holder of such Securities as the actual Holder of the
Securities so registered until the Company or its agent is required to record a
transfer of such Securities on its register. Subject to SECTION 5(b) hereof, the
Company or its agent will be required to record any such transfer when it
receives the Security to be transferred, duly and properly endorsed by the
registered Holder thereof or by its attorney-in-fact duly authorized in writing.
(b) RESTRICTIONS ON TRANSFER.
(i) The Investors will not sell, transfer, assign, pledge, hypothecate
or otherwise dispose of any of the Securities except in compliance with the
Securities Act and the registration or qualification requirements of any
applicable state securities laws or any exemption therefrom.
(ii) The certificates evidencing the Preferred Stock, each certificate
issued in transfer thereof, and each certificate evidencing the Series B Common
Stock issued upon conversion of shares of the Preferred Stock will bear a legend
substantially to the effect of the following, along with any legend required
under any applicable state securities laws:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
any applicable state securities laws. These securities may not be
sold or transferred in the absence of such registration or an
exemption therefrom under such Act and under any applicable state
securities laws."
(iii) The Company will make a notation on its records and may give
instructions to any transfer agent of the Series B Common Stock or Preferred
Stock in order to implement the restrictions on transfer set forth in this
SECTION 5(b).
6. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. To induce the Investors to
enter into this Agreement and to consummate the transactions contemplated
hereby, the Company covenants with, and represents and warrants to, the
Investors as follows:
(a) ORGANIZATION; POWER; QUALIFICATION; CAPITAL STOCK.
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
corporate power and authority to own or lease and operate its properties and to
carry on its business as it is now being and
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hereafter proposed to be conducted. The Company is duly qualified, in good
standing and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its businesses requires such
qualification or authorization. ANNEX 6(a) sets forth the number of authorized
shares of each class and series of Equity Securities of the Company, the par
value per share, and the number of issued and outstanding shares of each such
class and series on the date hereof, after giving effect to the transactions
contemplated hereby. Except as described on ANNEX 6(a) attached hereto, the
Company does not have outstanding any stock or other securities convertible into
or exchangeable for any shares of its Equity Securities, nor are there any
preemptive or other rights to subscribe for or to purchase, or any other rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments, or claims of any character relating to, any Equity
Securities or any stock or securities convertible into or exchangeable for any
Equity Securities. Except as set forth on ANNEX 6(a), the Company is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its Equity Securities or to register any shares of its
Equity Securities, and there are no agreements restricting the transfer of any
shares of the Company's Equity Securities.
(ii) Other than the Preferred Stock to be issued to the Investors
pursuant to this Agreement, there are no shares of preferred stock of the
Company or its Subsidiaries outstanding. The Preferred Stock has been duly
authorized and, when issued and paid for pursuant to the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, will have the rights, preferences and privileges specified in the
Designations and will be free and clear of all Liens and restrictions, other
than Liens that might have been created by the Investors and restrictions on
transfer imposed by SECTION 5(b) hereof; and the Series B Common Stock issuable
upon conversion of the Preferred Stock has been (or will be upon the
effectiveness of the Proposed Amendments) duly authorized and reserved for
issuance upon conversion of the Preferred Stock and, when issued will be duly
authorized, validly issued, fully paid and nonassessable Series B Common Stock,
and clear of all Liens and restrictions, other than Liens that might have been
created by the Investors and restrictions imposed by SECTION 5(b) hereof.
(b) AUTHORIZATION. The Company has the corporate power and has taken all
necessary corporate action to authorize it to issue the Preferred Stock and to
execute, deliver and perform this Agreement and the Designations in accordance
with their respective terms, and to consummate the transactions contemplated by
this Agreement and the Designations. This Agreement has been duly executed and
delivered by the Company and is, along with the Designations, a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement of remedies, to the following qualifications: (i)
certain equitable remedies are discretionary and, in particular, may not be
available where damages are considered an adequate remedy at law; and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Company).
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(c) SUBSIDIARIES. The Subsidiaries of the Company are listed in ANNEX 6(c)
attached hereto. The Company owns all of the outstanding capital stock of each
Subsidiary, except as set forth in ANNEX 6(c).
(d) COMPLIANCE WITH OTHER DOCUMENTS AND CONTEMPLATED TRANSACTIONS. Except
for, and subject to the receipt of the Required Consents, all of which are set
forth in ANNEX 6(d), the execution, delivery and performance by the Company of
this Agreement and the Designations, each in accordance with their respective
terms, and the consummation of the transactions contemplated by this Agreement
and the Designations, do not and will not (i) require any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority, (ii) violate any Applicable Law
with respect to the Company, (iii) conflict with, result in a breach of, or
constitute a default under the Certificate of Incorporation or the bylaws of the
Company, or under any indenture, agreement, or other instrument, including the
Licenses, to which the Company or any Subsidiary of the Company is a party or by
which any such company or its properties may be bound, or (iv) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Company or any of its
Subsidiaries. All Notification and Report Forms required to be filed under the
HSR Act with respect to the transactions contemplated by this Agreement have
been filed and the applicable waiting period under the HSR Act has been
terminated.
(e) LICENSES. All material Licenses necessary to the operation of the
Company's business have been authorized by the grantors thereof and are in full
force and effect, and the Company is in compliance in all material respects with
all of the provisions thereof.
(f) COMPLIANCE WITH LAW. The Company is in compliance in all material
respects with all Applicable Laws.
(g) LITIGATION. There is no action, suit or proceeding pending or, to the
best of the Company's knowledge, threatened against or in any other manner
relating directly and adversely to, the Company or any of its properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority, and no such action, suit, proceeding or investigation (i) calls into
question the validity of this Agreement or the Designations, or (ii) if
determined adversely to the Company, would be likely to have a Materially
Adverse Effect.
(h) FINANCIAL STATEMENTS. The Company has furnished or caused to be
furnished to the Investors the audited balance sheet and statement of income for
the fiscal year ended December 31, 1998 and unaudited balance sheets and
statements of income for each quarterly period since December 31, 1998
(collectively, the "FINANCIALS"), which as of the date hereof are complete and
correct in all material respects and present fairly in accordance with generally
accepted accounting principles the Company's financial position on and as at
such dates and the results of operations for the periods then ended. Except as
set forth in ANNEX 6(h), there are no material liabilities, contingent or
otherwise, of the Company which are not disclosed in such Financials.
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(i) NO ADVERSE CHANGE. Except as set forth in ANNEX 6(i), since December
31, 1998, there has occurred no event which is likely to have a Materially
Adverse Effect.
(j) ABSENCE OF DEFAULT, ETC. The Company is in compliance with all the
provisions of its Certificate of Incorporation and bylaws, and, except as set
forth in ANNEX 6(j), no event has occurred or failed to occur, which has not
been remedied or waived, the occurrence or non-occurrence of which constitutes,
or which with the passage of time or giving of notice or both would constitute a
material default by the Company under any material indenture, agreement or other
instrument (a "MATERIAL AGREEMENT"), including any License or any judgment,
decree or order to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or their properties may be bound or
affected. All Material Agreements are in full force and effect, and the Company
has no knowledge that any party to any Material Agreement is seeking or
presently intends to seek to terminate, amend or modify such Material Agreement.
(k) INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. The Company
is not subject to regulation under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), as an "investment company" or a company
"controlled by an investment company" that is required to register, in each
case, under the provisions of the Investment Company Act, and neither the
entering into or performance by the Company of this Agreement violates any
provision of such Act or requires any consent, approval or authorization of, or
registration with, the Commission or any other Governmental Authority pursuant
to any provisions of such Act. The Company is not a "public utility holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended. None of the transactions contemplated by this Agreement (including
the use of proceeds from the sale of the Securities) will violate or result in a
violation of Section 7 of the Exchange Act or any regulation issued pursuant
thereto.
(l) SECURITIES LAWS. The Company and any underwriters, sales agents,
representatives or brokers representing or acting on behalf of the Company have
complied with all material federal and state securities laws in connection with
the offer and issuance of share interests in the Company, including the
Preferred Stock to be issued pursuant to this Agreement. The offer and issuance
of the Securities, including the issuance of the shares of Series B Common Stock
in connection with the conversion of the Series B Preferred Stock (assuming no
action is taken after the date hereof by the Holders of Preferred Stock to make
an exemption from registration unavailable), are, in each case, exempt from the
registration requirements of the Securities Act and from the registration or
qualification requirements of the laws of any applicable state or other
jurisdiction, so long as the Investors do not take any action which would cause
the loss of such exemption. Neither the Company nor anyone on its behalf will
take any action hereafter that would or would be likely to cause the loss of
such exemption.
(m) DISCLOSURE; SEC FILINGS. There is no fact known to the Company which
the Company has not disclosed to the Investors in writing which has or is
reasonably expected to have a Materially Adverse Effect. As of the date of this
Agreement, the information contained in this
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Agreement, the Financials and in any writing furnished pursuant hereto or in
connection herewith, does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or herein or
necessary to make the statements therein or herein not misleading. Additionally,
the Company has delivered or has made available to the Investors true and
complete copies of each registration statement, report and proxy or information
statement, including any Annual Reports to Shareholders incorporated by
reference in any of such reports, in form (including exhibits and any amendments
thereto) required to be filed with the Commission since December 31, 1996
(collectively, the "COMPANY SEC REPORTS"). As of the respective dates the
Company SEC Reports were filed, or, if any such Company SEC Report was amended,
as of the date such amendment was filed, each of the Company SEC Reports (i)
complied in all respects with all applicable requirements of the Securities Act
and the Exchange Act, and the rules and regulations promulgated thereunder, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
misleading. Each of the audited financial statements and unaudited interim
financial statements of the Company (including any related notes and schedules)
included (or incorporated by reference) in its Annual Reports on Form 10-K for
each of the three fiscal years ended December 31, 1996, 1997 and 1998 and its
Quarterly Reports on Form 10-Q for all interim periods subsequent thereto fairly
present, in conformity with generally accepted accounting principles, the
financial position of the Company as of its date and the results of operations
and cash flows for the period then ended (subject to normal year-end adjustments
in the case of any unaudited interim financial statements).
(n) YEAR 2000 COMPLIANCE. All of the business operations of the Company and
its Subsidiaries are Year 2000 compliant except to the extent that a failure to
do so could not reasonably be expected to have a Materially Adverse Effect. To
the best knowledge of the Company after due investigation, any suppliers and
vendors that are material to the operations of the Company or its Subsidiaries
are Year 2000 compliant for their own computer applications except to the extent
that a failure to do so could reasonably be expected not to have a Materially
Adverse Effect.
(o) BROKERS' AND FINDERS' FEES. The Company has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES BY THE INVESTORS. To induce the Company to
enter into this Agreement and consummate the transactions contemplated hereby,
each of the Investors, severally and not jointly, covenants with, and represents
and warrants to, the Company as follows:
(a) ORGANIZATION; POWER; QUALIFICATION; ACCREDITED INVESTOR STATUS. Each
Investor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each Investor has the corporate power
and authority to own or lease and operate its properties and to carry on its
business as it is now being and hereafter proposed to be conducted. Each
Investor is duly qualified, in good standing and authorized to do business in
each jurisdiction
11
in which the character of its properties or the nature of its businesses
requires such qualification or authorization. Each Investor is an "accredited
investor" as that term is defined in Rule 501 under the Securities Act.
(b) AUTHORIZATION. Each Investor has the corporate power and has taken all
necessary corporate action to authorize it to execute, deliver and perform this
Agreement in accordance with its terms, and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Investors and is a legal, valid and binding obligation of each of them
enforceable in accordance with its terms, except that: (i) certain equitable
remedies are discretionary and, in particular, may not be available where
damages are considered an adequate remedy at law; and (ii) enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditors' rights generally
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of the Investors).
(c) COMPLIANCE WITH OTHER DOCUMENTS AND CONTEMPLATED TRANSACTIONS. The
execution, delivery and performance by the Investors of this Agreement in
accordance with its terms, and the consummation of the transactions contemplated
hereby, do not and will not (i) require any consent, approval, authorization,
permit or license which has not already been obtained from, or effect any filing
or registration which has not already been effected with, any federal, state or
local regulatory authority, (ii) violate any Applicable Law with respect to
either Investor, (iii) conflict with, result in a breach of, or constitute a
default under the certificate of incorporation or the bylaws of either Investor,
or under any indenture, agreement, or other instrument to which either Investor
is a party or by which any such company or its properties may be bound, or (iv)
result in or require the creation or imposition of any Lien upon or with respect
to the PCS Shares.
(d) LITIGATION. There is no action, suit or proceeding pending or, to the
best of the Investors' knowledge, threatened against or in any other manner
relating directly and adversely to, either Investor or any of its properties in
any court or before any arbitrator of any kind or before or by any Governmental
Authority, and no such action, suit, proceeding or investigation calls into
question the validity of this Agreement.
(e) BROKERS' AND FINDERS' FEES. Neither Investor has incurred, nor will
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
(f) INFORMATION. The Investors have been given full access to and ample
opportunity to review such financial and other information concerning the
transactions contemplated by this Agreement as they have deemed necessary to
make an informed investment decision and have availed themselves of such access
and opportunity to the full extent that they desired. The Investors acknowledge
that the Company has afforded them the opportunity to make inquiries and obtain
information from the Company and its representatives and advisors. Based upon
their own investigations and upon information provided by the Company their own
tax, legal, financial and
12
regulatory advisers with regard to all matters relating to this Agreement and
not on any advice or recommendation of the Company.
(g) PCS SHARES. As of the Closing Date:
(i) Each Investor will own the interests in the PCS Shares which it
will be contributing to the Company under SECTION 3, free and clear of all Liens
(other than Liens created by the Company), subject, however, to the terms of the
PCS Trust Documents;
(ii) Neither Investor will be a party to any option, warrant, purchase
right, or other contract or commitment that could require it to sell, transfer
or otherwise dispose of any of the interests in the PCS Shares which it will be
contributing to the Company under SECTION 3 (other than this Agreement); and
(iii) Neither Investor will be a party to any voting trust, proxy or
other agreement or understanding, other than the PCS Trust Documents, with
respect to the voting or disposition of any of the PCS Shares as to which it
will be contributing its interests to the Company under SECTION 3.
8. CONDITIONS PRECEDENT TO THE INVESTORS' OBLIGATIONS AT THE CLOSING. The
obligation of the Investors to execute, deliver and consummate this Agreement is
subject to the prior fulfilment of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company under this Agreement will be true and correct in all material
respects as of the date hereof and any exceptions thereto will be acceptable to
the Investors.
(b) SATELLITE VENTURE CONTRIBUTION. The conditions to the Liberty
Affiliates' consummation of the Satellite Venture Contribution Agreement will
have been satisfied or waived, and the Company, the Liberty Affiliates and the
Satellite Venture will have consummated, or will be contemporaneously
consummating, the transactions contemplated by the Contribution Agreement.
(c) NO MATERIAL ADVERSE CHANGE. There will not have occurred (i) a change
in the financial condition, business, assets or prospects of the Company or any
of its Subsidiaries that constitutes a Materially Adverse Effect with respect to
the Company and its Subsidiaries taken as a whole, (ii) any substantive change
in Applicable Laws affecting the business of the Company or any of its
Subsidiaries or the business proposed to be conducted by the Company or any of
its Subsidiaries that has a Materially Adverse Effect, or (iii) any threatened,
instituted or pending action, proceeding, application or counterclaim by or
before any Governmental Authority or foreign governmental body, which seeks to
restrain or prohibit the transactions contemplated by this Agreement or seeks
damages in connection therewith or resulting therefrom, seeks to impose any
limitations on the ability of the Investors effectively to acquire or to hold or
to exercise full rights
13
of ownership of the Securities, including the right to vote the Securities in
accordance with their terms, or would otherwise be reasonably likely to have a
Materially Adverse Effect on the Company.
(d) DESIGNATIONS AND PROPOSED AMENDMENTS. The Designations will have been
approved by the Company as required by applicable law, will have been filed and
recorded with the Delaware Secretary of State and will have become effective,
and a copy of the Certificate of Incorporation, as amended, certified by the
Delaware Secretary of State will have been delivered to the Investors. The Board
will have resolved to submit for shareholder approval at or before the next
annual meeting of the shareholders, but in no event later than July 15, 2000,
the proposed amendments to the Certificate of Incorporation set forth on ANNEX D
(the "PROPOSED AMENDMENTS").
(e) QUALIFICATION UNDER STATE SECURITIES LAWS. All registrations,
qualifications, permits and approvals required under applicable state securities
laws will have been obtained for the lawful execution, delivery and performance
of this Agreement and the performance of the Designations, including all such
registrations, qualifications, permits and approvals necessary for the offer,
sale, issue and delivery of the Securities.
(f) FAIRNESS OPINION. The Company will have received from a nationally
recognized investment banking firm reasonably acceptable to the Investors an
opinion that the transactions contemplated by this Agreement and the Satellite
Venture Contribution Agreement are fair to the Company's stockholders (other
than the Investors and their Affiliates) from a financial point of view, and
such firm will not have withdrawn such opinion prior to the Closing Date.
(g) DELIVERY OF DOCUMENTS. The Investors will have received the following:
(i) copies of resolutions of the Board, certified by an Authorized
Signatory of the Company, authorizing and approving the Designations and the
matters set forth in SECTION 8(d) hereof, the execution, delivery and
performance of this Agreement, and all other documents and instruments to be
delivered pursuant hereto and thereto;
(ii) a copy of the bylaws of the Company certified by an Authorized
Signatory of the Company;
(iii) a true and complete copy of each and any agreements or
arrangements of any kind among the shareholders of the Company, or otherwise
with respect to the ownership of the Company;
(iv) evidence satisfactory to the Investors that all Required Consents
have been obtained, and a certificate of an Authorized Signatory of the Company
so stating;
(v) good standing certificates for the Company issued by the Secretary
of State, or similar official, of each state in which the Company is
incorporated or qualified to do business as a foreign corporation;
14
(vi) this duly executed Agreement;
(vii) certificates representing the shares of Preferred Stock to be
purchased by each Investor;
(viii) a certificate of incumbency with respect to each Authorized
Signatory;
(ix) a duly executed Registration Rights Agreement in the form attached
to this Agreement as ANNEX E (the "REGISTRATION RIGHTS AGREEMENT");
(x) such agreements and undertakings reasonably requested by the
Investors to evidence the Company's assumption of obligations under the PCS
Trust Documents, as set forth in Section 3; and
(xi) such additional supporting documentation and other information
with respect to the transactions contemplated hereby as the Investors may
reasonably request.
(h) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned in this
Agreement or incident to any such transactions, will be satisfactory in form and
substance to the Investors.
9. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS AT THE CLOSING. The
obligation of the Company to execute, deliver and consummate this Agreement is
subject to the prior fulfilment of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Investors under this Agreement will be true and correct in all material
respects as of the date hereof and any exceptions thereto will be acceptable to
the Company.
(b) SATELLITE VENTURE CONTRIBUTION. The conditions to the Company's
consummation of the Satellite Venture Contribution Agreement will have been
satisfied or waived, and the Company, the Liberty Affiliates and the Satellite
Venture will have consummated, or will be contemporaneously consummating, the
transactions contemplated by the Satellite Venture Contribution Agreement.
(c) FAIRNESS OPINION. The Company will have received from a nationally
recognized investment banking firm reasonably acceptable to the Investors an
opinion that the transactions contemplated by this Agreement and the Satellite
Venture Contribution Agreement are fair to the Company's stockholders (other
than the Investors and their Affiliates) from a financial point of view, and
such firm will not have withdrawn such opinion prior to the Closing Date.
15
(d) DELIVERY OF DOCUMENTS. The Company will have received the following:
(i) copies of resolutions of the board of directors of each Investor,
certified by a duly authorized officer of the Company, authorizing and approving
the delivery and performance of this Agreement, and all other documents and
instruments to be delivered pursuant hereto and thereto;
(ii) this duly executed Agreement;
(iii) trust certificates delivered pursuant to SECTION 4 representing
the PCS Shares;
(iv) a certificate of incumbency with respect to each officer
authorized by the Investors to execute and deliver on behalf of each of them
this Agreement and the documents described in this Section 9(d);
(v) a duly executed Registration Rights Agreement; and
(vi) such additional supporting documentation and other information
with respect to the transactions contemplated hereby as the Company may
reasonably request.
(e) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned in this
Agreement or incident to any such transactions, will be satisfactory in form and
substance to the Company.
10. AFFIRMATIVE COVENANTS. The Company agrees, that, unless the Holders of a
Majority of the then-outstanding shares of each series of Preferred Stock
otherwise agree in writing, so long as any shares of either series of Preferred
Stock are outstanding, the Company will (and will cause its Subsidiaries to) do
the following:
(a) PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. Preserve and maintain,
or timely obtain and thereafter preserve and maintain, its existence, material
rights, franchises and Licenses and its material privileges and qualify and
remain qualified and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualifications or authorizations.
(b) COMPLIANCE WITH APPLICABLE LAW. Comply in all respects with the
requirements of all Applicable Laws except where compliance is being contested
in good faith by appropriate proceedings and adequate reserves have been set
aside therefor.
(c) MAINTENANCE OF PROPERTIES. Maintain or cause to be maintained in the
ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used or useful in its
business (whether owned or held under lease), and from time to time
16
make or cause to be made all needed and appropriate repairs, renewals,
replacements, additions, betterments and improvements thereto; PROVIDED,
HOWEVER, that the provisions of this SECTION 10(c) will not prevent the Company
from selling, transferring or otherwise disposing of property.
(d) ACCOUNTING METHODS AND FINANCIAL RECORDS. Maintain a system of
accounting established and administered in accordance with generally accepted
accounting principles consistently applied, keep adequate records and books of
account in which complete entries will be made in accordance with such
accounting principles consistently applied and reflecting all transactions
required to be reflected by such accounting principles. The Company will also
maintain a fiscal year ending on December 31.
(e) MAINTAIN INSURANCE. Maintain in full force and effect a policy or
policies of insurance issued by insurers of recognized responsibility, insuring
it and its properties and business against such losses and risks, and in such
amounts, as are customary in the case of corporations of established reputation
engaged in the same or a similar business and similarly situated.
(f) PAY TAXES AND OTHER LIABILITIES. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or any of its
Subsidiaries or their income or profits or upon any properties belonging to them
prior to the date on which penalties attach thereto, and all lawful claims for
labor, materials and supplies which, if unpaid, might become a Lien or charge
upon any of their properties; except that no such tax, assessment, charge, levy
or claim need be paid which is being contested in good faith by appropriate
proceedings and for which adequate reserves will have been set aside on the
appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge (other than a Lien for taxes not yet due
and payable) and no foreclosure, distraint, sale or similar proceedings will
have been commenced. The Company will timely file all information returns
required by federal, state or local tax authorities.
(g) FINANCIAL REPORTS. The Company will furnish to each Holder of Preferred
Stock:
(i) As soon as practicable and in any event within 60 days after the
last day of each quarter of each fiscal year of the Company, the consolidated
balance sheet of the Company as at the end of such quarter and the related
consolidated statement of income and retained earnings and related consolidated
statement of cash flows of the Company for such quarter and for the elapsed
portion of the year ended with the last day of such quarter, all of which will
be certified by the chief financial officer or chief accounting officer of the
Company, to be, in his opinion, complete and correct in all material respects
and to present fairly, in accordance with generally accepted accounting
principles, the financial position of the Company as at the end of such period
and the results of operation for such periods, and the elapsed portion of the
year ended with the last day of such period, subject only to normal year-end
adjustments; and
(ii) As soon as practicable and in any event within 120 days after the
end of each fiscal year of the Company, the audited consolidated balance sheet
of the Company as at the end of such fiscal year and the related audited
consolidated statements of income and retained earnings or
17
deficit and related consolidated statement of cash flows for the Company for
such fiscal year, setting forth in comparative form the figures as at the end of
and for the previous fiscal year and certified by independent certified public
accountants of national recognized standing, whose opinion will be in scope and
substance reasonably satisfactory to the Holders of Preferred Stock, and who
will have authorized the Company to deliver such financial statements and
opinions thereon to the Holders of Preferred Stock pursuant to this Agreement.
(h) ANNUAL BUDGETS. Promptly after its preparation and in no event later
than January 31 of each year, a copy of the annual budget of the Company and its
Subsidiaries for the fiscal year, including the budget for capital expenditures
for the operations of their businesses.
(i) NOTICE OF LITIGATION AND OTHER MATTERS. Provide prompt notice (and in
any event, notice within three Business Days) to the Holders of Preferred Stock
of the following events after the Company has received notice thereof or
otherwise becomes aware of:
(i) The commencement of any material proceeding or investigation by or
before any Governmental Authority and any material actions or proceedings in any
court or before any arbitrator against, or in any other way relating materially
adversely and directly to, the Company or any Subsidiary or any of their
properties, assets or businesses or any License; and
(ii) Any material amendment or material modification to the budget
submitted under SECTION 10(h) hereof.
(j) BOARD OF DIRECTORS. As soon as practicable following the Closing and so
long as any shares of Preferred Stock are outstanding, the Company will fill any
vacancies on its Board of Directors and otherwise increase the size of the Board
(as necessary) to include a majority of directors, the nominees for which will
be designated by the Investors.
(k) PROXY STATEMENT. The Company will (i) sufficiently in advance of its
next regularly scheduled annual Stockholders' meeting to permit consideration at
such Stockholders' meeting, prepare and file with the Commission, and use its
commercially reasonable efforts to have cleared by the Commission and thereafter
mail to its stockholders a proxy statement and a form of proxy, in connection
with the vote at such regularly scheduled annual meeting of the Company's
stockholders (such proxy statement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the Company's
stockholders, is called the "PROXY STATEMENT"), (ii) use its best efforts to
obtain the necessary approvals by its stockholders of the Proposed Amendments
and (iii) otherwise comply with all legal requirements applicable to such
meeting. The Company will include in the Proxy Statement the recommendation of
the Board that stockholders of the Company vote in favor of the approval of the
Proposed Amendments. The Company will use its best efforts to conduct the
stockholders' meeting on or before July 15, 2000.
(l) REPLACEMENT OF CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any certificate representing any of the
18
Securities, and subject to the Company's right to require reasonable
indemnification by the holder, issue a new certificate representing such
Securities in lieu of such lost, stolen, destroyed, or mutilated certificate.
(m) COMPLIANCE WITH DESIGNATIONS AND BYLAWS. Perform and observe all
requirements of the Company's bylaws and the Designations, including its
obligations to the Holders of Securities set forth in the Designations and the
Company's bylaws.
(n) AMENDMENTS TO OR REPEAL OF BYLAWS. Not amend or repeal any bylaw in any
manner that would significantly and adversely affect the right and preferences
of the Preferred Stock.
11. INDEMNIFICATION AND ENFORCEMENT.
(a) INDEMNIFICATION BY EACH INVESTOR. Subject to written notice of such
claim for indemnification being given to the Investors within the appropriate
survival period referred to in SECTION 12(d), each Investor, severally and not
jointly, covenants and agrees to indemnify, defend and hold harmless the
Company, its Affiliates and their respective stockholders, directors, officers,
employees, agents, successors and assigns from and against:
(i) all losses, damages, liabilities, deficiencies, obligations, costs
and expenses resulting from or arising out of any misrepresentation or breach of
warranty or any nonperformance or breach of any covenant or agreement of such
Investor contained in this Agreement or any document delivered under SECTION
9(d) to which such Investor is a party; and
(ii) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including, without
limitation, settlement costs and reasonable legal, accounting, experts, and
other fees, costs and expenses) incident or relating to or resulting from any of
the foregoing.
Notwithstanding the foregoing provisions of this SECTION 11(a), no claim
shall be made by the Company, its Affiliates or their respective stockholders,
directors, officers, employees, agents, successors and assigns hereunder unless
and until any or all of the losses, damages, liabilities, deficiencies,
obligations, costs and expenses (and amounts incident or relating to or
resulting from any or all of the foregoing) (collectively, the "LOSSES")
referred to in this SECTION 11(a) exceeds, either individually or in the
aggregate, $3,000,000 (the "MINIMUM AMOUNT"); provided, however, that at such
time as the aggregate amount of the Losses exceeds the Minimum Amount, the
Company, its Affiliates and their respective stockholders, directors, officers,
employees, agents, successors and assigns may assert a claim for the full amount
of the Losses up to a maximum of $150,000,000 (the "MAXIMUM AMOUNT").
(b) INDEMNIFICATION BY THE COMPANY. Subject to written notice of such claim
for indemnification being delivered to the Company within the appropriate
survival period set forth in SECTION 12(d), the Company agrees to indemnify,
defend and hold harmless each Investor, its
19
Affiliates and their respective stockholders, directors, officers, employees,
agents, successors and assigns from and against:
(i) all losses, damages, liabilities, deficiencies, obligations, costs
and expenses resulting from or arising out of any misrepresentation or breach of
warranty or any nonperformance or breach of any covenant or agreement of the
Company contained in this Agreement or any document delivered under SECTION 8(g)
to which it is a party; and
(ii) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including, without
limitation, settlement costs and reasonable legal, accounting, experts, and
other fees, costs and expenses) incident or relating to or resulting from any of
the foregoing.
Notwithstanding the foregoing provisions of this SECTION 11(b), no claim
shall be made by either Investor, their Affiliates or their respective
stockholders, directors, officers, employees, agents, successors and assigns
hereunder unless and until any or all of the Losses referred to in this SECTION
11(b) exceeds, either individually or in the aggregate the Minimum Amount;
provided, however, that at such time as the aggregate amount of the Losses
exceeds the Minimum Amount, each of the Investors, their Affiliates and their
respective stockholders, directors, officers, employees, agents, successors and
assigns may assert a claim for the full amount of its Losses up to a maximum of
the Maximum Amount.
(c) THIRD PARTY CLAIMS. Promptly after the receipt by the Company or an
Investor of notice of any claim, action, suit or proceeding (collectively, an
"ACTION") by any third party for which indemnification is sought hereunder, such
party (the "INDEMNIFIED PARTY") shall give reasonable written notice to the
party from whom indemnification is claimed (the "INDEMNIFYING PARTY"). The
Indemnified Party's failure to so notify the Indemnifying Party of any such
matter shall not release the Indemnifying Party, in whole or in part, from its
obligations to indemnify under this SECTION 11, except to the extent the
Indemnified Party's failure to so notify actually prejudices the Indemnifying
Party's ability to defend against such Action. The Indemnified Party shall be
entitled, at the sole expense and liability of the Indemnifying Party, to
exercise full control of the defense, compromise or settlement of any such
Action unless the Indemnifying Party, within a reasonable time after the giving
of such notice by the Indemnified Party, shall: (i) notify the Indemnified Party
in writing of the Indemnifying Party's intention to assume the defense thereof,
and (ii) retain legal counsel reasonably satisfactory to the Indemnified Party
to conduct the defense of such Action; in which case the Indemnifying Party
shall be entitled to exercise full control of the defense, compromise or
settlement of such action, subject to the terms of this SECTION 11. The
Indemnified Party and the Indemnifying Party shall cooperate with the party
assuming the defense, compromise or settlement of any such Action in accordance
herewith in any manner that such party reasonably may request. If the
Indemnifying Party so assumes the defense of any such Action, the Indemnified
Party shall have the right to employ separate counsel and to participate in (but
not control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel shall be the expense of the Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and
20
expenses, (ii) any material relief other than the payment of money damages is
sought against the Indemnified Party or (iii) the Indemnified Party shall have
been advised by its counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party, and in any such case the fees and expenses of such separate
counsel shall be borne by the Indemnifying Party. No Indemnified Party shall
settle or compromise or consent to entry of any judgment with respect to any
such Action for which it is entitled to indemnification hereunder without the
prior written consent of the Indemnifying Party, unless the Indemnifying Party
shall have failed, after reasonable notice thereof, to undertake control of such
Action in the manner provided above in this SECTION 11(c). No Indemnifying Party
shall, without the written consent of the Indemnified Party, settle or
compromise or consent to entry of any judgment with respect to any such Action
in which any relief other than the payment of money damages is sought against
any Indemnified Party or any Action unless such settlement, compromise or
consent includes as an unconditional term thereof the giving by the claimant,
petitioner or plaintiff, as applicable, to such Indemnified Party of a release
from all liability with respect to such Action.
(d) CUMULATIVE REMEDIES. None of the rights, powers or remedies conferred
upon any Holder of shares of Preferred Stock or Series B Common Stock will be
mutually exclusive, and each such right, power or remedy will be cumulative and
in addition to every other right, power or remedy, whether conferred hereby or
by the Designations or now or hereafter available at law, in equity, by statute
or otherwise (subject to the application of the last paragraph of Section 11(a)
or 11(b), as the case may be, regarding the Minimum Amount and the Maximum
Amount).
(e) NO IMPLIED WAIVER. Except as expressly provided in this Agreement, no
course of dealing between the Company and the Investors or the Holder of any
Security and no delay in exercising any such right, power or remedy conferred
hereby or by the Designations now or hereafter existing at law, in equity, by
statute or otherwise, will operate as a waiver of, or otherwise prejudice any
such right, power or remedy.
12. MISCELLANEOUS.
(a) TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned (i) by the Investors upon written notice to
the Company, if any of the conditions to its obligations set forth in SECTION 8
are not satisfied on or before March 31, 2000; (ii) by the Company upon written
notice to the Investors if any of the condition to its obligations set forth in
SECTION 9 are not satisfied on or before March 31, 2000; or (iii) by either the
Investors or the Company if an injunction, restraining order or decree of any
nature of any Governmental Authority of competent jurisdiction is issued that
prohibits the consummation of any of the transactions contemplated hereby and
such injunction, restraining order or decree is final and nonappealable;
provided, however, that the party seeking to terminate this Agreement pursuant
to this clause has used commercially reasonable efforts to have such injunction,
order or decree vacated or denied. This Agreement will be deemed terminated
automatically and without further action of the parties upon the termination of
the Satellite Venture Contribution Agreement.
21
(b) WAIVERS AND AMENDMENTS. With the written consent of the Holders of a
majority of the outstanding shares of Preferred Stock or such other percentage
as is expressly stated herein or in the Designations, the obligations of the
Company and the rights of the Holders of the Securities under this Agreement and
the rights of the Holder of the Securities under the Designations may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), and
with the same consent the Company, when authorized by resolution of its Board,
may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of any supplemental agreement or modifying in any manner the
rights and obligations hereunder of the Holders of the Securities and the
Company; PROVIDED, HOWEVER, that no such waiver or supplemental agreement will
(a) affect any of the rights of any Holder of a Security created by the
Designations or by the Delaware General Corporation Law without compliance with
all applicable provisions of the Designations and the Delaware General
Corporation Law or (b) reduce the aforesaid proportion of Preferred Stock, the
Holders of which are required to consent to any waiver or supplemental
agreement, without the consent of the Holders of all of the shares of Preferred
Stock. Upon the effectuation of each such waiver, consent or agreement of
amendment or modification, the Company will promptly give written notice thereof
to all the Holders of the shares of Preferred Stock in writing. Neither this
Agreement nor the Designations nor any provision hereof or thereof, may be
amended, waived, discharged or terminated orally or by course of dealing, but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, except to the extent
provided in this SECTION 12(b).
(c) NOTICES. All notices, requests, consents and other communications
required or permitted hereunder will be in writing and will be hand-delivered,
sent by recognized overnight courier, mailed first class postage prepaid,
registered or certified mail, or sent by facsimile transmission as follows:
If to either Investor, at
c/o Liberty Media Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: 720-875-5382
With a copy (which will not constitute notice) to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Company, at
TCI Satellite Entertainment, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Leaf
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and each such notice, request, consent and other communication will for all
purposes of the Agreement be treated as being effective or having been given
when delivered, if delivered personally, by overnight courier or by facsimile
transmission, or, if sent by mail, at the earlier of its actual receipt or three
days after the same has been deposited in a regularly maintained receptacle for
the deposit of United States mail, addressed and postage prepaid as aforesaid.
(d) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in, pursuant to or in connection with this Agreement will
survive the execution and delivery of this Agreement, any investigation at any
time made by or on behalf of the parties, and the issuance of the Securities
under this Agreement. All statements contained in any certificate, instrument or
other writing delivered by or on behalf of any party pursuant to this Agreement
will constitute representa tions and warranties hereunder. Any claim against any
party based upon any inaccuracy in any of the representations or breach of any
of the warranties hereunder must be asserted, if at all, either by written
notice given to such party specifying with reasonable particularity the claimed
inaccuracy or breach or by institution of an action at law or suit in equity
against such party and the serving of the process and complaint with respect
thereto, within one year after the Closing Date.
(e) SEVERABILITY. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
will be given effect separately from the provision or provisions determined to
be illegal or unenforceable and will not be affected thereby.
(f) PARTIES IN INTEREST. All the terms and provisions of this Agreement
will be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, whether so expressed or
not, and, in particular, will inure to the benefit of and be enforceable by the
Holder or Holders at the time of any of the Securities. Subject to the
immediately
23
preceding sentence, this Agreement will not run to the benefit of or be
enforceable by any Person other than a party to this Agreement and its
successors and assigns.
(g) RULES OF CONSTRUCTION. The headings of the Sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement. The word "include" and derivatives of that
word are used in this Agreement in an illustrative sense rather than limiting
sense. References to Sections and Annexes will be deemed to refer to Sections
and Annexes of this Agreement, unless the context requires otherwise. This
Agreement has been negotiated by the parties and their respective legal counsel,
and legal or equitable principles that might require the construction of this
Agreement or any provision of this Agreement against the party drafting this
Agreement will not apply in any construction or interpretation of this
Agreement.
(h) ENTIRE AGREEMENT. This Agreement (including Annexes) and the documents,
instruments and agreements to be delivered at the Closing contain the entire
agreement of the parties and supersede all prior oral or written agreements and
understandings with respect to the subject matter, except that the
representations and warranties of the Company set forth in that letter of intent
between the Company and Liberty Media Corporation dated December 17, 1999, will
survive the execution and delivery of this Agreement in accordance with SECTION
12(d).
(i) CHOICE OF LAW. It is the intention of the parties that the internal
substantive laws, and not the laws of conflicts, of the State of Delaware will
govern the enforceability and validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties.
(j) EXPENSES. Whether or not the transactions contemplated hereby are
consummated, each of the parties will bear the fees and expenses relating to its
compliance with the various provisions of this Agreement, and each of the
parties will pay all of its own expenses (including all attorneys' fees and
expenses) incurred in connection with this Agreement, the transactions
contemplated hereby, the negotiations leading to the same and the preparation
made for carrying the same into effect.
(k) COUNTERPARTS; TELEFACSIMILE. This Agreement and any certificate
contemplated hereby may be executed in any number of counterparts and by
different parties hereto in separate counterparts, with the same effect as if
all parties had signed the same document. All such counterparts will be deemed
an original, will be construed together and will constitute one and the same
instrument. Delivery of an executed counterpart of this Agreement any
certificate or other document contemplated hereby by facsimile transmission will
be as effective as delivery of a manually executed counterpart hereof.
[the remainder of this page has intentionally been left blank]
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The parties have executed this Contribution and Exchange Agreement (TSAT)
as of the date first written above.
LIBERTY LSAT, INC.
By: /s/ ILLEGIBLE
-----------------------------------
Name:
Title:
LIBERTY LSAT II, INC.
By: /s/ ILLEGIBLE
-----------------------------------
Name:
Title:
TCI SATELLITE ENTERTAINMENT, INC.
By: /s/ ILLEGIBLE
-----------------------------------
Name:
Title:
