EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL MOTORS CORPORATION,
XXXXXX ELECTRONICS CORPORATION
AND
UNITED STATES SATELLITE BROADCASTING COMPANY, INC.
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NYFS08...:\68\41668\0004\1323\MRG5228V.18K
TABLE OF CONTENTS
Page
ARTICLE 1
THE MERGER................................. 1
1.1. The Merger............................................................... 1
1.2. Effective Time........................................................... 2
1.3. Closing of the Merger.................................................... 2
1.4. Effects of the Merger.................................................... 2
1.5. Certificate of Incorporation and Bylaws.................................. 2
1.6. Directors................................................................ 2
1.7. Officers................................................................. 2
ARTICLE 2
CONVERSION OF SHARES; MERGER CONSIDERATION................. 3
2.1. Conversion of Shares..................................................... 3
2.2. Merger Consideration..................................................... 3
2.3. Stock and Cash Elections; Exchange Fund.................................. 5
2.4. Prorations............................................................... 8
2.5. Dissenting Shares........................................................ 11
2.6. Stock Options............................................................ 11
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... 11
3.2. Capitalization of the Company and Its Subsidiaries....................... 12
3.3. Authority Relative to This Agreement..................................... 14
3.4. SEC Reports; Financial Statements........................................ 14
3.5. Information Supplied..................................................... 15
3.6. Consents and Approvals; No Violations.................................... 15
3.7. No Default............................................................... 16
3.8. No Undisclosed Liabilities; Absence of Changes........................... 16
3.9. Litigation............................................................... 17
3.10. Compliance with Applicable Law........................................... 17
3.11. Employee Plans........................................................... 17
3.12. Environmental Matters.................................................... 18
3.13. Tax Matters.............................................................. 22
3.14. Opinion of Financial Advisors............................................ 24
3.15. Brokers.................................................................. 24
i
3.16. Material Contracts....................................................... 25
3.17. Labor and Employment Matters............................................. 26
3.18. FCC Matters.............................................................. 26
3.19. Intellectual Property.................................................... 27
3.20. Insurance................................................................ 27
3.21. Indebtedness............................................................. 27
3.22. Liens.................................................................... 28
3.23. Real Property............................................................ 28
3.24. Tangible Property........................................................ 28
3.25. Programming Arrangements................................................. 28
3.26. Consolidation Matters.................................................... 28
3.27. No Other Representations or Warranties................................... 29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF GM AND XXXXXX.............................. 29
4.1. Organization and Qualification........................................... 29
4.2. Capitalization of GM and Its Subsidiaries................................ 29
4.3. Authority Relative to This Agreement..................................... 30
4.4. SEC Reports; Financial Statements........................................ 30
4.5. Information Supplied..................................................... 31
4.6. Consents and Approvals; No Violations.................................... 31
4.7. No Default............................................................... 32
4.8. No Undisclosed Liabilities; Absence of Changes........................... 32
4.9. Litigation............................................................... 32
4.10. Compliance with Applicable Law........................................... 32
4.11. Brokers.................................................................. 33
4.12. Employee Plans........................................................... 33
4.13. Environmental Matters.................................................... 34
4.14. FCC Matters.............................................................. 34
4.15. No Other Representations or Warranties................................... 34
ARTICLE 5
COVENANTS................................. 35
5.1. Conduct of Business of the Company....................................... 35
5.2. Conduct of Business of GM and Xxxxxx..................................... 37
5.3. Preparation of S-4 and the Proxy Statement............................... 38
5.4. Company Meeting.......................................................... 38
5.5. No Solicitation.......................................................... 38
5.6. Letter of the Company's Accountants...................................... 39
ii
5.7. Access to Information.................................................... 40
5.8. Additional Agreements; Reasonable Best Efforts........................... 41
5.9. Regulatory Reviews....................................................... 41
5.10. Public Announcements..................................................... 42
5.11. Directors' and Officers' Insurance; Indemnification...................... 42
5.12. Notification of Certain Matters.......................................... 43
5.13. Tax-Free Reorganization Treatment........................................ 43
5.14. Company Affiliates....................................................... 44
5.15. SEC Filings.............................................................. 44
5.16. Employee Matters......................................................... 44
5.17. Ancillary Agreements..................................................... 46
5.18. Billing and Customer Management Systems.................................. 47
5.19. 110(degree) Construction Permit.......................................... 47
5.20. Spring Communications.................................................... 47
5.21. Confirmatory Certificates; Communications................................ 47
5.22. Affiliate Agreements..................................................... 48
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER.................. 48
6.1. Conditions to Each Party's Obligations to Effect the Merger.............. 48
6.2. Conditions to the Obligations of the Company............................. 49
6.3. Conditions to the Obligations of GM and Xxxxxx........................... 49
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER....................... 51
7.1. Termination.............................................................. 51
7.2. Effect of Termination.................................................... 51
7.3. Expenses................................................................. 52
7.4. Amendment................................................................ 52
7.5. Extension; Waiver........................................................ 52
ARTICLE 8
MISCELLANEOUS............................... 52
8.1. Nonsurvival of Representations and Warranties............................ 52
8.2. Entire Agreement; Assignment............................................. 52
8.3. Notices.................................................................. 53
8.4. Governing Law............................................................ 53
8.5. Descriptive Headings..................................................... 54
8.6. Parties in Interest...................................................... 54
8.7. Severability............................................................. 54
iii
8.8. Specific Performance..................................................... 54
8.9. Brokers.................................................................. 54
8.10. Counterparts............................................................. 54
iv
EXHIBITS
Exhibit A - Shareholders Agreement
Exhibit B-1 - Company Tax Certificate
Exhibit B-2 - Shareholder Tax Certificate
Exhibit B-3 - Xxxxxx Tax Certificate
Exhibit C - Form of Consulting Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Transition Services Agreement
Exhibit F - Replacement Payload Option Agreement
Exhibit G - Channel Capacity Provision Agreement
Exhibit H - United States Satellite Broadcasting Company, Inc.
Closing Certificate
v
GLOSSARY OF DEFINED TERMS
Defined Terms Defined in Section
------------- ------------------
110(degree) Construction Permit....................................3.18
20-Day Average Price...............................................2.2(a)(ii)(3)
Acquiror Certificates..............................................2.3(d)
Acquiror Share Cap.................................................2.4(e)(i)
Acquiror Stock.....................................................2.2(a)(ii)(1)
Acquisition Proposal...............................................5.5(a)
Adjusted Price.....................................................2.4(e)(ii)
ADS................................................................3.26
Adverse Environmental Condition....................................5.7(b)
Agreement..........................................................Preamble
Allocation Determination...........................................2.3(c)
Ancillary Agreements...............................................5.17
Cap Price..........................................................2.2(b)(i)(A)
Cash Cap...........................................................2.4(e)(iii)
Cash Consideration Per Share.......................................2.2(a)(i)
Cash Election......................................................2.2(a)(i)
Class A Common Stock...............................................3.2(a)
Closing............................................................1.3
Closing Date.......................................................1.3
Closing Date Price.................................................2.4(e)(iv)
Code...............................................................Recitals
Common Stock.......................................................3.2(a)
Communications Act.................................................3.6
Company............................................................Preamble
Company Affiliate..................................................5.14
Company Board......................................................3.3(a)
Company Certificate................................................2.1(c)
Company Common Stock...............................................3.2(a)
Company Disclosure Schedule........................................3.1(b)
Company Employee Benefit Plan......................................3.11(a)
Company Financial Advisors.........................................3.14
Company Permits....................................................3.10
Company SEC Reports................................................3.4(a)
Company Securities.................................................3.2(a)
Company Stock Options..............................................3.2(a)
Confidentiality Agreement..........................................5.7(d)
D&O Insurance......................................................5.11(a)
DGCL...............................................................1.1
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Defined Terms Defined in Section
------------- ------------------
DIRECTV Benefit Plan...............................................4.12(a)
DIRECTV FCC Licenses...............................................4.14
Dissenters' Rights Statute.........................................2.5
Dissenting Shares..................................................2.5
Effective Time.....................................................1.2
Election Deadline..................................................2.3(c)
Election Form......................................................2.3(b)
Environmental Claim................................................3.12(a)(2)
Environmental Investigation........................................5.7(b)
Environmental Law..................................................3.12(a)(1)
Environmental Permit...............................................3.12(a)(3)
ERISA..............................................................3.11(a)
Excess Termination Amount..........................................2.2(b)(ii)
Excess Termination Amount Per Share................................2.2(b)(ii)(A)
Exchange Act.......................................................3.4(a)
Exchange Agent.....................................................2.3(b)
Exchange Fund......................................................2.3(d)
Excise Tax.........................................................5.16(j)
FCC................................................................3.18
FCC Application....................................................3.18
FCC Licenses.......................................................3.18
Filed Company SEC Reports..........................................3.4(a)
Filed GM SEC Reports...............................................4.8
Floor Price........................................................2.2(b)(1)(A)
GAAP...............................................................3.4(a)
GM.................................................................Preamble
GM Permits.........................................................4.10
GM SEC Reports.....................................................4.4
Governmental Entity................................................3.6
Hazardous Substance................................................3.12(a)(4)
HSR Act............................................................3.6
Xxxxxx.............................................................Preamble
Xxxxxx Securities..................................................4.2
Indemnified Party..................................................5.11(b)
Intellectual Property..............................................3.19(b)
Latest Date........................................................7.1(b)
Letter of Transmittal..............................................2.3(b)
Lien...............................................................3.2(b)
Lien...............................................................3.22
Material Adverse Effect............................................3.1(a)
Material Contracts.................................................3.16(a)
MBCA...............................................................1.1
Merger.............................................................1.1
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Defined Terms Defined in Section
------------- ------------------
Merger Consideration...............................................2.2(a)
Minimum Cash Amount................................................2.4(e)(v)
NPL................................................................3.12(m)
NYSE...............................................................2.2(a)(ii)(3)
Payment............................................................5.16(j)
Program............................................................5.16(e)
Property...........................................................3.12(a)(5)
Proxy Statement....................................................3.5(b)
Redacted Contracts.................................................5.7(a)
Release............................................................3.12(a)(6)
Relocation Package.................................................5.16(b)
Remedial Action....................................................3.12(a)(7)
Requested Cash Amount..............................................2.4(e)(vi)
S-4................................................................3.5(a)
SEC................................................................3.4(a)
Share..............................................................2.1(b)
Share Value........................................................2.2(a)(ii)(2)
Shareholders Agreement.............................................Recitals
Spring.............................................................5.20
Statutory Committee................................................Recitals
Stock Consideration Per Share......................................2.2(a)(ii)
Stock Election.....................................................2.2(a)(ii)
subsidiary.........................................................3.1(b)
Surviving Corporation..............................................1.1
tax................................................................3.13(a)
tax returns........................................................3.13(a)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 11, 1998
(the "Agreement"), is among GENERAL MOTORS CORPORATION, a Delaware corporation
("GM"), XXXXXX ELECTRONICS CORPORATION, a Delaware corporation and a direct
wholly owned subsidiary of GM ("Xxxxxx"), and UNITED STATES SATELLITE
BROADCASTING COMPANY, INC., a Minnesota corporation (the "Company").
WHEREAS, the Board of Directors of the Company and the committee of
disinterested directors of the Company formed pursuant to Section 302A.673,
subd. 1(d) of the MBCA (as defined in Section 1.1) (the "Statutory Committee")
have determined that the Merger (as defined in Section 1.1) is fair to and in
the best interests of the Company's shareholders and have approved the Merger in
accordance with this Agreement;
WHEREAS, the respective Boards of Directors of GM and Xxxxxx have
determined that the Merger is advisable and in the best interests of Xxxxxx, XX
and GM's common stockholders;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the execution hereof, certain holders of
shares of Company Common Stock (as defined in Section 3.2) are entering into an
agreement providing for certain matters with respect to their shares of Company
Common Stock (the "Shareholders Agreement"), a copy of which is attached hereto
as Exhibit A; and
WHEREAS, GM, Xxxxxx and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, GM,
Xxxxxx and the Company hereby agree as follows:
ARTICLE 1
THE MERGER
1.1. The Merger. At the Effective Time, upon the terms and subject
to the conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL") and the Minnesota Business Corporations Act (the
"MBCA"), the Company shall be merged with and into Xxxxxx (the "Merger").
Following the Merger, Xxxxxx shall continue as the surviving corporation (the
"Surviving Corporation") and shall continue its
corporate existence under the DGCL, and the separate corporate existence of the
Company shall cease.
1.2. Effective Time. Subject to the provisions of this Agreement,
GM, Xxxxxx and the Company shall cause the Merger to be consummated by (i)
filing a certificate of merger complying with the DGCL with the Secretary of
State of the State of Delaware and (ii) filing articles of merger complying with
the MBCA with the Secretary of State of the State of Minnesota, in each case as
soon as practicable on or after the Closing Date (as defined in Section 1.3).
The Merger shall become effective upon the later of such filings or at such time
thereafter as is provided in such certificate of merger and such articles of
merger (the "Effective Time").
1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Article 6, at the
offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, unless another time, date or place is agreed to in writing by the parties
hereto.
1.4. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL and the MBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, immunities, powers and franchises of the Company and Xxxxxx
shall vest in the Surviving Corporation, and all debts, liabilities, obligations
and duties of the Company and Xxxxxx shall become the debts, liabilities,
obligations and duties of the Surviving Corporation.
1.5. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Xxxxxx in effect immediately prior to the Effective Time shall
be the Certificate of Incorporation of the Surviving Corporation, until amended
in accordance with such Certificate of Incorporation and the DGCL. The Bylaws of
Xxxxxx in effect immediately prior to the Effective Time shall be the Bylaws of
the Surviving Corporation, until amended in accordance with such Bylaws and the
DGCL.
1.6. Directors. The directors of Xxxxxx immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
1.7. Officers. The officers of Xxxxxx at the Effective Time shall be
the initial officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
2
ARTICLE 2
CONVERSION OF SHARES; MERGER CONSIDERATION
2.1. Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any of the parties hereto or any
holder of shares of Company Common Stock:
(a) Common Stock of Xxxxxx and GM. Each issued and outstanding share
of common stock, par value $1.00 per share, of Xxxxxx shall remain outstanding
and shall be unchanged as a result of the Merger. The issued and outstanding
securities of GM shall remain outstanding and shall be unchanged as a result of
the Merger.
(b) Cancellation of Treasury Shares and GM-Owned Shares. Each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (each, a "Share") that is owned by the Company or any subsidiary
of the Company, or by GM or Xxxxxx (other than Shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned by third
parties) shall automatically be cancelled and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Common Stock of the Company. Each Share, other than Shares to be
cancelled in accordance with Section 2.1(b) and any Dissenting Shares (as
defined in Section 2.5), shall be converted, in accordance with Section 2.2(a),
into the right to receive the Merger Consideration (as defined in Section
2.2(a)) and shall cease to be outstanding and shall automatically be canceled
and shall cease to exist, and each holder of a certificate previously evidencing
any such Shares (each, a "Company Certificate") shall cease to have any rights
with respect thereto, except the right to receive, upon the surrender of such
Company Certificate in accordance with the provisions of Section 2.3, the Merger
Consideration multiplied by the number of Shares previously evidenced by such
Company Certificate.
2.2. Merger Consideration.
(a) Merger Consideration. Except as otherwise provided in Section
2.4 and subject to Section 2.5, the term "Merger Consideration" shall mean, at
the election of each holder of Shares, which election shall be available on a
share-by-share basis, one of the following:
(i) for each Share with respect to which an
election to receive cash has been effectively made or deemed made
pursuant to Section 2.3 and not revoked (a "Cash Election"), the
right to receive an amount in cash, without interest, equal to the
Share Value (the "Cash Consideration Per Share"); or
(ii) for each Share with respect to which an
election to receive shares of Acquiror Stock has been effectively
made pursuant to Section 2.3 and not revoked (a "Stock Election"),
the right to receive a fractional interest
3
in a share of Acquiror Stock equal to the Exchange Ratio (as defined
in Section 2.2(b)) (the "Stock Consideration Per Share"), subject to
Section 2.3(h).
For purposes of this Agreement:
(1) "Acquiror Stock" shall mean the Class H Common
Stock of GM, par value $0.10 per share;
(2) "Share Value" shall mean the product of (x)
the Exchange Ratio and (y) the 20-Day Average Price; and
(3) "20-Day Average Price" shall mean the average
(rounded to 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
averages (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 trading
prices of the Acquiror Stock on the New York Stock Exchange, Inc.
(the "NYSE") as reported by Bloomberg Financial Markets (or such
other source as the parties shall agree in writing) for each of the
20 consecutive trading days ending on and including the second
trading day prior to the Closing Date;
(b) Exchange Ratio.
(i) The Exchange Ratio shall be determined in the
following manner, subject to reduction pursuant to Section 2(b)(ii):
(A) If the 20-Day Average Price is less than or equal to
$47.6821 (the "Cap Price"), and greater than or equal to $27.8146
(the "Floor Price"), the Exchange Ratio shall be equal to 0.3775.
(B) If the 20-Day Average Price is greater than the Cap Price,
the Exchange Ratio shall be equal to the quotient obtained by
dividing $18.00 by the 20-Day Average Price (such quotient shall be
rounded to the nearest 1/10,000, or if there shall not be a nearest
1/10,000 to the next lowest 1/10,000).
(C) If the 20-Day Average Price is less than the Floor Price,
the Exchange Ratio shall be equal to the quotient obtained by
dividing (x) the lower of (1) $10.50 and (2) the Adjusted Price (as
defined in Section 2.4(e)) by (y) the 20-Day Average Price (such
quotient shall be 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).
(ii) The Exchange Ratio shall be reduced by the
amount determined by:
4
(A) first, dividing the Excess Termination Amount by the
number of Shares (such quotient, the "Excess Termination Amount Per
Share"), and
(B) then, dividing the Excess Termination Amount Per Share by
the 20-Day Average Price (the resulting quotient shall be 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).
The "Excess Termination Amount" shall be the sum of (x) the amount,
if any, by which the payments made or required to be made by the
Company or any of its subsidiaries after the date hereof arising out
of or relating to the termination of the contract identified on
Section 2.2(b)(ii)(x) of the Acquiror Disclosure Schedule exceed the
Termination Amount in respect thereof set forth therein, and (y) the
amount, if any, by which the payments made or required to be made by
the Company or any of its subsidiaries after the date hereof arising
out of or relating to the termination of the contract identified in
Section 2.2(b)(ii)(y) of the Acquiror Disclosure Schedule exceed the
Termination Amount in respect thereof set forth in therein.
(iii) If between the date of this Agreement and
the Effective Time, the outstanding shares of Acquiror Stock or
Company Common Stock shall have been changed into a different number
of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, rights offering,
split, combination or exchange of shares, the Exchange Ratio
correspondingly shall be adjusted to the extent warranted to reflect
such stock dividend, subdivision, reclassification,
recapitalization, rights offering, split, combination or exchange of
shares.
2.3. Stock and Cash Elections; Exchange Fund.
(a) Right to Elect. Each Person who, at the Effective Time, is a
record holder of Shares (other than holders of Shares to be cancelled as set
forth in Section 2.1(b) or Shares subject to Section 2.5) shall have the right
to submit an Election Form (as defined in Section 2.3(b)) specifying the number
of Shares that such Person desires to have converted into the right to receive,
subject to Section 2.4, (i) the Stock Consideration Per Share pursuant to the
Stock Election and (ii) the Cash Consideration Per Share pursuant to the Cash
Election.
(b) Letter of Transmittal and Election Form. As soon as reasonably
practicable after the Effective Time, a bank or trust company to be designated
by GM (the "Exchange Agent") shall mail to each holder of record of Shares
immediately prior to the Effective Time (excluding any Shares to be cancelled
pursuant to Section 2.1(b) or subject to Section 2.5) (i) a letter of
transmittal (the "Letter of Transmittal") which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall
pass, only upon delivery of such Company Certificates to the Exchange Agent and
shall be in such form and have such other provisions as GM shall reasonably
specify, (ii) an election form (the "Election Form") providing for such holders
to make the Cash Election or the Stock
5
Election and (iii) instructions for use in effecting the surrender of the
Company Certificates in exchange for the Merger Consideration with respect to
the Shares formerly represented thereby. The Election Form shall include
information as to the Share Value and the Exchange Ratio. As of the Election
Deadline (as hereinafter defined), to the extent that a holder of Shares shall
not have submitted to the Exchange Agent an effective, properly completed
Election Form with respect to all or certain of the Shares held by such holder
or shall have properly revoked and not properly submitted to the Exchange Agent
a subsequent Election Form with respect to all or certain of the Shares, such
holder shall be deemed to have made the Cash Election with respect to such
Shares.
(c) Election Deadline and Allocation Determination. Any Stock
Election shall have been validly made only if the Exchange Agent shall have
received by 5:00 p.m. New York, New York time on a date (the "Election
Deadline") to be mutually agreed upon by Xxxxxx and the Company (which date
shall not be later than the twentieth (20th) business day after the Effective
Time), an Election Form properly completed and executed (with the signature or
signatures thereof guaranteed to the extent required by the Election Form) by
such holder accompanied by such holder's Company Certificates, or by an
appropriate guarantee of delivery of such Company Certificates from a member of
any registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States as set forth in such Election Form. Any holder of Shares (other than a
holder who has submitted an irrevocable election) who has made an election by
submitting an Election Form to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a revised Election
Form, properly completed and signed that is received by the Exchange Agent prior
to the Election Deadline. Any holder of Shares may at any time prior to the
Election Deadline revoke such holder's election by written notice to the
Exchange Agent received by the close of business on the day prior to the
Election Deadline. As soon as practicable after the Election Deadline, the
Exchange Agent shall, subject to Section 2.4, determine the allocation of the
cash portion of the Merger Consideration and the stock portion of the Merger
Consideration and shall notify GM, Xxxxxx and HBI (as a representative of the
shareholders of the Company) of its determination (the "Allocation
Determination").
(d) Deposit of Merger Consideration. Promptly after the Allocation
Determination, Xxxxxx shall deposit with the Exchange Agent, for the benefit of
the holders of Shares for exchange in accordance with this Article 2, (i) cash
in an amount sufficient to pay the aggregate Merger Consideration that shall
take the form of cash and (ii) certificates or other evidence representing the
aggregate Merger Consideration that shall take the form of shares of Acquiror
Stock ("Acquiror Certificates"; the cash and certificates or other evidence
deposited pursuant to clauses (i) and (ii) being hereinafter referred to as the
"Exchange Fund"). The Acquiror Stock into which Company Common Stock shall be
converted pursuant to the Merger shall be deemed to have been issued at the
Effective Time for purposes of entitlement to dividends declared, if any, after
the Effective Time. In connection with the issuance of shares of Acquiror Stock
pursuant to this Agreement and the contribution by GM to the capital of Xxxxxx
of cash in an amount no less than the fair market value of such shares, GM's
Board of Directors shall, in accordance with paragraph (a)(4) of Division I of
Article Fourth of GM's Amended and Restated Certificate of Incorporation, as
amended, make an appropriate adjustment to the denominator of the
6
fraction used to determine the "Available Separate Consolidated Net Income of
Xxxxxx," as defined therein.
(e) Surrender of Company Certificates. Upon surrender of a Company
Certificate to the Exchange Agent, together with the Letter of Transmittal, duly
executed, and such other documents as Xxxxxx or the Exchange Agent shall
reasonably request, the holder of such Company Certificate shall be entitled to
receive, promptly after the Election Deadline in exchange therefor, (i) a
certified or bank cashier's check in the amount equal to the aggregate amount of
the Merger Consideration consisting of cash which such holder has the right to
receive pursuant to the provisions of this Article 2 (including any cash in lieu
of fractional shares of Acquiror Stock pursuant to Section 2.3(h)) and (ii)
Acquiror Certificates representing the Acquiror Stock, if any, which such holder
has the right to receive (in each case without interest and less the amount of
any required withholding taxes, if any, in accordance with Section 2.3(k)).
(f) Rules Governing Exchange. Xxxxxx, in consultation with the
Company prior to the Effective Time, shall have the right to make reasonable
rules, not inconsistent with the terms of this Agreement, governing the validity
of the Election Forms, the manner and extent to which Cash Elections or Stock
Elections are to be taken into account in making the determinations prescribed
by Section 2.4, the issuance and delivery of certificates for, or other evidence
of, Acquiror Stock, and the payment of the Cash Consideration Per Share.
(g) Distributions With Respect to Unexchanged Shares of Acquiror
Stock. No dividends or other distributions with respect to shares of Acquiror
Stock, with a record date after the Effective Time, shall be paid to the holder
of any unsurrendered Company Certificate with respect to the shares of Acquiror
Stock they are entitled to receive until such Company Certificate is surrendered
by such holder.
(h) Fractional Shares. No fraction of a share of Acquiror Stock
shall be issued in the Merger. In lieu of any such fractional shares, each
holder of Shares entitled to receive a fraction of a share of Acquiror Stock in
the Merger, upon surrender of a Company Certificate for exchange pursuant to
this Section 2.3, shall be paid in lieu thereof an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying (x) the Share
Value by (y) the fractional interest in Acquiror Stock to which such holder
would otherwise be entitled (after aggregating all shares of Acquiror Stock
which such holder is entitled to receive pursuant to this Article 2).
(i) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the former holders of Shares for twelve (12)
months after the Effective Time shall be delivered to Xxxxxx, upon demand, and
any former holders of Shares who have not theretofore complied with this Article
2 shall thereafter look only to Xxxxxx for the Merger Consideration to which
they are entitled pursuant to this Article 2.
(j) No Liability. None of GM, Xxxxxx or the Company shall be liable
to any former holder of Shares for any Merger Consideration from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
7
(k) Withholding Rights. GM, Xxxxxx and the Exchange Agent shall be
entitled to deduct and withhold, from the consideration otherwise payable
pursuant to this Agreement to any former holder of Shares, such amounts as GM,
Xxxxxx, the Company (or any subsidiary thereof) or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by GM, Xxxxxx or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the former holder of the Shares in respect of which such deduction and
withholding was made by GM, Xxxxxx or the Exchange Agent.
2.4. Prorations.
(a) Requested Cash Amount Not in Excess of Cash Cap and Not Below
Minimum Cash Amount. If the Requested Cash Amount equals or exceeds the Minimum
Cash Amount and does not exceed the Cash Cap, the Merger Consideration shall be
issued and paid in the manner set forth in Section 2.2, unless the 20-Day
Average Price is less than the Floor Price and the Acquiror Stock to be issued
pursuant to this Agreement would exceed the Acquiror Share Cap, in which case
the adjustments set forth in Section 2.4(d) shall be made.
(b) Requested Cash Amount in Excess of Cash Cap. If the Requested
Cash Amount exceeds the Cash Cap, each holder who makes or is deemed to have
made a Cash Election pursuant to Section 2.3 shall receive, for each Share for
which a Cash Election has been made or deemed made, Merger Consideration
consisting of:
(i) cash in an amount equal to the product of the
Share Value and a fraction, (A) the numerator of which is the Cash
Cap and (B) the denominator of which is the Requested Cash Amount;
and
(ii) a fractional interest in a share of Acquiror
Stock equal to a fraction, (A) the numerator of which is equal to
the Share Value minus the amount of cash payable pursuant to clause
(i) of this Section 2.4(b) and (B) the denominator of which is the
20-Day Average Price.
(c) Requested Cash Amount Below Minimum Cash Amount. If the
Requested Cash Amount is less than the Minimum Cash Amount and the 20-Day
Average Price equals or exceeds the Floor Price, each holder making a Stock
Election shall receive, for each Share for which a Stock Election has been made,
Merger Consideration consisting of:
(i) cash in an amount equal to the quotient
obtained by dividing (A) the excess of the Minimum Cash Amount over
the Requested Cash Amount by (B) the number of Shares for which such
Stock Elections have been made; and
(ii) a fractional interest in a share of Acquiror
Stock equal to a fraction, (A) the numerator of which is equal to
the excess of the Share Value
8
over the amount of cash payable pursuant to clause (i) of this
Section 2.4(c) and (B) the denominator of which is the 20-Day
Average Price.
(d) Adjustments Required if 20-Day Average Price Is Less Than Floor
Price. If (A) the 20-Day Average Price is less than the Floor Price, (B) the
Requested Cash Amount does not exceed the Cash Cap, and (C) the number of shares
of Acquiror Stock that would be issuable pursuant to this Agreement would, but
for this Section 2.4(d), exceed the Acquiror Share Cap, then each holder making
a Stock Election shall receive, for each Share for which a Stock Election has
been made, Merger Consideration consisting of:
(x) a fractional interest in a share of
Acquiror Stock equal to the product of the Stock Consideration Per Share
and a fraction, (I) the numerator of which is the Acquiror Share Cap and
(II) the denominator of which is the total number of shares of Acquiror
Stock that, but for Section 2.4, would have been issuable to all holders
of Shares pursuant to this Agreement, and
(y) an amount of cash equal to the excess of
(I) the Share Value over (II) the product of (a) the fractional interest
in a share of Acquiror Stock to which such holder shall be entitled
pursuant to clause (x) of this Section 2.4(d) and (b) the 20-Day Average
Price.
(e) Certain Definitions. For purposes of this Agreement:
(i) "Acquiror Share Cap" shall mean a number equal
to seventy percent (70%) of the product of the number of Shares and
0.3775.
(ii) "Adjusted Price" shall mean an amount equal
to the quotient obtained by dividing (1) an amount equal to two
hundred percent (200%) of the product of the Acquiror Share Cap and
the 20-Day Average Price by (2) the number of Shares.
(iii) "Cash Cap" shall mean an amount of cash
determined as follows:
(A) If the 20-Day Average Price equals or
exceeds the Floor Price, the Cash Cap shall be equal to fifty percent
(50%) of the product of (1) the Exchange Ratio, and (2) the Closing Date
Price, and (3) the number of Shares.
(B) If the 20-Day Average Price is less than
the Floor Price, the Cash Cap shall be equal to the lesser of (1) the
amount described in clause (A) of this Section 2.4(e)(iii) and (2) the
product of (X) the Acquiror Share Cap and (Y) the Closing Date Price.
(C) Notwithstanding anything to the contrary
contained in this Agreement, if, based on the Merger Consideration payable
pursuant to this Agreement, the tax opinions referred to in Sections
6.2(e) and 6.3(h) hereof
9
cannot be delivered as a result of the Merger potentially failing to
satisfy continuity of interest requirements under applicable federal
income tax principles relating to reorganizations under 368(a) of
the Code (as reasonably determined by Weil, Gotshal & Xxxxxx LLP, in
consultation with Xxxxxxx, Street and Deinard Professional
Association, such determination to be made (x) taking into account
Dissenting Shares and cash issued in lieu of fractional shares, if
any, (y) using the Closing Date Price as the measure of value of the
shares of Acquiror Stock issued as Merger Consideration and (z) on
the basis that the total value of such Acquiror Stock issued as
Merger Consideration must represent no less than forty-five percent
(45%) of the total consideration issued and to be issued in the
Merger to all holders of Shares), then the Cash Cap shall be reduced
to the extent necessary to enable the tax opinions to be rendered.
(iv) "Closing Date Price" shall mean the per share
closing price of the Acquiror Stock on the NYSE as of the Closing
Date.
(v) "Minimum Cash Amount" shall mean an amount
equal to the lesser of (A) 30% of the product of the Share Value and
the number of Shares and (B) the Cash Cap.
(vi) "Requested Cash Amount" shall mean the
aggregate amount of cash that would be payable with respect to all
Shares for which Cash Elections have been made or deemed made
pursuant to Section 2.3 or 2.5, before giving effect to Section 2.4.
(f) Application of Cash and Share Limitations. The foregoing
provisions of this Article 2 are not intended to, and shall not be applied so as
to, result in:
(i) the issuance of an aggregate number of shares
of Acquiror Stock in excess of the Acquiror Share Cap;
(ii) the payment of an aggregate amount of cash in
excess of the Cash Cap;
(iii) the receipt by a holder of Merger
Consideration per Share having an aggregate value (with Merger
Consideration in the form of Acquiror Stock valued for this purpose
at the 20-Day Average Price) less than the Share Value unless both
(x) the aggregate number of shares of Acquiror Stock to be issued is
equal to the Acquiror Share Cap, and (y) the aggregate amount of
cash to be paid is equal to the product of (1) the Acquiror Share
Cap and (2) the Closing Date Price; or
(iv) the receipt by a holder making a Cash
Election of a value per Share which is different from the value per
Share received by a holder making a Stock Election (with Acquiror
Stock valued for this purpose at the 20-Day Average Price).
10
2.5. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares held by a holder (if any) who has the right to exercise
dissenters' rights under Section 302A.471 and Section 302A.473 of the MBCA, or
any successor provisions (the "Dissenters' Rights Statute") and who shall have
filed with the Company, prior to the vote by the shareholders of the Company on
this Agreement and the Merger, a notice of intent to demand payment of the fair
value of such Shares in accordance with the Dissenters' Rights Statute and shall
not have voted to approve this Agreement and the Merger ("Dissenting Shares")
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or otherwise loses such holder's right to exercise
such holder's dissenters' rights with respect to such Shares, if any. If, before
or after the Effective Time, such holder fails to perfect or loses any such
right to exercise such holder's dissenters' rights with respect to such Shares,
each such Share of such holder shall be treated as a Share that had been
converted as of the Effective Time into the right to receive the Merger
Consideration and such holder shall be deemed to have made the Cash Election. At
the Effective Time, any holder of Dissenting Shares shall cease to have any
rights with respect thereto, except the rights provided in the Dissenters'
Rights Statute and as provided in the immediately preceding sentence. The
Company shall give prompt notice to Xxxxxx of any notices of intent to demand
fair value of Shares in accordance with the Dissenters' Rights Statute received
by the Company, and Xxxxxx shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Xxxxxx, make any payment with
respect to, or settle or offer to settle, any such demands.
2.6. Stock Options. The Company may elect to take all such action
necessary to cause each Company Stock Option (as defined in Section 3.2(a)),
which is outstanding and unexercised immediately prior to the Effective Time, to
become vested as of the Effective Time. Xxxxxx shall pay each holder of any
Company Stock Option, with respect to each Share subject to such Company Stock
Option, an amount in cash equal to the excess of the Share Value over the
exercise price per Share of such Company Stock Option, less all applicable
withholding taxes. All Company Stock Options and all Company stock option plans,
arrangements or agreements shall be terminated thereafter as of the Effective
Time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of GM and Xxxxxx
as follows:
3.1. Organization and Qualification.
(a) The Company and each of its subsidiaries (as defined in Section
3.1(b)) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, except where
the failure to be so organized, existing and in good standing or to
11
have such power and authority would not have or constitute a Material Adverse
Effect (as defined below) on the Company. When used in connection with any party
to this Agreement, the term "Material Adverse Effect" means (i) a material
adverse effect, or any development that results in a material adverse effect, on
the business, operations, financial performance or prospects of such party and
its subsidiaries, taken as whole, or (ii) an event, change, effect or
development that may materially impair or delay the ability of such party to
consummate the transactions contemplated hereby; provided, however, that effects
or developments arising from (A) general economic conditions affecting
participants in the multichannel entertainment distribution industry, (B)
inactions of the Company resulting from Xxxxxx' refusal to provide its consent
pursuant to Section 5.1 of this Agreement or (C) actions which the Company is
required to take pursuant to this Agreement, shall not constitute a Material
Adverse Effect.
(b) Except as set forth in Section 3.1(b) of the Disclosure Schedule
previously delivered by the Company to GM (the "Company Disclosure Schedule"),
the Company has no subsidiaries and does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other security of any
other entity or any other investment in any other entity. The term "subsidiary"
shall mean, when used with reference to any party to this Agreement, any entity
more than fifty percent (50%) of either the outstanding voting securities or the
value of the outstanding equity securities or interests (including membership
interests) of which are owned directly or indirectly by such party.
(c) The Company and each of its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(d) The Company has heretofore delivered to Xxxxxx accurate and
complete copies of the articles of incorporation and by-laws, as currently in
effect, of the Company and each of its subsidiaries.
3.2. Capitalization of the Company and Its Subsidiaries.
(a) The authorized capital stock of the Company consists of: (i)
100,000,000 shares of Common Stock, par value $.0001 per share (the "Common
Stock"), of which, as of December 1, 1998, 60,868,825 shares were issued and
outstanding and no shares were held in treasury, (ii) 500,000,000 shares of
Class A Common Stock, par value $.0001 per Share (the "Class A Common Stock";
and collectively with the Common Stock, the "Company Common Stock"), of which,
as of December 1, 1998, 28,941,950 shares were issued and outstanding and no
shares were held in treasury and (iii) 50,000,000 shares of Preferred Stock, par
value $.01 per share, no shares of which are issued and outstanding. All of the
issued and outstanding shares of Company Common Stock have been validly issued,
and are fully paid, nonassessable and free of preemptive rights. As of December
1, 1998, 713,400 shares of Class A Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding
12
options granted by the Company to purchase shares of Class A Common Stock (the
"Company Stock Options") issued pursuant to the Company stock option plans
listed in Section 3.2(a) of the Company Disclosure Schedule. Since December 1,
1998, no shares of the Company's capital stock have been issued other than
pursuant to the exercise of Company Stock Options already in existence on such
date and, since December 1, 1998, no Company Stock Options have been granted.
Except as set forth above in this Section 3.2(a), as of the date hereof, there
are outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or its subsidiaries convertible into
or exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or its
subsidiaries, and no obligations of the Company or its subsidiaries to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company, and (iv) no
equity equivalents, or interests in the ownership or earnings, of the Company or
its subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Company Securities"). There are no outstanding obligations of
the Company or its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. Except as set forth in Section 3.2(a) of the Company
Disclosure Schedule, there are no shareholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or to which it is
bound relating to the voting of any shares of capital stock of the Company.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding capital stock of the Company's subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien (as
defined below) or any other limitation or restriction (including any restriction
on the right to vote or sell the same, except as may be provided as a matter of
law). There are no securities of the Company or its subsidiaries convertible
into or exchangeable for, no options or other rights to acquire from the Company
or its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly of, any capital stock or other ownership interests in, or
any other securities of, any subsidiary of the Company. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including, without limitation, any
security) any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
13
3.3. Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board of Directors of the Company (the "Company
Board") and the Statutory Committee and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby (other than, with respect to the Merger,
the approval and adoption of this Agreement by the holders of a majority of the
voting power of the then outstanding shares of Company Common Stock). This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid, legal and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
(b) The Company Board has, by unanimous vote of those present, duly
and validly approved, and taken all corporate actions required to be taken by
the Company Board for the consummation of the transactions, including the
Merger, contemplated hereby and by the Shareholders Agreement and resolved to
recommend that the shareholders of the Company approve and adopt this Agreement.
The Statutory Committee has been duly formed pursuant to Section 302A.673,
subd.1, and has duly and validly authorized and approved this Agreement, the
Merger and the Shareholders Agreement and the consummation of the transactions
contemplated by this Agreement and the Shareholders Agreement. The action of the
Statutory Committee in approving this Agreement and the transactions
contemplated hereby, including the Merger, and in approving the Shareholders
Agreement and the transactions contemplated thereby, is sufficient to render
inapplicable to the Merger, this Agreement, and the transactions contemplated by
the Shareholders Agreement, the provisions of Sections 302A.673 and 302A.675 of
the MBCA and no Minnesota or other State takeover statute or similar statute or
regulation applies to the Merger, this Agreement, the Shareholders Agreement, or
any of the transactions contemplated hereby or thereby.
3.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
with the Securities and Exchange Commission (the "SEC") since February 6, 1996
(the "Company SEC Reports"), each of which has complied in all material respects
with all applicable requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each as in effect on the
dates such forms, reports and documents were filed. None of the Company SEC
Reports, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included in
the Company SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly present, in conformity with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis
14
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and changes in financial
position for the periods then ended (subject, in the case of the unaudited
interim financial statements, to (A) normal year-end adjustments and (B) any
other adjustments described in the Company SEC Reports filed prior to the date
of this Agreement (the "Filed Company SEC Reports")).
(b) The Company has heretofore made available to GM a complete and
correct copy of any material amendments or modifications, which have not yet
been filed with the SEC, to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Exchange
Act.
3.5. Information Supplied.
(a) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the registration
statement on Form S-4 to be filed with the SEC by GM in connection with the
issuance of shares of Acquiror Stock in the Merger, including the prospectus
contained therein and any amendment thereof or supplement thereto (the "S-4")
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If at any time prior to
the Effective Time, any event with respect to the Company, its officers and
directors or any of its subsidiaries should occur which is required to be
described in the S-4, the Company shall promptly so advise Xxxxxx.
(b) The proxy statement relating to the meeting of the Company's
shareholders to be held in connection with the Merger, including any amendment
thereof or supplement thereto (the "Proxy Statement") will not, at the date
mailed to shareholders of the Company and at the times of the meeting of
shareholders of the Company to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Communications Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the "Communications Act"),
the filing and recordation of a certificate of merger as required by the DGCL,
the filing of articles of merger as required by the MBCA, and as otherwise set
forth in Section 3.6 of the Company Disclosure Schedule, no filing with or
notice to, and no permit, authorization, consent or approval of, any court or
tribunal or administrative, governmental or regulatory body, agency or authority
(a "Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the
15
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Except as set forth in Section
3.6 to the Company Disclosure Schedule, neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective certificate or articles of
incorporation or bylaws (or similar governing documents) of the Company or any
of its subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, or (iii)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Except as set forth in Section 3.6 of
the Company Disclosure Schedule, neither the execution, delivery and performance
of this Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, will require any consent or approval pursuant
to any material programming agreement, software license or billing/customer
service agreement binding on the Company. No rights of first refusal or first
offer, preemptive rights or similar rights of participation are applicable to
the transactions contemplated by this Agreement or the Shareholders Agreement.
3.7. No Default. None of the Company or its subsidiaries is in
default or violation (and no event has occurred which with or without due notice
or the lapse of time or both would constitute a default or violation) of any
term, condition or provision of (i) its certificate or articles of incorporation
or bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound or (iii)
any order, writ, injunction, decree, law, statute, rule or regulation applicable
to the Company, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
3.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent disclosed by the Company in the Filed Company SEC Reports or as
disclosed in Section 3.8 of the Company Disclosure Schedule, since January 1,
1998, (a) neither the Company nor its subsidiaries has incurred any liabilities
or obligations of any nature, whether or not accrued, contingent or otherwise,
and whether due or to become due or asserted or unasserted, which would,
individually or in the aggregate, have a Material Adverse Effect on the Company,
(b) except as contemplated by this Agreement, the business of the Company and
its subsidiaries has been carried on in all material respects in the ordinary
course consistent with past practices, (c) the Company has not paid any dividend
or distribution in respect of, or redeemed or repurchased any of, its capital
stock or other equity
16
securities, including securities directly or indirectly convertible into or
exercisable or exchangeable for any of its capital stock or other equity
securities, (d) the Company has not entered into or consummated any transaction
with any officer, director or affiliate of the Company or any person known by
the Company to be an affiliate of any of them and (e) except as required by
GAAP, the Company has not changed its methods of accounting (either for
financial accounting or tax purposes).
3.9. Litigation. Except as disclosed by the Company in the Filed
Company SEC Reports, as disclosed in Section 3.9 of the Company Disclosure
Schedule, or as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, (i) there is no suit, claim, action, proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets and (ii) none of the Company or its subsidiaries is subject to any
outstanding order, writ, injunction or decree.
3.10. Compliance with Applicable Law. Except as disclosed by the
Company in the Filed Company SEC Reports and for failures which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
(i) the Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), (ii) the
Company and its subsidiaries are in compliance with the terms of the Company
Permits, (iii) the businesses of the Company and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity and (iv) no investigation or review by any Governmental Entity with
respect to the Company or its subsidiaries is pending or, to the knowledge of
the Company, threatened, nor, to the knowledge of the Company, has any
Governmental Entity indicated an intention to conduct the same. No
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws (as defined in Section 3.12(a)) and the FCC Licenses (as
defined in Section 3.18).
3.11. Employee Plans.
(a) Section 3.11(a) of the Company Disclosure Schedule lists all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and all other employee benefit
plans or other benefit arrangements, including but not limited to all employment
and consulting agreements and all bonus and other incentive compensation,
deferred compensation, disability, severance, retention, salary continuation,
stock and stock-related award, stock option, stock purchase, collective
bargaining or workers' compensation agreements, plans, policies and arrangements
which the Company or any of its subsidiaries maintains, is a party to,
contributed to or has any obligation to or liability for in respect of current
or former employees and directors (each, a "Company Employee Benefit Plan" and
collectively, the "Company Employee Benefit Plans"). None of the Company
Employee Benefit Plans is subject to Title IV of ERISA.
17
(b) True, correct and complete copies of the most recent summary
plan description for each Company Employee Benefit Plan have been delivered to
Xxxxxx for review prior to the date hereof.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, (i) all payments required to be made by
or under any Company Employee Benefit Plan, any related trusts, insurance
policies or ancillary agreements, or any collective bargaining agreement have
been timely made, (ii) the Company and its subsidiaries have performed all
obligations required to be performed by them under any Company Employee Benefit
Plan, (iii) the Company Employee Benefit Plans comply in all respects and have
been maintained in compliance with their terms and the requirements of ERISA,
the Code and other applicable laws, and (iv) there are no actions, suits,
arbitrations or claims (other than routine claims for benefits) pending or, to
the knowledge of the Company, threatened with respect to any Company Employee
Benefit Plan.
(d) Each Company Employee Benefit Plan and its related trust which
are intended to be "qualified" within the meaning of Sections 401(a) and 501(a)
of the Code, respectively, have been determined by the Internal Revenue Service
to be so "qualified" under such Sections, as amended by the Tax Reform Act of
1986, and the Company knows of no fact which would adversely affect the
qualified status of any such Company Employee Benefit Plan and its related
trust.
(e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) increase any
benefits otherwise payable under any Company Employee Benefit Plan, or (ii)
result in the acceleration of the time of payment or vesting of any such
benefits. Except as contemplated by Section 5.1(f) or 5.16 of this Agreement,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in any payment becoming due, or
increase the compensation due, to any current or former employee or director of
the Company or any of its subsidiaries.
3.12. Environmental Matters. (a) As used in this Agreement:
(i) "Environmental Law" means any applicable federal, state or local
law, statute, code, ordinance, policy, rule, regulation, order, settlement
agreement, or other governmental requirement from any U.S. or foreign
jurisdiction concerning the Release (as defined herein), handling, storage,
management, processing, transportation or other use, or disposal or arrangement
for disposal, of any solid waste, industrial waste or Hazardous Substance (as
defined herein) including, by way of example but not limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (43 U.S.C.
ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss.
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et
seq.), the Clean Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (33
U.S.C. ss. 2601 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.
136 et seq.) and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.) as such laws have been amended and the regulations promulgated
18
pursuant thereto, and any applicable and analogous state or local statutes,
codes, policies, rules, regulations or related requirements of governmental
entities of foreign jurisdictions.
(ii) "Environmental Claim" means any allegation, notice of
violation, action, claim, lien, demand, order, injunction, judgment, decree,
ruling, assessment or arbitration award or directive (conditional or otherwise)
by any court, arbitrator or governmental entity or any person for personal
injury (including sickness, disease or death), tangible or intangible property
damage, diminution in value, damage to the environment or natural resources,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions resulting from or based upon (A) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden accidental or non-accidental Release)
of, or exposure to, any Hazardous Substance, odor, audible noise, or any solid
or industrial waste, (B) the transportation, storage, treatment or disposal of
solid waste, industrial waste or Hazardous Substances, in connection with the
past or present operations of the Company, any of its subsidiaries or any of
their respective predecessors or assigns, or (C) the violation, or alleged
violation, of any Environmental Laws, orders, injunctions, judgments, decrees,
rulings, assessments, arbitration awards, Environmental Permits or ruling, order
or decision of any court arbitrator or Government Entity relating to
environmental matters.
(iii) "Environmental Permit" means any permit, approval,
authorization, license, variance, registration, permit application,
notification, program development and implementation, or permission required
under any applicable Environmental Law.
(iv) "Hazardous Substance" means any substance, material or waste
which is regulated under any Environmental Law or by any applicable governmental
entity, governmental entity in the jurisdictions in which the Company or any
subsidiary or any of their respective predecessors or assigns conducts or has
conducted business, or the United States, including, without limitation, any
material or substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste," "subject waste," "contaminant," "toxic waste," "toxic
substance" or "residual waste" "under any Environmental Law, including, but not
limited to, radioactive materials, petroleum products (including fractions
thereof), asbestos and polychlorinated biphenyls.
(v) "Property" means any land, facility or operations currently or
previously owned by the Company, any of its subsidiaries or any of their
respective predecessors or assigns.
(vi) "Release" means any intentional or unintentional, continuous or
intermittent release, spill, emission, seepage, leaking, pumping, uncontrolled
loss, injection, deposit, disposal, discharge, dispersal, leaching or migration
into the environment, or any building surface, or onto or from any Property of
any Hazardous Substance, including the movement of any Hazardous Substance
through or in the air, soil, surface water, ground water or otherwise.
19
(vii) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required or voluntarily undertaken to (A)
clean up, remove, treat, or in any other way address any Hazardous Substance or
any other material required pursuant to applicable Environmental Law, (B)
prevent the Release or threat of Release, or minimize the further Release of any
Hazardous Substance or any other material required pursuant to applicable
Environmental Law, (C) perform pre-remedial studies and investigations or
post-remedial monitoring and care including the conduct of risk assessments and
negotiation with applicable governmental entities regarding Hazardous Substance
or any other material required pursuant to applicable Environmental Law, or (D)
bring the Properties into compliance with all applicable Environmental Laws and
Environmental Permits.
(b) The Company and each of its subsidiaries, with respect to its
use of and operations at each Property, has been and is in compliance in all
material respects with all Environmental Laws, except where the failure so to be
in compliance would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(c) Neither the Company nor any of its subsidiaries or any of their
respective predecessors (to the Company's knowledge, with respect to
non-affiliated predecessors) has received any written communication from a
court, arbitrator or governmental entity or any other person that alleges that
the Company or any such subsidiary or predecessor is not in compliance, in any
respect, with any Environmental Law or has liability thereunder, except for
written communications which make allegations which, if true, are not reasonably
likely, individually or in the aggregate, to result in a Material Adverse Effect
on the Company.
(d) Except as disclosed in Section 3.12 of the Company Disclosure
Schedule, none of the operations or Properties of the Company or any of its
subsidiaries or any of their respective predecessors or assigns (to the
Company's knowledge, with respect to unaffiliated predecessors and assigns) is
the subject of investigation by any governmental entity, whether U.S., State,
local or foreign, respecting (i) Environmental Laws, (ii) any Remedial Action or
(iii) any Environmental Claim arising from a Release or otherwise of any
Hazardous Substance or any other substance regulated under any Environmental
Law, which in each case would, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its subsidiaries have
filed all notices, obtained all Environmental Permits and conducted all actions
required under all Environmental Laws, except where the failure to file such
notices, obtain such Environmental Permits or take such actions would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(e) The Company, each of its subsidiaries and any of their
respective predecessors (to the Company's knowledge, with respect to
unaffiliated predecessors) have filed all notices required to be filed under all
Environmental Laws reporting any Release, obtained all Environmental Permits and
taken all Remedial Actions required under all Environmental Laws, except where
failure to file such notices, obtain such Environmental Permits or take such
Remedial Actions would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
20
(f) Neither the Company nor any of its subsidiaries has any
contingent liabilities (as defined in GAAP) with respect to its business or that
of its predecessors in connection with any Hazardous Substance or Environmental
Law that would, individually or in the aggregate, have a Material Adverse Effect
on the Company.
(g) Underground storage tanks are not and have not been located on
or under any Property and there have been no Releases of Hazardous Substances
on, in or under any Property or other real property for which the Company or any
of its subsidiaries would be responsible or potentially responsible and that
would, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(h) Neither the Company nor any of its subsidiaries or any of their
respective predecessors (to the Company's knowledge, with respect to
unaffiliated predecessors) is subject to any judicial, administrative or
arbitral actions, suits, proceedings (public or private), written claims or
governmental proceedings alleging the violation of any Environmental Law or
Environmental Permit that would, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(i) Neither the Company nor any of its subsidiaries or any of their
respective predecessors or assigns (to the Company's knowledge, with respect to
unaffiliated predecessors and assigns) as a result of their respective past and
current operations, has caused or permitted any Hazardous Substances to remain
or be disposed of, either on or under any Property or on any real property not
permitted to accept, store or dispose of such Hazardous Substances, that would,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(j) The transactions contemplated under this Agreement do not
trigger any obligation or duty on the part of the Company or the subsidiaries to
file any notice with or obtain approval from any Governmental Entity having
jurisdiction over environmental or health and safety matters.
(k) None of the Properties owned by the Company or any of its
subsidiaries contain or are constructed with any asbestos or asbestos-containing
building materials, the presence of which in its current condition requires
abatement or encapsulation.
(l) The Company and all its subsidiaries have obtained, currently
maintain, and are in material compliance with all Environmental Permits required
for their operations, such Environmental Permits are readily transferable to the
Buyer, and there is no pending or threatened action or proceeding to revoke or
materially modify or alter the terms and condition of such Environmental
Permits.
(m) None of the Properties of the Company or any subsidiaries is
listed or proposed for listing on the National Priorities List ("NPL"), the
CERCLIS, or any analogous state list of sites to be investigated or remediated
as a result of the possible presence of Hazardous Substances and neither the
Company nor the subsidiaries has received any notice from any Governmental
Entity or Person that it is or could potentially be liable for the cost
21
to investigate or remediate contamination under Environmental Law or any request
for information under section 104 of CERCLA or any analogous state law.
3.13. Tax Matters. Except as disclosed on Section 3.13 of the
Company Disclosure Schedule:
(a) The Company and each of its subsidiaries, and each affiliated
group (within the meaning of Section 1504 of the Code), unitary group or
combined group of which the Company or any of its subsidiaries is or has ever
been a member, has (or, by the Closing Date, will have) timely filed with the
appropriate taxing authorities all Federal income tax returns and all other
material tax returns and reports required to be filed by it through the Closing
Date. All such tax returns are (or will be) complete and correct in all material
respects. Except to the extent adequately reserved for in accordance with GAAP,
the Company and each of its subsidiaries has (or, by the Closing Date, will
have) paid (or the Company has paid on its subsidiaries' behalf) all taxes due
in respect of the taxable periods covered by such tax returns. The most recent
consolidated financial statements contained in the Company SEC Reports reflect
an adequate reserve in accordance with GAAP for all taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof through the
date of such financial statements. Since December 31, 1997, neither the Company
nor any of its subsidiaries has incurred any liability for taxes other than in
the ordinary course of its businesses for which adequate reserves have been
established on subsequent unaudited financial statements. The Company has
previously delivered to Xxxxxx copies of all income and franchise tax returns
filed by the Company and each of its subsidiaries for their taxable years ended
in 1995, 1996 and 1997 and all audit or examination reports relating to income
or franchise taxes in respect of the Company or any of its subsidiaries within
the preceding ten (10) years. For purposes of this Agreement, "tax" or "taxes"
shall mean all taxes, charges, fees, imposts, levies, gaming or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
and shall include any joint and/or transferee liability (including any liability
under Treasury Regulation Section 1.1502-6 or any comparable provision of state,
local or foreign tax law) in respect of taxes or any liability in respect of
taxes imposed by contract, tax sharing agreement, tax indemnity agreement or any
similar agreement; and "tax returns" shall mean any report, return, document,
declaration or any other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to taxes,
including, without limitation, information returns, any document with respect to
or accompanying payments or estimated taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return
document, declaration or other information.
(b) No material deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and its subsidiaries. No state where the Company or
one of its subsidiaries does not file an income
22
or franchise tax return has asserted in writing during the preceding five (5)
years that such corporation should be so filing, no outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to taxes or tax returns have been given by or on behalf of the Company
or any of its subsidiaries (and no request for any such waiver or consent is
pending) and no power of attorney with respect to any taxes has been executed or
filed with any taxing authority. No material issues relating to taxes have been
raised in writing by the relevant taxing authority during any presently pending
audit or examination. None of the federal income tax returns of the Company and
each of its subsidiaries consolidated in such tax returns have been reviewed by
the Internal Revenue Service and the Company has not been contacted regarding
any such review, and the state and local tax returns of the Company and its
subsidiaries have been examined for the taxable periods set forth in Section
3.13(b) of the Company Disclosure Schedule.
(c) No material Liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for statutory liens
for taxes not yet due.
(d) None of the Company or any of its subsidiaries is a party to or
is bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority).
(e) None of the Company or any of its subsidiaries has taken, agreed
to take or will take any action that would prevent the Merger from constituting
a reorganization qualifying under the provisions of Section 368(a) of the Code.
(f) Neither the Company nor any of its subsidiaries has made, will
make, or is obligated to make any payment (whether in cash or property or the
vesting of property) that, either individually or in the aggregate, would not be
deductible by reason of Section 280G or 162(m) of the Code, or is party to any
employment, severance or termination agreement, other compensation arrangement
or Company Employee Benefit Plan currently in effect, or the Program (as defined
in Section 5.16(e)) or any other program established pursuant to Section 5.16,
which provides for the making of any such payment.
(g) The Company and its subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of taxes.
(h) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending or
threatened in writing with regard to any federal income or material state, local
or foreign taxes or tax returns of the Company or its subsidiaries and neither
the Company nor any of its subsidiaries has received a written notice of any
pending audit or proceeding.
(i) Neither the Company nor any of its subsidiaries has agreed to or
is required to make any adjustment under Section 481(a) of the Code.
23
(j) Neither the Company nor any of its subsidiaries has (i) with
regard to any assets or property held or acquired by any of them, filed a
consent to the application of Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any of its subsidiaries, (ii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any similar provision of state, local or
foreign law, or (iii) received or filed any requests for rulings or
determinations in respect of any taxes within the last five (5) years.
(k) No property owned by the Company or any of its subsidiaries (i)
is property required to be treated as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986, (ii) constitutes "tax exempt use property" within the meaning of
Section 168(h)(1) of the Code, or (iii) is "tax exempt bond financed property"
within the meaning of Section 168(g) of the Code.
(l) The Company and each of its subsidiaries are not currently, have
not been within the last five years, and do not anticipate becoming, a "United
States real property holding company" within the meaning of Section 897(c) of
the Code.
(m) No subsidiary of the Company owns any Shares.
3.14. Opinion of Financial Advisors. Each of Credit Suisse First
Boston Corporation and Xxxxxxx, Xxxxx & Co. (the "Company Financial Advisors")
has delivered to the Company Board its opinion, dated the date of this
Agreement, to the effect that, as of such date, and based upon and subject to
certain matters stated in such opinions, the Merger Consideration is fair to the
holders of Shares from a financial point of view, and such opinion has not been
withdrawn or adversely modified.
3.15. Brokers. No broker, finder or investment banker (other than
the Company Financial Advisors, a true and correct copy of whose engagement
agreements have been provided to GM) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
24
3.16. Material Contracts.
(a) Section 3.16 of the Company Disclosure Schedule lists all
contracts and agreements (and all amendments, modifications and supplements
thereto and all side letters to which the Company is a party affecting the
obligations of any party thereunder) to which the Company or any of its
subsidiaries is a party or by which any of its properties or assets are bound
that relate to: (i) material employment, product design or development, personal
services, consulting, non-competition, severance or indemnification; (ii)
material licensing, merchandising, production, manufacturing, retailing, sales
(including sales agency) or programming, production or distribution (including
any programming "puts"), including without limitation, all such contracts and
agreements containing exclusivity or "most favored nation" provisions; (iii) a
right of first refusal, first negotiation, "tag along" or "drag along" rights
applicable to any capital stock or material assets of the Company; (iv) a
partnership or joint venture, or cooperative development efforts; (v) the
acquisition, sale, lease or other disposition of material properties or assets
of the Company or its subsidiaries or predecessors (by merger, purchase or sale
of assets or stock or otherwise) entered into since February 6, 1996; (vi)
agreements with any Governmental Entity; (vii) contracts for the construction of
satellites; (viii) financial incentive arrangements for equipment manufacturers;
(ix) signal security and testing or signal theft; (x) material promotion,
marketing, sponsorship or similar arrangements; (xi) indebtedness for borrowed
money, letters of credit, security agreements, lockbox arrangements or
guaranties of the foregoing; (xii) real property deeds or leases and material
equipment leases including, without limitation, all satellite transponder
leases; (xiii) material software or Intellectual Property (as defined in Section
3.19(b)) license or maintenance agreements; (xiv) customer services (including,
without limitation, telemarketing and billing); (xv) the provision of any
services, products or payments to or from any officer, director, employee or
other affiliate of the Company or such officer, director or employee; (xvi) all
agreements relating to the retransmission of the Company's signal by cable
systems or any other multichannel programming distributor; and (xvii) all
commitments and agreements to enter into any contracts or agreements relating to
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 5.1 hereof, the "Material Contracts").
(b) Each of the Material Contracts is valid and enforceable in
accordance with its terms, and there is no default under any Material Contract
so listed either by the Company (including the consummation of the Merger) or,
to the knowledge of the Company, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company (including the consummation of
the Merger) or, to the knowledge of the Company, any other party, in any such
case in which such default or event would, individually or in the aggregate,
have a Material Adverse Effect on the Company. Except as set forth in Section
3.16 of the Company Disclosure Schedule, all material agreements or other
arrangements between the Company and its sales agents, dealers and retailers are
terminable by the Company on not greater than 30 days' notice, with no material
termination fee or, except for commissions or fees earned, continuing payment
obligations thereunder.
(c) No party to any Material Contract has given notice to the
Company of, or made a claim against the Company with respect to, any breach or
default thereunder, in
25
any such case in which such breach or default would, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company is not
currently being audited, and has not received notice of an intent to conduct any
audit, under any material programming agreement.
3.17. Labor and Employment Matters.
(a) Except as set forth in Section 3.17(a) of the Company Disclosure
Schedule or as contemplated by Section 5.16 of this Agreement, neither the
Company nor any of its subsidiaries is a party to any employment, severance
compensation, labor or collective bargaining agreement and there are no
employment, severance compensation, labor or collective bargaining agreements
which pertain to employees of the Company or any of its subsidiaries. No labor
organization or group of employees of the Company or any of its subsidiaries has
made a pending written demand for recognition or certification.
(b) Except as contemplated by Section 5.16 of this Agreement, the
only employment agreements and severance compensation agreements with officers
of the Company or any of its subsidiaries are set forth in Section 3.17(b) of
the Company Disclosure Schedule. Except as set forth in Section 3.17(b) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
a party to or bound by any severance or other agreement with any employee or
consultant pursuant to which such person would be entitled to receive any
additional compensation or an accelerated payment of compensation as a result of
the consummation of the transactions contemplated hereby.
3.18. FCC Matters. Section 3.18 of the Company Disclosure Schedule
sets forth all permits, licenses, waivers or authorizations issued by the
Federal Communications Commission (the "FCC") held by the Company and its
subsidiaries (the "FCC Licenses"). For the purposes of this Agreement, the term
"FCC Licenses" shall not include the FCC construction permit and launch
authority to use DBS frequencies at 110(degree) west longitude (the "110(degree)
Construction Permit"). Except as is not material to the conduct of the business
of the Company and its subsidiaries: (i) the Company and its subsidiaries are
financially qualified and, to the knowledge of the Company, are otherwise
qualified to hold the FCC Licenses or to control the FCC Licenses, as the case
may be; (ii) the FCC Licenses constitute all permits, licenses, waivers or
authorizations that the Company and its subsidiaries are required by the FCC to
hold in connection with the operation of its business as currently conducted,
the Company and such subsidiaries that are required to hold FCC Licenses to
operate the Company's business as currently conducted validly hold such FCC
Licenses, and the FCC Licenses are in full force and effect; (iii) the Company
is not aware of any facts or circumstances relating to the FCC qualifications of
the Company or any of its subsidiaries that would prevent the FCC's granting the
Transfer of Control Application to be filed with respect to the Merger (the "FCC
Application"); (iv) the Company and its subsidiaries are in compliance with all
FCC Licenses and with the Communications Act; and (v) there is not pending or,
to the knowledge of the Company threatened, any application, petition, objection
or other pleading with the FCC or other governmental authority which challenges
the validity of, or any rights of the holder under, any FCC License.
26
3.19. Intellectual Property.
(a) The Company or one of its subsidiaries owns or possesses (and
will own or possess as of the Effective Time) all right, title and interest in
and to, or a valid and enforceable license or other right to use all of the
Intellectual Property (as defined below), and all of the right, benefits, and
privileges associated therewith, that is material to the conduct of the business
of the Company and its subsidiaries as currently conducted (and as conducted as
of the Effective Time). To the knowledge of the Company, neither the Company nor
any of its subsidiaries has infringed, misappropriated or otherwise violated any
Intellectual Property of any other person, and neither the Company nor any of
its subsidiaries is aware of any such infringement, misappropriation or
violation which would reasonably be expected to occur prior to the Effective
Time. To the knowledge of the Company, no person is materially infringing upon
any Intellectual Property right of the Company or any of its subsidiaries.
Notwithstanding the foregoing, no representation or warranty is made with
respect to any Intellectual Property licensed from Xxxxxx or DIRECTV
Enterprises, Inc. ("DIRECTV"), or developed or used by Xxxxxx or DIRECTV in
connection with the multichannel entertainment distribution business.
(b) The term "Intellectual Property" means all patents, patent
applications and patent disclosures; all inventions (whether or not patentable
and whether or not reduced to practice); all trademarks, service marks, trade
dress, trade names and corporate names and all the goodwill associated
therewith; all mask works; all registered and unregistered statutory and common
law copyrights; all registrations, applications and renewals for any of the
compositions, know-how, manufacturing and production processes and techniques,
research information, drawings, specifications, design plans, improvements,
proposals, technical and computer data, documentation and software, financial
proposals, technical and computer data, documentation and software, financial
business and marketing plans, customer and supplier lists and related
proprietary information, marketing materials and all other proprietary rights.
3.20. Insurance. The Company and its subsidiaries maintain adequate
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by corporations of established reputations
engaged in the same or similar business and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such other corporations. For all such insurance policies, as described in
Section 3.20 of the Company Disclosure Schedule, all premiums shall be paid to
ensure that they are in effect and will remain in force until or after the
Effective Time.
3.21. Indebtedness. Except as set forth in the Filed Company SEC
Reports, neither the Company nor any of its subsidiaries has any outstanding
indebtedness for borrowed money or representing the deferred purchase price of
property or services or similar liabilities or obligations, including any
guarantee in respect thereof, or is a party to any agreement, arrangement or
understanding providing for the creation, incurrence or assumption thereof.
27
3.22. Liens. Neither the Company nor any of its subsidiaries has
granted, created or suffered to exist with respect to any of its assets, any
security interest, mortgage, deed of trust, pledge or encumbrance (a "Lien") of
any kind or nature whatsoever.
3.23. Real Property. Section 3.23 of the Company Disclosure Schedule
sets forth all of the real property owned in fee by the Company and its
subsidiaries that is material to the conduct of the business of the Company and
its subsidiaries, taken as a whole. Each of the Company and its subsidiaries has
good and marketable title to each parcel of real property owned by it free and
clear of all Liens, except those listed in Section 3.22 of the Company
Disclosure Schedule.
3.24. Tangible Property. With respect to the tangible properties and
assets of the Company and its subsidiaries (excluding real property) that are
material to the conduct of the businesses of the Company and its subsidiaries,
the Company and its subsidiaries have good title to, or hold pursuant to valid
and enforceable leases, all such properties and assets. All of the assets of the
Company and its subsidiaries have been maintained and repaired for their
continued operation and are in good operating condition, reasonable wear and
tear excepted, and usable in the ordinary course of business, except where the
failure to be in such repair or condition or so usable would not individually or
in the aggregate, have a Material Adverse Effect on the Company.
3.25. Programming Arrangements. The amount of license fees currently
paid by the Company pursuant to any material programming agreement has not been
and shall not be increased due to the Company's failure to meet any subscriber
penetration requirements or other similar benchmarks. Except as set forth in
Section 3.25 of the Company Disclosure Schedule, none of the Company's material
programming agreements are subject to renewal prior to December 31, 2000, nor
will any negotiation period relating to the renewal or extension of any material
programming agreement commence prior to December 31, 2000. Except as set forth
on Section 3.25 to the Company Disclosure Schedule, there are no affirmative
obligations under any programming (or similar) agreement to carry any additional
programming channels (or feeds thereof) above and beyond what the Company
currently carries.
3.26. Consolidation Matters. The Agreement, dated March 5, 1993, as
amended, between ADS Alliance Data Systems, Inc. ("ADS") and the Company is
terminable effective as of June 17, 1999, without the payment of any termination
fee and without the obligation to continue to use or pay for ADS services
following such date. The Company has the contractual right to terminate (i)
Direct Broadcast Satellite Contract No. 104274-B, effective December 31, 1996,
between Lockheed Xxxxxx Corporation and the Company, as amended and (ii) the
Billing and Customer Service Agreement between the Company and Convergys
Information Management Group Inc., effective October 16, 1998 and the letter
agreement dated October 16, 1998. The rights of Vulcan Ventures, Inc. and Dow
Xxxxx & Company under their respective programming agreements with the Company
have been suspended effective on the date hereof. Such agreements automatically
terminate upon the Closing of the Merger, and there will be no continuing
payment or performance obligation of the Company under such agreements
thereafter. The Agreement, dated March 21, 1997 between the Company and ADS for
remittance processing service (the "ADS
28
Remittance Agreement") is terminable effective March 20, 2000 upon prior notice
as required by such agreement. The fees due under the ADS Remittance Agreement
are subject to adjustment in March 1999 as provided in Section 4.2 of such
Agreement. The ADS Remittance Agreement contains minimum fee obligations as
provided in Appendix A thereto.
3.27. No Other Representations or Warranties. Notwithstanding
anything contained in this Article 3 or any other provision of this Agreement,
it is the explicit intent of each party hereto that the Company is making no
representation or warranty whatsoever, express or implied, except those
representations and warranties of the Company set forth in this Article 3.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF GM AND XXXXXX
XX and Xxxxxx hereby jointly and severally represent and warrant to
the Company as follows:
4.1. Organization and Qualification. GM is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power and authority
would neither have a Material Adverse Effect on Xxxxxx nor materially impair or
delay the ability of GM to consummate the transactions contemplated hereby. GM
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would neither have a Material Adverse Effect on
Xxxxxx nor may materially impair or delay the ability of GM to consummate the
transactions contemplated hereby.
4.2. Capitalization of GM and Its Subsidiaries. The Acquiror Stock
is the only class of authorized capital stock of GM as to which GM reports
earnings per share based upon the Available Separate Consolidated Net Income of
Xxxxxx attributable to holders of Acquiror Stock, as provided for under GM's
Amended and Restated Certificate of Incorporation and as set forth in GM's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997. As of
November 30, 1998, 600,000,000 shares of Acquiror Stock were authorized and
105,993,793 shares of Acquiror Stock were issued and outstanding. All of the
issued and outstanding shares of Acquiror Stock have been validly issued, and
are fully paid, nonassessable and free of preemptive rights. As of November 30,
1998, 16,396,454 shares of Acquiror Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding options to purchase Acquiror Stock granted by GM or Xxxxxx pursuant
to the GM Amended Stock Incentive Plan and the Xxxxxx Incentive Plan. Except (i)
as described in the GM SEC Reports, and (ii) as set forth above, as of the date
hereof, there are outstanding (A) no securities of GM or
29
its subsidiaries convertible into or exchangeable for shares of Acquiror Stock,
(B) no options or other rights to acquire from GM or its subsidiaries, and no
obligations of GM or its subsidiaries to issue, any Acquiror Stock, or
securities convertible into or exchangeable for Acquiror Stock, and (C) no
equity equivalents, interests in the ownership or earnings of Xxxxxx or its
subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Xxxxxx Securities"). There are no outstanding obligations of GM
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
Acquiror Stock.
4.3. Authority Relative to This Agreement. Each of GM and Xxxxxx has
all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Boards of
Directors of GM and Xxxxxx and by GM as the sole shareholder of Xxxxxx, and no
other corporate proceedings on the part of GM or Xxxxxx are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of GM
and Xxxxxx and constitutes a valid, legal and binding agreement of each of GM
and Xxxxxx, enforceable against each of GM and Xxxxxx in accordance with its
terms.
4.4. SEC Reports; Financial Statements. (a) GM has filed all
required forms, reports and documents with the SEC since January 1, 1996 (the
"GM SEC Reports"), each of which has complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, each as in
effect on the dates such forms, reports and documents were filed. None of the GM
SEC Reports, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained, when filed,
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of GM included
in the GM SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly present, in conformity with GAAP applied
on a consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of GM and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended (subject, in the case of the
unaudited interim financial statements, to (A) normal year-end adjustments and
(B) any other adjustments described in the GM SEC Reports filed prior to the
date of this Agreement (the "Filed GM SEC Reports")).
(b) Xxxxxx has heretofore made available to the Company a complete
and correct copy of any material amendments or modifications, which have not yet
been filed with the SEC, to agreements, documents or other instruments which
previously had been filed by GM with the SEC pursuant to the Exchange Act, to
the extent that Xxxxxx or DIRECTV is a party to such agreements or such
agreements relate to the business of Xxxxxx or DIRECTV.
30
4.5. Information Supplied.
(a) None of the information supplied or to be supplied by GM or
Xxxxxx for inclusion in the Proxy Statement will, at the date mailed to
shareholders of the Company and at the time of the meeting of shareholders of
the Company to be held in connection with the Merger, 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 are made, not misleading. If at any time
prior to the Effective Time, any event with respect to GM, its officers and
directors or any of its subsidiaries should occur which is required to be
described in the Proxy Statement, GM shall promptly so advise the Company.
(b) Neither the S-4 nor any amendment thereto will at the time it
becomes effective under the Securities Act or at the Effective Time 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 are made, not misleading. No
representation or warranty is made by GM or Xxxxxx in this Section 4.5 with
respect to statements made or incorporated by reference therein based on
information supplied by the Company or any of its subsidiaries for inclusion or
incorporation by reference in the S-4. The S-4 will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations thereunder.
4.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the Communications Act, the filing and
recordation of a certificate of merger as required by the DGCL, and the filing
of articles of merger as required by the MBCA, no filing with or notice to, and
no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by GM or Xxxxxx of this Agreement or
the consummation by GM or Xxxxxx of the transactions contemplated hereby, except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings or give such notice would neither have a Material
Adverse Effect on Xxxxxx nor materially impair or delay the ability of GM to
consummate the transactions contemplated hereby. Except as set forth in Section
4.6 of the GM Disclosure Schedule, neither the execution, delivery and
performance of this Agreement by GM or Xxxxxx nor the consummation by GM or
Xxxxxx of the transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the respective certificate or articles of
incorporation or bylaws (or similar governing documents) of GM or Xxxxxx or any
of GM's subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which GM or Xxxxxx or any of GM's subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to GM or Xxxxxx or any of GM's subsidiaries or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would neither have a Material Adverse
31
Effect on Xxxxxx nor materially impair or delay the ability of GM to consummate
the transactions contemplated hereby.
4.7. No Default. None of GM or its subsidiaries is in default or
violation (and no event has occurred which with or without due notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its certificate or articles of incorporation or
bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which GM or any of its subsidiaries is now a party or by which any of them or
any of their respective properties or assets may be bound or (iii) any order,
writ, injunction, decree, law, statute, rule or regulation applicable to GM, its
subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for violations, breaches or defaults which would neither have a
Material Adverse Effect on Xxxxxx nor materially impair or delay the ability of
GM to consummate the transactions contemplated hereby.
4.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent disclosed by GM in the GM SEC Reports filed prior to the date of
this Agreement (the "Filed GM SEC Reports"), since January 1, 1998, (a) neither
GM nor its subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, and whether due or to
become due or asserted or unasserted, which would either have a Material Adverse
Effect on Xxxxxx or materially impair or delay the ability of GM to consummate
the transactions contemplated hereby, (b) except as contemplated by this
Agreement, Xxxxxx and its subsidiaries have conducted their respective
businesses in all material respects in the ordinary course consistent with past
practices, (c) GM has not paid any dividend or distribution in respect of, or
redeemed or repurchased any of, the Acquiror Stock or other securities directly
or indirectly convertible into or exercisable or exchangeable for any Acquiror
Stock, and (d) except as required by GAAP, neither GM nor Xxxxxx has changed its
method of accounting (either for financial accounting or tax purposes) in any
manner which would reasonably be expected to materially adversely affect the
valuation of the Acquiror Stock.
4.9. Litigation. Except as disclosed by GM in the Filed GM SEC
Reports, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of GM, threatened against GM or any of its subsidiaries or
any of their respective properties or assets which, individually or in the
aggregate, would either have a Material Adverse Effect on Xxxxxx or materially
impair or delay the ability of GM to consummate the transactions contemplated
hereby. Except as disclosed by GM in the Filed GM SEC Reports, none of GM or its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which would either have a Material Adverse Effect on Xxxxxx or materially impair
or delay the ability of GM to consummate the transactions contemplated hereby.
4.10. Compliance with Applicable Law. Except as disclosed by GM in
the Filed GM SEC Reports, GM and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "GM
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which would neither have a Material Adverse
Effect on Xxxxxx nor materially impair or delay the ability of GM to
32
consummate the transactions contemplated hereby. Except as disclosed by GM in
the Filed GM SEC Reports, GM and its subsidiaries are in compliance with the
terms of the GM Permits, except where the failure so to comply would neither
have a Material Adverse Effect on Xxxxxx nor materially impair or delay the
ability of GM to consummate the transactions contemplated hereby. Except as
disclosed by GM in the Filed GM SEC Reports, the businesses of GM and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity except for violations or possible
violations which would neither have a Material Adverse Effect on Xxxxxx nor
impair or materially delay the ability of GM to consummate the transactions
contemplated hereby. Except as publicly disclosed by GM in the Filed GM SEC
Reports, no investigation or review by any Governmental Entity with respect to
GM or its subsidiaries is pending or, to the knowledge of GM, threatened, nor,
to the knowledge of GM, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those the outcome of which would
neither have a Material Adverse Effect on Xxxxxx nor materially impair or delay
the ability of GM to consummate the transactions contemplated hereby. No
representation or warranty is made in this Section 4.10 with respect to
Environmental Laws and the FCC Licenses.
4.11. Brokers. No broker, finder or investment banker (other than
Xxxxxxx Xxxxx Barney) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of GM or Xxxxxx or any of their
affiliates.
4.12. Employee Plans.
(a) Section 4.12(a) of the Disclosure Schedule previously delivered
by GM and Xxxxxx to the Company (the "Acquiror Disclosure Schedule") lists all
"employee benefit plans," as defined in Section 3(3) of ERISA and all bonus and
other incentive compensation, disability, severance, retention, salary
continuation, stock and other stock-related award, stock option, stock purchase,
collective bargaining or workers' compensation agreements, plans, policies and
arrangements generally made available to the employees of DIRECTV and which will
be made available to the employees of the Company (each, a "DIRECTV Benefit
Plan" and collectively, the "DIRECTV Benefit Plans").
(b) Except as set forth in the Filed GM SEC Reports or would not,
individually or in the aggregate, have a Material Adverse Effect on Xxxxxx, (i)
all payments required to be made by or under any DIRECTV Employee Benefit Plan,
any related trusts, insurance policies or ancillary agreements, or any
collective bargaining agreement have been timely made; (ii) Xxxxxx has performed
all obligations required to be performed by it under any DIRECTV Employee
Benefit Plan; (iii) the DIRECTV Employee Benefit Plans comply in all respects
and have been maintained in compliance with their terms and the requirements of
ERISA, the Code and other applicable laws; and (iv) there are no actions, suits,
arbitrations or claims (other than routine claims for benefits) pending or, to
the knowledge of Xxxxxx, threatened with respect to any DIRECTV Employee Benefit
Plan.
(c) Each DIRECTV Employee Benefit Plan and its related trust which
are intended to be "qualified" within the meaning of Sections 401(a) and 501(a)
of the Code,
33
respectively, have been determined by the Internal Revenue Service to be so
"qualified" under such Sections, as amended by the Tax Reform Act of 1986, and
Xxxxxx knows of no fact which would adversely affect the qualified status of any
such DIRECTV Employee Benefit Plan and its related trust.
4.13. Environmental Matters. Except as would not reasonably be
expected to have a Material Adverse Effect on Xxxxxx, (1) Xxxxxx is in
compliance with Environmental Laws; (2) no judicial or administrative
proceedings are pending or, to the knowledge of Xxxxxx, threatened against
Xxxxxx or any real property owned or operated by Xxxxxx alleging the violation
of or seeking to impose liability under any Environmental Law, and there are no
investigations of an environmental nature pending or, to the knowledge of
Xxxxxx, threatened against Xxxxxx or any real property owned or operated by
Xxxxxx; and (3) there are no facts, circumstances or conditions relating to,
arising from or attributable to Xxxxxx or any real property currently or, to the
knowledge of Xxxxxx, formerly owned, operated or leased by Xxxxxx that are
reasonably likely to result in Xxxxxx incurring liabilities under Environmental
Laws.
4.14. FCC Matters. Section 4.14 of the Acquiror Disclosure Schedule
sets forth all material permits, licenses, waivers or authorizations issued by
the FCC held by DIRECTV (the "DIRECTV FCC Licenses"). Except as is not material
to the conduct of the business of DIRECTV: (i) DIRECTV is financially qualified
and, to the knowledge of Xxxxxx, is otherwise qualified to hold the DIRECTV FCC
Licenses or to control the DIRECTV FCC Licenses, as the case may be; (ii) the
DIRECTV FCC Licenses constitute all permits, licenses, waivers or authorizations
that DIRECTV is required by the FCC to hold in connection with the operation of
its business as currently conducted; (iii) DIRECTV is not aware of any facts or
circumstances relating to the FCC qualifications of Xxxxxx that would prevent
the FCC's granting the FCC Application; (iv) DIRECTV is in compliance with all
DIRECTV FCC Licenses and with the Communications Act; and (v) there is not
pending or, to the knowledge of Xxxxxx threatened, any application, petition,
objection or other pleading with the FCC or other governmental authority which
challenges the validity of, or any rights of the holder under, any DIRECTV FCC
License.
4.15. No Other Representations or Warranties. Notwithstanding
anything contained in this Article 4 or any other provision of this Agreement,
it is the explicit intent of each party hereto that neither GM nor Xxxxxx is
making any representation or warranty whatsoever, express or implied, except
those representations and warranties of GM and Xxxxxx set forth in this Article
4.
34
ARTICLE 5
COVENANTS
5.1. Conduct of Business of the Company. Except as contemplated by
this Agreement, during the period from the date hereof to the Effective Time,
the Company will, and will cause each of its subsidiaries to, conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, seek to preserve intact its current
business organizations, take all actions necessary to maintain and preserve the
FCC Licenses, seek to keep available the service of its current officers and
employees and seek to preserve its relationships with customers, suppliers and
others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Effective Time, the Company shall not, and shall not
permit any of its subsidiaries to, without the prior written consent of Xxxxxx
(which consent shall not be unreasonably withheld):
(a) amend its certificate or articles of incorporation or bylaws (or
other similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for the
issuance or sale of shares of Company Common Stock pursuant to outstanding
options granted prior to the date hereof under existing stock incentive plans;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to shareholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of any of its subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any subsidiary;
(f) except as may be required by law or as contemplated by this
Agreement, (i) enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan,
35
fund, award or other arrangement for the benefit or welfare of any director,
officer or employee in any manner; (ii) except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any plan and arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock appreciation rights or performance units); or
(iii) pay any bonuses or annual incentive awards with respect to fiscal 1998 or
the interim period of fiscal 1999 ending on the Closing Date in excess of
$1,375,000 in the aggregate;
(g) except as set forth on Section 5.1(g) of the Company Disclosure
Schedule, hire or retain any individual as an employee of or consultant to the
Company or any subsidiary of the Company;
(h) except as set forth on Section 5.1(h) of the Company Disclosure
Schedule, enter into, renew or modify any agreement which, if in effect on the
date hereof, would have been required to be disclosed in Section 3.16 of the
Company Disclosure Schedule;
(i) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(j) revalue any of its assets, including, without limitation,
writing up or down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary course of business consistent with past
practice;
(k) make or revoke any tax election or settle or compromise any tax
liability material to the Company and its subsidiaries taken as a whole, or
change (or make a request to any taxing authority to change) any material aspect
of its method of accounting for tax purposes;
(l) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company and its subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(m) settle or compromise any pending or threatened material suit,
action or claim or initiate or join any material suit, action or claim;
(n) (i) incur or assume any long-term or short-term debt or issue
any debt securities except for borrowings under existing lines of credit in the
ordinary course of business and in amounts not material to the Company and its
subsidiaries, taken as a whole; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary
36
course of business consistent with past practice and in amounts not material to
the Company and its subsidiaries, taken as a whole, and except for obligations
of wholly owned subsidiaries of the Company; (iii) make any loans, advances or
capital contributions to, or investments in, any other person (other than to
wholly owned subsidiaries of the Company or customary loans or advances to
employees in the ordinary course of business consistent with past practice and
in amounts not material to the maker of such loan or advance); (iv) pledge or
otherwise encumber shares of capital stock of the Company or its subsidiaries;
or (v) mortgage or pledge any of its assets, tangible or intangible, or create
or suffer to exist any Lien thereupon;
(o) (i) acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate are material to
the Company and its subsidiaries, taken as a whole; (ii) enter into any
commitment or transaction outside the ordinary course of business; or (iii)
grant any exclusive distribution rights;
(p) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $250,000 or, in
the aggregate, are in excess of $3 million; or (iii) enter into or amend any
contract, agreement, commitment or arrangement providing for the taking of any
action that would be prohibited hereunder; or
(q) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(p) or any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect.
5.2. Conduct of Business of GM and Xxxxxx. Except as contemplated by
this Agreement, during the period from the date hereof to the Effective Time,
Xxxxxx and its subsidiaries shall conduct their respective operations in the
ordinary course of business consistent with past practice and, to the extent
consistent therewith, with no less diligence and effort than would be applied in
the absence of this Agreement. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Agreement, prior to the
Effective Time, GM shall not, and shall not permit Xxxxxx and its subsidiaries
to, without the prior written consent of the Company, which consent shall not be
unreasonably withheld:
(a) amend its certificate or articles of incorporation or bylaws (or
other similar governing instrument) in a manner which adversely affects the
rights, powers and preferences of the Acquiror Stock;
(b) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Xxxxxx or any of its subsidiaries (except that Xxxxxx and/or any subsidiary
of Xxxxxx may adopt a plan of merger in connection with (i) a merger of any
subsidiary of Xxxxxx into Xxxxxx or another subsidiary of Xxxxxx or (ii) an
acquisition or disposition of a business or assets, except for any such
acquisition or disposition which would have a Material Adverse Effect on
Xxxxxx);
37
(c) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of Xxxxxx or any of
its subsidiaries, except for any such alteration which would not have a Material
Adverse Effect on Xxxxxx; or
(d) take any action, or agree to take any action, which would have
the effect of terminating Xxxxxx'x engaging in the multichannel entertainment
distribution industry.
5.3. Preparation of S-4 and the Proxy Statement.
(a) The Company will, as promptly as practicable, prepare and file
with the SEC the Proxy Statement in connection with the vote of the shareholders
of the Company with respect to the Merger. GM and Xxxxxx shall have a reasonable
opportunity to review the Proxy Statement and any supplement thereto prior to
the filing or submission thereof to the SEC.
(b) GM will, as promptly as practicable, prepare, following receipt
of notification from the SEC that it has no further comments on the Proxy
Statement, and file with the SEC the S-4 in connection with the registration
under the Securities Act of the shares of Acquiror Stock issuable upon
conversion of the Shares and the other transactions contemplated hereby. The
Company will have a reasonable opportunity to review the S-4 and any amendments
thereto prior to the filing thereof with the SEC.
(c) GM and the Company will, and will cause their accountants and
lawyers to, use all reasonable best efforts to have or cause the S-4 declared
effective as promptly as practicable after it is filed, and will take any other
action required or necessary to be taken under federal or state securities laws
or otherwise in connection with the registration process. The Company will use
its reasonable best efforts to cause the Proxy Statement to be mailed to its
shareholders at the earliest practicable date after the S-4 shall become
effective.
5.4. Company Meeting. The Company shall call a meeting of its
shareholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and the Merger. The Company agrees that its obligations
pursuant to the first sentence of this Section 5.4 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Acquisition Proposal (as defined in Section 5.5). The Company shall use
its reasonable best efforts to hold such meeting as soon as practicable after
the date hereof and will, through the Company Board, subject to the fiduciary
duties of the Company Board, recommend to its shareholders approval of this
Agreement and the Merger.
5.5. No Solicitation.
(a) Until the termination of this Agreement, the Company shall not,
and shall not permit any of its subsidiaries, or any of its or its subsidiaries'
officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment
38
banker, financial advisor, attorney, accountant or other representative of the
Company or any of its subsidiaries), to, directly or indirectly, initiate,
solicit or knowingly encourage (including by way of furnishing non-public
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative of it or any of
its subsidiaries to take any such action; provided, however, that the Company
may engage in discussions with any person or entity for the sole purpose of
clarifying the terms of any unsolicited Acquisition Proposal if such discussions
are in the judgment of independent counsel to the independent directors of the
Company (as set forth in a reasoned legal opinion delivered to Xxxxxx prior to
any such discussions), required by the fiduciary duties of the Company Board.
The Company will promptly (and in no event later than twenty-four (24) hours
after receipt of any Acquisition Proposal) notify (which notice shall be
provided orally and in writing and shall identify the person making such
Acquisition Proposal and set forth the material terms thereof) Xxxxxx after any
receipt of any Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any proposal regarding any of the following (other
than the transactions contemplated by this Agreement) involving the Company or
any of its subsidiaries: (w) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (x) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of
fifteen percent (15%) or more of the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of related transactions; (y)
any tender offer or exchange offer that if consummated would result in any
person (other than HBI) beneficially owning more than fifteen percent (15%) of
the outstanding shares of Company Common Stock or the filing of a registration
statement under the Securities Act in connection therewith; or (z) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
(b) Until the termination of this Agreement, the Company Board shall
not (i) subject to the fiduciary duties of the Company Board, withdraw or
modify, or propose to withdraw or modify, in a manner adverse to GM or Xxxxxx,
the approval or recommendation of the Merger, this Agreement and the
Shareholders Agreement by the Company Board, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal or (iii) cause the
Company or any of its subsidiaries to enter into any agreement (including,
without limitation, any letter of intent) with respect to any Acquisition
Proposal.
5.6. Letter of the Company's Accountants. The Company shall use all
reasonable best efforts to cause to be delivered to GM a letter of Xxxxxx
Xxxxxxxx LLP (or its successor firm), the Company's independent auditors, dated
a date within two (2) business days before the date on which the S-4 shall
become effective and addressed to GM, in form and substance reasonably
satisfactory to GM and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4.
39
5.7. Access to Information.
(a) Between the date hereof and the Effective Time, the Company will
give GM and Xxxxxx and their authorized representatives reasonable access to all
employees (which access shall be coordinated with the Company's executive
management), plants, offices, warehouses and other facilities and to all books
and records of the Company and its subsidiaries, will permit GM and Xxxxxx to
make such inspections as GM and Xxxxxx may reasonably require and will cause the
Company's officers and those of its subsidiaries to furnish GM and Xxxxxx with
such financial and operating data and other information with respect to the
business, properties and personnel of the Company and its subsidiaries as GM or
Xxxxxx may from time to time reasonably request; provided, that no investigation
pursuant to this Section 5.7(a) shall affect or be deemed to modify any of the
representations or warranties made by the Company and provided, further, except
as provided in Section 6.3(i), that information heretofore redacted by the
Company and relating to exclusivity and renegotiation provisions of programming
agreements may, at the Company's discretion, be provided only in redacted form
(contracts containing such redaction being referred to herein as the "Redacted
Contracts").
(b) From and after the date of this Agreement, Xxxxxx shall have the
right, but not the obligation, to retain one or more environmental professionals
to conduct an environmental assessment and investigation ("Environmental
Investigation") of the Properties, which Environmental Investigation shall be
conducted as promptly as reasonably practicable in consultation with the Company
and shall include the right to conduct such tests of soil, groundwater, surface
water or air that Xxxxxx reasonably requires, in its sole discretion, to
determine whether there exists an Adverse Environmental Condition at any of the
Properties. For purposes of this Agreement, "Adverse Environmental Condition"
shall mean any of the following: (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or non-sudden,
accidental or non-accidental Releases), of, or exposure to, any Hazardous
Substance at, in, by, from or related to the Properties, (ii) damage or injury
to the environment in connection with the transportation, storage, treatment or
disposal (or the arrangement thereof) of Hazardous Substances in connection with
the operation of the Company or its subsidiaries or (iii) the violation, or
alleged violation, of Environmental Law by the Company or any of its
subsidiaries.
(c) Between the date hereof and the Effective Time, the Company
shall furnish to Xxxxxx (i) within two business days after the delivery thereof
to management, such monthly financial statements and data as are regularly
prepared for distribution to the Company's Chief Executive Officer and (ii) at
the earliest time at which they are available and prior to filing thereof with
the SEC, such quarterly and annual financial statements as are prepared for the
Company's SEC filings, which shall be in accordance with the books and records
of the Company, and drafts of all such Company SEC filings.
(d) Each of GM and Xxxxxx will hold and will cause its consultants
and advisors to hold in confidence all documents and information concerning the
Company and its subsidiaries furnished to GM or Xxxxxx in connection with the
transactions contemplated by this Agreement to the extent required by that
certain confidentiality agreement entered
40
into between the Company, DIRECTV and Xxxxxx dated December 1, 1998 (the
"Confidentiality Agreement").
5.8. Additional Agreements; Reasonable Best Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperation in the preparation and filing of the Proxy Statement and the S-4,
any filings that may be required under the HSR Act and the Communications Act,
and any amendments to any thereof, (ii) cooperation in obtaining, prior to the
Effective Time, the approval for listing on the NYSE, effective upon the
official notice of issuance, of the shares of Acquiror Stock into which the
Shares will be converted pursuant to Article 2 hereof, (iii) the taking of all
action reasonably necessary, proper or advisable to secure any necessary
consents of all third parties and Governmental Entities, including those
relating to existing debt obligations of the Company and its subsidiaries, (iv)
the transfer of existing Environmental Permits to Xxxxxx (or, if such transfer
is not permissible, the Company shall assist Xxxxxx in obtaining new
Environmental Permits as necessary), (v) contesting any legal proceeding
relating to the Merger and (vi) the execution of any additional instruments
necessary to consummate the transactions contemplated hereby. Subject to the
terms and conditions of this Agreement, GM, Xxxxxx and the Company agree to use
all reasonable efforts to cause the Effective Time to occur as soon as
practicable after the shareholder vote with respect to the Merger. In case at
any time after the Effective Time any further action is necessary to carry out
the purposes of this Agreement, the proper officers and directors of each party
hereto shall take all such necessary action.
5.9. Regulatory Reviews. Each party hereto will use its reasonable
best efforts (a) to file with the U.S. Department of Justice and U.S. Federal
Trade Commission, as soon as practicable after the date hereof, the Notification
and Report Form under the HSR Act and any supplemental information or material
requested pursuant to the HSR Act, and (b) to comply as soon as practicable
after the date hereof with any other laws of any country and the European Union
under which any consent, authorization, registration, declaration or other
action with respect to the transactions contemplated herein may be required.
Each party hereto shall furnish to the other such information and assistance as
the other may reasonably request in connection with any filing or other act
undertaken in compliance with the HSR Act or other such laws, and shall keep
each other timely apprised of the status of any communications with, and any
inquiries or requests for additional information from, any Governmental Entity
under the HSR Act or other such laws. Xxxxxx and the Company will each use its
reasonable best efforts to cause termination of the HSR waiting period(s) in
connection with any review of the transactions contemplated by this Agreement
under the HSR Act. In connection with any litigation or administrative
proceeding instituted to prevent the consummation of the Merger, Xxxxxx and the
Company shall take any and all action reasonably necessary in connection with
such litigation or administrative proceeding (i) to prevent the entry of any
order, preliminary or permanent injunction, or other legal restraint or
prohibition preventing consummation of the Merger or any related transactions
contemplated by this Agreement and (ii) to vacate any order, injunction of legal
restraint or prohibition which would prevent the consummation of the
transactions contemplated by this
41
Agreement; provided, however, that nothing contained herein shall require Xxxxxx
to divest any portion of Xxxxxx or the Company or to accept any restrictions or
the operation of Xxxxxx or the Company in order to consummate the transactions
contemplated this Agreement.
5.10. Public Announcements. Each of GM, Xxxxxx and the Company will
agree on the text of any press release before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger. The
press release or public statement shall make appropriate reference to the role
of the Company and the HBI family in the development of the direct-to-home
satellite broadcasting business. None of GM, Xxxxxx or the Company shall issue
any such press release or make any such public statement prior to such
agreement, except as may be required by applicable law or by obligations
pursuant to any agreement with the NYSE or NASDAQ, as determined by GM, Xxxxxx
or the Company, as the case may be, in which case such release or statement
shall be limited to a factual summary of the material provisions of this
Agreement and the transactions contemplated hereby.
5.11. Directors' and Officers' Insurance; Indemnification.
(a) Directors' and Officers' Insurance. Xxxxxx will provide, for an
aggregate period of not less than six (6) years from the Effective Time, the
directors and officers of the Company who are currently covered by the Company's
existing insurance and indemnification policy an insurance and indemnification
policy that provides coverage for events occurring prior to the Effective Time
(the "D&O Insurance") that is no less favorable than the Company's existing
policy or, if substantially equivalent insurance coverage is unavailable, the
best available coverage; provided that Xxxxxx shall not be required to pay an
annual premium for the D&O Insurance in excess of 150% of the last annual
premium paid prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount.
(b) Indemnification. To the extent, if any, not provided by a right
under one of the parties' directors and officers liability insurance policies,
from and after the Effective Time, Xxxxxx shall, to the fullest extent permitted
by applicable law and consistent with the by-laws of Xxxxxx, indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date hereof, or who becomes prior to the Effective Time, a director or officer
of the Company (each an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, expenses (including reasonable attorneys' fees and
expenses), claims, damages or liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement, arising out of actions or
omissions occurring at or prior to the Effective Time and whether asserted or
claimed prior to, at or after the Effective Time that are in whole or in part
(i) based on, or arising out of the fact that such person is or was a director
or officer of the Company or (ii) based on, arising out of or pertaining to the
transactions contemplated by this Agreement. In the event of any such loss,
expense, claim, damage or liability (whether or not arising before the Effective
Time), in addition to any indemnification and hold harmless hereunder (i) Xxxxxx
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to Xxxxxx,
promptly after statements therefor are received and otherwise advance
42
to such Indemnified Party upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited by the DGCL and
upon receipt of any affirmation and undertaking required by the DGCL and (ii)
Xxxxxx will cooperate in the defense of any such matter; provided, however, that
Xxxxxx shall not be liable for any settlement effected without its written
consent. The Indemnified Parties as a group may retain only one law firm with
respect to each related matter.
(c) Successors. In the event Xxxxxx or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of Xxxxxx shall assume the obligations set forth
in this Section 5.11.
(d) Benefit. The provisions of this Section 5.11 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
5.12. Notification of Certain Matters. The Company, on the one hand,
and GM and Xxxxxx, on the other, shall give prompt notice to each other of (i)
the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time, (ii) any material failure of a party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default or
event which, with notice or lapse of time or both, would become a default,
received by a party or any of its subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any contract or agreement
material to the financial condition, properties, businesses or results of
operations of a party and its subsidiaries taken as a whole to which it or any
of its subsidiaries is a party or is subject, (iv) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, or (v) any Material Adverse Effect on a party; provided, that the
delivery of any notice pursuant to this Section 5.12 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to GM and Xxxxxx.
5.13. Tax-Free Reorganization Treatment. The Company, the
significant shareholders of the Company, and Xxxxxx (on behalf of GM and Xxxxxx)
shall execute and deliver to Xxxxxxx, Street and Deinard Professional
Association, counsel to the Company, and Weil, Gotshal & Xxxxxx LLP, counsel to
Xxxxxx and GM, certificates containing customary representations relating to
their business operations and substantially in the forms attached hereto as
Exhibits X-0, X-0 and B-3 (with such changes as may be reasonably requested by
such law firms) at such time or times as may be reasonably requested by such law
firms in connection with their respective deliveries of opinions, pursuant to
Sections 6.2(e) and 6.3(h) hereof, with respect to the tax-free reorganization
treatment of the Merger. Prior to the Effective Time, none of the Company, GM or
Xxxxxx shall take or cause to be taken any action which would cause to be untrue
(or fail to take or cause not to
43
be taken any action which would cause to be untrue) any of the representations
in such certificates.
5.14. Company Affiliates. Prior to the Closing Date, the Company
shall deliver to GM a letter identifying each affiliate (as such term is defined
in Rule 12b-2 under the Exchange Act) of the Company at the time the Merger is
submitted for approval to the shareholders of the Company (each a "Company
Affiliate") and the Company shall use its reasonable best efforts to cause each
Company Affiliate to deliver to GM on or prior to the Closing Date, a written
agreement that such Company Affiliate will not sell, pledge, transfer or
otherwise dispose of any shares of Acquiror Stock issued to such Company
Affiliate pursuant to the Merger, except in compliance with Rule 145 promulgated
under the Securities Act or an exemption from the registration requirements of
the Securities Act.
5.15. SEC Filings. Each of GM and the Company shall promptly provide
the other party (or its counsel) with copies of all filings made by the other
party or any of its subsidiaries with the SEC or any other state or federal
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
5.16. Employee Matters.
(a) All employees of the Company who are actively at work as of the
Closing Date shall be employed immediately after the Closing Date at a rate of
salary comparable to the salary rate in effect for such employee as of the date
immediately preceding the Closing Date. All employees of the Company who are on
unpaid leave as of the Closing Date and who have rights of re-employment upon
termination of such individual's leave shall be employed by DIRECTV upon such
termination and shall not receive any salary until the return of such employees
to active work with DIRECTV. Section 5.16(a) of the Company Disclosure Schedule
sets forth a list of all employees of the Company, their positions, status and
rates of salary as of November 24, 1998.
(b) If any employee of the Company is required within the first
twelve (12) months after the Closing Date by DIRECTV to relocate to a facility
that was owned by DIRECTV immediately prior to the Closing Date and such
employee accepts such relocation, such employee shall be provided with (i) the
standard relocation benefits under the DIRECTV Relocation Allowances Policy (the
"Relocation Package") and (ii) an adjusted salary rate for comparable positions
at DIRECTV at such DIRECTV facility; provided, that any such employee who is
required to relocate pursuant to this paragraph shall be provided with up to two
(2) weeks to consider such relocation.
(c) Any employee of the Company who (i) (x) is actively at work as
of the Closing Date or (y) is on an authorized leave of absence as of the
Closing Date, has rights of re-employment upon termination of such individual's
leave, and is able to return to work, and (ii) (x) has not accepted a Relocation
Package and within twelve (12) months after the Closing terminates employment
with DIRECTV (other than any employee whose employment was terminated or could
have been terminated for cause, death or disability) or (y) has accepted a
Relocation Package and within twelve (12) months after the Closing is terminated
by DIRECTV without cause, shall be entitled to receive severance pay of six (6)
months'
44
salary (in lump sum), career counseling and outplacement services (consistent
with the counseling and outplacement services previously provided to similarly
situated employees of DIRECTV); provided, however, that no such severance shall
be paid under this Section 5.16(c) unless (i) such employee has signed a full
release of any claims against DIRECTV, the Company and any of their affiliates
and (ii) such employee, if voluntarily terminating his or her employment with
DIRECTV, has provided at least two (2) weeks' notice to DIRECTV; and provided,
further, that any severance paid under this Section 5.16(c) shall be reduced by
the amount of any payment under the Worker Adjustment and Retraining
Notification Act and by the amount of severance paid or payable under any other
plan or arrangement, but not any severance paid pursuant to Section 5.16(e)
hereof. Any person receiving a severance payment under this Section 5.16(c)
shall not be entitled to any payment or benefit under the Xxxxxx Employment
Transition Assistance Plan.
(d) Subject to applicable laws and Sections 5.16(a), (b), (c) and
(e) hereof, DIRECTV shall have the right to terminate the employment of any
employee of the Company who becomes an employee of DIRECTV, with or without
cause, change the terms and conditions of employment of any such employee, and
amend or terminate any employee benefit plans or employee arrangements
applicable to such employees.
(e) The Company and DIRECTV shall establish a program ("Program")
pursuant to which $15 million shall be made available to be awarded to current
employees and certain former employees of the Company and certain current
employees of HBI. The amount of individual awards shall be as heretofore
established by the executive management of the Company with the approval of
DIRECTV. Awards under the Program to any participating employee shall be payable
on (i) the first anniversary of the Closing Date, (ii) with respect to current
employees of the Company, such participating employee's termination of
employment by reason of death or disability or by DIRECTV without cause, if
earlier, or (iii) with respect to current employees of HBI, the termination of
the Transition Services Agreement by DIRECTV, if earlier. No person shall be
entitled to payment of an award if such person is terminated or could have been
terminated for cause or resigns from employment with the Company, DIRECTV and
their affiliates, and awards with respect to such persons shall be forfeited.
The amount payable with respect to any award under the Program shall be reduced
by the amount paid or payable under any change-in-control, retention or similar
arrangements, but not any severance paid pursuant to Section 5.16(c) hereof. For
purposes of this Section 5.16(e), a termination of employment by DIRECTV
"without cause" shall include a termination of employment by a participating
employee resulting from a material reduction in his or her job duties or salary,
which reduction shall have continued for a period of ten (10) days after written
notice to DIRECTV.
(f) For purposes of this Section 5.16, "cause" shall mean: (A)
fraud, embezzlement, theft or material dishonesty against the Company or the
Surviving Corporation, any of their subsidiaries or the Board of Directors; (B)
conviction of or plea of nolo contendere to any crime (whether or not involving
the Company or the Surviving Corporation) constituting a felony in the
jurisdiction involved; provided, that such felony is related to such employee's
job responsibility or the safety of co-workers; (C) a willful failure by the
employee to follow reasonable directions or instructions of his or her
supervisor and, in the case of senior officers, the Board of Directors, in each
case consistent with his or her
45
position, which failure shall have continued for a period of time that allows
the progressive discipline policy to be followed and shall not be the result of
the employee's physical or mental incapacity or disability, provided that the
employee's resignation during such time shall not be effective without the
written consent of the Company; or (D) willful misconduct in the performance of
the employee's duties which results in material damage to or material liability
of the Company, the Surviving Corporation or any of their subsidiaries.
(g) Service by the employees of the Company who are actively at work
as of the Closing Date or who are on authorized leave of absence as of the
Closing Date with rights of re-employment upon termination of such leave and
return to active work shall be recognized under any benefit plan or arrangement
established, maintained or contributed to by DIRECTV or its affiliates after the
Closing Date for the benefit of any such employee solely for purposes of
eligibility and vesting, except that, with respect to DIRECTV's Non-Bargaining
Retirement Plan, such service shall be recognized solely for purposes of
vesting; provided, that such recognition does not result in any duplication of
benefits. Individuals who have terminated employment with the Company prior to
the Closing Date and are subsequently hired by DIRECTV or its affiliates will
not be entitled to any service recognition under this paragraph.
(h) Xxxxxx shall cause DIRECTV to perform all of the obligations
under this Section 5.16, and all rights hereunder are intended to accrue to the
benefit of DIRECTV.
(i) Notwithstanding anything to the contrary herein, in the event
that any payment pursuant to this Section 5.16, together with any payment or
benefit received or to be received by any person pursuant to the terms of this
Agreement or of any other plan, arrangement or agreement of the Company or its
affiliates (each a "Payment" and collectively, the "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code (the "Excise Tax") either
in whole or in part, the Payments shall be reduced (but not below zero) until no
portion of the Payments would be subject to the Excise Tax. The Company and HBI
agree to provide all such information DIRECTV may request to determine whether
and to what extent the Excise Tax applies to any Payment. Each recipient of a
Payment pursuant to this Section 5.16 shall be required to agree, as a condition
to receiving such Payment, to indemnify and hold GM, Xxxxxx and their respective
affiliates harmless with respect to any liability for the Excise Tax arising
from or relating to the Payments if it is established that such Payments
resulted in the imposition of the Excise Tax.
5.17. Ancillary Agreements. On or prior to the Closing Date, Xxxxxx
shall, or shall cause DIRECTV to, and the Company shall, or shall use its
reasonable best efforts to cause its relevant affiliates to, enter into the
following agreements (the "Ancillary Agreements"): (i) Consulting Agreements,
substantially in the form of Exhibit C hereto, with the Chairman, the President
and the Executive Vice President of the Company, (ii) a Non-Competition
Agreement, substantially in the form of Exhibit D hereto, binding HBI and the
foregoing officers, and (iii) a Transition Services Agreement, substantially in
the form of Exhibit E hereto, providing for certain transition services to be
provided by HBI to the Company. Concurrently with the execution of this
Agreement, Xxxxxx and the Company have entered into (i) a Replacement Payload
Option Agreement, substantially in the form of Exhibit F hereto, providing for
certain arrangements for the benefit of the Company in the
46
event that this Agreement is terminated pursuant to Section 7.1(g) and (ii) a
Channel Capacity Provision Agreement, substantially in the form of Exhibit G
hereto, providing for channel capacity and related services to be provided to
the Company in the event of a "Total Failure" (as defined therein) of DBS-1.
5.18. Billing and Customer Management Systems. Prior to the Closing
Date, the Company and DIRECTV will cooperate with each other to facilitate the
consolidation of their respective billing and customer management systems and
other support systems, and DIRECTV shall provide the Company, upon terms
reasonably satisfactory to the Company, in the event the transactions
contemplated by this Agreement are not consummated, with billing and customer
management systems (including CUI) for a period of up to eighteen (18) months
(the length of such period to be determined by the Company in its sole
discretion) commencing on the later of July 1, 1999 or the date on which this
Agreement is terminated pursuant to Section 7.1 at the rates specified in the
contract for such services between the Company and Convergys, a true, correct
and complete copy of which has been provided to Xxxxxx. The Company has advised
Xxxxxx that it has elected to, and covenants and agrees to, exercise its
existing contractual right to terminate its contract with Convergys within two
(2) weeks of the date hereof. The parties hereto agree that the payment by the
Company of any fee or penalty pursuant to such contract on account of such
termination shall not be a violation of Section 5.1 hereof and shall not
constitute a Material Adverse Effect. Each of the Company and Xxxxxx covenants
and agrees to use its reasonable best efforts to reduce the amount of such
termination fee or penalty. In the event the Company utilizes the billing and
customer management systems of DIRECTV, DIRECTV shall use its reasonable best
efforts to assist the Company in transitioning such services to DIRECTV and,
subsequently, transitioning such services to a third party service provider.
5.19. 110(degree) Construction Permit. The Company and Xxxxxx will
cooperate and use their reasonable best efforts to maintain (including, without
limitation, by obtaining extensions of) the 110(degree) Construction Permit
including, without limitation, jointly developing a plan for the 110(degree)
Construction Permit which may include, without limitation, the use of a
satellite produced by Xxxxxx. The Company, with prior notice to Xxxxxx, shall
exercise its existing contractual right to terminate the Lockheed Xxxxxx
Contract on or prior to December 31, 1998, unless instructed to the contrary by
Xxxxxx.
5.20. Spring Communications. Promptly following the date hereof, HBI
shall purchase from the Company, and the Company shall sell to HBI, all of the
Company's interest in Spring USSB Communications LLC ("Spring") for a purchase
price of One Hundred Thousand Dollars ($100,000), plus an amount equal to all
capital contributions paid by the Company to Spring following the date hereof
and prior to such purchase. As part of such purchase and sale, HBI shall assume
all liabilities and obligations relating to Spring and shall indemnify and hold
the Company harmless with respect thereto. All documents relating to the
purchase of Spring and such indemnification shall be reasonably satisfactory to
Xxxxxx and the Company.
5.21. Confirmatory Certificates; Communications. In order to verify
the truth of the representations and warranties contained in (i) Section
3.16(b), (ii) the penultimate sentence of Section 3.6 and (iii) the first
sentence of Section 3.25, Xxxxxx may elect to
47
provide the Company with a list of Material Contracts as to which it desires
written confirmation to such effect from the parties to such Contracts. Xxxxxx
shall consult with the Company regarding the content of such list and conduct
such confirmation in a reasonable manner to limit disruption to the business.
The Company shall use its reasonable best efforts to obtain such requested
written confirmations prior to the Closing Date. The Company and Xxxxxx will
coordinate their communications to, and each participate in all meetings and
discussions with, material providers of programming and other suppliers to the
Company; provided, that the Company may continue its day-to-day operational
activities with such parties in the ordinary course of business. Without
limiting the foregoing, Xxxxxx shall direct, and the Company shall assist and
cooperate with respect to, the development of any new programming arrangements
to be effective from and after the Closing Date, to the extent deemed necessary
or advisable by Xxxxxx to fulfill the conditions to closing pursuant to this
Agreement, with providers of programming to the Company.
5.22. Affiliate Agreements. On or prior to the Closing Date, the
Company shall (i) assume the Company's liability insurance and indemnification
policy currently held by HBI and (ii) terminate and cancel all agreements with
HBI and its affiliates, except as set forth in the Transition Services
Agreement.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1. Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party hereto to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the shareholders of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority and continued in
effect which prohibits, restrains, enjoins or restricts the consummation of the
Merger;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired, and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received;
(d) the FCC shall have consented to the transfer of control of the
FCC Licenses, by means of action by the FCC (including action duly taken by the
FCC's staff, pursuant to delegated authority), which shall not have been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect to
which no timely request for stay, petition for rehearing, appeal or certiorari
or sua sponte action of the FCC with comparable effect shall be pending and as
to which the time for filing any such request, petition, appeal, certiorari or
for the taking of any such sua sponte action by the FCC shall have expired;
48
(e) the S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order
and GM shall have received all state securities laws or "blue sky" permits and
authorizations necessary to issue shares of Acquiror Stock in exchange for the
Shares in the Merger; and
(f) the Acquiror Stock issuable in the Merger shall have been
authorized for listing on the NYSE, subject to official notice of issuance.
6.2. Conditions to the Obligations of the Company. The obligation of
the Company to effect the Merger is subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) the representations and warranties of GM and Xxxxxx contained in
this Agreement or in any other document delivered pursuant hereto shall be true
and correct in all respects at and as of the Effective Time with the same effect
as if made at and as of the Effective Time, and at the Closing GM and Xxxxxx
shall have delivered to the Company a certificate to that effect;
(b) each of the obligations of GM and Xxxxxx to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time and
at the Closing GM and Xxxxxx shall have delivered to the Company a certificate
to that effect;
(c) the Ancillary Agreements shall have been duly executed and
delivered by Xxxxxx or DIRECTV;
(d) there shall have been no events, changes or effects with respect
to Xxxxxx or its subsidiaries which would have a Material Adverse Effect on
Xxxxxx; and
(e) the opinion of Xxxxxxx, Street and Deinard Professional
Association, dated the Closing Date and addressed to the Company substantially
to the effect that (i) the Merger should be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code;
(ii) each of GM, Xxxxxx and the Company should be a party to the reorganization
within the meaning of Section 368(b) of the Code; and (iii) no gain or loss
should be recognized by a shareholder of the Company as a result of the Merger
with respect to Shares converted into shares of Acquiror Stock (other than with
respect to cash received in lieu of fractional shares of Acquiror Stock), shall
have been delivered and such opinion shall not have been withdrawn or modified
in any material respect. In rendering such opinion, Xxxxxxx, Street and Deinard
Professional Association shall have received and may rely upon the
representations contained in the certificates referred to in Section 5.13.
6.3. Conditions to the Obligations of GM and Xxxxxx. The respective
obligations of GM and Xxxxxx to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
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(a) the representations and warranties of the Company contained in
this Agreement or in any other document delivered pursuant hereto shall be true
and correct in all respects at and as of the Effective Time with the same effect
as if made at and as of the Effective Time, and at the Closing the Company shall
have delivered to GM and Xxxxxx a certificate to that effect in the form of
Exhibit H hereto, duly executed by each of the Chairman, President, Executive
Vice President and Chief Financial Officer of the Company in their respective
capacities as such;
(b) each of the obligations of the Company to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time and
at the Closing the Company shall have delivered to GM and Xxxxxx a certificate
to that effect;
(c) the Dissenting Shares shall constitute not more than five
percent (5%) of the Shares;
(d) the Company shall have delivered to Xxxxxx all consents or
notices necessary to effect valid assignments of the contracts listed on Section
6.3(d) of the Acquiror Disclosure Schedule, all in form and substance reasonably
acceptable to Xxxxxx;
(e) HBI and the Company, as applicable, shall have duly executed and
delivered the Ancillary Agreements;
(f) the Shareholders Agreement shall be in full force and effect;
(g) there shall have been no events, changes or effects with respect
to the Company or its subsidiaries (except for events, changes or effects
primarily resulting from the actions of DIRECTV) which would have a Material
Adverse Effect on the Company;
(h) the opinion of Weil, Gotshal & Xxxxxx LLP, dated the Closing
Date and addressed to Xxxxxx and GM, substantially to the effect that (i) the
Merger should be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code; (ii) each of GM, Xxxxxx and
the Company should be a party to the reorganization within the meaning of
Section 368(b) of the Code; and (iii) no gain or loss should be recognized by
GM, Xxxxxx or the Company as a result of the Merger, shall have been delivered
and such opinion shall not have been withdrawn or modified in any material
respect. In rendering such opinion, Weil, Gotshal & Xxxxxx LLP shall have
received and may rely upon the representations contained in the certificates
referred to in Section 5.13;
(i) the Company shall have delivered to Xxxxxx no later than two (2)
business days prior to the Effective Time true, correct and complete copies of
the Redacted Contracts, without any redaction of the information contained
therein; and
(j) the modifications to certain Material Contracts described in
Section 6.3(j) of the Acquiror Disclosure Schedule shall have been adopted by
each party thereto and shall be in full force and effect.
50
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual written consent of GM, Xxxxxx and the Company;
(b) by Xxxxxx or the Company if the Merger has not been consummated
by September 30, 1999 (the "Latest Date"); provided, that no party may terminate
this Agreement pursuant to this Section 7.1(b) if such party's failure to
fulfill any of its obligations under this Agreement shall have been the reason
that the Effective Time shall not have occurred on or before said date;
(c) by Xxxxxx or the Company if the U.S. Department of Justice or
U.S. Federal Trade Commission has issued or stated its intention to seek an
order, preliminary or permanent injunction, or other legal restraint or
prohibition preventing consummation of the Merger or any related transactions
contemplated by this Agreement;
(d) by the Company, so long as the Company is not then in material
breach of its obligations hereunder, if (i) there shall have been a breach of
any representation or warranty on the part of GM or Xxxxxx set forth in this
Agreement, or (ii) there shall have been a material breach by GM or Xxxxxx of
any of their respective covenants or agreements hereunder, in either case such
that the conditions set forth in Section 6.2(a) would be incapable of being
satisfied by the Latest Date;
(e) by Xxxxxx, so long as GM and Xxxxxx are not then in material
breach of any of their obligations hereunder, if (i) there shall have been a
breach of any representation or warranty on the part of the Company set forth in
this Agreement or (ii) there shall have been a material breach by the Company of
its covenants or agreements hereunder in either case such that the conditions
set forth in Section 6.3(a) would be incapable of being satisfied by the Latest
Date;
(f) by Xxxxxx if the Company shall have convened a meeting of its
shareholders and failed to obtain the requisite vote to approve this agreement
and the Merger; or
(g) by Xxxxxx by written notice to the Company following the date on
which all transponders on DBS-1 (and not solely those transponders utilized by
the Company) have suffered a "Confirmed Failure" as defined in the Satellite
Payload Purchase Agreement dated as of May 31, 1991.
7.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than the provisions of this Section 7.2 and Sections 5.7(d),
51
5.10, 5.18 and 7.3, which shall survive any termination. Nothing contained in
this Section 7.2 shall relieve any party from liability for any breach of this
Agreement.
7.3. Expenses. Each party shall bear its own expenses in connection
with this Agreement and the transactions contemplated hereby. The cost of filing
and printing the S-4 and the Proxy Statement shall be borne by the Company.
7.4. Amendment. This Agreement may be amended by action taken by the
Company, GM and Xxxxxx at any time before or after approval of the Merger by the
shareholders of the Company but, after any such approval, no amendment shall be
made which requires the approval of such shareholders under applicable law
without such approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of the parties hereto.
7.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these purposes, GM and Xxxxxx shall together be deemed
one party and the Company shall be deemed the other party) may (i) extend the
time for the performance of any of the obligations or other acts of the other
party, (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 8
MISCELLANEOUS
8.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
8.2. Entire Agreement; Assignment. This Agreement:
(a) constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof; and
(b) shall not be assigned by operation of law or otherwise;
provided, however, that Xxxxxx may assign any or all of its rights and
obligations under this Agreement to any direct or indirect wholly owned
subsidiary of GM, but any representation, warranty or covenant of Xxxxxx
contained in this Agreement shall remain a representation, warranty or covenant
of Xxxxxx and no such assignment shall relieve Xxxxxx of its obligations
hereunder if such assignee does not perform such obligations.
52
8.3. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, confirmed facsimile or telex, or by first class mail (postage prepaid,
return receipt requested), to the other party as follows:
if to GM or
to Xxxxxx to: General Motors Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer
Facsimile:
and Xxxxxx Electronics Corporation
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company to: United States Satellite Broadcasting Company,
Inc.
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx, Street and Deinard Professional
Association
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
8.4. Governing Law. Except to the extent that Minnesota law is
mandatorily applicable to the Merger and the rights of the shareholders of the
Company, this Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the principles of conflicts
of law thereof.
53
8.5. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
8.6. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Section 5.11, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
8.7. Severability. If any term or other provision of this Agreement
is invalid, illegal or unenforceable, all other provisions of this Agreement
shall remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
8.8. Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and, shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
8.9. Brokers. Except as otherwise provided in Section 7.3, the
Company agrees to indemnify and hold harmless GM and Xxxxxx, and Xxxxxx agrees
to indemnify and hold harmless the Company, from and against any and all
liability to which GM and Xxxxxx, on the one hand, or the Company, on the other
hand, may be subjected by reason of any broker's, finder's or similar fees or
expenses with respect to the transactions contemplated by this Agreement to the
extent such similar fees and expenses are attributable to any action undertaken
by or on behalf of the Company, or GM or Xxxxxx, as the case may be.
8.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
GENERAL MOTORS CORPORATION
By:
----------------------------------------
Name:
Title:
XXXXXX ELECTRONICS CORPORATION
By:
----------------------------------------
Name:
Title:
UNITED STATES SATELLITE
BROADCASTING COMPANY, INC.
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
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