Exhibit 99.4
EXECUTION COPY
SEPARATION AGREEMENT
by and between
GENERAL MOTORS CORPORATION
and
▇▇▇▇▇▇ ELECTRONICS CORPORATION
Dated as of October 28, 2001
TABLE OF CONTENTS
Page
ARTICLE 1
THE ▇▇▇▇▇▇ RECAPITALIZATION.......................................................... 5
Section 1.1. Consummation of the ▇▇▇▇▇▇ Recapitalization.................. 5
Section 1.2. Further Assurances Regarding the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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
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Exhibit A--Form of GM/▇▇▇▇▇▇ Intellectual Property Agreement
Exhibit B--Form of GM/▇▇▇▇▇▇ Special Employee Items Agreement
Exhibit C--Form of Amended and Restated Agreement for the Allocation of United
States Income Taxes between GM and ▇▇▇▇▇▇
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INDEX OF DEFINED TERMS
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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/▇▇▇▇▇▇ Tax Agreements............................... 9
Governmental Authority................................. 7
HCG.................................................... 1
HCI.................................................... 1
HCSS................................................... 1
▇▇▇▇▇▇................................................. 1
▇▇▇▇▇▇ Affiliate....................................... 10
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▇▇▇▇▇▇ Business........................................ 11
▇▇▇▇▇▇ Class C Common Stock............................ 1
▇▇▇▇▇▇ Insurance Claims................................ 11
▇▇▇▇▇▇ Preference Stock................................ 2
▇▇▇▇▇▇ 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
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Volume Weighted Average Trading Price.................. 6
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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 ▇▇▇▇▇▇ Electronics Corporation, a Delaware corporation
and a wholly owned subsidiary of GM ("▇▇▇▇▇▇").
WHEREAS, ▇▇▇▇▇▇ and EchoStar Communications Corporation, a Nevada
corporation ("EchoStar"), desire to combine the business of EchoStar with the
▇▇▇▇▇▇ Business (as defined in the Implementation Agreement), following the
separation of ▇▇▇▇▇▇ from GM, pursuant to a merger of EchoStar with and into
▇▇▇▇▇▇ with ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Recapitalization (as defined below) and
the Spin-Off (as defined below) be completed and that ▇▇▇▇▇▇ be an independent,
publicly owned company comprising the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, ▇▇▇▇▇▇ Communications, Inc., a California corporation and
an indirect wholly owned subsidiary of ▇▇▇▇▇▇ ("HCI"), ▇▇▇▇▇▇ Communications
Galaxy, Inc., a California corporation and an indirect wholly owned subsidiary
of ▇▇▇▇▇▇ ("HCG"), and ▇▇▇▇▇▇ Communications Satellite Services, Inc.,
California corporation and an indirect wholly owned subsidiary of ▇▇▇▇▇▇
("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 ▇▇▇▇▇▇, par value $0.01
per share (the "▇▇▇▇▇▇ Class C Common Stock") (any such shares of GM Class H
Common Stock or ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ desire to consummate the ▇▇▇▇▇▇
Recapitalization on the terms set forth in this Agreement and to set forth
certain rights and obligations of GM and ▇▇▇▇▇▇ with respect to the separation
of ▇▇▇▇▇▇ from GM pursuant to the Spin-Off; and
WHEREAS, immediately following the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Recapitalization and the Spin-Off
(collectively, the "GM Transactions"); and
WHEREAS, GM, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ (in either case,
the "Merger Commitment Letter"); and
WHEREAS, GM, ▇▇▇▇▇▇, EchoStar and The Samburu Warrior Revocable Trust,
a trust as to which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 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 ▇▇▇▇▇▇, 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
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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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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:
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ARTICLE 1
THE ▇▇▇▇▇▇ RECAPITALIZATION
Section 1.1. Consummation of the ▇▇▇▇▇▇ 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"), ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ shall distribute as a dividend to GM a
demand note issued by ▇▇▇▇▇▇ with an original principal amount equal to the
amount of such shortfall (the "Demand Note"), having terms, including interest
rate, reasonably acceptable to GM, ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ shall issue to GM a number
of shares of ▇▇▇▇▇▇ Class C Common Stock such that the number of shares of
▇▇▇▇▇▇ 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 "▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Recapitalization.
In addition to the actions expressly provided for elsewhere in this Agreement,
each of GM and ▇▇▇▇▇▇
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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 ▇▇▇▇▇▇
Recapitalization. Without limiting the generality of the foregoing, each of GM
and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Recapitalization the aggregate number of
shares of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Recapitalization and (iii) the minimum
number by which the total number of shares of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, formerly known as ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ and PanAmSat, ▇▇▇▇▇▇ currently provides to PanAmSat a credit
facility, including the loan evidenced by the promissory note dated May 15,
1997, issued by PanAmSat to ▇▇▇▇▇▇ (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 ▇▇▇▇▇▇ (such
payment of the entire amount outstanding under the PanAmSat Note, the "PanAmSat
Note Repayment") prior to the consummation of the ▇▇▇▇▇▇ Recapitalization.
Accordingly, ▇▇▇▇▇▇ has requested that PanAmSat use its best efforts to, and
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇,
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/▇▇▇▇▇▇ Tax Agreements (as defined below), (b) the GM/▇▇▇▇▇▇
Intellectual Property Agreement in the form attached as Exhibit A hereto and (c)
the GM/▇▇▇▇▇▇ Special Employee Items Agreement in the form attached as Exhibit B
hereto. For the purposes of this Agreement, "GM/▇▇▇▇▇▇ Tax Agreements" means (i)
the Amended and Restated Agreement for the Allocation of United States Income
Taxes between GM and ▇▇▇▇▇▇, 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, ▇▇▇▇▇▇ Electronics Corporation (formerly
▇▇ ▇▇▇▇▇▇ Electronics Corporation), HE Holdings, Inc. (formerly ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇
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 ▇▇▇▇▇▇, ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, shall use commercially reasonable efforts to assist ▇▇▇▇▇▇ in the
transition to its own separate insurance coverage from and after the Spin-Off
Effective Time, and shall provide ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ in preventing gaps in its insurance
coverages, (ii) in the event that prior to the Spin-Off Effective Time ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇ shall cooperate
with each other to enter into an arrangement, on an arm's-length basis, that
would permit ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ to reimburse GM for the
costs of such extended insurance coverage that are fairly allocable to the
inclusion of ▇▇▇▇▇▇ among GM and the other GM parties that otherwise benefit
from such coverage, (iii) each of GM and ▇▇▇▇▇▇, 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, ▇▇▇▇▇▇, each GM Affiliate (as defined below) and each ▇▇▇▇▇▇ 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
▇▇▇▇▇▇, a GM Affiliate or a ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Affiliate as of such time;
(iv) "▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Business arising out of events, acts or omissions commencing or occurring prior
to the Spin-Off Effective Time, for which ▇▇▇▇▇▇, any ▇▇▇▇▇▇ 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 ("▇▇▇▇▇▇ Insurance
Claims"), GM, at the request of ▇▇▇▇▇▇, shall use commercially reasonable
efforts in asserting, or assisting ▇▇▇▇▇▇ in asserting, such claims under any
such Insurance Policy; provided, that in all cases (i) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, 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)
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ and shall have the
right in consultation with ▇▇▇▇▇▇ to control the investigation, defense and
settlement of all claims, but no such settlement may be effected without the
consent of ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ all of GM's rights as of such time relating to
the AOL Registration Rights Agreement and the PRIMESTAR Registration Rights
Agreement, and ▇▇▇▇▇▇ shall assume all of the obligations of GM as of such time
thereunder; provided, that ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇
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, ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇, with respect to ▇▇▇▇▇▇ and all of
the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, (A) any
information concerning GM, any GM Affiliate or the business or operations of GM
or any GM Affiliate other than the ▇▇▇▇▇▇ Business (the "GM Business") that was
obtained by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Affiliate prior to the Spin-Off Effective Time,
(B) any information concerning GM or any GM Affiliate that is obtained by ▇▇▇▇▇▇
under Section 4.1 or (C) any other information obtained by, or furnished to,
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ have agreed in writing is confidential or secret; and (ii) as
to GM, (A) any information concerning ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Affiliate or the ▇▇▇▇▇▇
Business that was obtained by GM or any GM Affiliate prior to the Spin-Off
Effective Time, (B) any information concerning ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Affiliate or (II) ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ remains outstanding, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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,
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Recapitalization. The obligations of GM and ▇▇▇▇▇▇ to consummate the ▇▇▇▇▇▇
Recapitalization shall be subject to fulfillment of each and all of the
following conditions (any of which may be waived by GM or ▇▇▇▇▇▇, on behalf of
GM or ▇▇▇▇▇▇, 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, 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;
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(f) all conditions to the Merger, other than the consummation of the
▇▇▇▇▇▇ Recapitalization and the Spin-Off, shall have been satisfied or waived
(provided that any such waiver by ▇▇▇▇▇▇ 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Class A Common Stock and of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ shall have received the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, addressed to the Board of Directors of GM and ▇▇▇▇▇▇, regarding
▇▇▇▇▇▇' ability to declare and pay the dividend contemplated by the ▇▇▇▇▇▇
Recapitalization, in form and substance reasonably acceptable to ▇▇▇▇▇▇,
immediately prior to the ▇▇▇▇▇▇ Recapitalization;
(k) at least five (5) trading days shall have elapsed since the
Regulatory Approval Date;
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(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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇. 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
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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:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ▇▇▇▇▇▇:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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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
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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, ▇▇▇▇▇▇, including with
respect to any potential tax or other liabilities or
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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 ▇▇▇▇▇▇ 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.
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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 ▇▇▇▇▇▇ 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
▇▇▇▇▇▇, The Corporation Trust Company, with offices on the date hereof at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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.
* * * * *
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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 set forth above.
GENERAL MOTORS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Title: Assistant General Counsel
--------------------------
▇▇▇▇▇▇ ELECTRONICS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Vice President
--------------------------
